BOND PLACEMENT AGREEMENT

      $2,565,000
      Piercing Pagoda, Inc.
      Taxable Variable Rate Demand/Fixed Rate Bonds
      Series of 1998

BOND PLACEMENT  AGREEMENT,  dated as of April 29, 1998, by and between  PIERCING
PAGODA, INC., a Delaware corporation (the "Company") and CORESTATES  SECURITIES,
CORP, (the "Placement Agent").

1.    Background

A. The Company is issuing its Taxable  Variable  Rate  Demand/Fixed  Rate Bonds,
Series of 1998, in the aggregate  principal  amount of $2,565,000  (the "Bonds")
pursuant  to a Trust  Indenture  dated as of April 29,  1998  (the  "Indenture")
between the Company and Dauphin Deposit Bank and Trust Company,  as Trustee (the
"Trustee").  The  proceeds  of the Bonds are being  applied to finance a project
(the "Project")  consisting of (i) the  construction of a new 70,655 square feet
building on 5.3 acres of land at the Company  headquarters in Hanover  Township,
Northampton  County,  Pennsylvania  for the purpose of expanding  the  Company's
capabilities to distribute, assemble and warehouse their products and to provide
for office  space to carry out the  administrative  functions  of the  Company's
business;  and (ii) the payment of fees and expenses relating to the issuance of
the Bonds.

B.  Concurrently  with,  and as a condition  to the  issuance of the Bonds,  the
Company  will cause to be delivered  to the Trustee an  irrevocable,  direct-pay
Letter of  Credit,  dated the date of  issuance  of the Bonds  (the  "Letter  of
Credit") issued by CoreStates  Bank,  N.A. (the "Bank").  Under the terms of the
Letter of Credit,  the Trustee will be entitled to draw up to an amount equal to
the  principal  of the Bonds plus at least  forty-five  (45) days'  accrued  and
unpaid interest thereon (at a maximum rate of 17% per annum for the Bonds, based
on a 365/366 day year, actual number of days elapsed). The Letter of Credit will
be issued pursuant to a Reimbursement Agreement, dated as of April 29, 1998 (the
"Reimbursement  Agreement")  between  the Bank and the  Company.  The  Letter of
Credit  will  expire  pursuant to its terms on April 29,  2003,  unless  earlier
terminated  pursuant to its terms (the "Letter of Credit Termination Date"). The
Bonds  mature  on May 1,  2013  and  are  subject  to  optional,  extraordinary,
mandatory and mandatory  sinking fund redemption  prior to maturity,  all as set
forth in the Preliminary Placement Memorandum (as hereinafter defined).

C. The Bonds will be issued pursuant to a resolution adopted by the Company (the
"Resolution") and pursuant to the Indenture.

D. The Bonds will be remarketed in accordance with the applicable  provisions of
the  Indenture  and a  Remarketing  Agreement,  dated as of April 29,  1998 (the
"Remarketing  Agreement"),  by  and  between  CoreStates  Securities,  Corp,  as
remarketing agent, and the Company.

E.  As  security  for  its  obligations  to the  Bank  under  the  Reimbursement
Agreement,  the Company will,  among other things,  grant to the Bank a mortgage
lien on and  security  interest  in its  facility  located in Hanover  Township,
Northampton  County,  pursuant to an open end mortgage  and  security  agreement
dated the date of original issuance of the Bonds (the "Mortgage").

F.     The professional advisors referred to in this Bond
Placement Agreement are:

Bond Counsel      King, McCardle, Herman, Freund & Olexa
and Placement     110-112 North Sixth Street
Agent Counsel:    P.O. Box 449
  Allentown, PA 19105

Company Counsel: Duane, Morris & Heckscher LLP
  Suite 200
  968 Postal Road
  Allentown, PA  18103-9390

Bank Counsel:     Klehr, Harrison, Harvey, Branzburg & Ellers, LLP
  1401 Walnut Street
  Philadelphia, PA  19102

2. Placement and Closing. Subject to the terms and conditions and in reliance on
the  representations,  warranties,  agreements and indemnities set forth herein,
(i) the  Placement  Agent  hereby  agrees to  privately  place  the  Bonds  with
qualified  purchasers,  as agent for the  Company;  and (ii) the Company  hereby
agrees to deliver to such investors, all (but not less than all) of the Bonds as
provided in the  Indenture.  The aggregate  price for the Bonds shall be 100% of
the principal  amount  thereof plus accrued  interest to the date of Closing (as
hereinafter defined), payable in immediately available funds to the order of the
Trustee  for the  account  of the  Company.  As  consideration  for its  private
placement of the Bonds,  the Company shall pay the  Placement  Agent a fee of in
immediately available moneys on the date of Closing. Closing will be held at the
offices of King,  McCardle,  Herman,  Freund & Olexa, at 10:30 a.m. on April 29,
1998, or at such other place and time as may be agreed to by the parties hereto.
The Bonds will be delivered in New York, New York, in fully  registered  form in
such  denominations  and  registered  in such names as shall be requested by the
Placement Agent.

3.  Company's  Representations.  To the  best  knowledge  of the  Company  after
reasonable  investigation  (including  but  not  limited  to  consultation  with
counsel, when appropriate) the Company makes the following representations,  all
of which will continue to be in effect  subsequent  to the private  placement of
the Bonds:

(a) The Company is a corporation  duly organized,  validly  existing and in good
standing under the laws of the State of Delaware.

(b) The Company has full legal power to execute and deliver the  Indenture,  the
Reimbursement Agreement, the Mortgage, the Remarketing Agreement, the Pledge and
Security Agreement,  this Bond Placement Agreement,  the Reimbursement Documents
(as such term is defined in the  Reimbursement  Agreement) and any and all other
documents,  certificates  and  agreements  executed by the Company in connection
with the  issuance  of the Bonds and the  Letter  of Credit  (collectively,  the
"Company Documents") and to perform its obligations thereunder and hereunder;

(c) The Company has duly  authorized  the  execution and delivery of the Company
Documents and the undertaking of their obligations thereunder and hereunder, and
the taking of all actions as may be required on the part of the Company to carry
out the same;  and the making and  performance  of each such  agreement will not
conflict with,  nor constitute a breach of or a default under,  any provision of
the  Articles  of  Incorporation  or  By-laws of the  Company or any  indenture,
agreement  or other  instrument  to which the Company is a party or by which the
Company  or  any of  its  properties  may be  bound,  or any  constitutional  or
statutory  provision  or order,  rule,  regulation,  decree or  ordinance of any
court,  government  or  governmental  body to which  the  Company  or any of its
properties are subject;

(d) As of the Closing, the Company Documents will be duly executed and delivered
by the Company,  will be in full force and will constitute the legal,  valid and
binding  obligations  of  the  Company  enforceable  in  accordance  with  their
respective terms,  except as enforcement may be limited by equitable  principles
or by bankruptcy,  insolvency,  reorganization,  moratorium and similar terms in
effect  from  time  to time  affecting  the  enforcement  of  creditors'  rights
generally.

(e)  As of the  Closing,  there  is no  action,  suit,  proceeding,  inquiry  or
investigation,  at law or in equity, before or by any court,  regulatory agency,
public  board  or  body  pending  or,  to the  best  knowledge  of the  Company,
threatened  against the  Company,  nor to the best  knowledge  of the Company is
there any basis  therefor,  wherein  an  unfavorable  ruling  or  finding  would
materially and adversely  affect the validity or  enforceability  of the Company
Documents  or would  materially  and  adversely  affect any of the  transactions
contemplated by this Bond Placement Agreement;

(f) The information set forth in the Preliminary  Placement Memorandum under the
headings "The  Company",  "Litigation"  and the  "Introductory  Statement"  with
respect to the  Company  (as  hereinafter  defined),  is true and correct in all
material  respects and does not contain any untrue  statement of a material fact
or omit to state any material fact necessary to make the statements  therein, in
light of the circumstances under which they were made, not misleading;

(g) The Company has obtained all consents, approvals,  authorizations and orders
of governmental or regulatory authorities that are required to be obtained by it
as a  condition  precedent  to the  execution  by  the  Company  of the  Company
Documents.  The  Company  has  obtained  all  consents  that are  required to be
obtained  by it  for  the  performance  of its  obligations  under  the  Company
Documents.

4. Placement Agent and Representations,  Warranties and Covenants. The Placement
Agent makes the following  representations,  warranties  and  covenants,  all of
which will continue to be in effect  subsequent to the purchase and placement of
the Bonds:

(a) The Placement Agent has all requisite power and authority to enter into this
Agreement,  consummate the transactions  contemplated hereby and to carry on its
business as now constituted;

(b) The Placement Agent has received all necessary  information  with respect to
the  Company,  the Bank and the  Project in order to place the Bonds and any and
all information relating to the Company or the Bank and their affairs, which the
Placement Agent has requested has been provided to the Placement Agent;

(c) This  Agreement has been duly executed and delivered by the Placement  Agent
and the information  contained in the Memorandum  (hereinafter defined) relating
to the Placement Agent does not contain any untrue  statement of a material fact
or omit to state a material  fact  necessary to make the  statement  therein not
misleading.

(d) The  Placement  Agent  has  received  the  Company  Documents  and all other
documents relating to the issuance of the Bonds,  including without  limitation,
the Trust  Indenture and the Letter of Credit and such  documents  contain terms
reasonably acceptable to, and agreed to by, the Placement Agent;

(e)  The  Placement  Agent  is a  broker-dealer  registered  as such  under  the
Securities  Exchange  Act of 1934 as  amended  (the  "1934  Act")  and under the
Securities  laws of the State in which the Bonds  will be offered or sold by the
Placement  Agent in which such  registration is required and is a member in good
standing of the NASD.

(f) The Bonds are being offered in authorized  denominations of $100,000 or more
and are being sold to no more than  thirty-five  (35)  persons  each of whom the
Placement  Agent  reasonably  believes (i) has such  knowledge and experience in
financial and business  matters that it is capable of evaluating  the merits and
risks of the prospective investment and (ii) is not purchasing for more than one
account or with a view to distributing the Bonds.

(g) There is no action, suit, proceeding,  inquiry or investigation at law or in
equity, or before or by any court, public body or other governmental  authority,
pending  or, to the best  knowledge  and  information  of the  Placement  Agent,
threatened  against or affecting the  Placement  Agent,  wherein an  unfavorable
decision,  ruling or finding could  materially  adversely affect the business or
financial  condition  of the  Placement  Agent or  could  adversely  affect  the
transactions  contemplated by this Agreement,  or which in any manner raises any
questions concerning the legality,  validity or enforceability of this Agreement
nor to the best  knowledge and belief of the Placement  Agent is there any basis
therefor; and

(h) The  execution,  delivery and  performance  by the  Placement  Agent of this
Agreement  does not and will not violate the  certificate  of  incorporation  or
by-laws of the Placement  Agent, or any order,  injunction,  ruling or decree by
which the  Placement  Agent is  bound,  and does not and will not  constitute  a
breach of or a default under any agreement,  indenture, mortgage, lease, note or
other  obligation,  instrument or arrangement to which the Placement  Agent is a
party or by which  the  Placement  Agent or any of its  property  is  bound,  or
contravene or constitute a violation of any law, rule or regulation to which the
Placement  Agent or any of its  property  is  subject,  and no approval or other
action by, or filing or registration  with any governmental  authority or agency
is required in connection  therewith which has not been  previously  obtained or
accomplished.   5.  Preliminary   Placement  Memorandum  and  Private  Placement
Memorandum.  Prior to the Closing,  the Company  shall approve and authorize the
distribution of the Preliminary Placement Memorandum (including all exhibits and
appendices  thereto the "Preliminary  Placement  Memorandum") and the (including
all exhibits and appendices thereto,  the "Private Placement  Memorandum"),  and
shall authorize the use of the Preliminary  Placement Memorandum and the Private
Placement Memorandum in connection with the private placement of the Bonds.

6. Company  Covenants.  The Company  covenants to  indemnify,  hold harmless and
defend the Placement Agent its officers, agents and employees, past, present and
future and each person,  if any, who  controls  the  Placement  Agent within the
meaning of Section 15 of the Securities  Act of 1933, as amended  (individually,
an "Indemnified  Party" and collectively,  the ("Indemnified  Parties"),  to the
full extent  permitted  by law against  any and all losses,  claims,  damages or
liabilities  (including  reasonable  legal and other  expenses of defending  any
actions) that they or any of them may incur or have asserted against them caused
by (i) any untrue  statement or alleged  untrue  statement of a material fact in
the Preliminary  Placement  Memorandum,  except for the information contained in
Appendix A and B or any amendments or supplements to the  Preliminary  Placement
Memorandum  ; or (ii) the  omission  or  alleged  omission  to state  therein  a
material  fact  required to be stated in the  Preliminary  Placement  Memorandum
necessary to make the statements  therein,  in light of the circumstances  under
which they are made not  misleading  or (iii) any breach (or alleged  breach) by
the Company of any of its  representations  or warranties set forth in this Bond
Placement Agreement or directly or indirectly resulting from, arising out of, or
relating to the Project.

7. Actions  Brought  Against  Indemnified  Parties.  In case any action shall be
brought  against any  Indemnified  Party with respect to which  indemnity may be
sought  against  the  Company  under  the  provisions  of  this  Bond  Placement
Agreement,  such Indemnified Party shall promptly notify the Company in writing,
and the Company shall assume the defense  thereof,  including the  employment of
counsel and the payment of all reasonable expenses.  Any Indemnified Party shall
have the right to employ separate  counsel in any such action and participate in
the defense  thereof,  but the fees and expenses of such counsel shall be at the
sole cost and expense of such  Indemnified  Party unless (i) the  employment  of
such counsel has been specifically authorized in writing by the Company; or (ii)
the named parties to any such action  (including any impleaded  parties) include
both such  Indemnified  Party and the Company and such  Indemnified  Party shall
have been advised by its counsel that it is probable that a conflict of interest
between the Company and such Indemnified  Party may arise and for this reason it
is not  desirable  for the same  counsel to  represent  both the Company and the
Indemnified  Party (in which case the Company shall not have the right to assume
the  defense  of such  action  on behalf of such  Indemnified  Party);  it being
understood, however, that in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general  allegations or circumstances,  the Company shall not be liable
for the reasonable fees and expenses of more than one separate firm of attorneys
for all such Indemnified  Parties,  which firm shall be designated in writing by
the Indemnified Parties).  The Company shall not be liable for any settlement of
any such action effected  without its written  consent,  but if settled with the
written consent of the Company or if there is a final judgment for the plaintiff
in any such  action,  the Company  agrees to  indemnify  and hold  harmless  any
Indemnified  Party from and  against any loss,  cost,  expense or  liability  by
reason of such  settlement or judgment,  including but not limited to reasonable
attorneys fees. This indemnity  includes but is not limited to reimbursement for
expenses reasonably incurred by the Indemnified Party in investigating the claim
and in defending it if the Company declines to assume the defense, provided that
the matter is one for which  indemnification  is required  of the Company  under
this Agreement.  The indemnity  agreements of the Company contained in Section 6
hereof shall survive the delivery and payment of the Bonds.

8. Blue Sky  Requirements.  The Placement Agent shall,  in its sole  discretion,
determine the  jurisdictions  in which the Bonds shall be offered and sold.  The
Placement Agent shall use its best efforts to qualify the Bonds for offer,  sale
and delivery under the  securities or "Blue Sky" laws of each such  jurisdiction
to the extent required.  The Company shall cooperate with the Placement Agent in
its  efforts to qualify the Bonds for such offer,  sale and  delivery  under the
securities or "Blue Sky" laws of such jurisdictions.

9.  Conditions of Closing.  The  obligations of the Placement Agent to privately
place the Bonds on the date of Closing shall be subject,  except as specifically
waived in  writing  by the  Placement  Agent in its sole  discretion  to (i) the
accuracy  of the  representations  and  warranties  on the  part of the  Company
contained  herein as of the date hereof and as of the date of Closing;  (ii) the
accuracy in all  material  respects  of the  statements  of the  officers of the
Company made in any  certificates or other documents  furnished  pursuant to the
provisions  hereof,  and (iii) the performance by the Company of its obligations
to be  performed  hereunder  or  otherwise at or prior to the Closing and to the
following additional conditions:

(a) At the Closing,  the Resolution  shall have been duly adopted by the Company
and shall be in full  force and  effect  and  constitute  the  legal,  valid and
binding  action of the Company,  and the Company  Documents,  when  executed and
delivered  by the parties  thereto,  will  constitute  legal,  valid and binding
obligations  of the  parties  thereto,  enforceable  in  accordance  with  their
respective terms,  except as enforcement may be limited by equitable  principles
or by bankruptcy,  insolvency,  reorganization,  moratorium and similar terms in
effect from time to time  affecting the  enforcement of creditors'  rights,  and
such documents shall not have been amended,  modified or supplemented  except as
may have been agreed to in writing by the Placement Agent;

(b) At the Closing, there shall not have been any material adverse change in the
business,  properties  or financial  condition of the Bank,  as described in the
Preliminary  Placement Memorandum or of the Company which in the judgment of the
Placement Agent,  makes it inadvisable to proceed with the offer and sale of the
Bonds;

(c)  The Letter of Credit shall have been delivered by the Bank;

(d) At the Closing,  the Preliminary  Placement  Memorandum  shall not have been
amended, modified or supplemented,  except as may have been agreed to in writing
by the Placement Agent;

(e) The Company  shall not have  defaulted  in the  performance  of any of their
covenants hereunder, under the Indenture or under the Company Documents;

(f) The Placement Agent shall have received:

(i)    The Preliminary Placement Memorandum  executed by the
Company, including all appendices thereto;

(ii) An opinion of Bond Counsel,  addressed to the Placement  Agent,  also dated
the date of Closing,  covering the matters set forth in Exhibit A hereto and any
other  matters which may be reasonably  requested by the Placement  Agent,  with
such changes therein as are acceptable to the Placement Agent;

(iii) An opinion  of  Counsel  for the  Company,  dated the date of Closing  and
addressed to the Placement Agent, the Bank and the Trustee, covering the matters
set forth in  Exhibit B hereto  and any other  matters  which may be  reasonably
requested by the Placement Agent, with such changes therein as are acceptable to
the Company, the Placement Agent, the Bank and the Trustee;

(iv) An opinion of Counsel for the Bank, dated the date of Closing and addressed
to the Placement Agent, the Bank and the Trustee, covering the matters set forth
in  Exhibit C  hereto,  with  such  changes  therein  as are  acceptable  to the
Placement Agent, the Bank, the Trustee and Bond Counsel;

(v) A  preference  opinion of Counsel for the Bank dated the date of Closing and
addressed to Moody's  (herein  defined),  the Trustee and the Placement Agent in
form satisfactory to the Placement Agent and Moody's;

(vi) A  certificate,  dated the date of  Closing  and  signed  by an  authorized
officer of the Company to the effect (A) that the representations and warranties
regarding  the Company  contained  herein are true and  correct in all  material
respects on and as of the date of Closing with the same effect as if made on the
date  of  Closing;  (B)  that  no  event  has  occurred  since  the  date of the
Preliminary  Placement  Memorandum to render any statements  therein untrue; (C)
that the information  contained in the Preliminary Placement Memorandum does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made, not misleading;  (D) that
the Company has complied  with all the  agreements  and  satisfied  all material
conditions on their part to be performed or satisfied  under this Bond Placement
Agreement  and the  Reimbursement  Agreement  or  otherwise  at or  prior to the
Closing;  and (E) such other matters as Bond Counsel and the Placement Agent may
reasonably request;

(vii) A  certificate,  dated the date of  Closing  and  signed by an  authorized
officer  of the  Bank to the  effect  that (A) the  Bank is a  national  banking
association,  duly  organized,  validly  existing and in good standing under the
laws of the United States of America;  (B) the Bank has full legal right,  power
and authority to execute and deliver the Reimbursement  Agreement and the Letter
of Credit and to  perform  its  obligations  thereunder;  (C) the  Reimbursement
Agreement  and the  Letter of Credit  have been duly  authorized,  executed  and
delivered  by the Bank,  are in full force and effect as to the Bank on the date
of Closing,  and  constitute  legal,  valid and binding  obligations of the Bank
enforceable  against the Bank in accordance with their respective terms,  except
as  enforcement  may be  limited  by  equitable  principles,  or by  bankruptcy,
insolvency,  reorganization,  moratorium and liquidation  laws and other similar
laws in effect from time to time affecting the enforcement of creditors'  rights
generally, as such laws would apply in the event of the bankruptcy,  insolvency,
reorganization  or liquidation  of, or other similar  occurrence with respect to
the Bank in the event of any  moratorium  or similar  occurrence  affecting  the
Bank; (D) to the Bank's knowledge, there is no action, suit, proceeding, inquiry
or  investigation,  at law or in  equity,  before  or by any  court,  regulatory
agency,  public board or body pending or threatened  against the Bank wherein an
unfavorable   ruling  or  finding  would   adversely   affect  the  validity  or
enforceability of the Reimbursement  Agreement or the Letter of Credit, or would
materially  and  adversely  affect  the  ability  of the  Bank  to  perform  its
obligations  thereunder;  (E) all of the conditions precedent to the issuance of
the  Letter  of  Credit  contained  in the  Reimbursement  Agreement  have  been
satisfied  or  waived  by the  Bank;  and  (F) to the  best  of  said  officer's
knowledge,  as of the date of issuance of the Bonds,  the information  contained
under the heading "The Letter of Credit and the Reimbursement  Agreement" and in
Appendix B to the  Preliminary  Placement  Memorandum  do not  contain an untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading.

(viii)     A letter of Moody's Investors Services, Inc.
("Moody's") stating that it has issued a rating of "Aa3/VMIG1" on
the Bonds; and

(xi)  Such  additional  documents,  instruments,  agreements,  certificates  and
opinions  as Bond  Counsel and the  Placement  Agent may  reasonably  request to
evidence the accuracy of the  representations and warranties and compliance with
the covenants  set forth herein,  including the covenants as to the exemption of
the offering of the Bonds from registration under the Securities Act of 1933, as
amended; and

(g)  Between  the date  hereof  and the date of  Closing,  the  market  price or
marketability  of the Bonds,  at the  initial  offering  prices set forth in the
Preliminary  Placement  Memorandum,  shall  not have been  materially  adversely
affected,  in the  reasonable  judgment of the Placement  Agent  (evidenced by a
written notice to the Company  terminating the obligation of the Placement Agent
to privately place the Bonds), by reason of any of the following:

           (i)  Legislation  enacted by or  introduced  in the  Congress  of the
United  States or reported  out of or pending in committee  or  recommended  for
passage by the President of the United States, or a decision rendered by a court
established  under Article III of the  Constitution of the United States,  or an
order, ruling,  regulation or official statement (final,  temporary or proposed)
issued  or made or any  other  release  or  announcement  by or on behalf of the
Securities  and Exchange  Commission,  or any other  governmental  agency having
jurisdiction  of the  subject  matter,  to the effect  that  obligations  of the
general character of the Bonds are not exempt from qualification under, or other
requirements  of,  the Trust  Indenture  Act of 1939,  as  amended,  or that the
issuance, offering or sale of obligations of the general character of the Bonds,
including any or all underlying  arrangements as  contemplated  hereby or by the
Preliminary  Placement  Memorandum,  is or would be in  violation of the federal
securities  laws as amended and then in effect and the  regulations  promulgated
thereunder; or

(ii) The  declaration  of war or engagement in major  hostilities  by the United
States or the occurrence of any other local, national or international emergency
or calamity  relating to the  effective  operation of the  government  of or the
financial  community in the United States, or a default with respect to the debt
obligations of, or the institution of proceedings  under the federal  bankruptcy
laws by or against,  any state of the United States or agency thereof,  the City
of New York,  New York,  or any city in the United States having a population of
over  1,000,000,  the  effect of which on the  financial  markets  of the United
States  will  be  such  as,  in  the  Placement  Agent's   judgment,   makes  it
impracticable for the Placement Agent to place the Bonds; or

(iii) The declaration of a general  banking  moratorium by federal New York, New
Jersey or Pennsylvania authorities,  or the general suspension of trading on any
national securities exchange; or

(iv) Any amendment to the federal,  Pennsylvania or New Jersey  Constitutions or
action by any federal or state court, legislative body, regulatory body or other
authority  materially  adversely affecting the validity or enforceability of the
Resolution, the Bonds, the Indenture, the Reimbursement Agreement, the Letter of
Credit or this Bond  Placement  Agreement,  or the ability of the Company or the
Bank to meet their respective covenants under such agreements; or

(v) Any event occurring,  or information becoming known which, in the reasonable
judgment of the  Placement  Agent or the Company  makes  untrue in any  material
respect any  statement or  information  contained in the  Preliminary  Placement
Memorandum  , or has  the  effect  that  the  Preliminary  Placement  Memorandum
contains any untrue  statement  of a material  fact or omits to state a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading.

If the  Placement  Agent  terminates  its  obligation to place the Bonds for any
reason permitted by this Bond Placement Agreement. This Bond Placement Agreement
will  terminate  without  liability on the part of the Company or the  Placement
Agent,  except for the  provisions  of Sections 6 as to  indemnification  of the
Placement Agent.

10. Representation of the Placement Agent. The Placement Agent acknowledges that
each investor has been given or will have been given an  opportunity  to examine
such material  relating to the Bonds and the Bank as is  satisfactory to each of
them.

11. Notices and Other Actions. All notices, demands and formal actions hereunder
will be in writing, mailed, telegraphed or delivered to:

The Company:

Piercing Pagoda, Inc.
3910 Alder Drive
P.O. Box 25007
Lehigh Valley, PA  18002-5007

The Placement Agent:

CoreStates Securities, Corp
600 Penn Street, Second Floor South
Reading, PA 19602
Attention: Sales and Underwriting Department

12.  Acknowledgment  of  Multiple  Representation.  Each of the  parties  hereto
acknowledges  and confirms  that it was advised on or before April 29, 1998 that
King, McCardle,  Herman, Freund & Olexa would act as Bond Counsel and Counsel to
the Placement Agent in connection  with the  transaction  described in this Bond
Placement  Agreement.  Each  of the  parties  hereto  further  acknowledges  and
confirms that, upon being so advised, it agreed to such multiple representation.

13. Execution in Counterparts.  This Bond Placement Agreement may be executed in
any number of  counterparts,  all of which shall constitute but one and the same
document,  and any parties hereto may execute this Bond  Placement  Agreement by
signing any such counterparts.


14. Successors.  This Bond Placement  Agreement will inure to the benefit of and
be binding  upon the parties  hereto and their  successors,  and no other person
shall acquire or have any right hereunder or by virtue hereof.

15.  Applicable  Law.  This Bond  Placement  Agreement  shall be governed by and
construed  in  accordance  with the domestic  internal  laws (but not the law of
conflict of laws) of the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF, the Company and the Placement Agent, intending to be legally
bound, have caused their duly authorized  representatives to execute and deliver
this Bond Placement Agreement as of the date first written above.

Attest:                        PIERCING PAGODA, INC.


------------------------- -------------------------------
Authorized Officer             Chief Financial Officer


Attest:                        CORESTATES SECURITIES, CORP



--------------------------     -------------------------------
Authorized Officer             Senior Vice President



      EXHIBIT A

      Points to be covered
      in Opinion of Bond Counsel


1. The Bonds are exempt from  registration  under the  Securities Act of 1933 as
amended, in connection with the offering and sale of the Bonds and the Indenture
is exempt from qualification under the Trust Indenture Act of 1939, as amended.

2. The description and summaries under the captions entitled "The Bonds" (except
for the  information  extracted  from  information  provided  by DTC),  and "The
Indenture"  contained in the Preliminary  Placement  Memorandum fairly summarize
the applicable provisions of the documents or portions of applicable law, as the
case may be, which are purported to be summarized therein.

3. Except as to the possible  application of state  securities laws, as to which
no opinion need be expressed, no authorization,  declaration,  approval, consent
or other  order of any  governmental  authority  or  agency  is  required  to be
obtained by the Company which has not been obtained for the valid authorization,
execution,  issuance  and  sale  of the  Bonds  by the  Company  and  the  valid
authorization,  execution and delivery of the Bond  Placement  Agreement and all
other  documents  executed by the Company in connection with the issuance of the
Bonds.

4. The issuance and sale of the Bonds have been duly  authorized  by the Company
and such  Bonds  have  been duly  executed  and  delivered  by the  Company  and
authenticated by the Trustee,  are valid and binding  obligations of the Company
and are  entitled to the benefit and  security of the  Indenture,  except as the
rights  created  thereunder  and  the  enforcement  thereof  may be  limited  by
bankruptcy,  insolvency  or other laws or  equitable  principles  affecting  the
enforcement of creditors' rights generally.



      EXHIBIT B

      Points to be covered in Opinion of Counsel for the Company


1. The Company is a corporation  duly  organized,  validly  existing and in good
standing under the laws of the Commonwealth of Pennsylvania.

2. The Company has the  necessary  authority  to execute and deliver the Company
Documents, and the undertakings of its obligations thereunder, and the taking of
all actions as may be required on the part of the Company to carry out the same,
and the making and  performance  of each such  agreement will not conflict with,
constitute  a breach of or a default  under,  any  provision  of the Articles of
Incorporation or By-laws of the Company or, to the best of counsel's  knowledge,
any indenture,  agreement or other instrument to which the Company is a party or
by which the Company or any of its properties may be bound or any constitutional
or statutory  provision or order, rule,  regulation,  decree or ordinance of any
court,  government  or  governmental  body to which  the  Company  or any of its
properties are subject.

3. The Company Documents have been duly authorized,  executed,  acknowledged and
delivered by the Company, are in full force and effect and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms,  except as enforcement may be limited to
equitable principles, or by bankruptcy, insolvency,  reorganization,  moratorium
and other  similar  laws or  equitable  principles  in effect  from time to time
affecting the enforcement of creditors' rights generally.

4. To the best of counsel's knowledge,  no authorization,  consent,  approval or
review of any court or governmental body or regulatory authority is required for
the authorization,  execution and delivery by the Company of, and performance by
the Company of its obligations  under,  the Company  Documents or for any action
taken by the Company in connection with the transactions  contemplated  thereby,
which has not been obtained or effected.

5. To the best of counsel's  knowledge,  there is no action,  suit,  litigation,
proceeding,  inquiry or  investigation,  at law or in  equity,  before or by any
court,  regulatory  agency,  public board or body pending or, threatened against
the  Company,  nor to the best of such  counsel's  knowledge  is there any basis
therefor,  wherein  an  unfavorable  ruling  or  finding  would  materially  and
adversely  affect (i) the  business,  properties  or financial  condition of the
Company; (ii) the validity or enforceability of the Company Documents;  or (iii)
any of the  transactions  contemplated by the undertaking of the Project and the
aforementioned documents.

6. The Company has duly authorized the taking of any and all action necessary to
carry out and give effect to the  transactions  contemplated  to be performed on
its part by the Company Documents and the Preliminary Placement Memorandum.

7. To the best of counsel's  knowledge,  the Company has all necessary  permits,
licenses,  certifications  and  qualifications  to conduct its business as it is
presently being conducted,  subject to such exceptions  which, in the aggregate,
would not have a material  adverse  effect on the business or  operations of the
Company  and the Company is not in any  material  way in breach of or in default
under any applicable law or  administrative  regulation of the  Commonwealth  of
Pennsylvania or of the United States or any applicable judgment or decree.

8. To the best of counsel's  knowledge,  the Company has obtained all  approvals
required under applicable federal and state laws (other than securities laws) to
finance the Project.



      EXHIBIT C

      Points to be covered in the Opinion of Counsel for the Bank


1. The Bank is a national  banking  association,  validly  existing  and in good
standing  under the laws of the United  States of America and has full power and
authority  to issue and  deliver the Letter of Credit and to execute and deliver
the Reimbursement Agreement and to perform its obligations thereunder.

2.  The  Reimbursement  Agreement  and the  Letter  of  Credit  have  been  duly
authorized and constitute valid and binding obligations of the Bank, enforceable
against  the Bank in  accordance  with  their  respective  terms,  except as the
enforceability thereof may be limited by equitable principles, or by bankruptcy,
insolvency,  reorganization,  moratorium, liquidation and similar laws in effect
from time to time affecting the enforcement of creditors,  rights generally,  as
such laws would apply in the event of the bankruptcy, insolvency, reorganization
or liquidation  of, or other similar  occurrence with respect to, the Bank or in
the event of any moratorium or similar occurrence affecting the Bank.

3. The issuance of the Letter of Credit and the  performance  by the Bank of its
obligations  thereunder (a) require no consents or approvals of, or filing with,
any  governmental  or  other  regulatory  agencies  and (b) do not  violate  any
existing law, rule, regulation or ordinance.

4. The Letter of Credit  constitutes  a security  issued or guaranteed by a bank
within the meaning of Section  3(a)(2) of the Securities Act of 1933, as amended
(the "Securities  Act") and, as such, is not required to be registered  pursuant
to the Securities Act.

5. Although  such counsel has not been engaged by the Bank to review  generally,
or to  express  its  opinion  with  respect  to,  disclosure  materials  used in
connection  with the offer and sale of the Bonds and  expresses  no opinion with
respect  thereto  other than as set forth in this  Paragraph 5, such counsel has
reviewed the information  relating to the Letter of Credit and the Reimbursement
Agreement in the Preliminary  Placement  Memorandum (the "Preliminary  Placement
Memorandum")  set  forth  under  the  heading  "The  Letter  of  Credit  and the
Reimbursement  Agreement." Such information sets forth accurate summaries of the
portions of the Letter of Credit and  Reimbursement  Agreement  purported  to be
summarized therein.