Document:

AMENDMENT AGREEMENT NO. 1, dated as of October 29, 2004 (the "Amendment
Agreement"), to Securities Purchase Agreement, dated as of May 19, 2004 (the
"Original Securities Purchase Agreement") and the Transaction Agreements
referred to therein, between SATELLITE ENTERPRISES CORP. (the "Company") and the
Buyers named at the foot of this Amendment (or their respective predecessors in
interest) (each, "Buyer" and any two or more of them, "Buyers").

      Reference is made to the Original Securities Purchase Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Original Securities Purchase Agreement or the relevant
Transaction Agreement, as the context may require.

      Reference is made to the provisions of Annex V to the Original Securities
Purchase Agreement. A dispute has arisen among the parties as to whether the
Company fulfilled certain of the Company's Obligations by the Final Issue Date.
The parties have determined to settle such dispute in accordance with the terms
of this Amendment.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

      1. The Transaction Agreements are hereby amended as provided in the
following provisions of this Amendment. Except to the extent specified below (or
to the extent the subject of the amendments below are inconsistent with such
amendments), all terms of the Transaction Agreements remain in full force and
effect.

      2. The transactions reflected by the Transaction Agreements (the
"Transactions") are hereby modified to reflect the following terms:

      (a) The number of Purchased Shares and the Purchase Price specified for
each Buyer shall be reduced to 80% of the number or amount specified for such
Buyer in the Original Securities Purchase Agreement (such reduced number of
shares, the "Adjusted Purchased Shares" and such reduced amount, the "Adjusted
Purchase Price"). As a result, the Total Purchase Price applicable to the
Purchased Shares of all Buyers shall be US$2,000,000 (the "Adjusted Total
Purchase Price"). The Company represents and acknowledges that the purchase
price for the Adjusted Purchased Shares was paid on the original Closing Date of
the Transactions and the shares representing such Adjusted Purchased Shares were
originally included in stock certificates (the "Original Certificates") dated on
or about August 24, 2004, each of which was issued for a number of shares in
excess of the Adjusted Purchased Shares for the relevant Buyer.

      (b) (i) Each Buyer agrees to lend to the Company an amount (the "Loan
Amount") equal to 20% of the Purchase Price specified on the Buyer's signature
page to the Original Securities Purchase Agreement. The aggregate Loan Amount of
all Buyers is US$500,000 (the "Total Loan Amount").

<PAGE>

            (ii) The obligation to repay the loan of the relevant Loan Amount
from the Buyer shall be evidenced by the Company's issuance of one or more
Convertible Debentures to the Buyer in such principal amount (the Convertible
Debentures issued to the Buyer, the "Debentures"). Each Debenture (i) shall
provide for a conversion price (the "Conversion Price"), which shall initially
be equal to US$0.23 (the "Fixed Conversion Price"), which price may be adjusted
from time to as provided in the Debenture or in the other Transaction
Agreements, and (ii) shall have the terms and conditions of, and be
substantially in the form attached hereto as, ANNEX A-2. The loan to be made by
the Buyer and the issuance of the Debentures to the Buyer are sometimes referred
to herein and in the other Transaction Agreements as the purchase and sale of
the Debentures.

            (iii) The funds for the Total Loan Amount are currently held as part
of the Reserved Escrow Funds by the Agent under the terms of the Pledge
Agreement. Such funds will be released as provided below in this Amendment.

            (iv) The shares of Common Stock issuable on conversion of the
Debentures are referred to as "Conversion Shares." The term "Issue Date
Conversion Shares" means the number of shares of Common Stock equal to (x) the
Loan Amount for the relevant Buyer, divided by (y) the Conversion Price in
effect on the original date of issuance of the relevant Debenture.

      (c) The aggregate amount of the Adjusted Purchase Price and the Loan
Amount for each Buyer is equal to the original Purchase Price for such Buyer.
The aggregate of the Adjusted Total Purchase Price and the Total Loan Amount
shall be US$2,500,000. Except as otherwise specified in this Amendment, all
references in the Transaction Agreements to the Buyer's Purchase Price or the
Total Purchase Price shall be deemed to refer to the respective amounts referred
in the preceding sentences of this subparagraph (c).

      (d) In some contexts in the Transaction Agreements,

            (i) the term "Purchased Shares" shall be deemed to refer to the
            Adjusted Purchased Shares and the Debentures;

            (ii) the term "Securities" shall be deemed to refer to the Adjusted
            Purchased Shares, the Debentures, the Conversion Shares, the
            Warrants, the Warrant Shares, and, if relevant, the Option Shares;

            (iii) the term "Shares" shall be deemed to refer to the shares of
            Common Stock representing any or all of the Purchased Shares, the
            Conversion Shares, the Warrant Shares and the Option Shares.

      (e) The Warrants issued to each Buyer remain unchanged by the terms of
this Amendment.

<PAGE>

      (f) The term "Transaction Agreements" is amended to include, (i) all other
items previously included in such definition, each as amended hereby, (ii) this
Amendment, (iii) the Debentures and (iv) all ancillary documents referred to in
those agreements and documents. Each of the Transaction Agreements is deemed to
refer to the original of such agreement or document, as the same may be amended
by this Amendment.

      (g) Additional specific amendments to one or more of the Transaction
Agreements are referred to below and in ANNEX A-1 attached hereto, the terms of
which are incorporated herein by reference.

      (h) All terms defined in this Amendment or in any document or instrument
contemplated by this Agreement are deemed incorporated by reference to each
relevant Transaction Agreement, as amended hereby.

      (i) Each Buyer's execution and delivery of this Amendment shall constitute
such Buyer's consent and direction, as may be relevant, for the Escrow Agent or
the Agent to take action consistent with the purposes and intent of this
Amendment.

      3. The closing of the transactions contemplated by this Amendment (the
"Amendment Closing") shall take place at the offices of the Escrow Agent no
later than five (5) Trading Days after the Escrow Agent has received executed
copies of this Amendment from all of the Buyers. The date on which the Amendment
Closing occurs is referred to as the "Amendment Closing Date." On the Amendment
Closing Date:

      (a) The Company will execute and deliver to the Escrow Agent the Debenture
for each Buyer;

      (b) The Company will deliver to the Escrow Agent one or more duly and
validly issued stock certificates representing the Adjusted Purchased Shares for
each Buyer; and

      (c) The Escrow Agent shall return the Original Certificates to the Company
(acting through Company Counsel, as defined in the Registration Rights
Agreement).

      4. Effective upon Amendment Closing, the parties have agreed to the
release or certain items of the Collateral (as defined in the Pledge Agreement)
and the distribution of the Reserved Escrow Funds (as defined in the Joint
Escrow Instructions) under the terms of the Joint Escrow Instructions, Annex V
and the Pledge Agreement as provided below in this Section 4. Such provisions
shall apply notwithstanding anything to the contrary in any of the other
Transaction Agreements, provided that the Amendment Closing has occurred.
Capitalized terms used in this Section 4 and not otherwise defined herein shall
have the meanings ascribed to them in the Joint Escrow Instruction or the Pledge
Agreement, as the context may require.

      (a) Each Secured Party hereby (i) releases the Guarantor from its
obligations under the Guarantee and the Pledge Agreement and (ii) releases such
Secured Party's security interest in the Pledged Shares under the Pledge
Agreement. In furtherance of the foregoing, the Security Agent is authorized to
return the Pledged Shares to the Pledgor by delivering them to Marc Ross, Esq.
of Company Counsel.

<PAGE>

      (b) The Reserved Escrow Funds is $529,500, of which the Total Purchase
Price Reserve is $500,000. Each Secured Party hereby releases its security
interest in the Reserved Escrow Funds in excess of the Total Purchase Price
Reserve. Such excess, totaling $29,500, shall be returned to the Escrow Agent to
be held under the terms of the Joint Escrow Instructions and distributed in
accordance with the provisions of Sections 1(d)(II), (III)(i), (IV) and (V)
thereof.

      (c) The Total Purchase Price Reserve will be released as follows:

            (i) upon receipt of proof (as that term is used in the Joint Escrow
            Instructions) of the filing of the Registration Statement (in form
            contemplated by the Registration Rights Agreement, as amended by
            this Amendment) within ten (10) Trading Days of the Amendment Date,
            (x) the Secured Parties' security interest in the Total Purchase
            Price Reserve will be released, (y) the Total Purchase Price Reserve
            will be returned to the Escrow Agent to be held under the terms of
            the Joint Escrow Instructions, and (z) the Escrow Agent will as
            promptly as possible thereafter (1) release to or upon the order of
            the Escrow Agent, the amount of $10,000, as the legal and escrow fee
            relating to this Amendment, and (2) release the balance of the Total
            Purchase Price Reserve in accordance with the provisions of clauses
            (ii) and (iv) of Section 1(d)(III) of the Joint Escrow
            Instructions;1 or

            (ii) if receipt of proof of the filing of the Registration Statement
            Registration Statement (in form contemplated by the Registration
            Rights Agreement, as amended by this Amendment) within ten (10)
            Trading Days of the Amendment Date is not received, the Security
            Agent will (1) release to or upon the order of the Escrow Agent, out
            of the Total Purchase Price Reserve, the amount of $10,000, as the
            legal and escrow fee relating to this Amendment, and (2) release to
            each Buyer, such Buyer's Allocable Share of the balance of the Total
            Purchase Price Reserve, which will be applied as follows: (1) first,
            to the accrued Periodic Amounts contemplated by Section 2(b) of the
            Registration Rights Agreement (determined without regard to the any
            amendments thereto which are conditioned on the timely of the
            Registration Statement as provided in Annex A-1 hereto) through the
            date of such release, and (2) the balance in reduction of the
            principal of the Buyer's Debenture.2

      5. Each Buyer represents and warrants to the Company with respect to the
Debentures and the transactions contemplated by this Amendment as follows: Each
of the representations Each of the representations in Section 3 of the Original
Securities Purchase Agreement is hereby restated as if set forth herein in full;
provided, however, that any defined terms used in such representations shall be
deemed to refer to such term as amended by this Amendment.

--------

1No amounts are released pursuant to clauses (i) or (iii) of this Section.

2The Debenture shall remaining outstanding and enforceable in accordance with
its terms with respect to the reduced principal balance thereof.

<PAGE>

      6. The Company represents and warrants to each Buyer with respect to the
Debentures and the transactions contemplated by this Amendment as of the
Amendment Closing Date , as follows:

      (a) Each of the representations in Section 3 of the Original Securities
Purchase Agreement is hereby restated as if set forth herein in full (but
without regard to any exceptions included in Annex V to the Original Securities
Purchase Agreement), except as otherwise provided in ANNEX A-4 attached hereto;
provided, however, that any defined terms used in such representations shall be
deemed to refer to such term as amended by this Amendment. In furtherance of the
foregoing, it is expressly understood by the Company that such representations
shall apply to the Debentures and the Conversions Shares.

      (b) As of the Amendment Closing Date, the Shares shall have been duly
authorized by all necessary corporate action on the part of the Company, and,
when issued on or before the Amendment Closing Date or upon conversion of the
Debentures or exercise of the Warrants or pursuant to other relevant provisions
of the Transaction Agreements, in each case in accordance with their respective
terms, will be duly and validly issued, fully paid and non-assessable and will
not subject the Holder thereof to personal liability by reason of being such
Holder.

      (c) The number of shares issuable upon conversion of the Debentures, or
upon exercise of the Warrants or pursuant to the other terms of the Transaction
Agreements may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities sold pursuant to the Original Securities
Purchase Agreement and pursuant to this Amendment and recognize that they have
such a potential dilutive effect. The board of directors of the Company has
concluded, in its good faith business judgment, that such issuance is in the
best interests of the Company. The Company specifically acknowledges that its
obligation to issue the Conversion Shares upon conversion of the Debentures, the
Warrant Shares upon exercise of the Warrants, the Additional Shares as provided
in the Original Securities Purchase Agreement or the Payment Shares as provided
in the Registration Rights Agreement, each as amended by this Amendment, is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company, and the Company will honor such obligations, including honoring every
Notice of Conversion (as contemplated by the Debentures), every Notice of
Exercise (as contemplated by the Warrants), every demand for Additional Shares
(as contemplated by the Securities Purchase Agreement), every demand for Payment
Shares (as contemplated by the Registration Rights Agreement), unless the
Company is subject to an injunction (which injunction was not sought by the
Company) prohibiting the Company from doing so.

<PAGE>

      (d) The Company confirms that all statements of the Company contained
herein shall survive acceptance of this Amendment by the Buyer. The Company
agrees that, if any events occur or circumstances exist prior to the Amendment
Closing Date which would make any of the Company's representations, warranties,
agreements or other information set forth herein materially untrue or materially
inaccurate as of such date, the Company shall immediately notify the Buyer and
the Escrow Agent in writing prior to such date of such fact, specifying which
representation, warranty or covenant is affected and the reasons therefor.

      7. The Buyer understands that, in addition to the actions referred to in
Section 3 hereof, the Company's obligation to consummate the Amendment Closing
on the Amendment Closing Date is conditioned upon:

            (a) The execution and delivery of this Agreement by all of the
Buyers on or before the Amendment Closing Date;

            (b) On such Amendment Closing Date, each of the Transaction
Agreements executed by the Buyer on or before such date shall be in full force
and effect and the Buyer shall not be in default thereunder;

            (c) The accuracy on such Amendment Closing Date of the
representations and warranties of the Buyer contained in this Amendment, each as
if made on such date, and the performance by the Buyer on or before such date of
all covenants and agreements of the Buyer required to be performed on or before
such date; and

            (d) There shall not be in effect any law, rule or regulation
prohibiting or restricting the amendment transactions contemplated hereby, or
requiring any consent or approval which shall not have been obtained.

      8. The Company understands that, in addition to the actions referred to in
Section 3 hereof, the Buyer's obligation to consummate the Amendment Closing on
the Amendment Closing Date is conditioned upon:

            (a) The execution and delivery of this Amendment and the other
Transaction Agreements contemplated hereby by the Company on or before the
Amendment Closing Date;

            (b) On such Amendment Closing Date, each of the Transaction
Agreements executed by the Company on or before such date shall be in full force
and effect and the Company shall not be in default thereunder;

            (c) The accuracy in all material respects on such Amendment Closing
Date of the representations and warranties of the Company contained in this
Amendment, each as if made on such date, and the performance by the Company on
or before such date of all covenants and agreements of the Company required to
be performed on or before such date;

            (d) On such Amendment Closing Date, the Buyer shall have received an
opinion of counsel for the Company, dated such Amendment Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer, substantially to the
effect set forth in ANNEX A-3 attached hereto;

<PAGE>

            (e) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained; and

            (f) From and after the date hereof to and including the Amendment
Closing Date, each of the following conditions will remain in effect: (i) the
trading of the Common Stock shall not have been suspended by the SEC or on the
Principal Trading Market; (ii) trading in securities generally on the Principal
Trading Market shall not have been suspended or limited; and (iii) no minimum
prices shall have been established for securities traded on the Principal
Trading Market.

      9. The provisions of Sections 8 through 14 of the Original Securities
Purchase Agreement are incorporated herein by reference and apply to the
execution of this Amendment.

      10. Except to the extent expressly contemplated hereby or necessary to
give effect to the amendments contemplated hereby, all other terms and
conditions of each of the original Transaction Agreements remains in full force
and effect.

                   [Balance of page intentionally left blank]

<PAGE>

      IN WITNESS WHEREOF, each Buyer and the Company has caused this Amendment
to be duly executed on its behalf (if an entity, by one of its officers
thereunto duly authorized) as of the date first above written.

LENDERS

[List]

COMPANY

SATELLITE ENTERPRISES CORP.

By: _______________________________

Name and Title: ___________________

The terms of the above Amendment are acknowledged by the following parties:

PLEDGOR:

MEDIA FINANCE EN SUISSE HOLDINGS GMBH

By: _______________________________

Name and Title: ___________________

ESCROW AGENT:

KRIEGER & PRAGER LLP

By:

SECURITY AGENT:

KRIEGER & PRAGER LLP

By:

<PAGE>

                                                                       ANNEX A-1
                                                                              TO
                                                             AMENDMENT AGREEMENT

                          SPECIFIC AMENDMENT PROVISIONS

                          SECURITIES PURCHASE AGREEMENT

SECTION 4(G)

      (a) The term "Final Lock Up Date" is amended to mean the later of (i) the
earlier of the Proceeds Date or the Trading Threshold Date or (ii) the Scheduled
Date (as such terms are defined below).

      (b) The term "Proceeds Date" means, with respect to each Buyer without
regard to any Other Buyer, the date when the Buyer has received, in the
aggregate, proceeds from the sale of the Adjusted Purchased Shares3 equal to the
Buyer's Allocable Share of US$1,500,000. The parties acknowledge that the
achievement of a Proceeds Date for any Buyer does not affect the determination
of whether an Other Buyer has achieved a Proceeds Date.

      (c) The term "Trading Threshold Date" means the Trading Day on which each
and all (and not less than all) of the following conditions is true:

            (i) the Closing Price for each Trading Day during the Half Year
            Period (as defined below) is US$0.40 or more; and

            (ii) the aggregate trading volume during the same Half Year Period
            is at least 65 million shares.

      (d) The term "Half Year Period" means, as of any Trading Day, the
preceding six (6) month period; provided, however, that (i) the first day of any
Half Year Period shall not commence prior to the Effective Date and (ii) such
period shall not include the Trading Days, if any, during which sale of
Registrable Securities was suspended such period.

      (e) The term "Scheduled Date" means the date which is 18 months after the
Effective Date, but not counting for such purposes the days, if any, during
which sale of Registrable Securities was suspended after the Effective Date.

      (f) The following references in Section 4(g) are amended as provided
below:

            (i) "Securities" or "Purchased Securities" shall be deemed to refer
            to the Purchased Shares (as defined in this Amendment);

-----------------
3 To the exclusion of any other shares, including, but not limited to, Warrant
Shares, Conversion Shares, Option Shares or Payment Shares

<PAGE>

            (ii) "Per Share Purchase Price"4 shall be deemed to refer to the Per
            Share Purchase Price and to the Conversion Price, each as then in
            effect after taking into account any prior adjustments, or to either
            of them, as the case may be;

            (ii) Clause (i)(B)(1) shall be amended to read as follows:

            "(1) the Per Share Purchase Price shall be adjusted to an amount
            (the "Adjusted Per Share Purchase Price") equal to the lower of (x)
            the lowest fixed purchase price of any shares of the New Common
            Stock contemplated in the New Transaction or (y) the lowest
            conversion price which would be applicable under the terms of the
            New Transaction; and the Conversion Price for the Unconverted
            Debentures (as defined in the Debentures) shall be adjusted to an
            amount (the "Adjusted Conversion Price") equal to the Adjusted Per
            Share Purchase Price;"

            (iii) In Clause (i)(C), references to (X) "Purchase Price" in clause
            (x) shall refer to the Adjusted Purchase Price and (Y) "Purchased
            Shares" shall refer to the Adjusted Purchased Shares5.

SECTION 4(H)

      (a) The term "Purchased Shares" means the Adjusted Purchased Shares and
the Issue Date Conversion Shares.

SECTION 4(I)

      (a) This section is amended in its entirety to read as follows:

            I. AVAILABLE SHARES. The Company shall have at all times authorized
            and reserved for issuance, free from preemptive rights, a number of
            shares (the "Minimum Available Shares") at least equal to (x) one
            hundred twenty percent (120%) of (1) the number of shares issuable
            upon the conversion of all Unconverted Debentures then held by all
            Holders (whether or not such Debentures were originally issued to
            the Holder, the Buyer or any other party) plus (2) the numbers or
            shares issuable upon the exercise of all outstanding Warrants then
            held by all Holders (in each case, whether such Warrants were
            originally issued to the Holder, the Buyer or to any other party)
            and (y) one hundred percent (100%) of the Option Shares. For the
            purposes of such calculations, the Company should assume that all
            Debentures and Warrants were then issued and exercisable, in each
            case without regard to any restrictions which might limit any
            Holder's right to convert any of the Debentures or to exercise any
            of the Warrants held by any Holder.

-----------

4 In some places this phrase was incorrectly typed as "Purchase Price Per
Share". In all such cases it should read "Per Share Purchase Price"

5 See fn 1 above.

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

SECTION 1

      The following terms are amended in their entirety or added in their
entirety to this Section:

      "Held Shares Value" means the sum of

      (x) with respect to the Purchased Shares, the amount equal to (i) the
      number shares of Adjusted Purchased Shares still held by the Holder,
      multiplied by (ii) the Per Share Purchase Price and

      (y) with respect to the Debentures, the sum of (I) the principal amount of
      the Unconverted Debentures, plus (II) for shares of Common Stock acquired
      by the Investor upon a conversion of the Debentures within the thirty (30)
      days preceding the Restricted Sale Date, but not yet sold by the Investor,
      the principal amount of the Debentures converted into such Conversion
      Shares; provided, however, that if the Investor effected more than one
      such conversion during such thirty (30) day period and sold less than all
      of such shares, the sold shares shall be deemed to be derived first from
      the conversions in the sequence of such conversions (that is, for example,
      until the number of shares from the first of such conversions have been
      sold, all shares shall be deemed to be from the first conversion;
      thereafter, from the second conversion until all such shares are sold).

      "Investor" means the Initial Investor and any permitted transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and who holds Purchased Shares, Debentures,
Conversion Shares, Warrants or Warrant Shares.

      "Purchase Price" or "Purchase Price for all Purchased Shares" means the
sum of the Purchase Price for all Adjusted Purchased Shares plus the principal
amount of the Debentures.

      "Required Filing Date" means the Required Filing Date or, if the amendment
to the first sentence of Section 2(a)(i) referred to in the Amendment is
applicable, the Adjusted Required Filing Date.

      "Registrable Securities" means, collectively, the Purchased Shares, the
Conversion Shares, the Warrant Shares, the Additional Shares, the Payment Shares
and, to the extent purchased prior to the filing of the Registration Statement,
the Option Shares.

<PAGE>

SECTION 2(A)(I)

      (a) Subject to the conditions referred to below, the first sentence shall
be amended to read as follows:

      "The Company shall cause Company Counsel to prepare and file with the SEC,
      no later than seven (7) Trading Days after the Amendment Date (the
      "Adjusted Required Filing Date"), a Registration Statement registering for
      resale by the Investor a sufficient number of shares of Common Stock for
      the Initial Investors to sell the Registrable Securities."

This amendment shall apply if, and only if, the Registration Statement, in form
consistent with the provisions of the Registration Rights Agreement is filed
with the SEC within ten (10) Trading Days after the Amendment Date; if
otherwise, the amendment to this sentence shall not apply and its original terms
shall apply.

      (b) The sentence beginning "The `Initial Number of Shares to Be
Registered' is a number ..." is amended to read in its entirety as follows:

      The "Initial Number of Shares to Be Registered" is a number of shares of
      Common Stock which is at least equal to the sum of (x) one hundred fifty
      percent (150%) of the sum of (i) the number of Adjusted Purchased Shares,
      (ii) the number of shares into which the Debentures would be convertible
      at the time of filing of such Registration Statement (assuming for such
      purposes that all Debentures had been issued, had been eligible to be
      converted, and had been converted, into Conversion Shares in accordance
      with their terms, whether or not such issuance, eligibility or conversion
      had in fact occurred as of such date), plus (iii) the number of Warrant
      Shares covered by the Warrants (assuming for such purposes that all the
      Warrants had been issued, had been eligible to be exercised and had been
      exercised for the issuance of Warrant Shares in accordance with their
      terms, whether or not such issuance, eligibility or exercise had in fact
      occurred as of such date) and (y) one hundred percent (100%) of the number
      of Option Shares, if any, purchased prior the initial filing of the
      Registration Statement.

SECTION 2(A)(II)

      Subject to the conditions referred to below, the section shall be amended
to read in its entirety as follows:

                  "(ii) The Company and Company Counsel will use their
            reasonable best efforts to cause such Registration Statement to be
            declared effective on a date (the "Initial Required Effective Date")
            which is no later than the earlier of (Y) five (5) days after oral
            or written notice by the SEC that it may be declared effective or
            (Z) sixty (120) days after the Adjusted Required Filing Date."

<PAGE>

This amendment shall apply if, and only if, the amendment to the first sentence
of Section 2(a)(i) referred to above is effective; if otherwise, the amendment
to this section shall not apply and its original terms shall apply.

SECTION 2(A)(III)(X)

      The sentence beginning "The `Increased Number of Shares to Be Registered"'
is a number ..." is amended to read in its entirety as follows:

      The "Increased Number of Shares to Be Registered" is a number of shares of
      Common Stock which is at least equal to the sum of (I) one hundred fifty
      percent (150%) of the sum of (A) the Adjusted Purchased Shares and
      Additional Shares, if any, previously issued or currently issuable, (B)
      the sum of the number of Conversion Shares previously issued plus the
      number of shares into which the Unconverted Debentures would be
      convertible at such time (assuming for such purposes that all Debentures
      had been issued, had been eligible to be converted, and had been
      converted, into Conversion Shares in accordance with their terms, whether
      or not such issuance, eligibility or conversion had in fact occurred as of
      such date), plus (C) the adjusted number of shares issued or still
      issuable upon exercise of the Warrants (assuming for such purposes that
      all the Warrants, including the Additional Warrants, had been issued, had
      been eligible to be exercised and had been exercised for the issuance of
      Warrant Shares in accordance with their terms, whether or not such
      issuance, eligibility or exercise had in fact occurred as of such date),
      plus (II) one hundred percent (100%) of the sum of (A) the number of
      Payment Shares, if any, previously issued or currently issuable, and (B)
      the number of Option Shares, if any, purchased prior the initial filing of
      the Registration Statement

SECTION 2(B)(V)(A)

      The section shall be amended to read in its entirety as follows:

            "(A) at the option of the Company, exercisable in its discretion on
      the date the Periodic Amount is due; provided, however, that the Company
      may exercise this discretion if, but only if, the Effective Date is within
      thirty (30) days after the Adjusted Initial Effective Date and the
      Registration Statement covering the Payment Shares is then effective1; or

<PAGE>

      ***

      [fn]1 If the Investor requests payment of any accrued Periodic Amount on
      any date which is earlier than thirty (30) days after the Adjusted Initial
      Effective Date but prior to the Effective Date, and if, prior to the
      payment thereof, the Investor does not elect to have such payment made in
      shares as provided in clause (B) of this paragraph, the Company shall
      either pay such amount to the Investor or deposit such amount in escrow
      with the Company Counsel with a statement that it will issue shares to the
      Investor pursuant to this clause (A) if the conditions provided herein are
      met. If such amount is paid in escrow, it shall be held until such date or
      the earlier issuance of shares pursuant to such election in accordance
      with such terms. If the shares are not issued or issuable by such date,
      the Company Counsel shall release the funds to the Investor. If the shares
      are duly issued to the Investor, as confirmed by the Investor, the funds
      held in escrow may be released to the Company.

SECTION 2(B)(IX)

      This section is deleted in its entirety.

<PAGE>

                                                                       ANNEX A-2
                                                                              TO
                                                             AMENDMENT AGREEMENT

                                FORM OF DEBENTURE

                                [TO BE PROVIDED]

<PAGE>

                                                                       ANNEX A-3
                                                                              TO
                                                             AMENDMENT AGREEMENT

                            FORM OF COUNSEL'S OPINION

                                [TO BE PROVIDED]

<PAGE>

                                                                       ANNEX A-4
                                                                              TO
                                                             AMENDMENT AGREEMENT

[Subject to modification by Company]

                          EXCEPTIONS TO REPRESENTATIONS

                                      NONEExhibit 10.9

                     SETTLEMENT AND MUTUAL RELEASE AGREEMENT

      This Settlement and Mutual Release Agreement (the "Agreement") is entered
into as of October 18, 2004 by and between Alliance Atlantis Communications,
Inc., a corporation governed by the laws of Canada ("AACI"), and Point.360, a
California corporation ("Point.360"). AACI and Point.360 are referred to
collectively herein as "the parties."

                                    RECITALS

      This Agreement is executed with reference to the following facts:

      A. On or about June 4, 2002, Point.360 and AACI entered into a letter
agreement regarding the possible sale by AACI of certain of its subsidiaries
(the "Non-Disclosure Agreement").

      B. On or about July 3, 2002, Point.360 and AACI entered into an Option
Agreement (the "Option") by which AACI granted Point.360 an option to purchase
all of the issued and outstanding shares of Tattersall Sound Inc., Calibre
Digital Design, Inc. and Salter Street Digital Limited (the "Optioned
Companies"). In connection with the Option, Point.360 issued a Warrant to AACI
to purchase 500,000 shares of Point.360 common stock at $2.00 per share;
Point.360 and AACI entered into a Registration Rights Agreement regarding the
shares of Point.360 common stock issuable to AACI pursuant to the Warrant; and
Point.360 and AACI entered into a Services Agreement setting out the terms and
conditions pursuant to which AACI agreed to retain Point.360 and Point.360
agreed to perform certain post-production work.

                                       1
<PAGE>

      C. On or about December 30, 2002, Point.360 and AACI entered into an
Amended And Restated Option Agreement (the "Amended Option") with regard to the
Optioned Companies; an Escrow Agreement with regard to a $300,000 deposit
provided by Point.360 as part of the consideration for the Amended Option; an
Amendment To Warrant extending the expiration date of the Warrant; and Amendment
To Services Agreement amending the Services Agreement to apply to the Amended
Option; and an Amendment To Registration Rights Agreement amending the
Registration Rights Agreement to apply to the Amended Option.
("Warrant," as used hereinafter, is the Warrant as amended.)

      D. On or about March 21, 2003, Point.360 notified AACI that it would not
exercise the Amended Option.

      E. On or about July 1, 2003, Point.360 notified AACI of certain claims
relating to the Option and the Amended Option.

      F. On or about July 7, 2003, AACI filed suit against Point.360 in the
United States District Court for the Central District of California, Case No. CV
03-4812 JFW (JWJx) (the "First U.S. Action") seeking declaratory relief and
asserting a claim for defamation. AACI later stipulated to the dismissal of the
defamation claim with prejudice. Point.360 filed a counterclaim against AACI
alleging breach of contract and fraud. The Court dismissed Point.360's fraud
claims with leave to amend, on motion by AACI, and they were not re-alleged in
Point.360's amended counterclaim.

      G. On or about July 10, 2003, AACI filed suit against Point.360 in the
Ontario Superior Court of Justice, Court File No. 03-CV-252550CM3 (the "Canadian
Action") asserting a claim for breach of the Non-Disclosure Agreement.

                                       2
<PAGE>

      H. On or about September 15, 2004, AACI filed suit against Point.360 in
the United States District Court for the Central District of California, Case
No. CV 04-7662 ABC (JTLx) (the "Second U.S. Action") asserting a claim for
breach of contract relating to the Warrant and the Amended Option.

      I. Point.360 and AACI desire to enter into this Agreement to compromise,
settle and resolve all disputes and claims existing between them.

                                    AGREEMENT

      NOW, THEREFORE, based on the facts set forth in the Recitals above and the
mutual promises and covenants hereinafter set forth, the parties agree as
follows:

      1. Settlement Payment.

      On or before November 4, 2004, Point.360 shall deliver to counsel for AACI
$575,000 by bank wire or by bank check made payable to Alliance Atlantis
Communications, Inc. (the "Settlement Payment").

      2. Cancellation of Warrant.

      Upon AACI's receipt of the Settlement Payment, the Warrant shall be deemed
cancelled and of no further force and effect.

      3. Dismissal Of The First U.S. Action.

      Concurrently with the execution of this Agreement, Point.360 and AACI,
through their counsel of record, shall execute the Stipulation For Dismissal Of
Entire Action With Prejudice attached hereto as Exhibit A, which AACI shall hold
and file with the court no later than three court days after the Settlement
Payment. Thereafter, the parties shall take any and all additional actions as
may be reasonably necessary to obtain the dismissal of the entire First U.S.
Action with prejudice.

                                       3
<PAGE>

      4. Dismissal Of The Second U.S. Action.

      Concurrently with the execution of this Agreement, Point.360 and AACI,
through their counsel of record, shall execute the Stipulation For Dismissal Of
Entire Action With Prejudice attached hereto as Exhibit B, which AACI shall hold
and file with the court no later than three court days after the Settlement
Payment. Thereafter, the parties shall take any and all additional actions as
may be reasonably necessary to obtain the dismissal of the entire Second U.S.
Action with prejudice.

      5. Dismissal Of The Canadian Action.

      Concurrently with the execution of this Agreement, Point.360 and AACI,
through their counsel of record, shall execute the Consent requesting that the
Canadian Action be dismissed without costs attached hereto as Exhibit C, which
AACI shall hold and file with the court no later than five court days after the
Settlement Payment. Thereafter, the parties shall take any and all additional
actions as may be reasonably necessary to obtain the dismissal of the entire
Canadian Action with prejudice.

      6. Mutual Releases by Point.360 and AACI.

      a. Release By Point.360. Upon the occurrence of all of the events
described in Paragraphs 1 through 6, above, Point.360 releases and discharges
AACI, and its past and present agents, employees, representatives, officers,
directors, attorneys, accountants, trustees, affiliates, subsidiaries, insurers
and advisors, from any and all suits, causes of action, demands, claims,
charges, complaints, obligations, liabilities, costs, losses, damages, injuries,
rights, judgments, attorneys' fees, expenses, bonds, bills, penalties, fines,
and all other legal responsibilities in any form whatsoever in law or in equity,
in tort or in contract, whether known or unknown, and whether suspected or
unsuspected, including but not limited to those arising out of or related to the
facts that provided the basis for the First U.S. Action, the Second U.S. Action,
and/or the Canadian Action.

                                       4
<PAGE>

      b. Release By AACI. Upon the occurrence of all of the events described in
Paragraphs 1 through 6, above, AACI releases and discharges Point.360 and its
past and present agents, employees, representatives, officers, directors,
attorneys, accountants, trustees, affiliates, subsidiaries, insurers and
advisors, from any and all suits, causes of action, demands, claims, charges,
complaints, obligations, liabilities, costs, losses, damages, injuries, rights,
judgments, attorneys' fees, expenses, bonds, bills, penalties, fines, and all
other legal responsibilities in any form whatsoever in law or in equity, in tort
or in contract, whether known or unknown, and whether suspected or unsuspected,
including but not limited to those arising out of or related to the facts that
provided the basis for the First U.S. Action, the Second U.S. Action, and/or the
Canadian Action.

      c. Waiver of Civil Code Section 1542. With respect to the releases set
forth above, the parties expressly and voluntarily waive any and all rights and
benefits conferred upon them by the provisions of Section 1542 of the California
Civil Code. Section 1542 states:

                  "A general release does not extend to claims which the
                  creditor does not know or suspect to exist in his favor at the
                  time of executing the release, which if known by him must have
                  materially affected his settlement with the debtor."

                                       5
<PAGE>

Each of the parties hereto acknowledges that it is aware that it or its
attorneys may hereafter discover claims or facts in addition to or different
from those which it now knows or believes to exist with respect to either the
subject matter of this Agreement or any party hereto, but each of the parties
hereto further acknowledges that it is its intention to hereby fully, finally
and forever settle and release all claims between them, whether known or
unknown, suspected or unsuspected, which now exist, may exist or heretofore have
existed.

      7. Attorneys' Fees and Costs.

      Each of the parties hereto agrees to pay its own attorneys' fees and costs
incurred in the negotiation and drafting of this Agreement and in connection
with the First U.S. Action, the Second U.S. Action and the Canadian Action.

      8. Warranties Against Assignments by Point.360 and AACI.

      Point.360 and AACI each warrants, represents, and agrees that it has not
heretofore assigned, subrogated or transferred, to any natural person, firm,
partnership, corporation or entity whatsoever, any of the claims released
herein. In the event that any claim, demand, cause of action, or suit is made or
initiated against any party to this Agreement because of any such purported
prior assignment, transfer or subrogation of any such claim, right or interest,
the assigning, transferring or subrogating party warrants, represents, and
agrees to defend, indemnify and hold such other party harmless from any such
claim, demand, cause of action, or suit, and from any such purported assignment,
subrogation or transfer.

                                       6
<PAGE>

      9. Representations and Warranties.

      Each party hereto represents, warrants and agrees that it is entering into
this Agreement without duress, in good faith and for sufficient consideration,
and that this Agreement is fair, just and reasonable as to that party. Each
party hereto enters into this Agreement with full knowledge of any and all
rights which that party may have by reason of the claims released herein. Each
party hereto has had available to it such information as it or its counsel
considered necessary to make an informed judgment concerning this Agreement, and
has conducted such investigation as its counsel deemed appropriate regarding the
settlement and its rights and asserted rights in connection therewith.

         10. No Admission of Liability.

         Each party expressly understands and acknowledges that the
above-mentioned covenants, agreements, representations, warranties, and mutual
releases are being made solely for the purpose of settlement, and are not, and
shall not be construed as, an admission on the part of any party of any unlawful
or wrongful conduct or of any liability whatsoever to the other parties to this
Agreement.

      11. Complete Agreement.

      This Agreement contains the entire understanding between the parties with
respect to the subject matter hereof and there are no promises, representations
or other agreements between the parties concerning the subject matter of this
Agreement, except as set forth herein. Each party expressly acknowledges that,
in making this Agreement, it has not relied upon any statement or representation
pertaining to the matters set forth herein made by the other party's
representatives. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties.

                                       7
<PAGE>

      12. No Interpretation of Ambiguities Against Drafting Party.

      This Agreement has been negotiated at arm's length between persons
knowledgeable in the matters dealt with herein. In addition, each party has been
represented by experienced and knowledgeable legal counsel. Accordingly, the
parties agree that any rule of law, including, but not limited to, California
Civil Code Section 1654 or any other statutes, legal decisions, or common law
principles of similar effect, that would require interpretation of any
ambiguities in this Agreement against the party that has drafted it, is of no
application and is hereby expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intentions of the
parties hereto.

      13. Successors; No Assignment.

      This Agreement shall be binding upon and inure to the benefit of the
successors of the parties. Neither this Agreement nor any of the parties' rights
or obligations under this Agreement may be assigned or otherwise transferred
except upon the written consent of all parties to this Agreement.

      14. Representation and Warranty Re Authority to Enter Into This Agreement.

      Each party whose signature is affixed hereto in a representative capacity
represents and warrants that he/she is authorized to execute this Agreement on
behalf of and to bind the person or entity on whose behalf his/her signature is
affixed.

                                       8
<PAGE>

      15. Invalidity.

      If any provision of this Agreement is held to be void or unenforceable,
all other provisions shall nevertheless continue in full force and effect.

      16. Governing Law.

      This Agreement shall be governed by and construed under the laws of the
State of California.

      17. Headings.

      The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.

      18. Counterparts.

      This Agreement may be executed in counterparts (including facsimile
transmission with mailed original confirmations thereof), each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same instrument.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

POINT.360                                ALLIANCE ATLANTIS COMMUNICATIONS, INC.,
a California corporation                 a Canadian corporation

                                         By:  /s/ Paul Laberge
By:  /s/  Haig S. Bagerdjian             Its:  SVP Corporate Development
     -------------------------------
     Its:  Chief Executive Officer       & General Counsel
     (signed 11/9/04)                    (signed 11/8/04)

                                       9

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