REPLACEMENT REVOLVING LOAN NOTE


$16,000,000.00                                               November 21, 1997


FOR  VALUE   RECEIVED  AND  INTENDING  TO  BE  LEGALLY  BOUND  HEREBY,   the
undersigned,  Piercing Pagoda, Inc.  ("Borrower"),  a Delaware  corporation,
promises to pay to the order of First Union National Bank ("Lender"), at the
offices of CoreStates Bank, N.A.  ("Administrative  Agent"), a national bank
with an office at Broad and Chestnut Streets, Philadelphia, Pennsylvania, or
at such other  location as  Administrative  Agent may designate from time to
time, with interest as set forth below, the principal sum of Sixteen Million
($16,000,000.00)  Dollars or such lesser sum which  represents  Lender's Pro
Rata Share of the principal  balance  outstanding  under the Revolving  Loan
established  pursuant to the  provisions  of that  certain  Syndicated  Loan
Agreement  certain  Syndicated  Loan  Agreement  dated  March 27, 1997 among
Borrower,  Administrative  Agent,  Lender  and the  other  "Lenders"  listed
therein,  as  amended  pursuant  to the  provisions  of that  certain  First
Amendment to  Syndicated  Loan  Agreement of even date  herewith  among such
parties (as it may be supplemented, restated, superseded, further amended or
replaced from time to time,  "Loan  Agreement").  The outstanding  principal
balance  hereunder  shall,  absent earlier  acceleration,  be payable on the
Revolving Loan  Termination  Date. The actual amount due and owing from time
to time hereunder  shall be evidenced by  Administrative  Agent's records of
receipts and  disbursements  with respect to the Revolving Loan, which shall
be prima facie  evidence of the amount.  All  capitalized  terms used herein
without  further  definition  shall have the  respective  meanings  ascribed
thereto in the Loan Agreement.

      Borrower  further agrees to pay interest on the outstanding  principal
balance  hereunder  from time to time at one or more of the per annum  Rates
set  forth  in  Paragraph  2.8 of the  Loan  Agreement.  Interest  shall  be
calculated  on the basis of a year of 360 days for the actual number of days
elapsed, and shall be due and payable as set forth in the Loan Agreement.

      The Revolving Loan shall continue to accrue interest at the applicable
Rates provided for in the Loan  Agreement  even after  Default,  an Event of
Default,   maturity,   acceleration,    judgment,   bankruptcy,   insolvency
proceedings  of any kind or the happening of any other event or  occurrence,
whether similar or dissimilar.

      If an  Event  of  Default  occurs  and is  continuing  under  the Loan
Agreement,  the unpaid principal balance of this Replacement  Revolving Loan
Note,  together with all accrued and unpaid  interest and other  outstanding
Obligations shall become, or may be declared, immediately due and payable as
provided in the Loan Agreement.

      This Replacement Revolving Loan Note may be prepaid only in accordance
with the terms and conditions of the Loan Agreement.

      Any failure or delay of  Administrative  Agent, any Agent or Lender to
exercise any right hereunder shall not be construed as a waiver of the right
to  exercise  the same or any other  right at any other  time or times.  The
waiver by  Administrative  Agent, any Agent or Lender of a breach or default
of any provision of this  Replacement  Revolving Loan Note shall not operate
or be  construed  as a waiver of any  subsequent  breach or default  hereof.
Borrower agrees to reimburse  Administrative Agent for all expenses incurred
by Administrative  Agent,  Lender or any other lender in accordance with the
provisions of the Loan Agreement.

      This  Replacement  Revolving Loan Note shall be construed and governed
by the laws of the Commonwealth of Pennsylvania  without regard to otherwise
applicable   principles  of  conflicts  of  laws.  The  provisions  of  this
Replacement  Revolving  Loan  Note  are  severable  and  the  invalidity  or
unenforceability  of any  provision  shall not alter or impair the remaining
provisions of this Replacement  Revolving Loan Note. No modification  hereof
shall be binding or enforceable against Lender unless approved in writing by
Lender.


THE  FOLLOWING  SETS FORTH A WARRANT OF AUTHORITY FOR ANY ATTORNEY TO, AFTER
THE  OCCURRENCE AND DURING THE  CONTINUANCE OF AN EVENT OF DEFAULT,  CONFESS
JUDGMENT AGAINST  BORROWER.  IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS
JUDGMENT  AGAINST  BORROWER,   BORROWER,  FOLLOWING  CONSULTATION  WITH  (OR
DECISION  NOT TO CONSULT  WITH)  SEPARATE  COUNSEL  FOR  BORROWER,  AND WITH
KNOWLEDGE  OF THE LEGAL  EFFECT  HEREOF,  HEREBY  WAIVES  ANY AND ALL RIGHTS
BORROWER HAS, OR MAY HAVE, TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING


<PAGE>


<PAGE>


BEFORE ENTRY OF JUDGMENT, OR EXECUTION UPON ANY REAL OR PERSONAL PROPERTY OF
BORROWER  UNDER THE  CONSTITUTIONS  AND LAWS OF THE  UNITED  STATES  AND THE
COMMONWEALTH  OF  PENNSYLVANIA.   BORROWER  SPECIFICALLY  ACKNOWLEDGES  THAT
ADMINISTRATIVE  AGENT AND LENDERS HAVE RELIED ON THIS WARRANT OF ATTORNEY IN
GRANTING THE FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN.

AFTER THE  OCCURRENCE  AND DURING THE  CONTINUANCE  OF AN EVENT OF  DEFAULT,
BORROWER HEREBY EMPOWERS ANY  PROTHONOTARY,  CLERK, OR ATTORNEY OF ANY COURT
OF RECORD IN THE UNITED STATES, OR ELSEWHERE,  TO APPEAR FOR BORROWER IN ANY
AND ALL  ACTIONS  WHICH MAY BE  BROUGHT  HEREUNDER  IN THE  COMMONWEALTH  OF
PENNSYLVANIA OR ELSEWHERE AND CONFESS  JUDGMENT AGAINST BORROWER FOR ALL, OR
ANY PART, OF THE UNPAID PRINCIPAL  BALANCE  HEREUNDER,  AND ACCRUED INTEREST
TOGETHER WITH OTHER EXPENSES INCURRED IN CONNECTION THEREWITH AND ATTORNEYS'
FEES OF FIVE  PERCENT  (5%) OF THE TOTAL OF THE  FOREGOING  SUMS,  BUT IN NO
EVENT LESS THAN FIVE THOUSAND ($5,000.00) DOLLARS, AND FOR SUCH PURPOSE, THE
ORIGINAL OR ANY PHOTOCOPY OF THIS REPLACEMENT REVOLVING LOAN NOTE SHALL BE A
GOOD AND  SUFFICIENT  WARRANT  OF  ATTORNEY.  SUCH  AUTHORITY  SHALL  NOT BE
EXHAUSTED  BY  ONE  EXERCISE  THEREOF  BUT  JUDGEMENT  MAY BE  CONFESSED  AS
AFORESAID  FROM TIME TO TIME.  BORROWER  WAIVES  ALL  ERRORS  AND  RIGHTS OF
APPEAL, AS WELL AS RIGHTS TO STAY OF EXECUTION AND EXEMPTION OF PROPERTY, IN
ANY ACTION TO ENFORCE ITS LIABILITY HEREON.

Except as expressly set forth in the Loan Agreement,  Borrower hereby waives
protest, notice of protest,  presentment,  dishonor,  notice of dishonor and
demand.  To the extent permitted by law, Borrower hereby waives and releases
all errors,  defects and  imperfections  in any  proceedings  instituted  by
Administrative  Agent or any  Lender  under  the  terms of this  Replacement
Revolving Loan Note. The rights and privileges of  Administrative  Agent and
any Lender  under this  Replacement  Revolving  Loan Note shall inure to the
benefit of its successors and assigns. All  representations,  warranties and
agreements of Borrower made in connection  with this  Replacement  Revolving
Loan Note shall  bind  Borrower's  successors  and  assigns.  The rights and
remedies of Administrative Agent or Lender under this Replacement  Revolving
Loan Note shall be in addition to any other rights and remedies available to
Administrative  Agent or  Lender  at law or in  equity,  all of which may be
exercised  singly  or  concurrently.  The  parties  agree  to the  exclusive
jurisdiction  of the federal and state  courts  located in  Pennsylvania  in
connection with any matter arising  hereunder,  including the collection and
enforcement hereof, except as the Administrative Agent may otherwise elect.

Borrower (and  Administrative  Agent and Lender by their acceptance  hereof)
each  hereby  waives  any and all  rights  it may  have to a jury  trial  in
connection  with  respect to rights any  litigation  arising with rights and
obligations of the parties hereto.

      IN WITNESS WHEREOF,  intending to be legally bound,  Borrower has duly
executed this  Replacement  Revolving Loan Note the day and year first above
written and has hereunto set hand and seal.

      ATTEST:                             PIERCING PAGODA, INC.

     By: /s/ Brandon R. Lehman____        By: /s/ John F. Eureyecko
           Name: Brandon R. Lehman              Name: John F. Eureyecko
           Title: Treasurer                                 Title:
     President

                    (Corporate Seal)