July 11, 2007 RE: Settlement of Liquidated Damages
EXHIBIT
99.1
CONFORMED
COPY
July
11,
2007
RE:
Settlement of Liquidated Damages
The
parties hereto by executing this settlement and release (the “Settlement”)
hereby agree upon execution of final documentation of the documents described
herein, to waive and release Enigma Software Group, Inc. (the “Company”) from
its obligation to pay liquidated damages, lower the maximum conversion price,
or
be responsible for any of the default penalties for not making Payments as
of
the date of this Settlement, under
the
Transaction Documents between the Company and Dutchess Private Equities Fund,
Ltd. as successor in interest to Dutchess Private Equities Fund, LP &
Dutchess Private Equities Fund, II, LP (“Dutchess”), in exchange for the
following:
| 1. |
The
Company shall issue a new convertible debenture to Dutchess in the
amount
of $500,000 (“New Debenture”) on similar terms and conditions as the
current Debenture (“Current Debenture”). The Company shall be required to
pay interest only under the New Debenture in cash and Dutchess shall
have
the right to convert the New Debenture under Rule 144, when and as
applicable.
|
| 2. |
The
Company shall issue to Dutchess a warrant to purchase up to 25,000,000
shares of the Company’s common stock at an exercise price equal to $0.01
per share. The term of the warrant shall be five years and have piggyback
registration rights.
|
| 3. |
The
Company shall make payments to Dutchess on the Current Debenture
starting
on August 1, 2007 in an amount not less than $20,000 plus interest
accrued
but in no event shall the payment exceed $104,166.67 plus interest
accrued. The Company shall make payments in the amount of $104,166.67
(with $83,333,33 applied to principal reduction and $20,833.34 applied
to
principal reduction premium) plus accrued interest, commencing September
1, 2007 and each month thereafter until the balance of the Current
Debenture, redemption and interest is paid in full pursuant to the
terms
outlined in the Current Debenture.
|
By
executing below, the parties acknowledge that they are bound by the terms of
this Settlement. The parties also agree to cooperate and execute all other
documents as may be necessary to effectuate their agreement.
All
of
the terms and provisions of the Current Debenture and all other documents and
agreements between the Company and Dutchess shall continue in full force and
effect.
| Enigma Software Group, Inc.: | ||||
| By: /s/ Xxxxxxx X. Xxxxxxxx | By: /s/ Xxxxx X. Xxxxxxx | By: /s/ Colorado Xxxxx | ||
| Xxxxxxx X. Xxxxxxxx, CFO | Xxxxx X. Xxxxxxx, President & CEO | Colorado Xxxxx, Executive Chairman | ||
| Date: July 15, 2007 | Date: July 15, 2007 | Date: July 15, 2007 | ||
Dutchess
Private Equities Fund, Ltd. as successor in interest to Dutchess Private
Equities Fund, LP & Dutchess Private Equities Fund, II, LP
| By: /s/ Xxxxxxx Xxxxxxxx | ||
| Xxxxxxx Xxxxxxxx | ||
| Date: July 15, 2007 |
