EXHIBIT 10.5

                      BRILLIANT DIGITAL ENTERTAINMENT, INC.
                    6355 Topanga Canyon Boulevard, Suite 120
                            Woodland Hills, CA 91367

                                 October 2, 2002



To the Holders of Secured Convertible Promissory Notes
of Brilliant Digital Entertainment, Inc. Set
Forth on the Schedule Attached Hereto

     Re:  Extension of Maturity Date

Gentlemen:

     This letter agreement (this "AGREEMENT")  constitutes the binding agreement
of Brilliant Digital Entertainment, Inc., a Delaware corporation (the "COMPANY")
and each of you that accepts the Company's offer in accordance with the terms of
this  Agreement  (each,  a  "PARTICIPATING  HOLDER"),  pursuant  to  which  each
Participating  Holder, to the extent a holder of the following,  shall amend (i)
the Secured Convertible Promissory Note, dated as of May 23, 2001, issued by the
Company in favor of the  Participating  Holder,  as  previously  amended by that
certain  Amendment No. One to Secured  Convertible  Promissory Note, dated as of
December 19, 2001 (as amended,  each a "MAY CONVERTIBLE  NOTE" and collectively,
the "MAY CONVERTIBLE NOTES"), and (ii) the Secured Convertible  Promissory Note,
dated  as of  December  19,  2001,  issued  by  the  Company  in  favor  of  the
Participating Holder (each a "DECEMBER  CONVERTIBLE NOTE" and collectively,  the
"DECEMBER CONVERTIBLE NOTES").

     For  good  and   valuable   consideration,   receipt  of  which  is  hereby
acknowledged, the Company and each Participating Holder agree as follows:

     1.   AMENDMENTS TO CONVERTIBLE  NOTES.  Concurrently with the execution and
delivery of this Agreement by a Participating  Holder, such Participating Holder
shall  execute  and  deliver to the  Company,  to the extent  applicable  to the
Participating  Holder, (i) that certain Amendment No. Two to Secured Convertible
Promissory Note, dated as of October 4, 2002, substantially in the form attached
hereto as EXHIBIT A (the "MAY NOTE  Amendment"),  which May Note Amendment shall
amend the Participating  Holder's  respective May Convertible Note to change the
Maturity Date (as defined  therein) from November 10, 2002 to December 31, 2003,
and (ii) that certain Amendment No. One to Secured Convertible  Promissory Note,
dated as of  October  4,  2002,  substantially  in the form  attached  hereto as
EXHIBIT B (the "DECEMBER NOTE  AMENDMENT"),  which December Note Amendment shall
amend the Participating  Holder's respective December Convertible Note to change
the Maturity  Date (as defined  therein)  from November 10, 2002 to December 31,
2003.

     2.   CONSIDERATION  FOR AMENDMENTS.  In consideration of each Participating
Holder's amendment of the May Convertible Note and/or December Convertible Note,
as soon as  practicable  following  receipt by the Company of this Agreement and
the  May  Note  Amendment   and/or  December  Note  Amendment,   as  applicable,
countersigned  by the  Participating  Holder,  the


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Company shall issue to such  Participating  Holder a warrant expiring October 4,
2005 (each, a "WARRANT") initially  exercisable for a number of shares of Common
Stock equal to (i) one hundred  seventy five percent  (175%) of the  outstanding
principal amount (which, for purposes of clarity,  shall not include accrued but
unpaid  interest) of the May Convertible  Note and/or December  Convertible Note
being amended by the Participating Holder pursuant to this Agreement, divided by
(ii) a price (the  "EXERCISE  PRICE")  which  represents  a twelve and  one-half
percent (12.5%) premium over the volume weighted  average per share price of the
Company's  Common  Stock for the five (5)  trading  days  immediately  preceding
October 4, 2002.  Each Warrant  shall have an exercise  price per share equal to
the Exercise Price, and shall otherwise be on the terms set forth in the form of
Warrant attached as EXHIBIT C to this Agreement.

     3.   PARTICIPATING  PURCHASER  REPRESENTATIONS.  Each Participating  Holder
represents and warrants to the Company with respect to itself as follows:

          3.1. INVESTMENT REPRESENTATIONS.

               3.1.1. The Participating Holder has such knowledge and experience
in financial and business matters, including investments of the type represented
by this Agreement and the Warrants, as to be capable of evaluating the merits of
an  investment in the Company and can bear the economic risk of an investment in
the  Warrant  and the  shares  of  Common  Stock  that  may be  acquired  by the
Participating  Holder upon  exercise of the Warrant (the  "WARRANT  SHARES" and,
together with the Warrant, the "SECURITIES");

               3.1.2. The  Participating  Holder is an "accredited  investor" as
such term is defined in Rule 501 of  Regulation  D under the  Securities  Act of
1933 (the "SECURITIES ACT"); and

               3.1.3. The Participating  Holder is acquiring the Warrant and, to
the extent  exercised,  will be acquiring  the Warrant  Shares,  for  investment
purposes  only,  for its own  account  and not with a view to, or for  resale in
connection with, the distribution or other disposition  thereof in contravention
of the Securities Act or any state securities law.

          3.2. TRANSFER RESTRICTIONS.  The Participating Holder acknowledges and
agrees that the Securities are subject to the following transfer restrictions:

               3.2.1. The  Securities  have   not  been   registered  under  the
Securities  Act,  and the  Participating  Holder  agrees  not to  sell,  pledge,
distribute,  offer for sale, transfer or otherwise dispose of the Securities, as
applicable,  in the absence of (i) an effective registration statement under the
Securities  Act  as  to  Securities,   as  applicable,   and   registration   or
qualification  of  the  Securities  under  any  applicable  Blue  Sky  or  state
securities  laws then in  effect,  or (ii) an  opinion  of  counsel,  reasonably
satisfactory to the Company,  that such  registration and  qualification are not
required. Upon exercise of the Warrants, each of the certificates evidencing the
Warrant Shares shall bear a legend in substantially the following form:

          THE  SECURITIES  EVIDENCED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
          REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
          "SECURITIES  ACT"), OR ANY OTHER  APPLICABLE  SECURITIES LAWS AND
          HAVE  BEEN  ISSUED  IN  RELIANCE  UPON  AN  EXEMPTION   FROM  THE
          REGISTRATION  REQUIREMENTS  OF THE


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          SECURITIES  ACT AND SUCH  OTHER  SECURITIES  LAWS.  NEITHER  THIS
          SECURITY  NOR  ANY  INTEREST  OR  PARTICIPATION   HEREIN  MAY  BE
          REOFFERED,  SOLD,  ASSIGNED,  TRANSFERRED,  PLEDGED,  ENCUMBERED,
          HYPOTHECATED  OR  OTHERWISE  DISPOSED OF,  EXCEPT  PURSUANT TO AN
          EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR
          PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO,
          SUCH REGISTRATION.

               3.2.2. In the reasonable  discretion of the Company,  the Company
may condition any transfer of all or any portion of the Securities (other than a
disposition  satisfying  the  conditions  set  forth in  clause  (i) of  SECTION
3.2.1(I)  above)  upon the  transferee's  delivery  to the  Company of a written
agreement, in form and substance reasonably satisfactory to the Company, whereby
the  transferee  (i) makes such  representations  and  warranties to and for the
benefit of the Company as are comparable to the  representations  and warranties
of the  Participating  Holder  hereto,  as and to the extent  applicable  to the
proposed  disposition,  and (ii) agrees to be bound by the transfer restrictions
set forth in this SECTION 3.2.

          3.3. MANNER OF SALE. At no time was the Participating Holder presented
with or  solicited  by or  through  any  leaflet,  public  promotional  meeting,
television   advertisement  or  any  other  form  of  general   solicitation  or
advertising.

     4.   REGISTRATION RIGHTS. The Company agrees that each Participating Holder
shall be entitled to have the Warrant Shares  registered with the Securities and
Exchange  Commission  for resale under the Securities Act upon the same terms as
the registration rights granted by the Company to the Participating  Holder with
respect to the shares of Common Stock underlying the Participating  Holder's May
Convertible Note and/or December Convertible Note.

     5.   HOLDBACK  AGREEMENT.   Notwithstanding  registration  of  the  Warrant
Shares,  prior to January 23,  2003,  each  Participating  Holder  agrees not to
affect any  private or public  sale of,  make any short sale of,  loan,  pledge,
grant any option with respect to, or otherwise dispose of or transfer for value,
any of the Warrant Shares acquired by such Participating Holder upon exercise of
the Warrant issued hereunder.

     6.   AUTHORIZATION.  The  Company,  and each subsidiary (a "SUBSIDIARY") of
the Company that executes this  Agreement,  has the full legal right,  power and
authority to conduct its business and affairs.  The Company and each  Subsidiary
has the full legal  right,  power and  authority  to enter into and  perform its
obligations  under this  Agreement,  the May Note  Amendment,  the December Note
Amendment and the Warrant (collectively,  the "TRANSACTION  DOCUMENTS"),  to the
extent a party  thereto.  The  execution  and  delivery  by the Company and each
Subsidiary  of  each  Transaction  Document  to  which  it is a  party,  and the
performance  by the Company and each  Subsidiary of its  respective  obligations
under each Transaction Document to which it is a party, are within the corporate
powers of the Company and each Subsidiary,  and have been duly authorized by all
necessary  corporate  action  properly  taken.  The  officer(s)   executing  the
Transaction  Documents  are duly  authorized to act on behalf of the Company and
each Subsidiary.


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     7.   ACKNOWLEDGEMENT AND REAFFIRMATION OF SECURITY AGREEMENTS. The Company,
and each  Subsidiary,  hereby agree that (i) the Security and Pledge  Agreement,
dated  as of May  23,  2001,  as  amended,  executed  by the  Company  and  each
Subsidiary  (the "May  Security  Agreement")  and (ii) the  Security  and Pledge
Agreement,  dated as of December 19, 2001,  as amended,  executed by the Company
and each Subsidiary (the "December Security  Agreement") are and shall continue,
after the amendments to the May Convertible Notes and December Convertible Notes
contemplated  herein,  in full force and effect and are hereby  confirmed in all
respects and the Company and each  Subsidiary  hereby  reaffirms  each and every
obligation  thereunder  and each of the waivers and consents made  therein.  The
Company  and each  Subsidiary  agree  that all  references  in the May  Security
Agreement  to  the  Convertible  Notes  shall  mean  and be a  reference  to the
Convertible Notes as amended by the May Note Amendments and the Company and each
Subsidiary agree that all references in the December  Security  Agreement to the
Convertible  Notes shall mean and be a  reference  to the  Convertible  Notes as
amended by the December Note Amendments.

     8.   ACKNOWLEDGEMENT AND  REAFFIRMATION OF GUARANTEES.  (a) Each Subsidiary
hereby agrees that (i) the Guaranty,  dated as of May 23, 2001, executed by each
Subsidiary (the "May Guaranty") and (ii) the Guaranty,  dated as of December 19,
2001,  executed by each  Subsidiary  (the  "December  Guaranty"),  are and shall
continue,  after  the  amendments  to the May  Convertible  Notes  and  December
Convertible Notes  contemplated  herein, in full force and effect and are hereby
confirmed in all respects and each  Subsidiary  hereby  reaffirms each and every
obligation  thereunder  and each of the waivers and consents made therein.  Each
Subsidiary  agrees that all  references  in the May Guaranty to the  Convertible
Notes,  or  words of  similar  import,  shall  mean  and be a  reference  to the
Convertible  Notes as amended  by the May Note  Amendments  and each  Subsidiary
agrees that all references in the December Guaranty to the Convertible Notes, or
words of similar import,  shall mean and be a reference to the Convertible Notes
as amended by the December Note Amendments. Any reference in the May Guaranty to
Secured  Obligations  or  Convertible  Note Loans shall  include,  to the extent
applicable,  the Convertible Notes as amended by the May Note Amendments and any
reference in the December  Guaranty to Secured  Obligations or Convertible  Note
Loans shall include, to the extent applicable,  the Convertible Notes as amended
by the December Note Amendments.

          (b)  Each  Subsidiary  acknowledges  that  the  amendments  to the May
Convertible  Notes  and  the  December  Convertible  Notes  contemplated  herein
directly  benefit  each  Subsidiary  and that  such  amendments  provide  for an
extension of the  maturity  date of the May  Convertible  Notes and the December
Convertible Notes to December 31, 2003.

     9.   MISCELLANEOUS.  This Agreement and the exhibits and schedules attached
hereto represent the entire agreement between the parties concerning the subject
matter hereof,  and all oral discussions and prior agreements are merged herein;
provided,  if there is a conflict  between this Agreement and any other document
executed  contemporaneously  herewith with respect to the obligations  described
herein,  the provision of this Agreement shall control.  This Agreement shall be
construed and enforced in accordance with, and shall be governed by, the laws of
the State of  California,  without  regard  to the  conflict  of law  principles
thereof.  Any dispute  arising under or in relation to this  Agreement  shall be
resolved  in any  competent  court  located  in Los  Angeles  County,  State  of
California,  and the Company and each  Participating  Holder hereby  irrevocably
submit to the jurisdiction of any such court.  This Agreement may be executed in
any


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number of  counterparts  and by different  parties to this Agreement in separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.

     If the terms and provisions of this Agreement are acceptable to you, please
indicate your acceptance and approval by signing,  or by causing to be signed on
your behalf,  the enclosed copy of this Agreement and the  accompanying May Note
Amendment and/or December Note Amendment, and returning such signed documents to
the undersigned.

                                          Very truly yours,

                                          BRILLIANT DIGITAL ENTERTAINMENT, INC.,
                                          a Delaware corporation

                                          By:      /s/ Rob Chmiel
                                                   ---------------------------
                                                   Rob Chmiel
                                          Its:     Chief Financial Officer and
                                                   Chief Operating Officer

ACCEPTED:

PARTICIPATING HOLDER:

------------------------------------
(Print Name of Participating Holder)

------------------------------------
(Signature)

------------------------------------
(Title, if applicable)

Address:
         ---------------------------

         ---------------------------

         ---------------------------




AGREED:


BRILLIANT DIGITAL ENTERTAINMENT, INC.,
a Delaware corporation

By:      /s/ Rob Chmiel
         ---------------------------
         Rob Chmiel
Its:     Chief Financial Officer and
         Chief Operating Officer


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<PAGE>


BRILLIANT STUDIOS, INC.

By:      ---------------------------
         Rob Chmiel
Its:     Chief Financial Officer and
         Chief Operating Officer

BRILLIANT B3D, INC.

By:      ---------------------------
         Rob Chmiel
Its:     Chief Financial Officer and
         Chief Operating Officer


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<PAGE>


                                   SCHEDULE OF
                                  NOTE HOLDERS

                                       PRINCIPAL AMOUNT         PRINCIPAL AMOUNT
                                           OF MAY                 OF DECEMBER
NAME OF NOTE HOLDER                    CONVERTIBLE NOTE         CONVERTIBLE NOTE
-------------------                    ----------------         ----------------

Harris Toibb                              $ 2,000,000                  $ 350,000
   6355 Topanga Canyon Blvd.
   Suite 411
   Woodland Hills, CA 91367

Europlay 1, LLC                               214,150                         --
   15821 Ventura Blvd., Suite 525
   Encino, California  91436

Preston Ford, Inc.                             50,000                         --
   P.O. Box 98
   Preston, MD 21655

Capel Capital, Ltd.                                --                    400,000
   P.O. Box 212                           -----------                  ---------
   Hadsley House
   St. Peter Port
   Guernsey, Channel Islands

   Total                                  $ 2,264,150                  $ 750,000
                                          ===========                  =========


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                                    EXHIBIT A
                                       TO
                                LETTER AGREEMENT

                              Dated October 2, 2002


                           FORM OF MAY NOTE AMENDMENT


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<PAGE>


                                    EXHIBIT B
                                       TO
                                LETTER AGREEMENT

                              Dated October 2, 2002


                         FORM OF DECEMBER NOTE AMENDMENT


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<PAGE>


                                    EXHIBIT C
                                       TO
                                LETTER AGREEMENT

                              Dated October 2, 2002


                                 FORM OF WARRANT


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