CRESTVIEW CAPITAL PARTNERS, LLC
April 30, 2007
VIA EMAIL AND MESSENGER
Halo Technology Holdings, Inc. (the "Company")
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Board of Directors
Re: Breach of that certain letter agreement, dated April 17, 2007, between the
Company and Crestview Capital Partners, LLC (the "Letter Agreement") related to
the acquisition of Empagio, Inc.
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Gentlemen:
We were dismayed to learn that the Company's senior representatives
have been engaged in discussions with respect to an Alternative Transaction (as
defined in the Letter Agreement).
These actions constitute a complete violation of the Company's
obligations under paragraph 1 of the Letter Agreement.
Accordingly, we hereby reiterate our demand (as a follow-up to our
prior demands of senior management of the Company) that the Company comply with
its obligations under paragraph 1 of the Letter Agreement and that it
immediately cease all discussions with any other person or entity regarding an
Alternative Transaction (and that it cause its affiliates, subsidiaries,
stockholders, officers, directors, employees, agents and representatives to do
the same) so that the Company and we can proceed with our efforts to achieve the
contemplated Transaction.
As you know, we have devoted significant resources in an effort to
move the proposed Transaction forward as contemplated by the Letter Agreement on
an extremely fast time-table, we remain committed to doing so and we find the
Company's actions outlandish.
We intend to hold you, and any others who may have participated in
that breach, including creditors, responsible for any and all damages which we
may suffer as a result of this breach of the Letter Agreement, and as you must
be well aware, the Letter Agreement itself provides that this breach
automatically entitles us to reimbursement of
any and all of our (and the Fund's) legal, transactional and due diligence costs
incurred in connection with the Transaction. In addition, as required by
paragraph 1 of the Letter Agreement, we hereby reiterate our demand (previously
made to the Company's senior management) that the Company immediately provide us
with copies of all written materials which it has received with respect to any
Alternative Transaction.
In closing we feel compelled to make three additional points. First, we
want to make sure that you understand that you and your related parties and
representatives and agents are prohibited by the exclusivity provision from
taking any action which is inconsistent with or adverse to the consummation of
an acquisition of the business of Empagio by the Fund and its designees. We
fully intend to hold you to this obligation and to vigorously defend our
exclusive business relationship with the Company, which was fully negotiated by
us and which is clear for all to know given our 13D filing, to seek to achieve
the proposed Transaction. Second, pursuant to the Letter Agreement, our
exclusivity will automatically extend this evening for an additional one week
period. Third, and finally, we remain one of the Company's largest interest
holders. It has become clear to us in our due diligence process, as we have
proceeded with our efforts regarding the proposed Transaction that delay with
respect to the Empagio transaction can have a serious adverse affect on
Empagio's customers, its contacts and employees. The delay in moving our
proposed Transaction forward as a result of the breach by the Company of the
Letter Agreement, and any further delay, could truly threaten the value of the
Empagio business. As a material interest holder in the Company, we intend to
take all legal action we deem necessary or appropriate to protect that
investment in the Company and we urge you to reconsider your potentially
destructive course and the duties that are applicable when dealing with the
value of the Company and a key business asset.
We trust that, upon reconsideration, you and your representatives will
fully commit to completing the proposed Transaction, ignore any interference
from any third party interlopers you are not permitted to speak with (who must
know you are not permitted to speak with them), and abide by all your
obligations under the Letter Agreement.
CRESTVIEW CAPITAL PARTNERS, LLC
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Manager
