APPENDIX B
Board of Directors
Castelle
August 22, 1996
Page 1
August 22, 1996
Board of Directors
Castelle
0000-0 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Gentlemen:
We understand that Castelle ("Castelle" or the "Company") and Ibex
Technologies, Inc. ("Ibex") have entered into a merger agreement pursuant to
which Ibex shall be merged with and into Castelle (the "Merger"). In connection
with the Merger, Castelle will issue 850,000 shares of its Common Stock in
exchange for all Ibex capital stock and options to purchase Ibex capital stock
(the "Merger Consideration").
You have requested our opinion of the Merger with respect to fairness, from
a financial point of view, to Castelle.
In connection with our review, we have, among other things
(i) reviewed the Agreement and Plan of Reorganization dated August 22,
1996,
(ii) reviewed financial information with respect to the business operations
of the Company including, but not limited to audited consolidated
financial statements for the fiscal years ended December 31, 1993,
December 31, 1994 and December 31, 1995 and unaudited consolidated
financial data for the period ended June 28, 1996,
(iii)reviewed financial information with respect to the business
operations of Ibex including, but not limited to, audited financial
statements for the fiscal years ended December 31, 1994 and December
31, 1995 and unaudited consolidated financial data for the period
ended June 30, 1996,
(iv) reviewed certain internal financial, operating and other information
relating to Castelle and Ibex (including financial projections)
prepared by the respective managements of each company,
(v) held discussions with certain members of both Xxxxxxxx and Ibex
management concerning past and current operations, financial condition
and business prospects,
(vi) held discussions and reviewed material prepared by certain members of
Castelle management analyzing their assessments of the business and
prospects of Castelle and Ibex and the potential financial effect of
the Merger on Castelle if the Merger were consummated,
(vii)discussed with Castelle management the results of their due diligence
of Ibex and reviewed related documents and analyses,
(viii) reviewed a comparison of operating results and other financial
information of Castelle and Ibex with other companies which we deemed
appropriate,
(ix) reviewed a comparison of the financial terms of the Merger with the
terms of certain other mergers and transactions which we deemed
appropriate, and
(x) considered such other information, financial studies and analyses as
we deemed relevant and performed such analyses, studies and
investigations as we deemed appropriate.
Xxxxxxxxx Xxxxxx has assumed and relied upon, without independent
verification, the accuracy and completeness of the information reviewed by it.
With respect to any financial projections, we assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the respective future financial performances of Xxxxxxxx and
Ibex and the future financial performance of the combined company. We also have
assumed without independent verification that Ibex owns and has adequate legal
protection for all material intellectual property it purports to own, that Ibex
owns or has adequate rights to use all intellectual property material to its
business as conducted or contemplated to be conducted and that the
representations and warranties of Castelle and Ibex in the Agreement and Plan of
Reorganization are true and correct. We have also assumed that the merger will
be accounted for as a pooling of interests.
We have not conducted a physical inspection of the properties or facilities
of Castelle or Ibex or made any independent valuation or appraisal of the
assets, liabilities, patents or intellectual property of Castelle or Ibex, nor
have we been furnished with any such valuations or appraisals. We have assumed
that the assessments of management have been made in good faith and reflect the
best currently available management judgments as to the matters covered. Our
opinion is necessarily based upon economic, market and other conditions as in
effect on, and the information made available to us as of, the date of this
letter.
We understand that in considering the Merger, the Board of Directors of the
Company has considered a wide range of financial and non-financial factors, many
of which are beyond the scope of this letter. This letter is not intended to
substitute for the Board's exercise of its own business judgment in reviewing
the Merger.
Based upon and subject to the foregoing considerations, it is our opinion
as financial advisors that the Merger Consideration is fair, from a financial
point of view, to Castelle.
This opinion is delivered to you based on your agreement that it is
intended solely for the benefit and use of the Company in considering the Merger
and that the Company will not use this opinion for any other purpose and will
not reproduce, disseminate or refer to this opinion at any time or make any
public reference to us or our engagement to deliver this opinion without our
prior written consent. It should be understood that, although subsequent
developments may affect this opinion, Xxxxxxxxx Xxxxxx does not have any
obligation to update, revise or reaffirm this opinion. Delivery of this opinion
is not intended to confer rights on any third party, including stockholders,
employees or creditors of the Company or Ibex.
Very truly yours,
Xxxxxxxxx Xxxxxx
By: ____________________
