$50,000,000.00                                                 September 5, 1996


                    ELEVENTH REPLACEMENT REVOLVING LOAN NOTE


     FOR  VALUE  RECEIVED,  PIERCING  PAGODA,  INC.  ("Borrower"),   a  Delaware
corporation  having its chief executive  office at 3910 Adler Place,  Bethlehem,
Pennsylvania   18016,   promises   to  pay  to  the   order  of   SUMMIT   BANK,
successor-in-interest to First Valley Bank ("Bank"), its successors and assigns,
at the office of Bank located at One Bethlehem  Plaza,  Bethlehem,  Pennsylvania
18018 or at such other  location as  designated by Bank from time to time, on or
before  October 31, 1996,  the principal  sum of Fifty Million  ($50,000,000.00)
Dollars or, if less, the unpaid  principal amount of all loans and advances made
by Bank to or for the  benefit of  Borrower  under and as part of the  Revolving
Loan described in that certain Third Amended and Restated Loan  Agreement  dated
February 13, 1995 between  Borrower and Bank (under its former name), as amended
by that certain letter  agreement dated April 21, 1995 between Borrower and Bank
(under its former  name),  that certain  Amendment to Third Amended and Restated
Loan Agreement dated August 4, 1995 between  Borrower and Bank (under its former
name),  that  certain  Second  Amendment  to Third  Amended  and  Restated  Loan
Agreement  dated  November 21, 1995 between  Borrower and Bank (under its former
name),  and that  certain  Third  Amendment to Third  Amended and Restated  Loan
Agreement of even date herewith  (the "Third  Amendment")  between  Borrower and
Bank (as amended,  the "Loan  Agreement"),  together  with  interest  thereon as
specified herein.

     This Note is that certain Eleventh  Replacement  Revolving Loan Note issued
in accordance  with the terms and subject to the  conditions of, and referred to
in, the Third  Amendment  and the Loan  Agreement  and all related  instruments,
agreements and documents.  All capitalized  terms not otherwise  defined in this
Note shall have the meanings  ascribed to such terms in the Loan Agreement.  The
outstanding  principal balance of all loans made hereunder  pursuant to the Loan
Agreement at any time shall be  evidenced  by Bank's  books and  records,  which
shall be deemed to be conclusive  and  irrefutable  evidence of the  correctness
thereof  unless  Borrower  objects  thereto within thirty (30) days of receiving
notice thereof.

     Notwithstanding  the face amount of this Note the Line Limit shall be Fifty
Million  ($50,000,000.00)  Dollars and the Cash Advance Sublimit shall be Thirty
Million and 00/100 ($30,000,000.00) Dollars.

     Interest on the outstanding  principal  balance of the Revolving Loan shall
accrue and be payable at a per annum rate equal to the Prime Rate in effect from
time to time minus  three-quarters  (3/4%) percent (the "Variable Revolving Loan
Rate").  Each time the Prime Rate shall change, the Variable Revolving Loan Rate
shall change contemporaneously with such change in the Prime Rate.

     Interest  on all Loans  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
monthly,  in arrears, on the fifteenth day of each month,  commencing  September
15, 1996.

     Except as  hereinafter  provided,  interest shall continue to accrue and be
payable on the unpaid  principal  balance of this Note at the aforesaid  rate of
interest  notwithstanding  any demand for payment,  acceleration and/or entry of
judgment for such sums. If any scheduled payment of principal or interest is not
made within five (5) days after Bank mails  notice of  non-payment  to Borrower,
there shall become immediately due and payable,  and Borrower shall pay to Bank,
an additional sum equal to five (5%) percent of the amount of such payment.

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          Each  installment  shall  be  applied  on  account  of  the  interest,
principal,  late charges,  or other sums payable  hereunder in such order as the
Bank may, in its sole discretion, determine.

DISBURSEMENT OF PROCEEDS - Borrower hereby  represents and warrants to Bank that
the  principal of this Note will be used solely for business  and/or  commercial
purposes.

RIGHT TO COMPLETE NOTE - Bank may at any time from time to time,  without notice
to any obligor for the  Obligations:  (1) date this Note as of the date when the
loan evidenced  hereby was made; (2) complete any blank spaces  according to the
terms upon which Bank has granted such loan;  and (3) cause the signature of one
or more Persons to be added as additional borrowers without in any way affecting
or limiting the liability of the existing obligors for the Obligations to Bank.

EVENTS  OF  DEFAULT  - Each of the  following  shall be an  "Event  of  Default"
hereunder:  (1) Borrower shall fail to pay when due any installment of principal
or interest payable hereunder or any Obligations and such failure shall continue
for a period  of five (5)  Business  Days  after the  mailing  of notice of such
default by Bank;  (2)  Borrower  shall  fail to  observe  or  perform  any other
Obligation  to be  observed  or  performed  by them  hereunder,  under  the Loan
Agreement or under any other agreement between Borrower and Bank.

BANK'S RIGHTS UPON DEFAULT - Upon the  occurrence  of an Event of Default,  Bank
shall have all rights and  remedies set forth in the Loan  Agreement  including,
but not limited to:

          (1) the right to  accelerate  the  maturity  of this  Note and  demand
immediate payment of all outstanding principal and accrued interest thereon;

          (2) the right to exercise  its right of set-off and all of the rights,
privileges and remedies under the Pennsylvania  Uniform  Commercial Code and all
of its  rights and  remedies  under the Loan  Agreement,  this Note or any other
note, or other  agreement,  instrument or document  issued in connection with or
arising  out of any of the  Obligations,  or at law or in  equity,  all of which
remedies  shall be  cumulative  and not  alternative.  Borrower  and each  other
obligor for the  Obligations  waives and  releases  any right to require Bank to
collect any of the  Obligations  from any other  collateral  under any theory of
marshalling of assets or otherwise,  and  specifically  authorizes Bank to apply
any  collateral  in which any such  obligor  has any  right,  title or  interest
against any of the Obligations in any manner that Bank may determine; and

          (3) the right upon five (5) days written notice to Borrower  forwarded
to the address of Borrower on the books of Bank, to begin accruing interest,  in
addition  to the  interest  provided  for  above,  at a rate not to exceed  five
percent (5%) per annum on the unpaid principal  balance of this Note;  provided,
however, that no interest shall accrue hereunder in excess of the maximum amount
of interest then allowed by law. Such interest shall accrue  notwithstanding the
entry or  obtaining of any judgment and shall be added to and become part of the
Obligations.  Borrower  agrees to pay such accrued  interest  upon  demand.  The
waiver of any Event of Default shall not be a waiver of any subsequent  Event of
Default.

WARRANT OF ATTORNEY - Borrower  hereby  irrevocably  authorizes and empowers any
Attorney or any Clerk of any court of record upon or after the occurrence of any
Event of Default to appear for and CONFESS  JUDGMENT against  Borrower,  (A) for
such sums as are due and/or may become due on the Obligations, and/or (B) in any
action of replevin  instituted by Bank to obtain  possession  on any  collateral
securing  this Note or securing any of the  Obligations,  in either case with or
without  declaration,  with costs of suit, without stay of execution and with an
amount not to exceed  five (5%)  percent of the unpaid  principal  amount of the
Obligations,  but not less than Five  Thousand  ($5,000.00)  Dollars,  added for
attorney's collection fees. Borrower: (1) waives the right of inquisition on any
real  estate  levied  on,   voluntarily   condemns  the  same,   authorizes  the
Prothonotary  or Clerk  to enter  upon  the  Writ of  Execution  said  voluntary

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condemnation  and  agrees  that  said  real  estate  may be  sold  on a Writ  of
Execution;  (2) to the extent  permitted by law,  waives and releases all relief
from all redemption,  appraisement,  stay, exemption or appeal laws of any state
now in  force  or  hereafter  enacted;  and  (3)  releases  all  errors  in such
proceedings.  If a copy of this Note,  verified by  affidavit by or on behalf of
Bank shall have been filed in such action, it shall not be necessary to file the
original  Note as a Warrant of Attorney.  The  authority and power to appear for
and enter  judgment  against  Borrower  shall not be  exhausted  by the  initial
exercise thereof, and the same may be exercised,  from time to time, as often as
Bank shall deem  necessary  and  desirable,  and this Note shall be a sufficient
Warrant therefore. Bank may enter one or more judgments in the same or different
counties for all or part of the Obligations,  without regard to whether judgment
has been  entered on more than one  occasion  for the same  Obligations.  In the
event any judgment entered against Borrower hereunder is stricken or opened upon
application by or on Borrower's behalf for any reason whatsoever, Bank is hereby
authorized  and  empowered  to again  appear for and  Confess  Judgment  against
Borrower;  subject,  however,  to the limitation that such  subsequent  entry or
entries  of  judgment  by Bank  may  only be done to cure  any  errors  in prior
proceedings,  only and to the extent that such errors are subject to cure in the
later proceedings.

MISCELLANEOUS - Borrower hereby waives protest, notice of protest,  presentment,
dishonor,  notice of dishonor and demand.  Borrower agrees to reimburse Bank for
all  costs,   including  court  costs  (whether   incurred  in  any  bankruptcy,
insolvency,  appellate or other  proceeding)  and  reasonable  attorneys'  fees,
incurred by Bank in  connection  with the  collection  and  enforcement  hereof.
Interest  shall be  calculated  hereunder for the actual number of days that the
principal is  outstanding,  based on a year of three  hundred  sixty (360) days.
Changes in the rate of interest  hereon  shall  become  effective on the days on
which Bank  announces  changes in its Prime Rate.  The rights and  privileges of
Bank under this Note shall inure to the benefit of its  successors  and assigns.
All representations,  warranties and agreements of Borrower and each obligor for
the Obligations made in connection with this Note shall bind Borrower's and such
obligor's  personal  representatives,  heirs,  successors  and  assigns.  If any
provision  of  this  Note  shall  for  any  reason  be  held  to be  invalid  or
unenforceable,  such invalidity or  unenforceability  shall not affect any other
provision  hereof,  but this  Note  shall be  construed  as if such  invalid  or
unenforceable provision had never been contained herein. The waiver of any Event
of Default or the  failure of Bank to  exercise  any right or remedy to which it
may be entitled shall not be deemed a waiver of any subsequent  Event of Default
or of Bank's  right to exercise  that or any other right or remedy to which Bank
is entitled.  This Note has been delivered to and accepted by Bank in, and shall
be governed by, the laws of the Commonwealth of Pennsylvania. This Note replaces
and supersedes (but does not extinguish any unpaid  Obligations  evidenced by or
constitute a novation of) that certain  Tenth  Replacement  Revolving  Loan Note
dated   November  21,  1995  in  the  principal  sum  of   Forty-Three   Million
($43,000,000.00)  Dollars  executed and delivered by Borrower to Bank (under its
former  name).  The parties agree to the  jurisdiction  of the federal and state
courts located in Pennsylvania in connection with any matter arising  hereunder,
including the collection and enforcement hereof. Borrower has duly executed this
Note the day and year first above written and has hereunto set  Borrower's  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


[Affix Corporate Seal]

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