SETTLEMENT AND MUTUAL RELEASE AGREEMENT

SETTLEMENT AND MUTUAL RELEASE AGREEMENT

THIS SETTLEMENT AND MUTUAL RELEASE AGREEMENT ("Agreement") is made and entered

into effective April 15, 2005, by and among AGU Entertainment Corp, a Delaware

corporation, and each of its subsidiaries, located at 3200 W. Oakland Park Blvd,

Lauderdale Lakes, FL 33311 (collectively "AGU") and Ned Siegel, Neil Strum, and

Strum Brothers Investment, LLC ("SBI") (collectively "Shareholders"),

collectively referred to herein as the "Parties".

WHEREAS, on March 3, 2004, a subsidiary of AGU, assumed all of the

covenants and obligations of Pyramid Media Group, Inc., a non-affiliated

company, relating to a Distribution Agreement, dated May 1, 2003 with Ark 21

Records L.P., including guaranteeing an obligation to repay $350,000 of notes

payable to Ned Siegel and Neil Strum (the "Notes"); and

WHEREAS, the Notes are in default, and AGU as guarantor of the Notes,

has requested certain amendments to the terms of the Notes as part of its

on-going obligations under the Notes; and

WHEREAS, certain other disputes arose between the Shareholders and AGU

regarding the stock ownership AGU provided to the Shareholders arising from a

Memorandum of Understanding dated June 25, 2002 between the founders of the

predecessors in interest of AGU and the Shareholders, and

WHEREAS, the parties wish to reach an amicable resolution of all

disputes and disagreements between them upon the terms and conditions hereof as

well as make revisions to the Notes upon the terms set forth in this Agreement;

NOW, THEREFORE, in consideration of the promises, releases, and

obligations of the Parties set forth herein, and other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, the

Parties agree as follows:

1. Terms of Settlement:

(a) Upon the closing of a capital raise of not less than $250,000,

AGU shall cause to be made all principal and interest payments

due under the Notes for the period January through April 2005

in the amount of approximately $36,000.

(b) All principal payments due under the Notes prior to January

2005 that have not been made in accordance with the terms of

the Notes shall be deferred, and will become due and payable

at the end of the term of the Notes;

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(c) AGU hereby agrees to issue 500,000 shares of unregistered

common stock to the Shareholders (250,000 shares to Ned Siegel

and 250,000 shares to SBI), to be delivered within ten

business days from the date hereof. It is the understanding of

both parties that the securities set forth herein shall be

considered additional securities, as if they were issued as of

the original issue date of the founder shares (100 shares

converted into 3,311,382 shares at a cost of $100.00) since

these shares relate back to a controversy involving the

founder shares and the Memorandum of Understanding dated June

25, 2003.

(d) Notwithstanding anything to the contrary herein, the parties

hereto agree to enter into new notes canceling the old Notes

with AGU as the borrower thereunder. The new notes will be on

the same terms and conditions as the Notes except that the new

notes will have a beginning principal balance of $331,240

(plus accrued interest) and shall, in addition to the monthly

payment of approximately $8,500 per month, require additional

principal payments of $50,000 for every $1,000,000 in equity

capital raised subsequent to the date hereof as the term

equity capital is defined in the Amendment to Assignment and

Assumption Agreement dated March 8, 2004;

(e) The additional promissory notes of Ned Siegel and Neil Strum

in the aggregate amount of $64,000 shall be amended and

restated in its entirety to be co-terminus with and have

acceleration provisions that are identical to the capital

contribution notes of the other principals, including but not

limited to David Levy and John Grandinetti;

2. Waiver. Shareholders hereby waive all past defaults incurred prior

to the date hereof relative to the Notes. Shareholders further waive

any rights to default interest or penalties arising from any past

defaults on the Notes.

3. Representations. David Levy and John Grandinetti hereby re