ASSET PURCHASE AGREEMENT


            Asset Purchase  Agreement,  made this 8th day of May 1998, by
and among  PIERCING  PAGODA,  INC.,  a  Delaware  corporation  ("Buyer");
SEDGWICK SALES, INC., a Nevada corporation ("Seller"); DONALD M. SEDGWICK
("DMS"),  GREGORY K.  STAPLEY  ("GKS");  THE  SEDGWICK  FAMILY TRUST (the
"Trust"); and the undersigned beneficiary of the Trust (the "Beneficiary"
and, collectively with the Trust, the "Shareholders");  provided that DMS
and GKS are signatories of this Agreement solely for purposes of agreeing
to enter into the  Non-competition  Agreement  (as defined  below) on the
terms  set forth  below and the  Beneficiary  shall  only have  liability
hereunder  to  the  extent,  if  any,  that  she  receives,  directly  or
indirectly, distributions of cash or other consideration from the Trust.

                                  BACKGROUND

            Seller operates  approximately  157 retail kiosk stores under
the names Golden Chain Gang, Golden Chain International,  Grand Illusions
and Sedgwick Solid Gold  International (the "Names") which sell primarily
gold-plated jewelry (the "Business").  The Trust owns one hundred percent
(100%) of the outstanding capital stock of Seller. The Beneficiary is the
primary beneficiary of the Trust.

            Buyer desires to purchase,  and Seller  desires to sell,  the
Assets (as defined below) on the terms set forth below.

            NOW,  THEREFORE,  in  consideration  of the mutual  covenants
hereinafter set forth, the parties, intending to be legally bound hereby,
agree as follows:

            1. Sale and  Purchase  of  Assets.  On the  Closing  Date (as
hereinafter defined) and subject to the terms and conditions contained in
this Agreement, Seller shall sell, transfer, assign and deliver to Buyer,
and Buyer shall purchase,  assume and accept from Seller,  free and clear
of all liens and  encumbrances,  all right,  title and interest in and to
all of the following assets owned by Seller (the "Assets"):

                  (a)  Seller's  interest  in the one  hundred  and seven
(107)  existing or pending  leases for Seller's  kiosk  stores  listed in
Schedule 1(a) attached hereto,  and the leases for any other locations as
to which an Additional Store Exercise is made pursuant to Section 4 below
(the "Stores"); and

                  (b)   Store   kiosks   and  any   and   all   leasehold
improvements,  fixtures,  benches,  point-of-sale registers,  telephones,
credit authorization devices, stools, safes, security panels and existing
security systems at the Stores (all of which are being sold "as is, where
is" without warranty or  representation  except as specifically set forth
herein); except to the extent that Buyer in its discretion determines not
to acquire any such  assets;  provided  that Seller  must  consent,  such
consent not to be  unreasonably  withheld or delayed,  to any decision by
Buyer not to acquire a Store kiosk;  provided  that  Buyer's  covenant to
dispose  of such  assets,  including  without  limitation  paying  off or
otherwise  eliminating  Seller's  obligations  under the  leases  for the
Stores,  at  Buyer's  sole  cost  and  expense,  shall  be a  permissible
condition  to the  granting  of  Seller's  consent  hereunder.  As to any
pending  Stores  for  which a kiosk has not yet been  constructed,  Buyer
shall be  responsible  for  constructing,  installing and paying for such
kiosk.

            2.  Excluded   Assets.   The  Assets  do  not  include  cash,
receivables,  prepaid rents,  inventory,  personal vehicles,  home office
building  and any other  assets of Seller  not  identified  in  Section 1
above.

            3.  Assumption of Certain  Liabilities.  Subject to the terms
and conditions of this Agreement,  Buyer shall assume and perform and pay
those  liabilities  and  obligations of Seller accruing or arising on and
after the applicable  Closing Date (as provided in Section 7 below):  (i)
with respect to the Stores'  utilities


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and  merchant  association  dues and  expenses  and (ii)  under the  Stores'
leases.  With the exception of the liabilities and obligations to be assumed
by Buyer pursuant to the preceding sentence and the other provisions of this
Agreement,  Buyer  shall not  assume and shall in no event be liable for any
other  debts,  liabilities  or  obligations  of  Seller,  whether  fixed  or
contingent,  known  or  unknown,  liquidated  or  unliquidated,  secured  or
unsecured,  or otherwise  and  regardless  of when they arose or arise.  The
obligations  of Buyer  pursuant to this  Section 3 shall be  evidenced  by a
lease assignment and assumption agreement setting forth such obligations, in
the form  attached  hereto as Exhibit "A" (the  "Assignment  and  Assumption
Agreement").  All liabilities and obligations of Seller not assumed by Buyer
pursuant to this Section 3 shall hereinafter be referred to as the "Retained
Liabilities."

            4.    Purchase Price.

            (a) The  consideration  paid or payable to Seller by Buyer in
exchange for the sale,  transfer,  assignment and delivery of the Assets,
(the "Purchase Price"),  shall be Three Million Dollars  ($3,000,000.00),
of which One Hundred Thousand Dollars ($100,000) was previously paid into
an escrow account (the "Escrow") by Buyer with CoreStates Bank, N.A. (the
"Escrow Agent") pursuant to the terms of an escrow agreement (the "Escrow
Agreement"),  which amount shall be returned to Buyer if the Closing does
not occur  unless the  failure to close  results  from the breach of this
Agreement by Buyer;  minus (A) any unpaid  amounts due to landlords  with
respect to the leases of the Stores  arising  prior to the  Closing  Date
(not including Buyer's share of any Administrative Fees as referred to in
section  17(n));  and (B) Fifteen  Thousand  Dollars  ($15,000) per Store
lease not assigned to Buyer (excluding the first seven such  non-assigned
Store  leases) by December  31, 1998 on  commercially  reasonable  terms,
provided that,  notwithstanding  anything  contained in this Agreement to
the contrary, the adjustment pursuant to this clause (B) shall not exceed
Ninety  Thousand  Dollars  ($90,000) in the  aggregate  (the  adjustments
pursuant  to  the   immediately   preceding   clauses  (A)  and  (B)  are
collectively  referred to as the "Lease Assignment  Adjustment").  Ninety
Thousand Dollars ($90,000) of the Purchase Price shall be paid on June 1,
1998 for the Initial Stores as provided in Section 7 below.  With respect
to any Remaining Stores not acquired by Buyer hereunder, Seller shall use
its reasonable  efforts to provide Buyer with an opportunity to negotiate
for the acquisition of such Remaining  Stores that Seller or its licensed
operators desire to sell or close from time to time in the future.

            (b) All funds due Seller  under this  Agreement or the Escrow
Agreement  shall be paid by wire  transfer  to an account  designated  by
Seller,  or by certified or bank treasurer's  check drawn to the order of
Seller, as Seller directs.

            (c) The  total of One  Hundred  Thousand  Dollars  ($100,000)
remaining in Escrow after Closing shall secure Seller's  obligations with
respect  to the  Lease  Assignment  Adjustment  and with  respect  to the
payment of  Administrative  Fees to landlords  pursuant to Section 17(n);
provided that,  when all but thirteen (13) of the landlord  consents have
been received,  then the Escrow agent shall immediately release to Seller
Fifteen Thousand Dollars ($15,000) of the escrowed funds for each consent
received thereafter; provided further that, to the extent that the Escrow
is  insufficient to pay to Buyer any amount owing on account of the Lease
Assignment   Adjustment   or  such   Administrative   Fees,   Seller  and
Shareholders shall remain liable for the payment of such amount. Upon the
earlier of (i) the  assignment  of all but seven (7) Store leases and the
tender  of  Seller's  share  of all  such  Administrative  Fees;  or (ii)
December 31, 1998,  the remaining  amount in the Escrow shall be released
to Buyer and/or Seller in accordance with the foregoing. Seller and Buyer
shall issue joint  instructions  to the Escrow Agent to release to Seller
and/or Buyer,  as applicable,  the Escrow in accordance with this Section
4. If there is a dispute as to such  instructions,  such dispute shall be
resolved in accordance with Section 5.

            (d) As  detailed on Exhibit B,  Seller  currently  intends to
dispose of approximately  seventeen (17) of its current  locations and to
sell  approximately  thirty-one  (31) stores to licensed  operators  that
would operate  gold-plated  jewelry  businesses  using the Names or other
names  selected by the licensed  operators.  Any of the  thirty-one  (31)
stores  currently  scheduled to be transferred  to licensed  operators in
accordance   with  the  preceding   sentence  which  are  not  ultimately
transferred to such licensed operators (the "Remaining  Stores") shall be
disclosed to Buyer in writing by Seller (a (4(d)  Notice")  promptly upon
Seller's  becoming  aware  that  any  such  Remaining  Store's  sale to a
licensed  operator  is not likely to be  completed.  Buyer shall have the
right and option,  at Buyer's sole election to be made by written  notice
to Seller within ten (10) business days following  Buyer's receipt of the

  

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applicable  4(d)  Notice,  to (i)  acquire  any of the  Remaining  Stores
specified  by  Buyer in such  4(d)  Notice  without  the  payment  of any
additional consideration; provided that the total of the number of Stores
so specified  plus the number of Stores on Schedule  1(a) does not exceed
one  hundred  ten  (110);  and  (ii)  purchase  none,  any or all of such
Remaining  Stores without  inventory from Seller at the price of Eighteen
Thousand Dollars ($18,000) each,  payable in cash at Closing,  with Buyer
accepting  the kiosk and assuming  the lease  therefor as of the Closing;
provided  that if,  as a result  of the  timing  of the  applicable  4(d)
Notice,  the  purchase  of  the  applicable  Remaining  Store  cannot  be
completed by the Closing Date, the purchase shall be completed as soon as
practicable  thereafter.  Buyer's  election to acquire  Remaining  Stores
pursuant  to 4(d)(i) or 4(d)(ii)  shall be  referred to as an  Additional
Store Exercise.

            5. Disputes. In the event there is a dispute as to any matter
arising under this Agreement,  the disputing party shall notify the other
in  writing  of such  dispute  and the basis  therefor  promptly  and the
parties shall  attempt to resolve such dispute.  In the event the parties
are unable to resolve such dispute  within  thirty (30) days,  they shall
reduce to writing  those  points on which they agree and those  points on
which they  disagree  and shall (i)  retain as  arbitrator  the  Chicago,
Illinois office of Arthur Andersen LLP or, failing their agreement to act
as arbitrator,  such other independent accounting firm as may be mutually
agreed upon by the parties to review such matters as to which the parties
have not agreed in writing and (ii)  request  such  arbitrator  to act as
promptly as practicable  in accordance  with its own rules to resolve all
such disputed matters within thirty (30) days after being retained by the
parties.  The decision of the arbitrator shall be in writing and shall be
final,  non-appealable  and binding on Seller and Buyer, and the fees and
expenses, if any, of such arbitrator shall be paid one-half by Seller and
one-half  by Buyer.  Nothing  herein  shall limit  Buyer's  right to seek
injunctive  or other  equitable  relief  in the  event of a breach of the
non-competition agreement referred in Section 9.

            6. Allocation of Assets,  Liabilities and Purchase Price. The
Purchase  Price shall be  allocated  among the Assets as set forth on the
Schedule attached hereto as Exhibit "C", provided that in the event of an
adjustment  to the Purchase  Price  hereunder  such  adjustment  shall be
applied prorata to the Assets itemized thereon. Such allocations shall be
binding on the parties and all income tax or other  information  returns,
including  IRS Form 8594  ("Asset  Acquisition  Statement  Under  Section
1060"), shall be filed in a manner consistent with such allocations.

            7. Closing.  The consummation and closing of the transactions
provided  for  herein  ("Closing")  shall take place on July 1, 1998 (the
"Closing Date"); provided however that Buyer and Seller shall have shared
access to the Stores  commencing  at 12:01 a.m. on Monday,  June 29, 1998
(the "Entry Date") through the Closing Date for the purpose of completing
Seller's closeout sales, cleaning,  packing unsold merchandise,  bringing
in Buyer's new merchandise and other pre-Closing transitional activities,
and Buyer shall be solely  responsible for all employee wages,  costs and
benefits from and after the Entry Date,  including without limitation the
wages  of  all  former  employees  of  Seller  who  participate  in  such
activities,  regardless of whether such  individuals are acting for Buyer
or for  Seller;  provided  that Buyer  will  provide  reimbursement  with
respect to, but will not include on its payroll, employees of Seller that
Buyer does not choose to hire; provided further that the Closing Date for
the  purchase  of the Stores at 114  Colonial  Park,  Harrisburg,  PA; 81
Viewmont,  Scranton,  PA; and 410 Neshaminy,  Bensalem, PA (collectively,
the "Initial Stores") shall be June 1, 1998. The aggregate purchase price
for the Initial Stores shall be Ninety Thousand Dollars ($90,000) payable
on June 1, 1998. Buyer and Seller shall cooperate with respect to closing
documentation for the Initial Stores which shall be substantially similar
to that contemplated by Sections 13 and 14 below.

            8.    Activities and Agreements Prior to Closing.

            (a) Between the date of this  Agreement and the Closing Date,
Seller shall:

                  (i)  continue to operate the Business at the Stores and
use  the  Assets  in the  ordinary  and  usual  course  of  business  and
consistent with past practice;  provided,  however,  that Seller shall be
entitled  to  conduct  such  "inventory   liquidation,"   or  "change  of
ownership" or similar promotions as Seller desires;

                  (ii)  consult  with Buyer with  respect to Seller's new
leases, if any, and lease renewal issues.
  
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                  (iii) comply with all material provisions of the leases
for the Stores and applicable laws, rules and regulations.

                  (iv) promptly notify Buyer if Seller shall learn of any
event,  matter or condition which has come to their attention which would
constitute at the Closing Date a material  breach of any  representation,
warranty or  covenant  made by Seller in this  Agreement  or in any other
agreement,  document or instrument  delivered in  connection  herewith or
which would  otherwise give rise to a claim of  indemnification  by Buyer
against Seller.

                  (v)  forward  to Buyer a copy  of:  (A) any  notice  of
default  received or issued by the Seller under the leases for the Stores
and (B) any written  notice of violation of any law,  rule or  regulation
received by Seller with respect to the Stores or the Assets.

                  (vi) notify Buyer of any material adverse change to any
of the Stores or Assets.

                  (vii) from and after the Announcement  Date agreed upon
by Buyer and Seller as set forth in Section 17(m) below, permit Buyer and
its  representatives  reasonable  access to the Stores and Assets and all
records relating to them, during business hours and upon reasonable prior
written notice.

                  (viii)  Seller  shall mail,  or  otherwise  provide for
payment of, by May 25, 1998,  all rent and other charges  relating to the
Stores due on or before June 1, 1998.

                  (ix)  Seller  shall  provide to Buyer by June 17,  1998
(and by May 18, 1998 with respect to the Initial Stores):  (A) reasonable
details  relating to rent and other charges  under the Store leases,  and
(B) payroll  information,  including  without  limitation,  W-4 forms and
social security  numbers,  relating to Store employees to the extent such
information is not included in Schedule 10(f).

                  (x) In the event  Closing  does not  occur,  Seller and
Shareholders  shall be jointly liable to reimburse Buyer for any payments
made by Buyer on  account of July 1998  Store  rent and  related  charges
(other than with respect to the Initial Stores).

            (b) Between the date of this  Agreement and the Closing Date,
Seller shall not, without the consent of Buyer:
                  (i) except for  assigning  the leases for the Stores to
Buyer, amend, modify, supplement,  extend or terminate any of the Stores'
leases or waive any rights thereunder.

                  (ii)  make  any  material  change  in  compensation  or
benefits of the employees of the Business.

                  (iii)  enter  into any  contract,  commitment  or other
transaction affecting the Assets, Stores or any of its current locations,
other  than  in  furtherance  of the  transaction  contemplated  in  this
Agreement or in the ordinary and usual course of business and  consistent
with past practice or as otherwise contemplated hereby.

            9. Non-Competition  Agreement.  As partial  consideration for
the  Purchase  Price,  Seller,  Shareholders,  DMS and GKS shall  execute
non-competition agreements in the form attached hereto as Exhibit "D".

            10.  Representations  and Warranties of Seller. As a material
inducement to Buyer to enter into this Agreement and to close  hereunder,
Seller makes the following  representations  and warranties to Buyer.  In
those cases where the following  warranties and representations  refer to
"Seller's  knowledge,"  this  shall  mean and be  limited  to the  actual
personal  knowledge of Donald M. Sedgwick and Gregory K.  Stapley,  as of
the date hereof, and shall not extend to the knowledge,  express, implied
or imputed, of any other person or organization:

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                  (a)   Corporate   Status;   Authority.   Seller   is  a
corporation  duly organized,  validly existing and in good standing under
the laws of Nevada.  Seller has the corporate  power and authority to own
its properties and to carry on the Business as it is now being conducted.
Seller  has the full power and  authority  to execute  and  deliver  this
Agreement and any and all other  documents or  instruments to be executed
and/or  delivered by Seller in connection  herewith,  including,  but not
limited  to  the  assignments  of  the  Stores'  leases,  subject  to the
landlords'  consents  (collectively,  the "Purchase  Documents"),  and to
perform its obligations hereunder and thereunder.

                  (b)  Due  Authorization;  Validity  of  Agreement.  The
execution,  delivery and  performance  of this Agreement and the Purchase
Documents  by Seller  have  been  duly  authorized  and  approved  by all
necessary corporate action on the part of Seller. This Agreement has been
duly executed and delivered by Seller and, assuming the due execution and
delivery of this  Agreement by Buyer,  constitutes  the valid and binding
obligation  of  Seller,  enforceable  against it in  accordance  with its
terms,  except as such  enforceability  may be  limited  by the effect of
bankruptcy,  insolvency  or  similar  laws  affecting  creditors'  rights
generally or by general principles of equity.  Assuming due execution and
delivery by Buyer,  the Purchase  Documents will constitute the valid and
binding obligations of Seller,  enforceable against it in accordance with
their respective terms.

                  (c) Title to  Assets.  Seller has good title to all the
Assets,  which at the  time of  transfer  will be free  and  clear of all
liens, mortgages, pledges, security interests,  restrictions on transfer,
prior  assignments,  encumbrances  and claims (all of the  foregoing  are
collectively  referred to as  "Liens"),  except for the  restrictions  on
transfer and  assignment  contained in the Stores'  leases which have not
been  waived.  None  of the  Assets  is held by  Seller  on  consignment.
Attached as Schedule  10(c) are copies of all  mortgages,  UCC statements
and any other  documents  evidencing  Liens on the Assets (not  including
statutory  landlord s liens or liens or security interests created by the
Store leases which are not, to the best of Seller's knowledge,  evidenced
by UCC-1  filings) and a list of all secured  parties  holding Liens (not
including  statutory  landlord  s liens or liens  or  security  interests
created  by the  Store  leases  which  are not,  to the best of  Seller's
knowledge,  evidenced  by UCC-1  filings)  on the  Assets  as of the date
hereof.

                  (d) Leases. To the best of Seller's  knowledge,  all of
the leases for the Stores are  valid,  binding  and  enforceable  against
Seller  in  accordance  with  their   respective  terms  except  as  such
enforceability may be limited by the effect of bankruptcy,  insolvency or
similar  laws  affecting   creditors'  rights  generally  or  by  general
principles of equity. Seller and, to the best of Seller's knowledge,  all
other parties to any of the Stores' leases have performed all obligations
required to be  performed  to date under such  leases and neither  Seller
nor,  to the  best of  Seller's  knowledge,  any such  other  party is in
default or in arrears  under the terms  thereof.  To the extent  such are
contained in Seller's  files,  or are otherwise  reasonably  available to
Seller,  Seller has delivered to Buyer true and correct copies of all the
Stores leases.

                  (e)  Litigation.  To the  best of  Seller's  knowledge,
Seller  is  not  a  party  to  or  threatened  with  any  suit,   action,
arbitration,  administrative  or  other  proceeding  or any  governmental
investigation  with  respect to the Assets,  the Stores or any  Employees
which would  prevent the  consummation  of the  transaction  contemplated
hereby;  however, as of the date of this Agreement Seller is aware of the
following claims:

                        (i)   a  suit  by  Sharen  Langston,  an  employee  of
Seller's Store No. 331 in Victorville,  California, alleging liability by
Seller for  injuries  allegedly  occurring in the course and scope of her
employment  which  would  have  been  covered  by  Worker s  Compensation
insurance but for an alleged  lapse of Seller's  coverage and the ensuing
bankruptcy of the carrier; and

                        (ii)  a  small-claims  court  suit  by  Shirley  Hill,
customer  of Seller's  Store No. 308 in Mobile,  Alabama,  alleging  defective
product, fraud and misrepresentation;

                        (iii) a  claim  by  R.  Guerra,  alleged  customer  of
Seller's Store No. 204 in Harlingen, Texas, alleging defective product; and

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                        (iv)  a claim  by  Carla  Guess,  customer  of Bel Air
Mall in Mobile, Alabama alleging, inter alia, false imprisonment;

and Seller and  Shareholders  hereby agree to indemnify,  defend and hold
Buyer harmless for, from and against the foregoing claims and any and all
such claims  arising from the conduct of Seller's  business at any of the
Stores prior to the Closing Date in  accordance  with the  provisions  of
Section 16 below.

                  (f) Employees.  Attached as Schedule 10(f) is a list of
all Seller's Store employees (the  "Employees")  which  identifies  their
names,  addresses,  respective  employment status (full-time,  part-time,
leave of absence, etc.), and their respective gross rate of compensation,
two-year wage history,  two-year  bonus and  incentive  program  history,
title,  original  date of hire  and  accrued  unused  vacation  time,  as
reflected in Seller's  current records.  There are no written  employment
agreements,  consulting or services  agreements  or severance  agreements
with respect to the  Employees to which the Seller is a party or by which
it is bound that will  survive the  Closing,  and to the best of Seller's
knowledge  no  Employee  or  former  employee  of any  Store  claims  the
existence  of any such  agreements,  express  or  implied.  There  are no
policies  or, to the best of Seller's  knowledge,  understandings  of the
Seller  rendering any of the Employees other than at-will  employees.  To
Seller's knowledge, Seller maintains a good working relationship with the
Employees.  During the past 12 months  there have been no, and  currently
there are no, strikes, slow downs, work stoppages, grievance proceedings,
arbitrations or, to Seller's knowledge, material labor disputes involving
the Employees, pending or, to the knowledge of Seller, threatened against
or involving the Seller, except as set forth in Section 10(e) above.

                  (g)  Attached  as  Schedule  10(g)  are  monthly  sales
reports for each Store for each month beginning April 1995.

                  (h)  Agreement  Not  in  Breach  of  Other  Instruments
Affecting  Seller.  The  execution  and delivery of this  Agreement,  the
consummation of the transactions  provided for herein and the fulfillment
of the terms  hereof by  Seller,  will not result in the breach of any of
the terms and provisions  of, or constitute a default under,  or conflict
with, or cause any  acceleration  of any obligation of Seller under,  any
agreement,  indenture or other  instrument to which Seller is bound,  any
judgment,  decree,  order  or award of any  court,  governmental  body or
arbitrator or any applicable  law, rule or regulation;  except that Buyer
and Seller mutually  acknowledge  that the transfer of the Stores without
prior landlord consent may, in some cases, constitute a default under the
leases for such Stores and entitle such  landlords to pursue  remedies as
provided in such leases.

                  (i)  Brokerage  Commissions.  There is no  corporation,
firm or person  entitled to receive from Seller any brokerage  commission
or finder's fee in  connection  with this  Agreement or the  transactions
provided for herein.

            11. Representations, Warranties and Agreements of Buyer. As a
material  inducement to Seller to enter into this  Agreement and to close
hereunder,  Buyer makes the following  representations,  warranties,  and
agreements to and with Seller:

                  (a) Corporate Status; Authority. Buyer is a corporation
duly organized,  validly  existing and in good standing under the laws of
the State of Delaware,  and has the corporate power to acquire the Assets
to be  acquired  hereunder.  Buyer has the full  power and  authority  to
execute and deliver this Agreement and the Purchase Documents and perform
its obligations hereunder and thereunder.

                  (b)  Due  Authorization;  Validity  of  Agreement.  The
execution,  delivery and  performance  of this Agreement and the Purchase
Documents  have  been  duly  authorized  and  approved  by all  necessary
corporate  action  on the part of  Buyer.  This  Agreement  has been duly
executed and  delivered  by Buyer and,  assuming  the due  execution  and
delivery of this Agreement by Seller,  constitutes  the valid and binding
obligation of Buyer,  enforceable in accordance with its terms, except as
such   enforceability  may  be  limited  by  the  effect  of  bankruptcy,
insolvency or similar laws affecting  creditor's  rights  generally or by
general  principles  of equity.  Assuming due  execution  and delivery by
Seller,  the Purchase  Documents  will  constitute  the valid and binding
obligations  of Buyer,  enforceable  against it in accordance  with their
respective terms.


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                  (c) Agreement Not in Breach of Other  Instruments.  The
execution  and  delivery  of  this  Agreement,  the  consummation  of the
transactions  provided for herein and the fulfillment of the terms hereof
by  Buyer,  will  not  result  in the  breach  of any  of the  terms  and
provisions of, or constitute a default under,  or conflict with, or cause
any  acceleration  of any  obligation  of  Buyer  under,  any  agreement,
indenture  or other  instrument  to which Buyer is bound,  any  judgment,
decree,  order or award of any court,  governmental body or arbitrator or
any applicable law, rule or regulation.

                  (d)  Brokerage  Commissions.  There is no  corporation,
firm or person entitled to receive from Buyer any brokerage commission or
finder's  fee in  connection  with  this  Agreement  or  the  transaction
provided for herein,  and Buyer hereby  agrees to  indemnify,  defend and
hold Seller  harmless  for, from and against any and all claims to such a
fee or commission made by any person claiming by or through Buyer.

            12.  Survival  of   Representations   and   Warranties.   All
representations  and  warranties of the parties  hereto in this Agreement
shall survive Closing until January 31, 2000.

            13. Closing Deliveries by Seller. On the Closing Date, Seller
shall deliver or cause to be delivered to Buyer the following:

                  (a)   [Intentionally Deleted.]

                  (b)   Non-Competition      Agreements.       Non-Competition
Agreements in the form of Exhibit "D",  executed by Seller,  the Shareholders,
DMS and GKS.

                  (c) Bill of Sale and General Assignment. A Bill of Sale
and General  Assignment,  in the form of Exhibit "E", executed by Seller,
transferring to Buyer good title to all of the personal property included
in the Assets.

                  (d)  Store  Lease   Assignment.   The   Assignment  and
Assumption  Agreement  for each Store  lease in the form of Exhibit  "A",
executed  by  Seller as to leases  the  assignment  of which has not been
consented  to by  the  landlord  prior  to  Closing  (the  "Non-consented
Leases"),  and a specific Assignment and Assumption Agreement with Lessor
Consent  Agreement  for each  Store  lease  received  by  Seller  in form
reasonably  acceptable to Buyer, Seller and the applicable landlord on or
before the  Closing  Date which is executed  by the  landlord,  Buyer and
Seller.

                  (e) Payoff Letter from Secured Lender.  A payoff letter
from any party holding a security interest in any of the Assets releasing
such security  interest and agreeing to execute  Uniform  Commercial Code
UCC-3  termination  statements and other  documents as may be required to
evidence the release of such security interest of record.

                  (f)   Certified   Corporate   Resolutions.    Corporate
resolutions  adopted by the board of directors of Seller and, if required
by law, by the  shareholders of Seller,  certified by Seller's  Corporate
Secretary,  approving  this  Agreement  and the  Purchase  Documents  and
authorizing the consummation of the transactions contemplated hereby.

                  (g)  Schedule of Security  Deposits.  A schedule of all
security and construction  deposits held by any landlords under the Store
leases.

                  (h)  Schedule  of  Insurance.  A schedule  of  existing
workers  compensation  insurance coverages for Employees and of liability
policies  covering the Business with evidence that Seller shall  continue
to be covered with  respect to personal  liability  for events  occurring
prior to the Closing Date.

                  (i)  Assets.   All  of  the  Assets  capable  of  being
delivered in physical  form shall be made  available to Buyer at Seller's
locations.

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<PAGE>


                  (j)   Shareholder;   Beneficiary.  The  Trust  is  the  sole
shareholder  of Seller.  The  Beneficiary  is the primary  beneficiary  of the
Trust.

            14. Closing  Deliveries by Buyer. On the Closing Date,  Buyer
shall deliver or cause to be delivered to Seller the following:

                  (a)   [Intentionally Deleted.]

                  (b)   Non-Competition    Agreements.    A    Non-Competition
Agreements, in the form of Exhibit "D", executed by Buyer.

                  (c)  Store  Lease   Assignment.   The   Assignment  and
Assumption  Agreement for each Non-consented Lease in the form of Exhibit
"A", executed by Buyer and a specific Assignment and Assumption Agreement
with Lessor Consent  Agreement for each Store lease received by Seller or
Buyer on or before the Closing  Date which is  executed by the  landlord,
Seller and Buyer.

                  (d) Certificates Confirming Approval of this Agreement.
Officer's Certificates of Buyer,  certifying that all necessary corporate
action by Buyer has been taken to approve this  Agreement  and  authorize
the consummation of the transactions contemplated hereby.
                  (e)  Additional   Sums.   Any   additional   funds  not
previously  deposited  under  Section  4(a)  or (b)  which  Escrow  Agent
requests in order to close the Escrow.

            15.   Covenants Extending Beyond Closing.

                  (a) Further  Assurances.  Seller and Shareholders agree
to execute and/or obtain and deliver all such other  instruments and take
all such other action as Buyer may reasonably  request from time to time,
before  or  after  the  Closing  Date  and  without  payment  of  further
consideration,  in order to  effectuate  the  transactions  provided  for
herein,  including,  without  limitation,  the  execution and delivery by
Seller of such further  instruments  of conveyance and transfer as may be
necessary to convey and transfer more  completely to the Buyer the Assets
being  purchased  hereunder;  and the  obtaining  and filing of  properly
executed termination statements in each applicable jurisdiction as to any
security  interests  that are  currently  of record.  The  parties  shall
cooperate  fully  with each other and with  their  respective  counsel in
connection  with  any  steps  required  to be  taken  as  part  of  their
respective obligations under this Agreement.

                  (b) WARN Act Liability;  Employees.  Buyer intends, but
shall have no  obligation,  to hire most of  Seller's  Employees.  Seller
shall provide Buyer with reasonable mutually agreeable access to Seller's
supervisory  Employees.  Seller  shall  indemnify  Buyer for any WARN Act
liability

                  (c)  Employee  Benefits.  Seller shall  compensate  all
Employees for vacations  earned or accrued through June 28, 1998 (May 31,
1998 with  respect to the Initial  Stores) in  accordance  with  Seller's
policies and shall provide all required  COBRA  notices.  With respect to
Employees hired by Buyer who had, on or immediately  prior to the Closing
Date,   been  receiving   health  or  dental  coverage  with  respect  to
themselves,  their spouses and/or  dependents  under an employee  welfare
benefit  plan  maintained  by  Seller,  Buyer  agrees to  cover,  or make
coverage  available to, such Employees,  spouses and/or  dependents under
Buyer's existing health and dental benefit  arrangements,  under the same
terms as available to Buyer's other employees;  provided,  however,  that
such individuals,  to the extent  practicable,  shall not be subjected to
any waiting  period or  preexisting  condition,  limitation or exclusion.
Seller shall have no  responsibilities  for any claims  incurred under or
premium payments with respect to such plans or arrangements.

                  (d) Gift Certificates;  Store Credits;  Coupons.  For a
period  of six (6)  months  following  the  Closing  Date,  Seller  shall
reimburse Buyer for the amounts of any gift  certificates,  store credits
and coupons

                                     65
<PAGE>

actually issued by Seller prior to Closing, if any, which gift certificates,
store  credits and  coupons  were issued not more than one year prior to the
date of honor and which  have been  honored  by Buyer,  within ten (10) days
after Buyer has submitted proof that such gift  certificates,  store credits
and coupons have been honored.

                  (e) Lay-Away and Store Deposits;  Repairs. For a period
of ninety (90) days  following the Closing Date,  Seller shall  reimburse
Buyer for any  verifiable  lay-away  deposits or special  order  deposits
accepted prior to Closing by any of the Stores which are honored by Buyer
during such  period,  within ten (10) days of  Seller's  receipt of proof
from Buyer that such  lay-away  deposits or special  order  deposits have
been  honored by Buyer.  Seller  shall use its best efforts to return all
such  deposits and complete  repairs on or prior to the Closing and shall
be responsible  for repairs  submitted prior or subsequent to the Closing
Date.  Seller shall  provide to Buyer a telephone  number at which Seller
may be contacted by its customers to resolve all issues  relating to such
deposits and repairs.

                  (f)  Security  Deposits.  Seller  shall use  reasonable
efforts to obtain  reimbursement  from the landlords of the Stores of the
security  deposits and construction  deposits made pursuant to the leases
for such Stores and listed on the schedule delivered on the Closing Date;
however,  if  Seller is unable  to  obtain  such  reimbursement,  but the
landlord  acknowledges in writing that Buyer will receive credit for such
deposits,  Buyer promptly shall pay the amount of such security  deposits
and construction deposits to Seller.

                  (g) Store  Leases.  Buyer shall assume the  obligations
and  liabilities of Seller under the Store leases,  notwithstanding  that
the landlord  parties to such leases have not consented to the assignment
of such  leases to Buyer as of the  Closing  Date.  Seller  shall pay all
amounts owed to landlords under the Store leases through the day prior to
the applicable Closing Date,  excepting  therefrom one-half of the amount
of any  Administrative  Fees as provided for in Section 17(n),  and Buyer
shall pay all sums due from and after the applicable  Closing Date. Buyer
and Seller shall use their best efforts to obtain landlord  consents from
the remaining  landlords on or before  December 31, 1998.  Buyer shall be
responsible for obtaining landlord consents,  provided however that for a
period of six months after closing, for no separate consideration, Seller
shall provide  reasonable  assistance in obtaining lease  assignments and
otherwise  dealing with landlords on issues pertinent to such assignments
and  consents.  Seller  shall  also use its  best  efforts  to cause  its
licensed operators that desire to dispose of their locations to negotiate
first  with  Buyer  prior to  transferring  such  locations  to any third
parties.

                  (h) Trust.  The Trust shall not make any  distributions
to or for the  benefit  of any  beneficiary  other  than the  Beneficiary
unless such other  beneficiary  agrees to be liable hereunder jointly and
severally  with  the   Beneficiary,   but  only  to  the  extent  of  any
distributions  to or for the benefit of such other  beneficiary  from the
Trust.  Such other  beneficiary shall also be entitled to the limitations
on  liability  applicable  to  Shareholders  set forth  elsewhere in this
Agreement.

            16.   Indemnification by Seller, Shareholders and Buyer.

                  (a) Indemnification by Seller.  Seller and Shareholders
shall  jointly and  severally  defend,  indemnify  and hold Buyer and its
officers,  directors  and  shareholders  harmless  from and  against  any
damage, claim,  liability,  loss, expense, cost or deficiency,  including
reasonable  attorneys' fees and costs ("Damages")  resulting from (i) any
breach of any  representation  or warranty  made by Seller in Section 10,
(ii) any claims  incurred or benefits  accrued on or prior to the Closing
Date with respect to employee  benefits and employee  benefit plans under
ERISA (the "Benefit  Plans")  maintained,  sponsored or contributed to by
Seller,  any  premiums or  contributions  due with respect to the Benefit
Plans based on service on or prior to the Closing Date or the requirement
to provide or make  available  to any employee  who is  terminated  on or
prior to the Closing Date any benefits under the Benefit Plans, including
COBRA continuation  coverage required under Section 4980B of the Internal
Revenue Code of 1986 and (iii) the Retained  Liabilities;  provided  that
Seller and Shareholders shall have no liability related to the failure to
have a Store lease assigned in excess of the Lease Assignment Adjustment,
provided that they comply with Section 15(g).

                  (b)  Indemnification  by  Buyer.  Buyer  shall  defend,
indemnify  and hold Seller and its officers,  directors and  shareholders
harmless  from and against any Damages  resulting  from (i) any breach of
any representation or warranty made by Buyer in Section 11, (ii) any WARN
Act liability if more than the number of

                                     66
<PAGE>

Employees  (excluding  Employees at Seller'  headquarters office) that would
trigger such Act either are not offered  employment  by Buyer or are offered
employment by Buyer and are terminated by Buyer within sixty (60) days after
the Closing Date,  (iii) the liabilities  assumed  pursuant to Section 3 and
(iv) the operation of the Stores and the  employment of the Employees  after
Closing (each an "Indemnity Claim").

                  (c) Notice to  Indemnifying  Party.  Promptly after the
assertion of any claim by any governmental authority or other third party
("Third Party Claim") or the  occurrence of any event which may give rise
to a claim for  indemnification  under this  Section 16, the  indemnified
party shall give the  indemnifying  party written notice of such event or
Third Party Claim,  including  copies of any summons,  complaint or other
pleading  which may have been  served  on the  indemnified  party and any
written claim, demand,  invoice,  billing or other document evidencing or
asserting a Third Party Claim.

                  (d) Third Party Claims.  The rights of  indemnification
under this  Section 16 with  respect to any Third  Party  Claim  shall be
subject to the following terms and conditions:

                        (i)   The  indemnifying  party, at its expense,  shall
have the sole and exclusive right to pay, compromise, settle or otherwise
dispose of any Third Party Claim.  Unless the indemnified party otherwise
agrees,  however,  no such settlement shall limit,  restrict or otherwise
adversely  affect  the  right  of the  indemnified  party  to carry on or
conduct its business  (then or in the future),  or require any payment to
be made by the indemnified  party (except as may be paid or reimbursed by
the indemnifying party). In addition, no settlement shall be entered into
which does not  include  the  delivery  by the Third  Party of a full and
final release of the  indemnified  party from all liability in respect of
such Third Party Claim.

                        (ii)  The  indemnifying  party, at its expense,  shall
be entitled to participate in and to the extent it wishes,  to direct the
defense,  including the selection of counsel  reasonably  satisfactory to
the  indemnified  party,  of any such Third Party Claim.  The indemnified
party shall  cooperate in all reasonable  respects with the  indemnifying
party and such  counsel in the  investigation,  discovery  and  pre-trial
phases, trial and appeal of such Third Party Claim. The indemnified party
shall at all times have the right to  participate  in the  defense of any
Third  Party  Claim  and to  employ  its own  counsel,  but the  fees and
expenses of such  counsel  shall be the  indemnified  party's own expense
unless the  employment of such counsel shall have been  authorized by the
indemnifying party in connection with the defense of any such Third Party
Claim,  or unless and so long as the  indemnifying  party  shall not have
employed  counsel to have  charge of the  defense of any such Third Party
Claim within a reasonable  period  after  notice  thereof,  in neither of
which  events such fees and expenses  shall be borne by the  indemnifying
party.

                        (iii) Notwithstanding  anything in this Section  16(d)
to the  contrary,  if there is a  reasonable  probability  that any Third
Party Claim may materially and adversely  affect the  indemnified  party,
other than as a result of money  damages  or other  money  payments,  the
indemnified  party shall have the right, at its own cost and expense,  to
defend,  compromise or settle such Third Party Claim; provided,  that the
indemnifying  party shall not be liable for any payment in  settlement of
any Third  Party  Claim  without  its prior  consent,  which shall not be
unreasonably withheld.

                  (e)  Limitations  on  Liability.  The  liability of the
parties  hereto under this  Section 16 shall be subject to the  following
limitations:

                        (i)   The  indemnifying  party shall not be  obligated
to  indemnify  the  indemnified  party under this  Section 16 for Damages
resulting from a breach or alleged breach of a representation or warranty
in this Agreement if the indemnified party has not given the indemnifying
party  notice of such  Damages  prior to the  expiration  of the survival
period for such representation or warranty as stated in Section 12.

                        (ii)  The   aggregate    liability   of   Seller   and
Shareholders  under  Section  16(a)(i)  shall not  exceed  Three  Million
Dollars ($3,000,000).

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<PAGE>


                        (iii) No  liability  shall  be  enforced  against  the
indemnifying  party to the  extent  of any  insurance  proceeds  that the
indemnified party receives with respect to any Damages.

            17.   Miscellaneous.

                  (a) Indulgences, Etc. Neither the failure nor any delay
on the part of any party to exercise any right under this Agreement shall
operate as a waiver thereof,  nor shall any single or partial exercise of
any right  preclude  any other or further  exercise of the same or of any
other  right nor  shall any  waiver  of any  right  with  respect  to any
occurrence  be  construed  as a waiver of such right with  respect to any
other  occurrence.  No waiver shall be effective  unless it is in writing
and is signed by the party asserted to have granted such waiver.

                  (b)  Controlling  Law. This Agreement and all questions
relating to its validity,  interpretation,  performance and  enforcement,
shall be governed by and  construed  in  accordance  with the laws of the
Commonwealth  of  Pennsylvania   (notwithstanding   any   conflict-of-law
doctrines of any state to the contrary) and without the aid of any canon,
custom or rule of law requiring construction against the draftsman.

                  (c)  Waiver.  Any  failure of Seller or Buyer to comply
with any obligation,  covenant,  agreement or condition  contained herein
may be  expressly  waived  in  writing  by  Buyer in the case of any such
failure by Seller or by Seller in the case of any such  failure by Buyer,
but such  waiver or failure to insist upon  strict  compliance  shall not
operate as a waiver of, or estoppel  with respect to, any  subsequent  or
other failure.  Whenever this Agreement requires or permits consent by or
on behalf of any party hereto,  such consent shall be given in writing in
a manner  consistent with the  requirements for a waiver of compliance as
set forth in this Section 17(c).

                  (d) Notices. All notices,  requests,  demands and other
communications  required or permitted  under this  Agreement  shall be in
writing  and shall be deemed to have been duly given,  made and  received
only when  delivered  (personally,  by  courier  service  such as Federal
Express,  or by other  messenger) or four (4) business days following the
day when  deposited in the United States  mails,  registered or certified
mail, postage prepaid,  return receipt requested,  addressed as set forth
below:

                        (i)   If to Sellers, Shareholders, DMS or GKS:

                              Sedgwick Sales, Inc.
                              1040 Calle Recodo
                              San Clemente, CA  92673
                   Attn: Donald M. Sedgwick, President

                              with a copy to:

                              Sedgwick Sales, Inc.
                              1040 Calle Recodo
                              San Clemente, CA  92673
                Attn: Gregory K. Stapley, General Counsel

                        (ii)  If to Buyer:

                              Piercing Pagoda, Inc.
                              3910 Adler Place
                              P.O. Box 25007
                              Lehigh Valley, PA  18002-5007
                              Attn:  John F. Eureyecko, President

                                     68

<PAGE>


                              With a copy to:

                              Wolf, Block, Schorr and Solis-Cohen
                              Twelfth Floor Packard Building
                  S.E. Corner 15th and Chestnut Streets
                       Philadelphia, PA 19102-2678
                    Attention: Jason M. Shargel, Esq.
            Any party may alter the  address to which  communications  or
copies  are to be sent by giving  notice of such  change  of  address  in
conformity  with the  provisions  of this  paragraph  for the  giving  of
notice.

                  (e) Exhibits and Schedules.  All Exhibits and Schedules
attached  hereto are hereby  incorporated  by reference  into, and made a
part of, this Agreement.

                  (f) Binding Nature of Agreement.  This Agreement  shall
be binding upon and inure to the benefit of the parties  hereto and their
respective  heirs,  personal  representatives,  successors  and permitted
assigns.  Seller  may not  assign  any of  their  rights  or  obligations
hereunder.  Buyer may assign any or all of its  rights  hereunder  to any
affiliate  of  Buyer;   provided,   however,   that  Buyer  shall  remain
responsible  for the performance of all of their  obligations  under this
Agreement notwithstanding any such assignment.

                  (g) Execution in  Counterparts.  This  Agreement may be
executed in any number of counterparts,  each of which shall be deemed to
be an original as against any party whose signature appears thereon,  and
all of which shall together constitute one and the same instrument.  This
Agreement  shall  become  binding when one or more  counterparts  hereof,
individually or taken  together,  shall bear the signatures of all of the
parties reflected hereon as the signatories.

                  (h)  Provisions  Separable.   The  provisions  of  this
Agreement  are  independent  of and  separable  from each  other,  and no
provision  shall be  affected  or rendered  invalid or  unenforceable  by
virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.

                  (i) Number of Days. In computing the number of days for
purposes  of  this  Agreement,  all  days  shall  be  counted,  including
Saturdays, Sundays and holidays; provided, however, that if the final day
of any time  period  falls on a  Saturday,  Sunday  or  holiday  on which
federal banks are or may elect to be closed,  then the final day shall be
deemed  to be the  next  day  which  is not a  Saturday,  Sunday  or such
holiday.

                  (j) Entire  Agreement.  This  Agreement  (including the
Exhibits and Schedules  hereto) contains the entire  understanding  among
the  parties  hereto  with  respect to the  subject  matter  hereof,  and
supersedes all prior and  contemporaneous  agreements and understandings,
inducements or conditions, express or implied, oral or written, except as
herein  contained.  The express  terms hereof  control and  supersede any
course of performance  and/or usage of the trade inconsistent with any of
the terms  hereof.  This  Agreement  may not be modified or amended other
than by an agreement in writing.

                  (k) Paragraph Headings.  The paragraph headings in this
Agreement are for  convenience  only; they form no part of this Agreement
and shall not affect its interpretation.

                  (l) No Third Party Beneficiaries.  This Agreement shall
inure to the benefit of the parties to this Agreement only and not to the
benefit of any third party, including Seller's employees.

                  (m) Publicity. Without the prior written consent of the
other,  which  either  party may deny or delay in its sole,  absolute and
unfettered  discretion,  neither  Buyer  nor  Seller,  nor  any  officer,
employee or other entity or person acting on their behalf,  shall issue a
press release or otherwise  discuss,  disclose or publicize,  formally or
informally,   the  execution  of  this   Agreement  or  the  pendency  or
consummation  of the transaction  contemplated  hereby prior to 3:00 p.m.
Eastern Daylight Time on May 18, 1998 (the "Announcement  Time");  except
that (i) Seller shall have the right to earlier  confidentially  disclose
this  Agreement  and the  transaction  contemplated  hereby to Sanwa Bank
California  in  accordance  with the terms of certain  credit  facilities

                                     69
<PAGE>

between Seller and said bank; (ii) Seller may disclose the transaction to
its regional  managers and district  managers on May 16, 1998 who will be
instructed not to discuss the acquisition  prior to noon on May 18, 1998;
(iii)  Seller may inform the  balance of its  employees  on May 18,  1998
pursuant to materials  that include a communique  from Buyer;  (iv) Buyer
may  disclose  the  transaction  to its  regional  managers  and district
managers  on May 18,  1998  who will be  instructed  not to  discuss  the
acquisition  prior to noon on May 18,  1998;  and (v)  Buyer  may issue a
press release and make statements to analysts  disclosing the acquisition
on May 14, 1998 provided that such release and statements do not disclose
the name of Seller.  The  parties  shall  mutually  agree on the form and
content of any press release or other public  announcement  regarding the
execution  of  this  Agreement  or the  consummation  of the  transaction
contemplated  hereby;  provided that,  except as provided  above, no such
announcement  shall be made prior to the  Announcement  Time. The parties
shall also coordinate with respect to notices to Employees and landlords,
such notices to be made only from and after the Announcement Time.

                  (n)  Expenses.  The parties  hereto  shall each pay the
expenses incurred by them in connection with the origin,  negotiation and
performance  of this Agreement and the  agreements  contemplated  hereby;
provided,  however,  that Seller and Buyer shall each be responsible  for
one-half of the  assignment,  transfer,  administrative  or similar fees,
only if any, to be paid to landlords of the Stores in connection with the
assignment of the Stores' leases (herein "Administrative Fees").

                           [Signature Page Follows]


                                     70
<PAGE>


                  IN  WITNESS  WHEREOF,  the  parties  have  caused  this
Agreement  to be  executed  and  delivered  as of the  date  first  above
written.


                          PIERCING PAGODA, INC.


                                          By:
                                           John F. Eureyecko, President


                           SEDGWICK SALES, INC.


                                          By:
                                           Donald M. Sedgwick, President



                            Donald M. Sedgwick



                            Gregory K. Stapley



                           Virginia B. Sedgwick






                                     71