January 14, 2000
Board of Directors
DynamicWeb Enterprises, Inc.
000 Xx 00 Xxxx
Xxxxxxxx X
Xxxxxxxxx XX 00000
Ladies and Gentlemen:
DynamicWeb Enterprises, Inc., a New Jersey company ("Dweb"), and eB2B Commerce,
Inc. ("eCom"), a Delaware company, have entered into an agreement and plan of
merger (the "Agreement") providing for the merger (the "Merger") of eCom into
Dweb. The Merger is expected to take place on or around April 15, 2000.
Capitalized terms used herein without definition have the meanings set forth in
the Agreement.
In accordance with the Agreement, the proposed Merger will be accomplished by:
Common Stock Conversion. At the Effective Time, each outstanding share of
eCom Common Stock shall be converted into the right to receive a number of
shares of Dweb Common Stock equal to one share of eCom Common Stock
multiplied by the Exchange Ratio.
The Exchange Ratio means the ratio determined by calculating a fraction,
the numerator of which shall be equal to the sum of (i) 25,000,000, plus
(ii) 5 multiplied by (A) the number of shares of Existing Common Stock (and
Existing Preferred Stock, and warrants, options and other securities
convertible into Existing Common Stock, all on an as-converted, fully
diluted basis) outstanding immediately prior to the Effective Time, minus
(B) 5,000,000, and the denominator of which shall be the number of shares
of eCom Common Stock (and eCom Preferred Stock and eCom Options and other
securities convertible into eCom Common Stock, all on an as-converted,
fully diluted basis) outstanding immediately prior to the Effective Time.
In addition, to the extent eCom raises capital in excess of $15 million
(which it did of approximately $18 million, for a total of approximately
$33 million) through its financing represented by a private placement
memorandum dated November 1, 1999 and subsequently amended and updated,
each such additional share of eCom Common Stock (on an as-converted, fully
diluted basis) will be converted into the right to receive a number of
shares of Dweb Common Stock equal to one share of eCom Common Stock
multiplied by the Exchange Ratio.
Preferred Stock and Other Securities Conversion. At the Effective Time,
each share of eCom Preferred Stock, and each eCom Option and other security
convertible into eCom Common Stock outstanding immediately prior to the
Effective Time, shall be converted into the right to receive, respectively,
shares of Dweb Preferred Stock, Company Options or other securities
convertible into Dweb Common Stock, as the case may be. The number of
shares of Dweb Common Stock issuable upon exercise or conversion of each
share of such Dweb Preferred Stock, and each Dweb Option or other security
convertible into Dweb Common Stock shall be calculated by multiplying (i)
the number of shares of eCom Common Stock into which each share of such
eCom Preferred Stock, each eCom Option or other
security convertible into eCom Common Stock is exercisable or convertible
by (ii) the Exchange Ratio. The exercise or conversion price of each share
of such Dweb Preferred Stock, each Dweb Option or other security
convertible into Dweb Common Stock shall be calculated by dividing (i) the
exercise or conversion price of each share of such eCom Preferred Stock,
each eCom Option or other security convertible into eCom Common Stock by
(ii) the Exchange Ratio.
You have asked us whether or not, in our opinion, the proposed Merger through
the exchange of shares as described above, is fair, from a financial point of
view, to your shareholders.
In arriving at the opinion set forth below, we have among other things:
1. Reviewed the Agreement;
2. Reviewed Dweb's recent SEC filings including its most recently available
Annual Report on Form 10-KSB and certain Quarterly Reports on Forms 10-Q;
3. Reviewed Dweb's internal business and financial analyses prepared by Xxxx's
management;
4. Reviewed eCom's private placement memorandum dated November 1, 1999
including subsequent amendments and updates to the memorandum; recent
financial results; and certain internal financial analyses and business
forecasts prepared by eCom's management;
5. Visited the corporate headquarters of both Dweb and eCom and conducted
meetings with members of management of Dweb and of eCom to discuss their
businesses and business prospects;
6. Performed a variety of financial and comparative analyses, including, but
not limited to:
i) Evaluation of certain financial information and ratios of
publicly-traded companies similar to Dweb;
ii) Evaluation of certain financial information and ratios of
publicly-traded companies similar to eCom;
iii) Evaluation of the financial terms of the proposed Merger;
iv) Comparison of the financial terms of the proposed Merger with
certain other mergers, acquisitions and business combination
transactions we deemed to be relevant; and
v) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other
matters as we deemed necessary, including our assessment of
general economic, market and monetary conditions.
Due to the significant reorganization of the business of Dweb and eCom and
uncertain nature of long-term consolidated, pro forma projections anticipated to
result from the Merger, we did not perform a discounted cash flow analysis to
arrive at our opinion.
In preparing our opinion, we have relied upon and assumed without independent
verification, the accuracy and completeness of all publicly available financial
information and all financial information furnished or otherwise communicated to
us by Dweb and by eCom. We have not made any appraisal of the assets of Dweb or
eCom, nor have we evaluated any other business combinations or acquisitions
contemplated by either Dweb or eCom, nor have we expressed any opinion as to
what the value of Dweb will be after the Merger is consummated or the
price at any time at which the common stock of Dweb will trade after the Merger.
Our opinion does not address the underlying business decision to enter into the
Merger.
It is understood that this letter may not be disclosed or otherwise referred to
without our prior consent, except as may otherwise be required by law or by a
court of competent jurisdiction; provided, however, that we hereby consent to
the inclusion of this opinion in any registration statement or proxy statement
used in connection with the Merger so long as the opinion is included in its
entirety in such registration statement or proxy statement.
On the basis of, and subject to the foregoing, we are of the opinion that the
proposed exchange of shares contemplated by the Merger is fair to Dweb's
shareholders, from a financial point of view.
Sincerely,
Xxxxxxxx, Xxxxxx & Xxxxxxxxxx, Inc.
DRAFT
Xxxxxxx X. Xxxxxxxxx
Executive Vice President
