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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PIERCING PAGODA, INC.
AT
$21.50 NET PER SHARE
BY
JEWELRY EXPANSION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
ZALE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, SEPTEMBER 19, 2000, UNLESS THE OFFER IS EXTENDED.
August 22, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 22,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
they may be amended and supplemented from time to time, together constitute the
"Offer") relating to the offer by Jewelry Expansion Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Zale
Corporation, a Delaware corporation ("Parent"), to purchase all of the issued
and outstanding shares of common stock, par value $0.01 per share (the
"Shares"), of Piercing Pagoda, Inc., a Delaware corporation (the "Company"), at
a price of $21.50 per Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal. Any holders who
desire to tender Shares and whose certificate(s) evidencing such Shares (the
"Certificates") are not immediately available, or who cannot comply with the
procedures for book-entry transfer described in the Offer to Purchase on a
timely basis, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of the Offer to Purchase.
We are (or our nominee is) the holder of record of Shares held for your
account. A tender of such Shares can be made only by us as the holder of record
and pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender Shares held by us
for your account.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account
pursuant to the terms set forth in the Offer.
Please note the following:
1. The Offer Price is $21.50 per Share, net to the seller in cash,
without interest thereon, as set forth in the Offer to Purchase.
2. The Offer is conditioned upon (i) there being validly tendered and
not withdrawn prior to the expiration of the Offer at least that number of
Shares that would constitute a majority of the then outstanding Shares on a
fully diluted basis on the date of purchase, (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and (iii) certain other
conditions. See Sections 1 and 14 of the Offer to Purchase.
3. The Offer is being made for all of the issued and outstanding
Shares.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on September 19, 2000 unless the Offer is extended.
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5. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of August 11, 2000, by and among Parent, Purchaser and the
Company (as it may be amended or supplemented from time to time, the
"Merger Agreement"). The Merger Agreement provides, among other things, for
the making of the Offer by the Purchaser, and further provides that,
following the completion of the Offer, upon the terms and subject to the
conditions of the Merger Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), the Purchaser will be merged with and
into the Company (the "Merger"). Following the effective time of the Merger
(the "Effective Time"), the Company will continue as the surviving
corporation and will become an indirect wholly owned subsidiary of Parent
and the separate corporate existence of the Purchaser will cease.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
7. The Board of Directors of the Company has unanimously (i) declared
that each of the Offer and the Merger is in the best interests of the
Company and its stockholders and is advisable and fair to the stockholders
of the Company, (ii) approved the Offer, the Merger and the Merger
Agreement, and (iii) recommended acceptance of the Offer and approval and
adoption of the Merger Agreement by the stockholders of the Company.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. If you authorize the tender
of your Shares, all such Shares will be tendered unless otherwise indicated in
such instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS
POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO
THE EXPIRATION OF THE OFFER.
The Offer is made solely pursuant to the Offer to Purchase and the related
Letter of Transmittal and any supplements or amendments thereto. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of the Shares pursuant thereto, Purchaser will make a
good faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager
(as defined in the Offer to Purchase) or one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
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INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
PIERCING PAGODA, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated as of August 22, 2000 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as they may be amended or supplemented from time
to time, together constitute the Offer) in connection with the offer by Jewelry
Expansion Corp., a Delaware corporation and an indirect wholly owned subsidiary
of Zale Corporation, a Delaware corporation, to purchase all outstanding shares
of common stock, par value $0.01 per share (the "Shares"), of Piercing Pagoda,
Inc., a Delaware corporation, at a purchase price of $21.50 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal furnished to the undersigned.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
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Number of Shares to be Tendered*
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Date
SIGN HERE
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Signature
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Print Name(s)
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Print Address(es)
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Area Code and Telephone Number(s)
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Taxpayer Identification or Social Security Number(s)
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* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
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