February 6, 2007
Exhibit
4.4
February
6, 2007
Gentlemen:
This
letter agreement (this “Agreement”) relates to the Series A Convertible
Preferred Stock, par value $.001 per share (the “Preferred Stock”) of Enigma
Software Group, Inc., a Delaware corporation (the “Company”). Capitalized terms
not otherwise defined herein shall have the meaning ascribed to them in that
certain Subscription Agreement between the Company and Dutchess Private Equities
Fund, LP & Dutchess Private Equities Fund, II, LP (collectively,
“Dutchess”), dated June 28, 2006 unless otherwise indicated.
Section
1.
(a)
The
undersigned (the “Preferred Holders”) hereby agree that during the period from
the date hereof until in either case ending on the earlier to occur of (i)
three
hundred and sixty (360) days after the Effective Date of the registration
statement on Form SB-2 covering resale of the shares of Common Stock underlying
the conversion of the Dutchess Debentures and the exercise of the Dutchess
Warrant or (ii) the date on which the full Face Amount, accrued interest and
penalties, if any, on the Debentures have been paid or (iii) the conversion
in
full of the Debenture, any accrued interest thereon and the full exercise of
the
Warrant (either being the "Lock Up Period"), the Preferred Holders will not,
directly or indirectly, convert any shares of the Company’s Preferred Stock
into, or exchangeable for any shares of the Company’s common stock, par value
$.001 (the “Common Stock”), except as set forth in Section 1(c).
(b)
Prior
to Dutchess’ conversion of shares underlying the Debenture or exercise of shares
underlying the Warrant, the Preferred Holders are entitled to vote the number
of
shares of Preferred Stock that equal the amount of (i) the aggregate number
of
shares of Common Stock that were cancelled in exchange for the shares of
Preferred Stock, as listed on Exhibit A of that certain Share Exchange
Agreement, by and among the Company, Xxxxx Xxxxxxx and Colorado Xxxxx, dated
June 28, 2006, multiplied by (ii) the Series A Conversion Price, as such term
is
defined in the Company’s Certificate of Designations for the Series A
Convertible Preferred Stock, dated June 29, 2006 (the “Series A Conversion
Price”).
(c)
During the Lock Up Period, upon and after the occurrence of Dutchess acquiring
6,582,023 shares of the Company’s Common Stock, whether through partial (i)
conversion of the shares underlying the Debenture or (ii) exercise of the shares
underlying the Warrant, the Preferred Holders shall convert shares of the
Preferred Stock into Common Stock on a pro rata basis with subsequent
conversions of Common Stock that have been issued to Dutchess as a result of
conversions of the Debenture and exercises of the Warrant as determined by
the
ratio provided below:
(1)
The
aggregate number of shares underlying Dutchess’ partial conversion of the
Debenture and exercise of the Warrant shall be divided by the total number
of
shares issuable to Dutchess upon the full conversion of the Debenture and the
full exercise of the Warrant;
(2)
The
sum from Section 1(c)(1) shall be multiplied by (i) the total number of shares
of Preferred Stock issued to the Preferred Holders (ii) divided by the Series
A
Conversion Price.
Section
2.
The
Preferred Holders hereby represent and warrant that the Preferred Holders have
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the Preferred Holders,
enforceable in accordance with its terms. Upon request, the Preferred Holders
will execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the Preferred Holders shall be binding upon the
successors and assigns of the Preferred Holders from the date first above
written.
Section
3.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York. Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.
By:
/s/
Colorado
Xxxxx
Name: Colorado
Xxxxx
Title:
Executive
Chairman
By:
/s/
Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
President and Chief Executive Officer
ACCEPTED
AND AGREED:
By:
/s/
Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title:
President and Chief Executive
Officer
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