ASSIGNMENT OF LESSOR'S INTEREST IN LEASES


      THIS  ASSIGNMENT  made as of this  29th day of  April,  1998 (as  amended,
modified,  extended,  supplemented,  restated and/or replaced from time to time,
this  "Assignment") is between PIERCING PAGODA,  INC.  ("Assignor"),  a Delaware
corporation  having  its chief  executive  office at 3910  Adler  Place,  Lehigh
Valley,  Pennsylvania  18002,  and CORESTATES  BANK,  N.A., a national bank with
offices at 600 Penn Street, Reading, Pennsylvania 19603, as administrative agent
for the  Lenders  (hereinafter  defined)  under  that  certain  Syndicated  Loan
Agreement dated March 27, 1997 (as amended,  modified,  extended,  supplemented,
restated and/or replaced from time to time, the "Syndicated  Loan Agreement") by
and among Assignor,  the lending  institutions from time to time parties thereto
(each  a  "Lender"  and   collectively,   the  "Lenders"),   and  Assignee,   as
administrative  agent for itself and the other  Lenders and as a Lender (in such
capacity, the "Assignee").

W I T N E S S E T H T H A T:

      Pursuant  to the  terms and  subject  to the  conditions  set forth in the
Syndicated Loan Agreement and that certain  Reimbursement  Agreement dated as of
the date hereof (as amended, modified, extended,  supplemented,  restated and/or
replaced  from  time  to  time,  the  "Reimbursement  Agreement")  by and  among
Assignor,  the Lenders and Assignee,  as the administrative agent for itself and
the  other  Lenders.  Assignee,  on  behalf of each  Lender  (according  to such
Lender's  Pro Rata Share [as  defined in the  Syndicated  Loan  Agreement])  has
issued for the account of Assignor its irrevocable letter of credit (as amended,
modified,  extended,  supplemented,  restated and/or replaced from time to time,
the "Letter of Credit") in an amount  equal to Two Million Six Hundred  Nineteen
Thousand Nine Hundred Fifty-Four and 25/100  ($2,619,954.25)  Dollars to provide
credit enhancement for Assignor's Taxable Variable Rate Demand/Fixed Rate Bonds,
Series of 1998, in the aggregate  amount of Two Million Five Hundred  Sixty-Five
Thousand ($2,565,000.00) Dollars (as amended, modified, extended,  supplemented,
restated and/or replaced from time to time collectively, the "Bonds").

      The  reimbursement  obligation  of Assignor to the Lenders is evidenced by
the  Letter of Credit  and those  certain  Revolving  Loan  Notes  executed  and
delivered  by Assignor  to the Lenders  pursuant  to, and as  described  in, the
Syndicated  Loan  Agreement.   To  induce  the  Lenders,   through  Assignee  as
administrative  agent and as issuer of the Letter of Credit, to issue the Letter
of Credit,  Assignor  is  executing  and  delivering  an Open-End  Mortgage  and
Security Agreement (as amended, modified, extended, supplemented restated and/or
replaced,  the "Mortgage") to secure the existing and future debts,  liabilities
and obligations of Assignor to the Lenders under the Reimbursement Agreement. As
a future  condition to the issuance of the Letter of Credit,  and as  additional
collateral security for the liabilities and obligations secured by the Mortgage,
Assignee has required the execution and delivery of this Assignment.

      NOW,  THEREFORE,  for value  received and  intending to be legally  bound,
Assignor  agrees as  follows:  1) As  security  for the  payment of all sums and
performance of all  obligations  secured by the Mortgage and as security for the
payment and performance of all of Assignor's obligations under the Reimbursement
Agreement,  Assignor  hereby  assigns to  Assignee  all of its right,  title and
interest as lessor in, to and under all leases now or  hereafter  affecting  the
Property,  together with all extensions and modifications of any such leases and
all  guarantees  of lessee's  obligations  thereunder  now or hereafter in force
(said  leases,  extensions,   modifications  and  guarantees  being  hereinafter
collectively called the "Lease"). This Assignment includes,  without limitation,
the right to receive all rents and other amounts  payable under the Lease.  Upon
the payment in full of all amounts secured hereby, as evidenced by the recording
or filing of an instrument or instruments of satisfaction or full release of the
Mortgage, this Assignment shall terminate and be of no further force or effect.

2)         Assignor represents, warrants and covenants that:

(a) The Lease shall be subordinate in estate,  lien, operation and effect to the
Note and the Mortgage.

(b)             Assignor has not made and will not make any other
assignment of the Lease.

(c)             There are no leases or agreements to lease all or
any part of the Property now in effect.

(d) Assignor  will not enter into any leases for all or any part of the Property
without the prior written approval thereof by Assignee. All leases of all or any
part of the Property  shall  include  subordination  and  attornment  provisions
satisfactory to Assignee, and shall be on the form of standard lease approved by
Assignee in writing with no modifications  except such modifications as Assignee
may approve in writing  prior to the  execution  and delivery of the  respective
lease.  No lease of all or any part of the Property shall be materially  amended
except any such  amendments  as  Assignee  may  approve in writing  prior to the
execution and delivery of the respective amendments.

(e) Within  ninety  (90) days  after the end of each  fiscal  year of  Assignor,
Assignor will deliver to Assignee an occupancy  report stating as of the date of
delivery  thereof  with respect to each lease of all or any part of the Property
the lessee's name, the date thereof,  the premises demised,  the term, the rent,
the security deposits,  any advance rent payments in excess of one month and any
defaults by the lessee or Assignor in respect thereof.

3) Except as otherwise  provided in paragraph 9 hereof,  Assignor shall have the
right to  collect,  but not more than  thirty  (30) days prior to  accrual,  all
stated rent and other  amounts due to Assignor  under the Lease,  and to retain,
use and enjoy the same.

4) Assignor  will:  (a) fulfill or perform  every  condition and covenant of the
Lease by the lessor to be fulfilled or  performed;  (b) give to Assignee  prompt
notice of the receipt of any notice  received by Assignor of a default under the
Lease by Assignor or any lessee,  together  with a copy of such default  notice;
(c) enforce, short of termination of the Lease, the performance or observance of
every  covenant  and  condition  of the Lease by any lessee to be  performed  or
observed;  (d) not  terminate  the Lease or accept a  surrender  thereof  unless
required to do so by the terms of the Lease;  (e) not anticipate the rents under
the Lease for more than 30 days prior to accrual;  (f) neither waive nor release
any lessee from any obligations or conditions  under the Lease;  and (g) deliver
to Assignee,  upon written demand, a statement  specifying the rents and profits
derived or received from the Lease for the period specified in such demand,  the
disbursements made for such period and the names of all lessees of the Property,
together with true and correct copies of all leases that have not been delivered
to Assignee previously for which rent is so accounted.

5) Assignor shall, at its sole expense,  appear in and defend any action growing
out  of or in any  manner  connected  with  the  Lease  or  the  obligations  or
liabilities of the lessor or any lessee or guarantor thereunder.

6) Should Assignor fail to make any payment or to do any act as herein provided,
Assignee may but need not,  without  notice to or demand on Assignor and without
releasing  Assignor from any obligation herein,  make or do the same,  including
without  limitation,  appearing in and defending any action purporting to affect
the  security  hereof  or the  rights  or powers  of  Assignee,  performing  any
obligation of the lessor in the Lease  contained,  and, in  exercising  any such
powers,  paying  necessary  costs and expenses,  including  without  limitation,
reasonable  attorneys' fees.  Assignor will pay immediately upon demand all sums
expended by Assignee under the authority hereof,  together with interest thereon
at the  lower of a rate  equal  to five  percent  per  annum  above  the rate of
interest  extant under the Note or the highest rate permitted by applicable law,
which sums together with such interest thereon shall be secured hereby.

7) After the occurrence of an Event of Default (as defined in the  Reimbursement
Agreement)  and so long as an Event of Default is continuing,  Assignee,  at its
option,  without  further  notice  and  without  regard to the  adequacy  of the
security  for the sums  secured  hereby,  either in person or by agent,  with or
without  bringing  any  action  or  proceeding,  may do any  one or  more of the
following:  (a) enter upon,  take  possession of and operate the  Property;  (b)
make, enforce,  modify and accept the surrender of the Lease or any of them; (c)
obtain and evict lessees; (d) fix and modify rents and other sums payable by any
lessee  under the Lease;  (e) either with or without  taking  possession  of the
Property,  in its  own  name or in the  name of  Assignor  or  both,  sue for or
otherwise  collect and receive all rents,  issues and profits,  including  those
past due and unpaid,  and apply the same,  less costs and  expenses of operation
and collection, including reasonable attorneys' fees, to the obligations secured
hereby in such order as Assignee may determine;  (f) exercise any and all rights
and remedies  available to a secured party under the Uniform Commercial Code and
any and all other rights and  remedies  now or hereafter  available at law or in
equity;  and (g) do any other acts which  Assignee  deems  proper to protect its
rights  hereunder.  The net  proceeds,  if any,  received by  Assignee  from the
Property in excess of the amount  necessary to meet all  obligations of Assignor
hereunder or secured hereby,  including any accelerated  indebtedness,  shall be
paid over by Assignee to Assignor.  The entering  upon and taking  possession of
the  Property,  the  collection  of  the  rents,  issues  and  profits  and  the
application thereof as aforesaid,  shall not cure or waive any default or waive,
modify or affect any notice of any Event of Default or  invalidate  any act done
pursuant to such notice.  All rights and remedies of Assignee provided herein or
in the Note or the  instruments  delivered  to Assignee in  connection  with the
Letter  of  Credit  Facility  (a)  are  cumulative  and  concurrent,  (b) may be
exercised  independently,  successively  or  together  against  Assignor  or its
properties at the sole discretion of Assignee, (c) shall not be exhausted by any
exercise thereof,  but may be exercised as often as occasion therefor may arise,
and (d) shall not be construed to be waived or released by  Assignee's  delay in
exercising,  or failure to  exercise,  them or any of them at any time it may be
entitled to do so.

8) Without the prior  written  consent of Assignee,  Assignor  will not cause or
permit  the  leasehold   estate  under  the  Lease  to  merge  with   Assignor's
reversionary or equitable interest in the Property.

9) Assignor hereby authorizes Assignee to give written notice of this Assignment
at any time to the  lessee or lessees  of all or any part of the  Property.  All
lessees are hereby authorized and directed to pay rent and other sums payable to
Assignor  under the Lease  directly to Assignee  upon receipt from Assignee of a
statement  that  there  has  occurred  an Event of  Default  in  respect  of the
obligations  secured  hereby,  without  any  further  evidence  of such Event of
Default.

10) Assignee shall not be obligated to perform or discharge any obligation under
the Lease, and Assignor hereby agrees to indemnify  Assignee against and hold it
harmless from any and all liability, loss or damage which it may incur under the
Lease or  under  or by  reason  of this  Assignment  and of and from any and all
claims and demands  whatsoever which may be asserted against it by reason of any
alleged obligation or undertaking on its part to perform or discharge any of the
terms of the Lease.

11) Assignor will, upon Assignee's  request,  execute and deliver to Assignee or
otherwise  obtain for  Assignee's  benefit  such further  assignments  and other
documents  and do or cause to be done such acts or  things as  Assignee,  in its
sole discretion, may require to perfect, protect or continue this Assignment, to
otherwise effect the transactions  contemplated hereby or to vest or confirm any
right or remedy herein  granted.  Assignor will pay all costs of  acknowledging,
recording  and filing this  Assignment  and such other  documents in such public
offices as Assignee may require.

12) If any provision hereof is found by a court of competent  jurisdiction to be
prohibited or unenforceable,  it shall be ineffective only to the extent of such
prohibition or unenforceability,  and such prohibition or unenforceability shall
not  invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally  construed  in favor of Assignee in order to effect the  provisions
hereof.  13) Notices  hereunder  shall be in writing and shall be  delivered  by
personal  service or shall be sent by postage prepaid,  registered mail,  return
receipt requested or reputable nationally recognized overnight delivery service,
addressed if to Assignee or Assignor, at the respective address set forth in the
heading of this  Assignment,  or at such  other  address  as the  addressee  may
designate in writing. Each notice hereunder shall be deemed given on the date it
is delivered in the case of personal  service,  or the date it is deposited with
the Postal Service or the overnight  delivery  service in the case of registered
mail or overnight delivery, respectively.

14)  This  Assignment  shall  be  governed  by and  construed  according  to the
substantive  laws of the  Commonwealth  of  Pennsylvania,  without regard to its
choice of law principles.

15) This Assignment  shall inure to the benefit of the successors and assigns of
Assignee and shall bind Assignor's  successors and assigns.  If Assignor is more
than one person, this Assignment shall be a joint and several obligation of each
person named herein as  "Assignor",  and each of such persons shall be deemed to
have made the representations and warranties herein set forth.

           IN WITNESS  WHEREOF,  Assignor has duly executed this  Assignment the
day and year first above written.

(CORPORATE SEAL)               PIERCING PAGODA, INC.



ATTEST:_______________________ By:______________________________
          Name:                      Name:
          Title:                     Title:


COMMONWEALTH OF PENNSYLVANIA   :
                                      : ss.
COUNTY OF _________________________ :


      On this _____ day of April,  1998,  before me,  the  subscriber,  a Notary
Public  in  and  for  the  Commonwealth  of  Pennsylvania,  personally  appeared
______________  _____________________ who acknowledged himself/herself to be the
_______________  of Piercing  Pagoda,  Inc.,  a Delaware  corporation,  and that
he/she,  being  authorized to do so,  executed the foregoing  instrument for the
purposes  therein  contained  by  signing  the name of the  corporation  as such
officer.

           IN WITNESS WHEREOF, I have hereunto set my hand and notarial seal.


[SEAL]
----------------------------------------
                                  Notary Public

                             My commission expires:


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