Exhibit 10.5
MSGI SECURITY SOLUTIONS, INC.
575 MADISON AVENUE
NEW YORK, NY 10022
December 13, 2006
AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners II, LLC
1044 Northern Boulevard
Suite 302
Roslyn, New York
11576
Re: MSGI
Security Solutions, Inc. (the "Company")
Ladies and Gentlemen:
This letter sets forth the agreement of the Company and the
investors
listed in the signature pages hereto (collectively, the
"Investors") to: (i)
amend the conversion provisions of certain Callable Secured
Convertible Notes,
as amended, which are convertible into shares of the Company's
common stock, par
value $.01 per share (the "Common Stock"), previously issued by the
Company to
the Investors (collectively, the "Convertible Notes"), as set forth
on Schedule
1 hereto; (ii) extend the expiration dates and amend the exercise
price of
certain warrants previously issued by the Company to the Investors
in connection
with the issuance of the Convertible Notes and in a subsequent
transaction in
June 2006 (collectively, the "Warrants"), as set forth on Schedule
1 hereto,
(iii) extend the maturity date of certain promissory notes
previously issued by
the Company to the Investors (collectively, the "Promissory
Notes"), (iv)
resolve certain other matters.
By execution hereof, for good and valuable consideration the
receipt
and sufficiency of which is hereby acknowledged, the parties hereto
agree that:
1. The
Convertible Notes shall no longer be subject to the
amortization provisions thereof, and such provisions shall be
deemed to be deleted.
2.
Section 2.2 of each of the Convertible Notes shall be amended
and restated in its entirety as follows:
"The
Conversion Price shall be the Variable Conversion Price (as
defined herein) (subject, in each case, to equitable adjustments
for
stock splits, stock dividends or rights offerings by the
Borrower
relating to the Borrower's securities or the securities of any
subsidiary of the Borrower, combinations, recapitalization,
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reclassifications, extraordinary distributions and similar events).
The
"Variable Conversion Price" shall mean the Applicable Percentage
(as
defined herein) multiplied by the Market Price (as defined
herein).
"Market Price" means the average of the lowest three (3) Trading
Prices
(as defined below) for the Common Stock during the twenty (20)
Trading
Day period ending one Trading Day prior to the date the
Conversion
Notice is sent by the Holder to the Borrower via facsimile (the
"Conversion Date"). "Trading Price" means, for any security as of
any
date, the closing price on the Over-the-Counter Bulletin Board
(the
"OTCBB") as reported by a reliable reporting service
("Reporting
Service") mutually acceptable to Borrower and Holder and
hereafter
designated by Holders of a majority in interest of the Notes and
the
Borrower or, if the OTCBB is not the principal trading market f
