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Exhibit 3
PIERCING PAGODA, INC.
0000 XXXXX XXXXX
XXXXXXXXX, XXXXXXXXXXXX 00000
August 22, 2000
To Our Stockholders:
I am pleased to inform you that, on August 11, 2000, Piercing Pagoda, Inc.
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Xxxx Corporation and Jewelry Expansion Corp., a wholly owned
subsidiary of Xxxx, pursuant to which Jewelry Expansion Corp. has commenced a
cash tender offer (the "Offer") to purchase all of the outstanding shares of the
Company's Common Stock for $21.50 per share. Under the terms of the Merger
Agreement, the Offer will be followed by a merger of Jewelry Expansion Corp.
with the Company in which any remaining shares of Company Common Stock will be
converted into the right to receive $21.50 per share in cash (or any higher
price that may be paid in the Offer), without interest.
The Board unanimously determined that the terms of the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, are
desirable, fair to and in the best interests of the Company and its
stockholders. Accordingly, the Board unanimously approved the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
and unanimously recommends that the stockholders of the Company tender their
shares in the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion (subject to the assumptions,
conditions and limitations described in such opinion) of ING Barings LLC, the
Company's financial advisor, that the $21.50 per share in cash to be received by
the holders of Company Common Stock in the Offer and the Merger is fair to such
holders from a financial point of view. A copy of the fairness opinion is
attached as Annex I to the attached Schedule 14D-9, and all stockholders are
urged to carefully read the opinion in its entirety for a description of the
assumptions made, matters considered and limits on the review undertaken by ING
Barings.
In addition to the attached Schedule 14D-9 relating to the Offer, the Offer
to Purchase, dated August 22, 2000, of Jewelry Expansion Corp., together with
related materials, including a Letter of Transmittal to be used for tendering
your shares of Company Common Stock, has been mailed to stockholders
concurrently herewith. These documents set forth the terms and conditions of the
Offer and the Merger and provide instructions as to how to tender your shares. I
urge you to read the enclosed material carefully.
Sincerely,
/s/ Xxxxxxx Xxxxxx
Chairman and
Chief Executive Officer
