APPENDIX B
May 31, 2000
Board of Directors of Pentech International, Inc.
c/o Mr. Norman Melnick
Chairman of the Board of Directors
Pentech International, Inc.
195 Carter Drive
Edison, NJ 08817
Gentlemen:
We have acted as financial advisor to the Board of Directors of Pentech
International, Inc. ("Pentech" or the "Company") in connection with its
review of the proposal by JAKKS Pacific, Inc. or its acquisition subsidiary,
JAKKS Acquisition II, Inc. ("JAKKS" or the "Acquiror") to acquire
100% of the outstanding equity of the Company by merger (the "Merger").
In connection therewith, you have requested our opinion as to the fairness,
from a financial point of view, of the consideration to be received by the
shareholders (including for such purpose the holders all outstanding options,
warrants or other rights to acquire stock in the Company) of Pentech in
connection with the proposed Merger (which we have been advised, and for
purposes of this opinion have assumed, to be approximately $18,000,000).
We understand that the Merger is to be effected pursuant to a merger
agreement by and among JAKKS and Pentech. The proceeds are comprised of
cash from the Acquiror for 100% of the outstanding equity interest in Pentech.
In arriving at our opinion, we have, among other things: (i) reviewed the
terms of the proposed Agreement of Merger of JAKKS Acquisition II, Inc with
and into Pentech International, Inc. dated as of May 22, 2000, (ii) reviewed
certain business and historical financial information relating to
Pentech, (iii) reviewed certain financial forecasts and other data provided
to us by management relating to the businesses and prospects of Pentech,
(iv) conducted discussions with members of the senior management of Pentech
with respect to the businesses and prospects of the Company, (v) reviewed
publicly available financial and stock market data with respect to certain
other companies in lines of business we believe to be generally comparable
to Pentech, (vi) reviewed the terms of certain recent acquisition
transactions, including business combinations, which we believe to be
generally comparable to the Merger, (vii) reviewed current market
conditions, including the markets for securities comparable to the
securities of Pentech, and (viii) conducted such other financial
studies, analyses and investigations, and considered such other information,
as we deemed necessary or appropriate.
Board of Directors of Pentech International, Inc.
May 31, 2000
Page 2
We have relied on the accuracy and completeness of the financial and other
information regarding Pentech provided to us, and have not independently
verified any such information. With respect to the financial forecasts
referred to above, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of
the management of Pentech as to the future financial performance of the
Company. In addition, we have not made any independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of
Pentech. Further, our opinion is based on economic, monetary and market
conditions existing on the date hereof.
It is our understanding that this letter is for the information of the Board
of Directors of Pentech only and, except as required by law, or pursuant to
order of a court, is not to used for any other purpose without the consent
of BVS, which consent shall not be unreasonably withheld. This letter may not
be quoted or referred to, in whole or in part, in any registration
statement, prospectus or proxy statement, or in any other written document
used in connection with the offering or sale of securities, without the
prior consent of BVS, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, we hereby consent to the Board of
Directors of Pentech making this opinion, and the contents hereof, available
to the Company's auditors and counsel.
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the aggregate consideration to be received in the Merger is
fair, from a financial point of view, to the holders of the outstanding
equity interests in Pentech.
Respectfully submitted:
BUSINESS VALUATION SERVICES, INC.
s/ David N. Fuller
David N. Fuller, CFA, ASA
Principal
