SECOND REPLACEMENT REVOLVING LOAN NOTE


$63,335,000.00                                 September 2, 1998


FOR VALUE  RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY,  the  undersigned,
Piercing Pagoda,  Inc.  ("PPI"),  a Delaware  corporation and Piercing Pagoda of
Florida,  Inc. ("PPF"), a Florida corporation (jointly and severally referred to
and  obligated  as  "Borrower"),  promise  to pay to the  order of  First  Union
National  Bank  ("Lender"),  at  the  offices  of  Lender,  in its  capacity  as
Administrative  Agent under the Loan Agreement (as hereinafter  defined) (acting
in such  capacity,  the  "Administrative  Agent")  at 123  South  Broad  Street,
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 Sixty-Three Million Three Hundred Thirty-Five  Thousand  ($63,335,000.00)
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  dated March 27, 1997
among PPI,  Administrative Agent, Lender and the other "Lenders" listed therein,
as amended  pursuant  to the  provisions  of that  certain  First  Amendment  to
Syndicated  Loan  Agreement  dated November 21, 1997 among such parties and that
certain  Second  Amendment to  Syndicated  Loan  Agreement of even date herewith
among such  parties and PPF (as it may be  supplemented,  restated,  superseded,
further  amended or replaced  from time to time,  "Loan  Agreement").  Except as
otherwise  provided below, 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.

      On or  before  October  31,  1998,  Borrower  shall  repay to  Lender  the
Temporary Commitment Increase, or so much thereof as shall have been advanced by
Lender, together with all accrued and unpaid interest.

      If an Event of Default occurs and is continuing  under the Loan Agreement,
the unpaid  principal  balance of this Second  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  Second  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 Second 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  Second  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
Second  Replacement  Revolving  Loan Note are  severable  and the  invalidity or
unenforceability  of any  provision  shall  not alter or  impair  the  remaining
provisions  of this Second  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  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 Second  Replacement
Revolving Loan Note. The rights and privileges of  Administrative  Agent and any
Lender  under this  Second  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 Second Replacement Revolving
Loan Note shall bind Borrower's  successors and assigns. The rights and remedies
of Administrative  Agent or Lender under this Second 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.

      This Second Replacement  Revolving Loan Note replaces and supersedes,  but
does  not  extinguish  or  constitute  a  novation  of any  of the  indebtedness
evidenced by a certain Replacement  Revolving Loan Note dated November 21, 1997.
In the principal amount of Sixteen Million ($16,000,000.00) Dollars executed and
delivered by PPI to Lender and a certain  Replacement  Revolving Loan Note dated
November 21, 1997 in the principal amount of Thirty-Seven  Million Three Hundred
Thirty-Five Thousand  ($37,335,000.00)  Dollars executed and delivered by PPI to
CoreStates Bank, N.A., Lender's predecessor-in-interest.

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


ATTEST:                        PIERCING PAGODA, INC.



By:____________________________
By:____________________________
      Name:                         Name:
      Title:                        Title:


                    (Corporate Seal)



ATTEST:                        PIERCING PAGODA of FLORIDA, INC.



By: __________________________
By:________________________________

Name:                                                        Name:
      Title:                        Title:


           (Corporate Seal)




PHIL1\144695-1