8-K 1 form8ktxt.txt FORM 8-K Microsoft Word 11.0.5604; [OBJECT OMITTED] SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: July 13, 2005 MSGI SECURITY SOLUTIONS , INC. (Exact name of Registrant as specified in charter) Nevada 0-16730 88-0085608 -------------------------------------------------------------------------------- (State or other (Commission (I.R.S. Employer jurisdiction of File No.) Identification No.) incorporation) 575 Madison Avenue New York, New York 10022 (Address of Principal Executive Offices) 917-339-7134 (Registrant's telephone number, including area code) Item 1.01 Entry into a Material Definitive Agreement Item 3.02 Unregistered Sale of Equity Securities On July 13, 2005, MSGI Securities Solutions, Inc ("MSGI" or the "Company") closed a Callable Secured Convertible Note financing of $3 million with a New York based institutional investor. Mallon Associates, a leading investment bank for the security industry, acted as the placement agent in this transaction. The instrument requires repayment over 36 months with a maximum of 8% interest per annum. Repayment shall be in cash or in registered shares of common stock. The monthly amortization shall commence 90 days after closing according to a 33 month amortization schedule. At the Investor's option, the note may be repaid upon the issuance of common stock at the conversion price; otherwise all payments must be in cash. The Conversion price shall be equal to 75% of the initial market price, which was $6.56. The interest rate resets to zero for any monthly period in which the stock price is greater than 125% of the initial market price. The Company granted registration rights to the investors for the resale of the shares of common stock underlying the notes and certain warrants that were issued in the transaction. The Company received $2 million in gross proceeds upon closing, and will receive an additional $500,000 upon filing of the registration statement relating to this offering, and $500,000 upon the effectiveness of such registration statement. The Company also issued warrants to the investors for the purchase of up to 75,000 shares of the Company's common stock, $0.01 par value, at an exercise price of $7.50 per share. The placement agent received warrants for the purchase of 12,195 shares of the Company's common stock, at an exercise price of $7.50 per share and a fee equal to 7% of the aggregate offering. The issuance of the notes and warrants constituted a private placement and therefore was exempt from registration in accordance with Regulation D of the Securities Act of 1933, as amended. The foregoing summary is qualified in its entirety by the Form of the Securities Purchase Agreement, Form of Callable Secured Convertible Note, the Form of Securities Purchase Warrant, Registration Rights Agreement, Security Agreement and Form of Agent's Warrant incorporated herein as Exhibits 4.1, 4.2, 4.3, 4.4 , 4.5 and 4.6 Item 9.01 Financial Statements and Exhibits (a) N/A (b) N/A (c) The following documents are filed herewith as exhibits to this Form 8-K: Exhibit No. 4.1 Form of Securities Purchase Agreement 4.2 Form of Callable Secured Convertible Note 4.3 Form of Securities Purchase Warrant 4.4 Registration Rights Agreement 4.5 Security Agreement 4.6 Form of Agent's Warrant 99.1 Press Release issued by the Registrant dated July 14, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MSGI SECURITY SOLUTIONS, INC. Date: July 19, 2005 By: /s/ Richard J. Mitchell III ---------------------------- Name: Richard J. Mitchell III, Chief Accounting Officer EXHIBIT INDEX Exhibit No. Description of Exhibit 4.1 Form of Securities Purchase Agreement 4.2 Form of Callable Secured Convertible Note 4.3 Form of Securities Purchase Warrant 4.4 Registration Rights Agreement 4.5 Security Agreement 4.6 Form of Agent's Warrant 99.1 Press Release issued by the Registrant dated July 14, 2005.