Document:

EXHIBIT 10.5

                 CANCELLATION OF DEBT IN EXCHANGE FOR SECURITIES

         This Cancellation of Debt in Exchange for Securities Agreement (the
"Agreement") is entered as of December 17, 2003 by and between JACK KUESSOUS
("Lender" or "Holder") and PEAK ENTERTAINMENT HOLDINGS, INC., a Nevada
corporation (hereinafter referred to as "Corporation").

         Whereas, Lender has previously loaned to the Corporation the aggregate
sum of $100,000 (the "Debt");

         Whereas, the Holder seeks repayment of the Debt and will cancel
repayment of the Debt in exchange for securities of the Corporation, and the
Corporation is willing to issue securities in exchange for Cancellation of the
Debt;

         NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, it is hereby
stipulated, consented to and agreed by and among the parties as follows:

         1. The Corporation hereby issues to the Holder 583,333 shares of the
Corporation's common stock and hereby grants to Holder common stock purchase
warrants to purchase 150,000 shares of the Corporation's common stock for three
years at an exercise price of $0.50 per share. Additional terms and conditions
of the warrant grant shall be as set forth in Exhibit A hereto. In consideration
and exchange therefor, the Debt and all rights associated with the Debt,
including any claim for interest, held by the Holder is hereby cancelled.

         2. The Holder shall be entitled to piggyback rights for the shares of
common stock issued pursuant to this Agreement and the shares of common stock
underlying the warrants issued pursuant to this Agreement on the next
registration statement filed by the Company and in subsequent registration
statements, including amendments thereto, filed by the Company.

         3. This Agreement contains the entire agreement and understanding
concerning the subject matter hereof between the parties and supersedes and
replaces all prior negotiations, proposed agreement and agreements, written or
oral. Should any provision of this Agreement be declared or be determined by any
court or tribunal to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and said illegal or invalid
part, term or provision shall be severed and deemed not to be part of this
Agreement. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state
or federal courts located in New York County in the State of New York. All
parties and the individuals executing this Agreement and other agreements agree
to submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. This Agreement may be executed in
counterparts, each of which, when all parties have executed at least one such
counterpart, shall be deemed an original, with the same force and effect as if
all signatures were appended to one instrument, but all of which together shall
constitute one and the same Agreement.

LENDER / HOLDER:                         CORPORATION:

/s/ Jack Kuessous                        PEAK ENTERTAINMENT HOLDINGS, INC.
JACK KUESSOUS

                                         By: /s/ Wilf Shorrocks
                                             ----------------------
Address: 1865 Ocean Parkway                  Name:  Wilf Shorrocks
         Brooklyn N.Y. 11223                 Title:  President

<PAGE>

                                                                       EXHIBIT A

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED
UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II)
THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.

                        PEAK ENTERTAINMENT HOLDINGS, INC.
                          COMMON STOCK PURCHASE WARRANT

                                 150,000 SHARES
                     ORIGINAL ISSUE DATE: DECEMBER 17, 2003

         THIS CERTIFIES THAT, FOR VALUE RECEIVED, JACK KUESSOUS or his
registered assigns ("Holder") is entitled to purchase, on the terms and
conditions hereinafter set forth, at any time or from time to time from the date
hereof until 5:00 p.m., Eastern Time, on third anniversary of the Original Issue
Date set forth above, or if such date is not a day on which the Company (as
hereinafter defined) is open for business, then the next succeeding day on which
the Company is open for business (such date is the "Expiration Date"), but not
thereafter, to purchase up to ONE HUNDRED FIFTY THOUSAND (150,000) shares of the
Common Stock, $.001 par value (the "Common Stock"), of Peak Entertainment
Holdings, Inc., a Nevada corporation (the "Company"), at $0.50 per share (the
"Exercise Price"), such number of shares and Exercise Price being subject to
adjustment upon the occurrence of the contingencies set forth in this Warrant.
Each share of Common Stock as to which this Warrant is exercisable is a "Warrant
Share" and all such shares are collectively referred to as the "Warrant Shares."

         Section 1.        Exercise of Warrant; Conversion of Warrant.

         (a) This Warrant may, at the option of Holder, be exercised in whole or
in part from time to time by delivery to the Company at its principal office,
Attention: President, on or before 5:00 p.m., Eastern Time, on the Expiration
Date, (i) a written notice of such Holder's election to exercise this Warrant
(the "Exercise Notice"), which notice may be in the form of the Notice of
Exercise attached hereto, properly executed and completed by Holder or an
authorized officer thereof, (ii) a check payable to the order of the Company, in
an amount equal to the product of the Exercise Price multiplied by the number of
Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the
items specified in (i), (ii), and (iii) are collectively the "Exercise
Materials").

         (b) As promptly as practicable, and in any event within five (5)
business days after its receipt of the Exercise Materials, Company shall execute
or cause to be executed and delivered to Holder a certificate or certificates
representing the number of Warrant Shares specified in the Exercise Notice,
together with cash in lieu of any fraction of a share, and if this Warrant is
partially exercised, a new warrant on the same terms for the unexercised balance
of the Warrant Shares. The stock certificate or certificates shall be registered
in the name of Holder or such other name or names as shall be designated in the
Exercise Notice. The date on which the Warrant shall be deemed to have been
exercised (the "Effective Date"), and the date the person in whose name any
certificate evidencing the Common Stock issued upon the exercise hereof is
issued shall be deemed to have become the holder of record of such shares, shall
be the date the Company receives the Exercise Materials, irrespective of the
date of delivery of a certificate or certificates evidencing the Common Stock
issued upon the exercise or conversion hereof, provided, however, that if the
Exercise Materials are received by the Company on a date on which the stock
transfer books of the Company are closed, the Effective Date shall be the next
succeeding date on which the stock transfer books are open. All shares of Common
Stock issued upon the exercise or conversion of this Warrant will, upon
issuance, be fully paid and nonassessable and free from all taxes, liens, and
charges with respect thereto.

         Section 2. Adjustments to Warrant Shares. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment as follows:

<PAGE>

         (a) In the event the Company is a party to a consolidation, share
exchange, or merger, or the sale of all or substantially all of the assets of
the Company to, any person, or in the case of any consolidation or merger of
another corporation into the Company in which the Company is the surviving
corporation, and in which there is a reclassification or change of the shares of
Common Stock of the Company, this Warrant shall after such consolidation, share
exchange, merger, or sale be exercisable for the kind and number of securities
or amount and kind of property of the Company or the corporation or other entity
resulting from such share exchange, merger, or consolidation, or to which such
sale shall be made, as the case may be (the "Successor Company"), to which a
holder of the number of shares of Common Stock deliverable upon the exercise
(immediately prior to the time of such consolidation, share exchange, merger, or
sale) of this Warrant would have been entitled upon such consolidation, share
exchange, merger, or sale; and in any such case appropriate adjustments shall be
made in the application of the provisions set forth herein with respect to the
rights and interests of Holder, such that the provisions set forth herein shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to the number and kind of securities or the type and amount of
property thereafter deliverable upon the exercise of this Warrant. The above
provisions shall similarly apply to successive consolidations, share exchanges,
mergers, and sales. Any adjustment required by this Section 2 (a) because of a
consolidation, share exchange, merger, or sale shall be set forth in an
undertaking delivered to Holder and executed by the Successor Company which
provides that Holder shall have the right to exercise this Warrant for the kind
and number of securities or amount and kind of property of the Successor Company
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 2 hereof.

         (b) In the event the Company should at any time, or from time to time
after the Original Issue Date, fix a record date for the effectuation of a stock
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock, or securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon exercise or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split, or subdivision if no record date is fixed), the number of
Warrant Shares issuable upon the exercise hereof shall be proportionately
increased and the Exercise Price shall be appropriately decreased by the same
proportion as the increase in the number of outstanding Common Stock Equivalents
of the Company resulting from the dividend, distribution, split, or subdivision.
Notwithstanding the preceding sentence, no adjustment shall be made to decrease
the Exercise Price below $.0001 per Share.

         (c) In the event the Company should at any time or from time to time
after the Original Issue Date, fix a record date for the effectuation of a
reverse stock split, or a transaction having a similar effect on the number of
outstanding shares of Common Stock of the Company, then, as of such record date
(or the date of such reverse stock split or similar transaction if no record
date is fixed), the number of Warrant Shares issuable upon the exercise hereof
shall be proportionately decreased and the Exercise Price shall be appropriately
increased by the same proportion as the decrease of the number of outstanding
Common Stock Equivalents resulting from the reverse stock split or similar
transaction.

         (d) In the event the Company should at any time or from time to time
after the Original Issue Date, fix a record date for a reclassification of its
Common Stock, then, as of such record date (or the date of the reclassification
if no record date is set), this Warrant shall thereafter be convertible into
such number and kind of securities as would have been issuable as the result of
such reclassification to a holder of a number of shares of Common Stock equal to
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such reclassification, and the Exercise Price shall be unchanged.

<PAGE>

         (e) The Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution,
issue, or sale of securities, sale of assets or any other voluntary action, void
or seek to avoid the observance or performance of any of the terms of the
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (x)
will not create a par value of any share of stock receivable upon the exercise
of the Warrant above the amount payable therefor upon such exercise, and (y)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares upon
the exercise of the Warrant.

         (f) When any adjustment is required to be made in the number or kind of
shares purchasable upon exercise of the Warrant, or in the Exercise Price, the
Company shall promptly notify Holder of such event and of the number of shares
of Common Stock or other securities or property thereafter purchasable upon
exercise of the Warrants and of the Exercise Price, together with the
computation resulting in such adjustment.

         (g) The Company covenants and agrees that all Warrant Shares which may
be issued will, upon issuance, be validly issued, fully paid, and
non-assessable. The Company further covenants and agrees that the Company will
at all times have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise of
the Warrant in full.

         Section 3. No Stockholder Rights. This Warrant shall not entitle Holder
hereof to any voting rights or other rights as a stockholder of the Company.

         Section 4.        Transfer of Securities.

         (a) This Warrant and the Warrant Shares and any shares of capital stock
received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon, or otherwise, shall not be
transferable except upon compliance with the provisions of the Securities Act of
1933, as amended (the "Securities Act") and applicable state securities laws
with respect to the transfer of such securities. The Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of Section 4 hereof and to
indemnify and hold harmless the Company against any loss or liability arising
from the disposition of this Warrant or the Warrant Shares issuable upon
exercise hereof or any interest in either thereof in violation of the provisions
of this Warrant.

         (b) Each certificate for the Warrant Shares and any shares of capital
stock received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:

                  "NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
                  UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
                  LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I)
                  A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH
                  APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
                  WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A
                  WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE
                  EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
                  APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
                  WITH SUCH PROPOSED TRANSFER."

         Section 5. Registration. All warrant shares are subject to the
customary piggyback registration rights granted to other warrant holders granted
similar warrants, and the Holder may request inclusion of the Warrant Shares in
a registration statement registering other shares of the Holder. Notwithstanding
the foregoing, the Holder shall be entitled to such greater piggyback rights as
set forth in the Cancellation of Debt in Exchange for Securities Agreement
between the Company and the Holder dated December 17, 2003.

<PAGE>

         Section 6.        Miscellaneous.

         (a) The terms of this Warrant shall be binding upon and shall inure to
the benefit of any successors or permitted assigns of the Company and Holder.

         (b) Except as otherwise provided herein, this Warrant and all rights
hereunder are transferable by the registered holder hereof in person or by duly
authorized attorney on the books of the Company upon surrender of this Warrant,
properly endorsed, to the Company. The Company may deem and treat the registered
holder of this Warrant at any time as the absolute owner hereof for all purposes
and shall not be affected by any notice to the contrary.

         (c) Notwithstanding any provision herein to the contrary, Holder may
not exercise, sell, transfer, or otherwise assign this Warrant unless the
Company is provided with an opinion of counsel reasonably satisfactory in form
and substance to the Company, to the effect that such exercise, sale, transfer,
or assignment would not violate the Securities Act or applicable state
securities laws.

         (d) This Warrant may be divided into separate warrants covering one
share of Common Stock or any whole multiple thereof, for the total number of
shares of Common Stock then subject to this Warrant at any time, or from time to
time, upon the request of the registered holder of this Warrant and the
surrender of the same to the Company for such purpose. Such subdivided Warrants
shall be issued promptly by the Company following any such request and shall be
of the same form and tenor as this Warrant, except for any requested change in
the name of the registered holder stated herein.

         (e) Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested, (c) three (3) days after being
sent by U.S. certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same.

         If to Holder, to the registered address of Holder appearing on the
books of the Company. Each party shall provide five (5) days prior written
notice to the other party of any change in address, which change shall not be
effective until actual receipt thereof.

         (f) The corporate laws of the State of Nevada shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting the City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Warrant in that jurisdiction or the validity or enforceability
of any provision of this Warrant in any other jurisdiction.

                       [Signatures on the following page]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                                     COMPANY
                          COMMON STOCK PURCHASE WARRANT

IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its
name by its duly authorized officers under seal, and to be dated as of the date
first above written.

                                         PEAK ENTERTAINMENT HOLDINGS, INC.

                                         By:
                                              ---------------------------------
                                              Name:  Wilfred Shorrocks
                                              Title: President

<PAGE>

                                   ASSIGNMENT

               (To be Executed by the Registered Holder to effect
                      a Transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto
___________________________________________________________________________ the
foregoing Warrant and the rights represented thereto to purchase shares of
Common Stock of Peak Entertainment Holdings, Inc. in accordance with terms and
conditions thereof, and does hereby irrevocably constitute and appoint
_______________________________________ Attorney to transfer the said Warrant on
the books of the Company, with full power of substitution.

Holder:
____________________________________

____________________________________

Address

Dated: __________________, 20__

In the presence of:
_______________________________

<PAGE>

                          EXERCISE OR CONVERSION NOTICE

                  [To be signed only upon exercise of Warrant]

To:      Peak Entertainment Holdings, Inc.

The undersigned Holder of the attached Warrant hereby irrevocably elects to
exercise the Warrant for, and to purchase thereunder, _____ shares of Common
Stock of Peak Entertainment Holdings, Inc., issuable upon exercise of said
Warrant and hereby surrenders said Warrant.

The undersigned herewith requests that the certificates for such shares be
issued in the name of, and delivered to the undersigned, whose address is
________________________________.

         If electronic book entry transfer, complete the following:

Account Number:_____________________________
Transaction Code Number:____________________

Dated: ___________________

                                         Holder:
                                         ____________________________________
                                         ____________________________________
                                         By:_________________________________
                                         Name:
                                         Title:

                                     NOTICE

The signature above must correspond to the name as written upon the face of the
within Warrant in every particular, without alteration or enlargement or any
change whatsoever.EXHIBIT 10.6

                        SETTLEMENT AGREEMENT AND RELEASE

         This Settlement Agreement and Release (the "Agreement") is dated as of
December 22, 2003 and is by and among The N.I.R. Group, LLC, a New York limited
liability company ("NIR"), AJW Partners, LLC, a Delaware limited liability
company, New Millennium Capital Partners II, LLC, a New York limited liability
company, AJW Offshore, Ltd. (formerly known as AJW/New Millennium Offshore,
Ltd.), a Cayman Islands entity, and AJW Qualified Partners, LLC (formerly known
as Pegasus Capital Partners, LLC), a New York limited liability company
(collectively, the "Holders"), and Peak Entertainment Holdings, Inc. (formerly
known as Palladium Communications, Inc.), a Nevada corporation ("Peak").
Collectively, NIR, the Holders, and Peak are referred to herein as the
"Parties."

         WHEREAS, Peak and the Holders entered into a Securities Purchase
Agreement dated as of February 28, 2002, pursuant to which Peak issued an
aggregate of $215,000 principal amount of 12% convertible debentures and
warrants to purchase 645,000 shares of common stock, as amended March 14, 2003,
and as amended June 16, 2003, including all exhibits, schedules and ancillary
agreements thereto (the "March Securities Purchase Agreement");

         WHEREAS, Peak and the Holders entered into a Securities Purchase
Agreement dated as of dated as of April 22, 2003, including all exhibits,
schedules and ancillary agreements thereto, whereby Peak issued an aggregate of
$785,000 principal amount of 12% convertible debentures and warrants to purchase
1,570,000 shares of common stock (the "April Securities Purchase Agreement");

         WHEREAS, Peak and the Holders have agreed that, upon payment of certain
consideration as set forth herein, the Holders will surrender all securities,
rights to receive additional securities, and secured interest rights received by
the Holders pursuant to the March Securities Purchase Agreement and the April
Securities Purchase Agreement (the "Subject Securities"), which will be
cancelled upon surrender and closing hereunder (the "Closing");

         WHEREAS, the Holders are willing to surrender all of the Subject
Securities in exchange for payment of $1,000,000 and 1,000,000 shares of Peak's
unregistered common stock, as provided herein;

         NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, it is hereby agreed by
and among the Parties as follows:

         1. Upon execution of this Agreement, the Holders will deliver the
Subject Securities to the Law Offices of Dan Brecher.

<PAGE>

         2. Upon execution of this Agreement, Peak will (i) deposit $500,000,
which shall secure the promissory note payable on the earlier of effectiveness
of a registration statement and March 22, 2004 (the "Promissory Note"), in
substantially the form as set forth in Exhibit A, in escrow with Law Offices of
Dan Brecher, to be held in escrow and to be released to the Holders on the terms
and conditions herein and (ii) will pay to the Holders an aggregate of $500,000
by wire transfer as directed by the Holders and will issue to the Holders an
aggregate of 1,000,000 shares of Peak's common stock, to be held by the Holders
in accordance with Section 5 below (collectively, the "Payment Price"). The
Payment Price shall be allocated among the Holders as follows:

                  AJW Partners, LLC                           31.05%
                  New Millennium Capital Partners II, LLC     14.24%
                  AJW Offshore, Ltd.                          28.59%
                  AJW Qualified Partners, LLC                 26.12%

         3. Upon receipt of the Subject Securities and the Payment Price, the
Law Offices of Dan Brecher will notify Peak and the Holders, and as soon as
practicable will forward the Subject Securities to Peak, provided that the
Subject Securities shall not be released to Peak until the delivery of $500,000,
the $500,000 Promissory Note and 1,000,000 unregistered shares of Peak to the
Holders by delivery to the Holders' designated agent for receipt of the Payment
Price, Ballard Spahr Andrews & Ingersoll, LLP, located at 51st Floor, 1735
Market Street, Philadelphia, PA 19103. This shall constitute the "Closing"
hereunder.

         4. It is understood that third parties ("Investors") will be providing
funding to pay amounts described above for which the Investors will be receiving
consideration that includes securities, convertible debentures and/or warrants,
and that Peak will be undertaking its best efforts to file, on or about January
15, 2004, a registration statement for the resale of the underlying common stock
(the "Investor Registration Statement"). It is understood that such agreements
with and issuances to Investors may be deemed in breach of certain provisions of
the agreements pursuant to which the Holder's debentures and warrants were
issued, and the Holders have waived such provisions, subject to Closing.

         5. The 1,000,000 shares of common stock to be issued to the Holders
hereunder (the "Holders' Common Stock") shall be unregistered and bear customary
restrictive legend. Prior to the first anniversary of Closing, the Holders'
Common Stock may not be transferred, sold or otherwise disposed of, whether by
means of a public or private transaction, except to the Investors or upon notice
to the Company, fully communicating all details of the proposed transactions,
upon which the Investors shall have a twenty day first right of refusal to match
any offer made. After the first anniversary date of Closing, the Holders' Common
Stock may be sold pursuant to applicable securities laws, subject to the
following: the Holders shall not sell short any of the Company's securities.
Thirteen months after Closing, the Holders shall have the right to put the
Holders' Common Stock (as to the unsold balance of the 1,000,000 shares) to Peak
at $.75 per share, on an all-or-none basis. The Holders shall provide Peak with
written notice if they wish to exercise the put, which must be received by Peak
after thirteen months and prior to one year and two months after Closing, at the
expiration of which, this put right terminates. Closing on the put shall occur
within ten (10) business days from receipt of notice of the put. The put cannot
be withdrawn by the Holders once exercised.

<PAGE>

         6. Peak and the Holders represent and warrant to each other that there
are no consulting or other agreements between them, other than the March
Securities Agreement and the April Securities Agreement. Peak and NIR represent
and warrant to each other that there are no services, consulting, management or
any other agreements between them in effect.

         7. NIR and the Holders shall reasonably cooperate with Peak, including
furnishing necessary documents and information, in connection with Peak's
securities reporting and disclosure obligations under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and
Peak's efforts to effect the Investor Registration Statement.

         8. In consideration of the foregoing, NIR and the Holders release and
discharge Peak, its officers, directors, principals, control persons, past and
present employees, insurers, subsidiaries, predecessors, successors, and assigns
("Peak Parties") from all actions, cause of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, in law, admiralty or
equity, which against Peak Parties that it ever had, now have or hereafter can,
shall or may, have for, upon, or by reason of any matter, cause or thing
whatsoever, whether or not known or unknown, from the beginning of the world to
the day of the date of this Agreement arising in connection with the March
Securities Purchase Agreement and the April Securities Purchase Agreement, and
any and all agreements between Peak and NIR, other than a breach of this
Agreement.

         9. In consideration of the foregoing, the Peak Parties release and
discharge NIR and the Holders, their officers, directors, principals, control
persons, past and present employees, insurers, subsidiaries, predecessors,
successors, and assigns ("NIR and Holders Parties") from all actions, cause of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against NIR and Holders
Parties that Peak ever had, now have or hereafter can, shall or may, have for,
upon, or by reason of any matter, cause or thing whatsoever, whether or not
known or unknown, from the beginning of the world to the day of the date of this
Agreement arising in connection with the March Securities Purchase Agreement and
the April Securities Purchase Agreement, and any and all agreements between Peak
and NIR, other than a breach of this Agreement.

         10. Each of the Parties acknowledges and represents that: (a) it has
read the Agreement; (b) it clearly understands the Agreement and each of its
terms; (c) it fully and unconditionally consents to the terms of this Agreement;
(d) it has had the benefit and advice of counsel of its own selection; (e) it
has executed this Agreement, freely, with knowledge, and without influence or
duress; (f) it has not relied upon any other representations, either written or
oral, express or implied, made to it by any person; and (g) the consideration
received by it has been actual and adequate.

<PAGE>

         11. This Agreement contains the entire agreement and understanding
concerning the subject matter hereof between the Parties and supersedes and
replaces all prior negotiations, proposed agreement and agreements, written or
oral. Each of the Parties hereto acknowledges that no other party, nor agents or
counsel of any other party whomsoever, has made any promise, representation or
warranty whatsoever, express or implied, not contained herein concerning the
subject hereto, to induce it to execute this Agreement, and each of the Parties
acknowledge and warrant that it is not executing this Agreement in reliance on
any promise, representation or warranty not contained herein.

         12. This Agreement may not be modified or amended in any manner except
by an instrument in writing specifically stating that it is a supplement,
modification or amendment to the Agreement and signed by each of the Parties
hereto.

         13. Should any provision of this Agreement be declared or be determined
by any court or tribunal to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall be severed and deemed not to be part of
this Agreement.

         14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state or federal courts located in New York County in the State of New
York. All parties and the individuals executing this Agreement and other
agreements agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.

         15. Any notice herein required or permitted to be given shall be in
writing and sent by means of certified or registered mail, express mail, or
other overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means), in each case proper postage or other
charges pre-paid and addressed or directed to the Party at the address set forth
on the signature page hereto. Any notice to Peak shall also be sent to the
attention of Dan Brecher, Esq., Law Offices of Dan Brecher, 99 Park Avenue, 16th
Floor, New York, New York 10016, telephone: 212-286-0747, facsimile:
212-808-4155, but such copy to Dan Brecher shall not constitute notice required
hereunder. Any notice to NIR or the Holders shall also be sent to the attention
of Gerald J. Guarcini, Esq., Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market
Street, 51st Floor, Philadelphia, PA, telephone: 215-864-8625, facsimile:
215-864-9181, but such copy to Gerald J. Guarcini shall not constitute notice
required hereunder.

         16. This Agreement may be executed in counterparts, each of which, when
all parties have executed at least one such counterpart, shall be deemed an
original, with the same force and effect as if all signatures were appended to
one instrument, but all of which together shall constitute one and the same
Agreement.

<PAGE>

         17. Peak shall reimburse the fees and expenses of the Holder's counsel
in the maximum amount of up to $10,000 upon receipt of a detailed invoice, upon
the closing of this Agreement, in connection with the negotiation and
preparation of this Agreement and the transactions contemplated hereby. No other
counsel fees or expenses are payable by or claimed against Peak for fees and
expenses of the Holder's counsel in connection with any matter, including, but
not limited to, this Agreement or in connection with the March Securities
Purchase Agreement and the April Securities Purchase Agreement.

                            [signature pages follow]

<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first indicated above.

THE N.I.R. GROUP, LLC

By:      /s/
     -------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

AJW PARTNERS, LLC

By:      /s/ Corey S. Ribotsky
     -------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

NEW MILLENNIUM CAPITAL PARTNERS II, LLC

By:      /s/ Corey S. Ribotsky
     -------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

AJW OFFSHORE, LTD.
(formerly known as AJW/New Millennium Offshore, Ltd.)

By:      /s/ Corey S. Ribotsky
     -------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

AJW QUALIFIED PARTNERS, LLC
(formerly known as Pegasus Capital Partners, LLC)

By:      /s/ Corey S. Ribotsky
     -------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

The address for NIR and the Holders is:

1044 Northern Boulevard
Suite 302
Roslyn, New York  11576
Facsimile:  (516) 739-7115
Telephone:  (516) 739-7110

<PAGE>

PEAK ENTERTAINMENT HOLDINGS, INC.
(formerly known as Palladium Communications, Inc.)

By:      /s/ Wilfred Shorrocks
     -------------------------------
     Wilfred Shorrocks, President

ADDRESS:

Bagshaw Hall, Bagshaw Hill
Bakewell, Derbyshire UK DE45 1DL
Telephone:  +44(0)1629 814555
Facsimile:  +44(0)1629 813539

<PAGE>

                                    EXHIBIT A

                                 PROMISSORY NOTE

Promissory Note

$_________                                                     December 22, 2003

         FOR VALUE RECEIVED, and intending to be legally bound, Peak
Entertainment, Inc., a Nevada corporation (the "Maker"), hereby unconditionally
and irrevocably promises to pay to the order of __________________________ (the
"Payee") at its address _____________________________________________, or such
other place as Payee may designate in writing, in lawful money of the United
States of America, the aggregate principal sum of Five Hundred Thousand Dollars
($500,000), and, subject to the terms set forth herein, to pay interest on the
principal outstanding from time to time.

         This Promissory Note is issued in connection with the Settlement
Agreement and Release dated as of December 22, 2003 (the "Settlement Agreement")
entered into by and among the Maker and the Payee. The Parties understand that
third parties ("Investors") will be providing the cash consideration for which
the Investors will be receiving securities, convertible debentures and/or
warrants, and that Maker will be undertaking its best efforts to file a
registration statement for the resale of the underlying common stock (the
"Investor Registration Statement") on or about January 15, 2004. In the event
the Investor Registration Statement is declared effective within two months of
filing, no interest shall accrue and no interest will be paid on the principal
amount of this Promissory Note. In the event the Investor Registration Statement
is not declared effective within two months of filing, interest shall accrue on
the outstanding principal balance of this Promissory Note on the basis of a
360-day year daily from the date of issuance until paid in full at the rate of
twelve percent (12%) per annum. Whenever any payment to be made hereunder falls
due on a Saturday, Sunday or business holiday in New York, New York, such
payment may be made on the next succeeding business day and such extension of
time will, in such case, be included in computing interest, if any, in
connection with such payment.

         Maker will cause funds in the amount of $500,000 to be deposited in
escrow with Law Offices of Dan Brecher (the "Securing Funds") to secure payment
of this Promissory Note issued pursuant to the Settlement Agreement. The
Securing Funds will be utilized to pay, on a pro rata basis, the principal
amount of this Promissory Note and of the related promissory notes.

         On the earlier of the effective date of the Investor Registration
Statement and March 22, 2004 (the "Maturity Date"), the principal amount
outstanding and the accrued interest, if any, shall be payable upon demand of
Payee to the Maker or to the escrow agent, which demand may be made in whole or
in part at any time. This Promissory Note may be prepaid in whole or in part at
any time or from time to time prior to the Maturity Date.

         For purposes of this Promissory Note, an "Event of Default" shall occur
if Maker shall: (i) fail to pay the entire principal amount of this Promissory
when due and payable, (ii) admit in writing its inability to pay any of its
monetary obligations under this Promissory Note, (iii) make a general assignment
of its assets for the benefit of creditors, or (iv) allow any proceeding to be
instituted by or against it seeking relief from or by creditors, including,
without limitation, any bankruptcy proceedings.

<PAGE>

         In the event that an Event of Default has occurred, Payee or any other
holder of this Promissory Note may, by notice to Maker, declare this entire
Promissory Note to be forthwith due and payable one business day after such
Event of Default. In the event that an Event of Default consisting of a
voluntary or involuntary bankruptcy filing has occurred, then this entire
Promissory Note shall automatically become due and payable without any notice or
other action by Payee.

         The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one or more occasions shall be conclusive as a bar to or waiver of any
right on any other occasion.

         Should any part of the indebtedness evidenced hereby be collected by
law or through an attorney-at-law, Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from Maker
all reasonable costs of collection, including, without limitation, attorneys'
fees.

         Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, and notice of dishonor of this Promissory
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Promissory Note.

         This Promissory Note shall be binding upon the successors and assigns
of Maker, and shall be binding upon, and inure to the benefit of, the successors
and assigns of Payee.

         Any notice herein required or permitted to be given shall be in writing
and sent by means of certified or registered mail, express mail, or other
overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means) in each case proper postage or other
charges pre-paid and addressed or directed to the Maker or to the Payee at the
address set forth in the signature page of the related Settlement Agreement.
Such notice shall be deemed given when actually received. Both Maker and Payee
may change the address and fax number for notices by service of notice to the
other as herein provided.

         This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of New York. All disputes between Maker and
Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County in the State of New York,
and the courts to which an appeal therefrom may be taken.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory
Note as of December 22, 2003.

                                    PEAK ENTERTAINMENT HOLDINGS, INC.

                                    By:
                                         --------------------------------
                                         Wilfred Shorrocks, President

<PAGE>

                                 PROMISSORY NOTE

Promissory Note

$155,250                                                       December 22, 2003

         FOR VALUE RECEIVED, and intending to be legally bound, Peak
Entertainment, Inc., a Nevada corporation (the "Maker"), hereby unconditionally
and irrevocably promises to pay to the order of AJW PARTNERS, LLC (the "Payee")
at its address 1044 Northern Boulevard, Suite 302, Roslyn, New York 11576, or
such other place as Payee may designate in writing, in lawful money of the
United States of America, One Hundred Fifty Five Thousand Two Hundred Fifty
Dollars ($155,250), and, subject to the terms set forth herein, to pay interest
on the principal outstanding from time to time.

         This Promissory Note is issued in connection with the Settlement
Agreement and Release dated as of December 22, 2003 (the "Settlement Agreement")
entered into by and among the Maker and the Payee. The Parties understand that
third parties ("Investors") will be providing the cash consideration for which
the Investors will be receiving securities, convertible debentures and/or
warrants, and that Maker will be undertaking its best efforts to file a
registration statement for the resale of the underlying common stock (the
"Investor Registration Statement") on or about January 15, 2004. In the event
the Investor Registration Statement is declared effective within two months of
filing, no interest shall accrue and no interest will be paid on the principal
amount of this Promissory Note. In the event the Investor Registration Statement
is not declared effective within two months of filing, interest shall accrue on
the outstanding principal balance of this Promissory Note on the basis of a
360-day year daily from the date of issuance until paid in full at the rate of
twelve percent (12%) per annum. Whenever any payment to be made hereunder falls
due on a Saturday, Sunday or business holiday in New York, New York, such
payment may be made on the next succeeding business day and such extension of
time will, in such case, be included in computing interest, if any, in
connection with such payment.

         Maker will cause funds in the amount of $500,000 to be deposited in
escrow with Law Offices of Dan Brecher (the "Securing Funds") to secure payment
of this Promissory Note issued pursuant to the Settlement Agreement. The
Securing Funds will be utilized to pay, on a pro rata basis, the principal
amount of this Promissory Note and of the related promissory notes.

         On the earlier of the effective date of the Investor Registration
Statement and March 22, 2004 (the "Maturity Date"), the principal amount
outstanding and the accrued interest, if any, shall be payable upon demand of
Payee to the Maker or to the escrow agent, which demand may be made in whole or
in part at any time. This Promissory Note may be prepaid in whole or in part at
any time or from time to time prior to the Maturity Date.

         For purposes of this Promissory Note, an "Event of Default" shall occur
if Maker shall: (i) fail to pay the entire principal amount of this Promissory
when due and payable, (ii) admit in writing its inability to pay any of its
monetary obligations under this Promissory Note, (iii) make a general assignment
of its assets for the benefit of creditors, or (iv) allow any proceeding to be
instituted by or against it seeking relief from or by creditors, including,
without limitation, any bankruptcy proceedings.

<PAGE>

         In the event that an Event of Default has occurred, Payee or any other
holder of this Promissory Note may, by notice to Maker, declare this entire
Promissory Note to be forthwith due and payable one business day after such
Event of Default. In the event that an Event of Default consisting of a
voluntary or involuntary bankruptcy filing has occurred, then this entire
Promissory Note shall automatically become due and payable without any notice or
other action by Payee.

         The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one or more occasions shall be conclusive as a bar to or waiver of any
right on any other occasion.

         Should any part of the indebtedness evidenced hereby be collected by
law or through an attorney-at-law, Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from Maker
all reasonable costs of collection, including, without limitation, attorneys'
fees.

         Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, and notice of dishonor of this Promissory
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Promissory Note.

         This Promissory Note shall be binding upon the successors and assigns
of Maker, and shall be binding upon, and inure to the benefit of, the successors
and assigns of Payee.

         Any notice herein required or permitted to be given shall be in writing
and sent by means of certified or registered mail, express mail, or other
overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means) in each case proper postage or other
charges pre-paid and addressed or directed to the Maker or to the Payee at the
address set forth in the signature page of the related Settlement Agreement.
Such notice shall be deemed given when actually received. Both Maker and Payee
may change the address and fax number for notices by service of notice to the
other as herein provided.

         This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of New York. All disputes between Maker and
Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County in the State of New York,
and the courts to which an appeal therefrom may be taken.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory
Note as of December 22, 2003.

                                    PEAK ENTERTAINMENT HOLDINGS, INC.

                                    By:  /s/ Wilfred Shorrocks
                                         ----------------------------------
                                         Wilfred Shorrocks, President

<PAGE>

                                 PROMISSORY NOTE

Promissory Note

$130,600                                                       December 22, 2003

         FOR VALUE RECEIVED, and intending to be legally bound, Peak
Entertainment, Inc., a Nevada corporation (the "Maker"), hereby unconditionally
and irrevocably promises to pay to the order of AJW QUALIFIED PARTNERS, LLC (the
"Payee") at its address 1044 Northern Boulevard, Suite 302, Roslyn, New York
11576, or such other place as Payee may designate in writing, in lawful money of
the United States of America, One Hundred Thirty Thousand Six Hundred Dollars
($130,600), and, subject to the terms set forth herein, to pay interest on the
principal outstanding from time to time.

         This Promissory Note is issued in connection with the Settlement
Agreement and Release dated as of December 22, 2003 (the "Settlement Agreement")
entered into by and among the Maker and the Payee. The Parties understand that
third parties ("Investors") will be providing the cash consideration for which
the Investors will be receiving securities, convertible debentures and/or
warrants, and that Maker will be undertaking its best efforts to file a
registration statement for the resale of the underlying common stock (the
"Investor Registration Statement") on or about January 15, 2004. In the event
the Investor Registration Statement is declared effective within two months of
filing, no interest shall accrue and no interest will be paid on the principal
amount of this Promissory Note. In the event the Investor Registration Statement
is not declared effective within two months of filing, interest shall accrue on
the outstanding principal balance of this Promissory Note on the basis of a
360-day year daily from the date of issuance until paid in full at the rate of
twelve percent (12%) per annum. Whenever any payment to be made hereunder falls
due on a Saturday, Sunday or business holiday in New York, New York, such
payment may be made on the next succeeding business day and such extension of
time will, in such case, be included in computing interest, if any, in
connection with such payment.

         Maker will cause funds in the amount of $500,000 to be deposited in
escrow with Law Offices of Dan Brecher (the "Securing Funds") to secure payment
of this Promissory Note issued pursuant to the Settlement Agreement. The
Securing Funds will be utilized to pay, on a pro rata basis, the principal
amount of this Promissory Note and of the related promissory notes.

         On the earlier of the effective date of the Investor Registration
Statement and March 22, 2004 (the "Maturity Date"), the principal amount
outstanding and the accrued interest, if any, shall be payable upon demand of
Payee to the Maker or to the escrow agent, which demand may be made in whole or
in part at any time. This Promissory Note may be prepaid in whole or in part at
any time or from time to time prior to the Maturity Date.

         For purposes of this Promissory Note, an "Event of Default" shall occur
if Maker shall: (i) fail to pay the entire principal amount of this Promissory
when due and payable, (ii) admit in writing its inability to pay any of its
monetary obligations under this Promissory Note, (iii) make a general assignment
of its assets for the benefit of creditors, or (iv) allow any proceeding to be
instituted by or against it seeking relief from or by creditors, including,
without limitation, any bankruptcy proceedings.

<PAGE>

         In the event that an Event of Default has occurred, Payee or any other
holder of this Promissory Note may, by notice to Maker, declare this entire
Promissory Note to be forthwith due and payable one business day after such
Event of Default. In the event that an Event of Default consisting of a
voluntary or involuntary bankruptcy filing has occurred, then this entire
Promissory Note shall automatically become due and payable without any notice or
other action by Payee.

         The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one or more occasions shall be conclusive as a bar to or waiver of any
right on any other occasion.

         Should any part of the indebtedness evidenced hereby be collected by
law or through an attorney-at-law, Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from Maker
all reasonable costs of collection, including, without limitation, attorneys'
fees.

         Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, and notice of dishonor of this Promissory
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Promissory Note.

         This Promissory Note shall be binding upon the successors and assigns
of Maker, and shall be binding upon, and inure to the benefit of, the successors
and assigns of Payee.

         Any notice herein required or permitted to be given shall be in writing
and sent by means of certified or registered mail, express mail, or other
overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means) in each case proper postage or other
charges pre-paid and addressed or directed to the Maker or to the Payee at the
address set forth in the signature page of the related Settlement Agreement.
Such notice shall be deemed given when actually received. Both Maker and Payee
may change the address and fax number for notices by service of notice to the
other as herein provided.

         This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of New York. All disputes between Maker and
Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County in the State of New York,
and the courts to which an appeal therefrom may be taken.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory
Note as of December 22, 2003.

                                    PEAK ENTERTAINMENT HOLDINGS, INC.

                                    By:  /s/ Wilfred Shorrocks
                                         ---------------------------------
                                         Wilfred Shorrocks, President

<PAGE>

                                 PROMISSORY NOTE

Promissory Note

$142,950                                                       December 22, 2003

         FOR VALUE RECEIVED, and intending to be legally bound, Peak
Entertainment, Inc., a Nevada corporation (the "Maker"), hereby unconditionally
and irrevocably promises to pay to the order of AJW OFFSHORE, LTD. (the "Payee")
at its address 1044 Northern Boulevard, Suite 302, Roslyn, New York 11576, or
such other place as Payee may designate in writing, in lawful money of the
United States of America, One Hundred Forty Two Thousand Nine Hundred Fifty
Dollars ($142,950), and, subject to the terms set forth herein, to pay interest
on the principal outstanding from time to time.

         This Promissory Note is issued in connection with the Settlement
Agreement and Release dated as of December 22, 2003 (the "Settlement Agreement")
entered into by and among the Maker and the Payee. The Parties understand that
third parties ("Investors") will be providing the cash consideration for which
the Investors will be receiving securities, convertible debentures and/or
warrants, and that Maker will be undertaking its best efforts to file a
registration statement for the resale of the underlying common stock (the
"Investor Registration Statement") on or about January 15, 2004. In the event
the Investor Registration Statement is declared effective within two months of
filing, no interest shall accrue and no interest will be paid on the principal
amount of this Promissory Note. In the event the Investor Registration Statement
is not declared effective within two months of filing, interest shall accrue on
the outstanding principal balance of this Promissory Note on the basis of a
360-day year daily from the date of issuance until paid in full at the rate of
twelve percent (12%) per annum. Whenever any payment to be made hereunder falls
due on a Saturday, Sunday or business holiday in New York, New York, such
payment may be made on the next succeeding business day and such extension of
time will, in such case, be included in computing interest, if any, in
connection with such payment.

         Maker will cause funds in the amount of $500,000 to be deposited in
escrow with Law Offices of Dan Brecher (the "Securing Funds") to secure payment
of this Promissory Note issued pursuant to the Settlement Agreement. The
Securing Funds will be utilized to pay, on a pro rata basis, the principal
amount of this Promissory Note and of the related promissory notes.

         On the earlier of the effective date of the Investor Registration
Statement and March 22, 2004 (the "Maturity Date"), the principal amount
outstanding and the accrued interest, if any, shall be payable upon demand of
Payee to the Maker or to the escrow agent, which demand may be made in whole or
in part at any time. This Promissory Note may be prepaid in whole or in part at
any time or from time to time prior to the Maturity Date.

         For purposes of this Promissory Note, an "Event of Default" shall occur
if Maker shall: (i) fail to pay the entire principal amount of this Promissory
when due and payable, (ii) admit in writing its inability to pay any of its
monetary obligations under this Promissory Note, (iii) make a general assignment
of its assets for the benefit of creditors, or (iv) allow any proceeding to be
instituted by or against it seeking relief from or by creditors, including,
without limitation, any bankruptcy proceedings.

<PAGE>

         In the event that an Event of Default has occurred, Payee or any other
holder of this Promissory Note may, by notice to Maker, declare this entire
Promissory Note to be forthwith due and payable one business day after such
Event of Default. In the event that an Event of Default consisting of a
voluntary or involuntary bankruptcy filing has occurred, then this entire
Promissory Note shall automatically become due and payable without any notice or
other action by Payee.

         The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one or more occasions shall be conclusive as a bar to or waiver of any
right on any other occasion.

         Should any part of the indebtedness evidenced hereby be collected by
law or through an attorney-at-law, Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from Maker
all reasonable costs of collection, including, without limitation, attorneys'
fees.

         Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, and notice of dishonor of this Promissory
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Promissory Note.

         This Promissory Note shall be binding upon the successors and assigns
of Maker, and shall be binding upon, and inure to the benefit of, the successors
and assigns of Payee.

         Any notice herein required or permitted to be given shall be in writing
and sent by means of certified or registered mail, express mail, or other
overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means) in each case proper postage or other
charges pre-paid and addressed or directed to the Maker or to the Payee at the
address set forth in the signature page of the related Settlement Agreement.
Such notice shall be deemed given when actually received. Both Maker and Payee
may change the address and fax number for notices by service of notice to the
other as herein provided.

         This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of New York. All disputes between Maker and
Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County in the State of New York,
and the courts to which an appeal therefrom may be taken.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory
Note as of December 22, 2003.

                                    PEAK ENTERTAINMENT HOLDINGS, INC.

                                    By:  /s/ Wilfred Shorrocks
                                         -------------------------------
                                         Wilfred Shorrocks, President

<PAGE>

                                 PROMISSORY NOTE

Promissory Note

$130,600                                                       December 22, 2003

         FOR VALUE RECEIVED, and intending to be legally bound, Peak
Entertainment, Inc., a Nevada corporation (the "Maker"), hereby unconditionally
and irrevocably promises to pay to the order of AJW QUALIFIED PARTNERS, LLC (the
"Payee") at its address 1044 Northern Boulevard, Suite 302, Roslyn, New York
11576, or such other place as Payee may designate in writing, in lawful money of
the United States of America, One Hundred Thirty Thousand Six Hundred Dollars
($130,600), and, subject to the terms set forth herein, to pay interest on the
principal outstanding from time to time.

         This Promissory Note is issued in connection with the Settlement
Agreement and Release dated as of December 22, 2003 (the "Settlement Agreement")
entered into by and among the Maker and the Payee. The Parties understand that
third parties ("Investors") will be providing the cash consideration for which
the Investors will be receiving securities, convertible debentures and/or
warrants, and that Maker will be undertaking its best efforts to file a
registration statement for the resale of the underlying common stock (the
"Investor Registration Statement") on or about January 15, 2004. In the event
the Investor Registration Statement is declared effective within two months of
filing, no interest shall accrue and no interest will be paid on the principal
amount of this Promissory Note. In the event the Investor Registration Statement
is not declared effective within two months of filing, interest shall accrue on
the outstanding principal balance of this Promissory Note on the basis of a
360-day year daily from the date of issuance until paid in full at the rate of
twelve percent (12%) per annum. Whenever any payment to be made hereunder falls
due on a Saturday, Sunday or business holiday in New York, New York, such
payment may be made on the next succeeding business day and such extension of
time will, in such case, be included in computing interest, if any, in
connection with such payment.

         Maker will cause funds in the amount of $500,000 to be deposited in
escrow with Law Offices of Dan Brecher (the "Securing Funds") to secure payment
of this Promissory Note issued pursuant to the Settlement Agreement. The
Securing Funds will be utilized to pay, on a pro rata basis, the principal
amount of this Promissory Note and of the related promissory notes.

         On the earlier of the effective date of the Investor Registration
Statement and March 22, 2004 (the "Maturity Date"), the principal amount
outstanding and the accrued interest, if any, shall be payable upon demand of
Payee to the Maker or to the escrow agent, which demand may be made in whole or
in part at any time. This Promissory Note may be prepaid in whole or in part at
any time or from time to time prior to the Maturity Date.

         For purposes of this Promissory Note, an "Event of Default" shall occur
if Maker shall: (i) fail to pay the entire principal amount of this Promissory
when due and payable, (ii) admit in writing its inability to pay any of its
monetary obligations under this Promissory Note, (iii) make a general assignment
of its assets for the benefit of creditors, or (iv) allow any proceeding to be
instituted by or against it seeking relief from or by creditors, including,
without limitation, any bankruptcy proceedings.

<PAGE>

         In the event that an Event of Default has occurred, Payee or any other
holder of this Promissory Note may, by notice to Maker, declare this entire
Promissory Note to be forthwith due and payable one business day after such
Event of Default. In the event that an Event of Default consisting of a
voluntary or involuntary bankruptcy filing has occurred, then this entire
Promissory Note shall automatically become due and payable without any notice or
other action by Payee.

         The nonexercise or delay by the Payee or any other holder of this
Promissory Note of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. No waiver of
any right shall be effective unless in writing signed by the Payee, and no
waiver on one or more occasions shall be conclusive as a bar to or waiver of any
right on any other occasion.

         Should any part of the indebtedness evidenced hereby be collected by
law or through an attorney-at-law, Payee or any other holder of this Promissory
Note shall, if permitted by applicable law, be entitled to collect from Maker
all reasonable costs of collection, including, without limitation, attorneys'
fees.

         Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, and notice of dishonor of this Promissory
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Promissory Note.

         This Promissory Note shall be binding upon the successors and assigns
of Maker, and shall be binding upon, and inure to the benefit of, the successors
and assigns of Payee.

         Any notice herein required or permitted to be given shall be in writing
and sent by means of certified or registered mail, express mail, or other
overnight delivery service, hand delivery confirmed by signed receipt or
facsimile transmission (followed by prompt transmission of the original of such
notice by any of the foregoing means) in each case proper postage or other
charges pre-paid and addressed or directed to the Maker or to the Payee at the
address set forth in the signature page of the related Settlement Agreement.
Such notice shall be deemed given when actually received. Both Maker and Payee
may change the address and fax number for notices by service of notice to the
other as herein provided.

         This Promissory Note shall be governed by and construed in accordance
with the internal laws of the State of New York. All disputes between Maker and
Payee relating in any way to this Promissory Note shall be resolved only by
state and federal courts located in New York County in the State of New York,
and the courts to which an appeal therefrom may be taken.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Maker has executed this Promissory
Note as of December 22, 2003.

                                    PEAK ENTERTAINMENT HOLDINGS, INC.

                                    By:  /s/ Wilfred Shorrocks
                                         ---------------------------------
                                         Wilfred Shorrocks, President

<PAGE>

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (this "Agreement") is made as of December 22,
2003, by and among Peak Entertainment Holdings, Inc., a corporation incorporated
under the laws of the State of Nevada (the "Company"), the Debenture Holders
signatory hereto ("Holders"), and Law Offices of Dan Brecher (the "Escrow
Agent").

                              W I T N E S S E T H:

         WHEREAS, by agreement dated as of December 22, 2003, the Holders have
agreed to relinquish and sell all ownership and other rights to the debentures
and warrants issued pursuant to the Securities Purchase Agreement dated as of
April 22, 2003 by and among the Company and the Holders and the Securities
Purchase Agreement dated as of February 28, 2002, as amended March 14, 2003 by
and among the Company and the Holders, and as amended June 17, 2003, for an
aggregate purchase price of $1,000,000 and 1,000,000 unregistered shares of
common stock of the Company (the "Purchase Price") as set forth in the
Settlement Agreement and Release dated as of December 22, 2003 by and among the
Holders and the Company (the "Settlement Agreement); and

         WHEREAS, the Holders and the Company have requested that the Escrow
Agent hold $500,000 (the "Funds") to secure payment of those certain promissory
notes issued to the Holders on the date hereof (the "Notes");

         NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:

                                    ARTICLE 1

                               TERMS OF THE ESCROW

         1.1 The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the Funds to secure the Notes;

         1.2 At the Closing, upon the Escrow Agent's receipt of the Funds into
its escrow account, together with executed counterparts of this Agreement, the
Settlement Agreement, and the Holders' debentures and warrants, the Escrow Agent
shall telephonically advise the parties, or the parties' designated attorney or
agent, that it has received the Funds into its account. Wire transfers to the
Escrow Agent shall be made as follows:

                LAW OFFICES OF DAN BRECHER,
                ESCROW ACCOUNT ACC. 37242193
                CITIBANK, N.A.
                CITICORP CENTER
                153 EAST 53RD STEET
                NEW YORK, NY 10043
                ABA NO. 021000089

<PAGE>

         1.3. The Funds shall remain in escrow until the earlier of March 22,
2004 or the effectiveness of the Investor Registration Statement, as provided in
the Settlement Agreement (the "Final Redemption Date"). On the Final Redemption
Date, the Escrow Agent shall deliver the Funds per written wire or other
delivery instructions to the Holders.

                                    ARTICLE 2

                                  MISCELLANEOUS

         2.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.

         2.2. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent as set forth in the Settlement
Agreement.

         2.3. This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.

         2.4. This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.

         2.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

         2.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, arising out of,
or relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York County in the State of
New York.

         2.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Holders and the
Escrow Agent.

         2.8. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, and any act done or omitted by the Escrow Agent
pursuant to the advice of the Escrow Agent's attorneys-at-law shall be
conclusive evidence of such good faith.

<PAGE>

         2.9. The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

         2.10. The Escrow Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Settlement Agreement or any documents or
papers deposited or called for thereunder.

         2.11. The Escrow Agent shall be entitled to employ such legal counsel
and other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Company, and may continue to act as legal counsel for the Company,
notwithstanding its duties as the Escrow Agent hereunder. The Holders consent to
the Escrow Agent in such capacity as legal counsel for the Company and waives
any claim that such representation represents a conflict of interest on the part
of the Escrow Agent. The Holders understand that the Company and the Escrow
Agent are relying explicitly on the foregoing provision in entering into this
Escrow Agreement.

         2.12. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         2.13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefor.

<PAGE>

         2.14. The Company and the Holders agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Settlement
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this 22nd day of December, 2003.

AJW PARTNERS, LLC                        PEAK ENTERTAINMENT HOLDINGS, INC.
AJW OFFSHORE, LTD.
AJW QUALIFIED PARTNERS, LLC
NEW MILLENNIUM CAPITAL                   By:  /s/ Wilfred Shorrocks
   PARTNERS II, LLC                           --------------------------------
                                              Name:  Wilfred Shorrocks
                                              Title:  President

By:      /s/ Corey S. Ribotsky
      ------------------------------
Name:  Corey S. Ribotsky
Title:  Authorized Signatory

ESCROW AGENT:

LAW OFFICES OF DAN BRECHER

By:      /s/ Dan Brecher
      ------------------------------
         Dan Brecher, Authorized Signatory

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