ASSET PURCHASE AGREEMENT


            Asset Purchase Agreement, made this 29th day of January 1997, by and
among PIERCING  PAGODA,  INC., a Delaware  corporation  ("PPI");  EARS,  Inc., a
Delaware  corporation ("EARS" and,  collectively with PPI,  "Buyers");  WEAVER'S
GEMS AND  MINERALS,  INC.,  a  Pennsylvania  corporation  ("WGM");  and GEMSTONE
JEWELRY,  INC., a Pennsylvania  corporation  ("Gemstone" and,  collectively with
WGM, "Sellers").

                                   BACKGROUND

            Sellers  operate  retail  kiosk  stores  under  the  names  Gemstone
Jewelry, Gold-N-Gifts and Facets of Nature which sell gold and non-gold jewelry,
pewter figurines and giftware (the "Business").

            Pursuant to a Letter  Agreement  dated November 14, 1996 between PPI
and Sellers (the "Letter  Agreement"),  PPI has agreed to acquire  substantially
all of the assets of the Business and Sellers have agreed to sell such assets to
PPI. EARS is a subsidiary of PPI that will acquire certain of Sellers' assets as
provided  in Section 6 below.  Buyers and  Sellers  desire to restate the Letter
Agreement in a more formal agreement to memorialize the transaction provided for
in the Letter Agreement.

            NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties, intending to be legally bound hereby, agree as follows:

            Sale and  Purchase of Assets.  On the Closing  Date (as  hereinafter
defined) and subject to the terms and  conditions  contained in this  Agreement,
Sellers  shall sell,  transfer,  assign and deliver to Buyers,  and Buyers shall
purchase,  assume  and  accept  from  Sellers,  free and  clear of all liens and
encumbrances,  all right,  title and interest in and to all of the assets of the
Business (the "Assets"), including, but not limited to the following:

                               The existing  leases for Sellers'  kiosk stores
operated under the names Gemstone(s),  Gemstone Jewelry, Gold-N-Gifts and Facets
of Nature (the "Stores").

                               Any and all leasehold  improvements,  fixtures,
benches,  leased point-of-sale  registers,  stools,  safes,  security panels and
existing security systems at the Stores.

                               All Sellers'  inventory  of the Business  which
is in good salable  condition  normally  sold in the Stores,  including  red dot
inventory, but excluding broken or damaged goods (collectively, the "Inventory")
and the  supplies of the  Business,  including  all  Inventory  of the  Business
delivered up to the Closing Date.

                               All  trademarks,  service  marks,  trade  names
including  without  limitation the trade names  Gemstone(s),  Gemstone  Jewelry,
Gold-N-Gifts and Facets of Nature, logos and other intellectual  property of the
Business, books and records relating solely to the Assets, but including without
limitation,  inventory  reports,  sales  records and  operating  reports for the
Business for the last two (2) years to the extent reasonably available, manuals,
price lists,  customer lists,  supplies and other related assets of the Business
as a going concern, excluding the name Weaver's Gems and Minerals, Inc.

                         Excluded  Assets.  The  Assets do not  include  cash,
receivables, prepaid rents (including, but not limited to, security deposits and
construction deposits under the Stores' leases), equipment not listed in Section
1(b), vehicles owned by Seller,  general intangibles not listed in Section 1(d),
the AS-400 computer system,  software and printers,  the cash register  software
and polling node used for Time for You locations, any Assets (including, but not
limited to,  patents,  trademarks,  service marks,  trade names,  logos or other
intellectual property or other real or personal property) of Sellers not related
to the  Business and any books and records of Sellers not related to the Assets.
Such  excluded  assets  specifically  include  assets  associated  with Sellers'
operations  conducted under the names "Time for You," "Sun Touch Shirts," "Civil
War Photo Prints," "Precision Movements," "Shoe Charmers" and "Woodworks."


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                         Assumption  of  Certain  Liabilities.  Subject to the
terms and conditions of this Agreement,  Buyers shall assume and perform and pay
those  liabilities  and  obligations  of Sellers (i)  accruing or arising on and
after  February 1, 1997 (A) with respect to the Stores'  utilities  and merchant
association  dues and expenses,  (B) under the Stores' leases and the leases for
the  computerized  point-of-sale  registers  leased from LDI Corporation for the
Business  and (C)  under  service  agreements  relating  to the  Stores  and the
computerized  point-of-sale  registers  leased  from  LDI  Corporation  for  the
Business which are transferred to Buyers,  and (ii) accruing or arising prior to
or on the Closing  Date under any  obligations  of Sellers to  customers  of the
Business under Sellers' Club Program . With the exception of the liabilities and
obligations to be assumed by Buyers  pursuant to the preceding  sentence and the
other  provisions  of this  Agreement,  Buyers  shall not assume and shall in no
event be liable for any other  debts,  liabilities  or  obligations  of Sellers,
whether  fixed or  contingent,  known or unknown,  liquidated  or  unliquidated,
secured or unsecured,  or otherwise and  regardless of when they arose or arise.
The  obligations  of Buyers  pursuant to this Section 3 shall be evidenced by an
assumption agreement setting forth such obligations, in the form attached hereto
as Exhibit "A" (the "Assumption Agreement").  All liabilities and obligations of
Sellers not assumed by Buyers  pursuant to this Section 3 shall  hereinafter  be
referred to as the "Retained Liabilities."

                         Purchase Price.

                         The  consideration  paid or  payable  to  Sellers  by
Buyers in  exchange  for the sale,  transfer,  assignment  and  delivery  of the
Assets,  subject to adjustments  pursuant to Section 5 (the  "Purchase  Price"),
shall consist of the following:

                               The amount of Six Million Dollars  ($6,000,000)
for Sellers' Inventory and supplies of the Business (the "Estimated  Inventory
Value").

                  Plus

                        The amount of Two  Million  Dollars  ($2,000,000)  for
the  assignment  of the  Stores'  leases  and the  Assets  other  than  Sellers'
Inventory  and  supplies  of  the  Business,   of  which  One  Million   Dollars
($1,000,000)  was paid by PPI to Sellers  pursuant to the Letter  Agreement upon
execution thereof.

                         Purchaser  shall  deliver to  Sellers on the  Closing
Date Three Million Five Hundred  Thousand  Dollars  ($3,500,000) of the Purchase
Price, at Sellers' option, by wire transfer to an account  designated by Sellers
or  certified  check drawn to the order of Sellers  jointly;  and the  remaining
Three Million Five Hundred Thousand  Dollars  ($3,500,000) of the Purchase Price
shall be deposited by Buyers on the Closing Date into an interest-bearing escrow
account with CoreStates Bank, N.A. (the "Escrow Agent") pursuant to the terms of
an escrow  agreement,  in the form  attached  hereto as Exhibit "B" (the "Escrow
Agreement").

                         On each Gold  Inventory  Release  Date (as defined in
Section 15(b)),  Sellers and Buyers shall issue joint instructions to the Escrow
Agent to release to Sellers an amount equal to ninety-three percent (93%) of the
estimated  value of the Gold  Inventory  (as  defined  below)  specified  in the
relevant  Weaver's  Grams On Hand With Cost Report (as defined in Section 15(b))
from  the  funds  in the  escrow  account  established  pursuant  to the  Escrow
Agreement (the "Escrow Account").

                         On each Non-Gold  Inventory  Release Date (as defined
in Section  15(b)),  Sellers and Buyers  shall issue joint  instructions  to the
Escrow Agent to release to Sellers an amount equal to ninety-three percent (93%)
of the extended  estimated  cost of the Non-Gold  Inventory  (as defined  below)
specified in the relevant  Non-Gold To Be Produced With Extended Cost Report (as
defined in Section 15(b)) from the funds in the Escrow Account.

                         On the Final  Inventory  Release  Date,  Sellers  and
Buyers shall issue joint  instructions  to the Escrow Agent to release to Buyers
the amount of Twenty Five Thousand Dollars ($25,000) in consideration of Buyers'
giving the credit to certain of the employees of Sellers who are employed at the
Stores (the "Employees") as provided in Section 15(d).

                         Adjustments  to Purchase  Price.  The Purchase  Price
shall be increased or  decreased  on a  dollar-for-dollar  basis for each dollar
that the Adjusted  Inventory  Value (as  hereinafter  defined) as of the Closing
Date exceeds or is less than the Estimated Inventory Value.  "Adjusted Inventory
Value" shall mean Sellers' average cost,  calculated on a "first in - first out"
basis, as of the Closing Date for Sellers' (i) Inventory of

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            the Business and (ii) usable and non-usable supplies of the Business
located at Sellers'  headquarters  location and usable  supplies of the Business
located at the Stores (up to an aggregate cost of $112,000), plus the associated
overhead  costs  equal  to five  percent  (5%) of  Sellers'  cost  for the  Gold
Inventory  and  twenty-two  percent  (22%) of  Sellers'  cost  for the  Non-Gold
inventory.  Sellers shall use their reasonable best efforts to furnish to Buyers
on or before March 31, 1997 the Sellers'  calculation of the Adjusted  Inventory
Value  and  any  required  adjustment  to  the  Purchase  Price,  together  with
reasonable documentation supporting such calculation.  Sellers shall give Buyers
reasonable access to relevant books and records to verify such  calculation.  If
Buyers have no objection to Sellers' calculation of the Adjusted Inventory Value
and if such Adjusted Inventory Value is less than the Estimated Inventory Value,
Sellers and Buyers shall issue joint instructions to the Escrow Agent to release
the difference between the Estimated  Inventory Value and the Adjusted Inventory
Value to Buyers. If the funds in the Escrow Account,  excluding  interest earned
thereon (the "Escrow Funds") exceed such difference,  the joint  instructions to
the Escrow  Agent  shall  direct the Escrow  Agent to release the balance of the
Escrow  Funds to  Sellers,  and if the  Funds  are  insufficient  to cover  such
difference,  Sellers  shall pay the amount of such  deficiency  to Buyers at the
same time.  If the Buyers  have no  objection  to the  calculation  of  Adjusted
Inventory  Value  and if the  Adjusted  Inventory  Value  is  greater  than  the
Estimated Inventory Value,  Sellers and Buyers shall issue joint instructions to
the Escrow  Agent to release the Escrow  Funds to Sellers,  and Buyers shall pay
the difference between the Adjusted Inventory Value and the Estimated  Inventory
Value to  Sellers  at the same  time.  Interest  earned on the  Escrow  Funds in
accordance  with the Escrow  Agreement shall be divided equally among Buyers and
Sellers as set forth in the Escrow Agreement.

            In  the  event  Buyers  dispute  the  calculation  of  the  Adjusted
Inventory Value set forth in Sellers'  calculation,  Buyers shall notify Sellers
in writing of such  dispute and the basis  therefor  within  thirty (30) days of
Buyer's receipt of Sellers' calculation and the parties shall attempt to resolve
such dispute. In the event the parties are unable to resolve such dispute within
thirty (30) days,  they shall reduce to writing those points on which they agree
and those points on which they disagree and shall (i) retain as  arbitrator  the
Philadelphia,  Pennsylvania  office of Arthur  Andersen  LLP or,  failing  their
agreement to act as arbitrator, such other independent accounting firm as may be
mutually  agreed  upon by the  parties  to review  such  matters as to which the
parties have not agreed in writing and (ii) request  such  arbitrator  to act as
promptly as  practicable  in  accordance  with its own rules to resolve all such
disputed  matters  within thirty (30) days after being  retained by the parties.
The  decision  of the  arbitrator  shall  be in  writing  and  shall  be  final,
non-appealable and binding on Sellers and Buyers, and the fees and expenses,  if
any,  of such  arbitrator  shall be paid  one-half  by Sellers  and  one-half by
Buyers.  If the  arbitrator  determines  that the  Adjusted  Inventory  Value is
different  than the Estimated  Inventory  Value,  Sellers and Buyers shall issue
joint  instructions to the Escrow Agent as set forth in the preceding  paragraph
of this Section 5.

                  Allocation  of Assets,  Liabilities  and Purchase  Price.  The
Assets and any assumed  liabilities  shall be allocated  between PPI and EARS as
Buyers  shall  determine,  provided  that PPI shall  guarantee  any  liabilities
assumed by EARS.  The  Purchase  Price  shall be  allocated  among the Assets as
Buyers shall  reasonably  determine.  Such  allocations  shall be binding on the
parties and all income tax or other information returns, including IRS Form 8594
("Asset Acquisition  Statement Under Section 1060"),  shall be filed in a manner
consistent with such allocations.

                         Closing.   The   consummation   and  closing  of  the
transaction provided for herein ("Closing") shall take place on January 29, 1997
(the "Closing Date").

                         Activities and Agreements Prior to Closing

                         Between  the date of this  Agreement  and the Closing
Date, Sellers shall:

                               continue to operate the  Business at the Stores
and use the Assets in the ordinary  and usual course of business and  consistent
with past  practice,  including,  but not  limited  to,  only  making  inventory
purchases in the ordinary course of business;  provided,  however,  that Sellers
shall be  permitted  to remove the  inventory  and  supplies of the Business for
purposes of performing the physical  inventory  referred to in Section 15(b) and
PPI shall  operate the Stores for PPI's account as of the opening of business on
January 27, 1997.

                               comply  with  all  material  provisions  of the
leases for the Stores and applicable laws, rules and regulations.


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                               promptly  notify PPI if Sellers  shall learn of
any event,  matter or condition  which has come to their  attention  which would
constitute  at the  Closing  Date a breach of any  representation,  warranty  or
covenant made by Sellers in this Agreement or in any other  agreement,  document
or instrument  delivered in connection  herewith or which would  otherwise  give
rise to a claim of indemnification by Buyers against Sellers.

                               forward  to PPI a copy of:  (A) any  notice  of
default  received or issued by the  Sellers  under the leases for the Stores and
(B) any written  notice of violation of any law, rule or regulation  received by
Sellers with respect to the Stores or the Assets.

                               notify PPI of any  material  adverse  change to
any of the Stores or Assets.

                               permit PPI and its representatives  full access
to the Stores and Assets and all records relating to them.

                               permit  PPI to  operate  the  Stores  for PPI's
account as of the opening of business on January  27,  1997,  provided  that PPI
shall pay the direct salary and compensation expense of Sellers' Store employees
directly to such employees from 12:01 a.m.,  January 27, 1997 through Closing as
required under Section 8(c).

                            Between  the  date  of  this   Agreement  and  the
Closing Date, Sellers shall not, without the consent of PPI:

                               except for  assigning the leases for the Stores
to PPI, amend, modify, supplement, extend or terminate any of the Stores' leases
or waive any rights thereunder.

                               make any  material  change in  compensation  or
benefits of the employees of the Business.

                               enter into any  contract,  commitment  or other
transaction  affecting  the Assets or Stores  other than in  furtherance  of the
transaction  contemplated  in this Agreement or in the ordinary and usual course
of business and consistent with past practice.

                            PPI shall pay the direct  salary and  compensation
expense of Sellers' Store employees  directly to such employees from 12:01 a.m.,
January 27, 1997 through Closing.

                            Non-Competition  Agreement.  In consideration  for
Ronald Weaver  ("Weaver")  executing a  non-competition  agreement,  in the form
attached  hereto as Exhibit  "C",  prohibiting  Weaver from  competing  with the
Business for a period of five (5) years,  the Buyers will pay Weaver $60,000 per
year for a period of five (5) years.

                            Representations  and  Warranties  of  Sellers.  As
material  inducement  to  Buyers  to  enter  into  this  Agreement  and to close
hereunder,   each  of  Sellers   jointly  and   severally   make  the  following
representations and warranties to Buyers:

                               Corporate   Status;   Authority.   Sellers  are
corporations  duly  organized,  validly  existing and in good standing under the
laws of the  jurisdictions of their respective  incorporations.  Each of Sellers
has the corporate  power and authority to own its properties and to carry on the
Business  as it is now being  conducted.  Each of Sellers has the full power and
authority to execute and deliver this Agreement and any and all other  documents
or  instruments  to be  executed  and/or  delivered  by  Sellers  in  connection
herewith,  including,  but not limited to the assignments of the Stores' leases,
(collectively,   the  "Purchase   Documents")  and  to  perform  its  respective
obligations hereunder and thereunder.

                               Due Authorization;  Validity of Agreement.  The
execution, delivery and performance of this Agreement and the Purchase Documents
by Sellers have been duly  authorized  and approved by all  necessary  corporate
action  on the part of  Sellers.  This  Agreement  has been  duly  executed  and
delivered  by Sellers  and,  assuming  the due  execution  and  delivery of this
Agreement by Buyers,  constitutes  the valid and binding  obligation of Sellers,
enforceable against each of them in accordance with its terms. Assuming due

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                  execution and delivery by Buyers,  the Purchase Documents will
constitute  the valid and binding  obligations of Sellers,  enforceable  against
each of them in accordance with their respective terms.

                               Title to  Assets.  Sellers  have good  title to
all the  Assets,  which at the time of  transfer  will be free and  clear of all
liens, mortgages,  pledges, security interests,  restrictions on transfer, prior
assignments, encumbrances and claims except for the restrictions on transfer and
assignment  contained in the Stores' leases which have not been waived.  None of
the Assets are held by Sellers on consignment.

                               Leases.  All of the  leases  for the Stores are
valid,  binding  and  enforceable  against  Sellers  in  accordance  with  their
respective terms except as such  enforceability  may be limited by the effect of
bankruptcy,  insolvency or similar laws affecting creditors' rights generally or
by general principles of equity.  Sellers and, to Sellers' knowledge,  all other
parties to any of the Stores' leases have performed all obligations  required to
be  performed  to date under such  leases and neither  Sellers  nor, to Sellers'
knowledge,  any such other  party is in  default  or in arrears  under the terms
thereof.  Sellers have  delivered  to Buyers true and correct  copies of all the
Stores' leases.

                               Litigation.  Neither  Seller  is a party to or,
to  Sellers'   knowledge,   threatened  with  any  suit,  action,   arbitration,
administrative  or  other  proceeding  or any  governmental  investigation  with
respect to the  Assets,  the Stores or any  Employees  or which may  prevent the
consummation of the transaction contemplated hereby.

                               Agreement  Not in Breach of Other  Instruments
Affecting   Sellers.   The  execution  and  delivery  of  this  Agreement,   the
consummation of the transactions  provided for herein and the fulfillment of the
terms  hereof by Sellers,  will not result in the breach of any of the terms and
provisions  of, or constitute a default  under,  or conflict  with, or cause any
acceleration  of any  obligation of Sellers under,  any agreement,  indenture or
other instrument to which either Seller is bound, any judgment, decree, order or
award of any court,  governmental body or arbitrator or any applicable law, rule
or regulation.

                               Brokerage    Commissions.     There    is    no
corporation,  firm or person  entitled to receive  from  Sellers  any  brokerage
commission or finder's fee in connection  with this Agreement or the transaction
provided for herein.

                            Representations,  Warranties  and  Agreements  of
Buyers.  As material  inducement to Sellers to enter into this  Agreement and to
close   hereunder,   Buyers   jointly   and   severally   make   the   following
representations, warranties, and agreements to and with Sellers:

                               Corporate  Status;  Authority.  Each Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware,  and has the corporate  power to acquire the Assets to
be acquired  hereunder.  Each Buyer has the full power and  authority to execute
and  deliver  this  Agreement  and  the  Purchase   Documents  and  perform  its
obligations hereunder and thereunder.

                               Due Authorization;  Validity of Agreement.  The
execution, delivery and performance of this Agreement and the Purchase Documents
have been duly authorized and approved by all necessary  corporate action on the
part of Buyers.  This  Agreement  has been duly executed and delivered by Buyers
and,  assuming  the due  execution  and  delivery of this  Agreement by Sellers,
constitutes  the  valid  and  binding  obligation  of  Buyers,   enforceable  in
accordance with its terms.  Assuming due execution and delivery by Sellers,  the
Purchase Documents will constitute the valid and binding  obligations of Buyers,
enforceable against each of them in accordance with their respective terms.

                               Agreement  Not in Breach of Other  Instruments.
The  execution  and  delivery  of  this  Agreement,   the  consummation  of  the
transactions  provided  for herein and the  fulfillment  of the terms  hereof by
Buyers,  will not result in the breach of any of the terms and provisions of, or
constitute a default under,  or conflict with, or cause any  acceleration of any
obligation  of Buyers under,  any  agreement,  indenture or other  instrument to
which either Buyer is bound, any judgment,  decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or regulation.


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                                           Brokerage  Commissions.   There  is
no  corporation,  firm or person  entitled to receive from Buyers any  brokerage
commission or finder's fee in connection  with this Agreement or the transaction
provided for herein.

                            Survival of  Representations  and Warranties.  All
representations  and warranties of the parties  hereto in this  Agreement  shall
survive Closing until July 28, 1997.

                            Closing  Deliveries  by  Sellers.  On the  Closing
Date, Sellers shall deliver or cause to be delivered to Buyers the following:

                               Escrow Agreement.  An Escrow Agreement,  in the
form of Exhibit "B", executed by Sellers.

                               Non-Competition  Agreement.  A  Non-Competition
Agreement in the form of Exhibit "C", executed by Weaver.

                               Bill of Sale  and  General  Assignment.  A Bill
of Sale and General Assignment, in the form of Exhibit "D", executed by Sellers,
transferring  to Buyers good title to all of the personal  property  included in
the Assets.

                               Store  Lease   Assignment.   A  General   Lease
Assignment  for each Store  lease  (except  those  Store  leases  identified  on
Schedule  13),  in the form of Exhibit  "E",  executed by Sellers and a specific
Assignment  with  Lessor  Consent  Agreement  for each Store  lease  received by
Sellers on or before the Closing Date which is executed by the landlord.

                               Computerized   Point-of-Sale   Cash  Register
System  Lease  Assignment  With Lessor  Consent.  A Transfer  Agreement  for the
computerized  point-of-sale  registers  leased  from  LDI  Corporation  for  the
Business, in the form of Exhibit "F", executed by Sellers.

                               Payoff  Letter from  Secured  Lender.  A payoff
letter from any secured lender holding a security  interest in any of the Assets
releasing such security interest and agreeing to execute Uniform Commercial Code
UCC-3 termination  statements and other documents as may be required to evidence
the release of such security interest of record.

                               Certified  Corporate   Resolutions.   Corporate
resolutions  adopted by the boards of  directors  of Sellers and, if required by
law,  by  the   shareholders  of  Sellers,   certified  by  Sellers'   Corporate
Secretaries,  approving this Agreement and authorizing  the  consummation of the
transactions contemplated hereby.

                               Schedule  of Security  Deposits.  A schedule of
all security and  construction  deposits held by any landlords under the Store
leases.

                               Schedule of  Insurance.  A schedule of existing
workers compensation insurance coverages for Employees and of liability policies
covering the Business with  evidence  that Sellers shall  continue to be covered
with respect to personal  liability  for events  occurring  prior to the Closing
Date.

                               Assets.  All of the  Assets  capable  of  being
delivered in physical form shall be delivered to Buyers.

                            Closing  Deliveries  by  Buyers.  On  the  Closing
Date, Buyers shall deliver or cause to be delivered to Sellers the following:

                               Assumption     Agreement.     An     Assumption
Agreement, in the form of Exhibit "A", executed by Buyers.

                               Escrow Agreement.  An Escrow Agreement,  in the
form of Exhibit "B", executed by Buyers.



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                               Non-Competition  Agreement.  A  Non-Competition
Agreement, in the form of Exhibit "C", executed by Buyers.

                               Store  Lease   Assignment.   A  General   Lease
Assignment  for each Store  lease  (except  those  Store  leases  identified  on
Schedule  13),  in the  form of  Exhibit  "E",  executed  by PPI and a  specific
Assignment  with  Lessor  Consent  Agreement  for each Store  lease  received by
Sellers or PPI on or before the Closing Date which is executed by the landlord.

                               Computerized   Point-of-Sale   Cash  Register
System  Lease  Assignment  With Lessor  Consent.  A Transfer  Agreement  for the
computerized  point-of-sale  registers  leased  from  LDI  Corporation  for  the
Business, in the form of Exhibit "F", executed by PPI.

                               Certificates   Confirming  Approval  of  this
Agreement.  Officer's  Certificates  of Buyers,  certifying  that all  necessary
corporate  action  by  Buyers  has been  taken to  approve  this  Agreement  and
authorize the consummation of the transactions contemplated hereby.

                               Purchase  Price.  That  portion of the Purchase
Price payable on the Closing Date.

                            Covenants Extending Beyond Closing.

                               Further  Assurances.  Sellers  agree to execute
and deliver all such other  instruments and take all such other action as Buyers
may reasonably  request from time to time,  before or after the Closing Date and
without payment of further consideration, in order to effectuate the transaction
provided for herein, including,  without limitation,  the execution and delivery
by Sellers of such  further  instruments  of  conveyance  and transfer as may be
necessary to convey and transfer more  completely to the Buyers the Assets being
purchased  hereunder;   and  the  obtaining  and  filing  of  properly  executed
termination  statements  in  each  applicable  jurisdiction  as to any  security
interests that are currently of record.  The parties shall  cooperate fully with
each  other and with  their  respective  counsel  in  connection  with any steps
required  to be  taken  as part  of  their  respective  obligations  under  this
Agreement.

                               Access  to  Inventory  and  Assets.   From  the
Closing  Date until final  delivery  of all  Inventory  and  supplies to Buyers,
Sellers will afford Buyers and their  authorized  representatives  access to the
Inventory  and  supplies  transferred  to  Buyers  and  being  held at  Sellers'
warehouse at Sellers' headquarters location.  Until the final Adjusted Inventory
Value shall have been  determined  and agreed to by Buyers and  Sellers,  Buyers
will afford Sellers and their authorized representatives access to the Inventory
and supplies of the  Business  and the books and records  relating to the Assets
(as such books and records  existed as of the Closing Date),  for the purpose of
performing a physical  inventory and calculating the Adjusted Inventory Value as
set forth in Section  5.  Buyers  shall  permit  Sellers  to retain in  Sellers'
warehouse at Sellers'  headquarters  location the gold and non-gold Inventory of
the Business,  removed from the Stores by Sellers  prior to Closing  pursuant to
Section 8(a)(i),  following  Closing until such Inventory is delivered to Buyers
as provided in this Section 15(b).

                                     Sellers    shall   perform   a   physical
inventory of the gold  Inventory of the Business  (the "Gold  Inventory")  which
may, at Sellers'  option,  be performed  in stages.  At the  conclusion  of such
physical  inventory and any stage  thereof,  Sellers shall provide Buyers with a
written  report  specifying  the following with respect to the Gold Inventory to
which the report pertains:  (A) the quantity count,  (B) the extended  estimated
cost, (C) the SKU/BIN Number or other location description and (D) the vendor of
the Gold Inventory  (each a "Weaver's  Grams On Hand With Cost Report").  Buyers
may, at Buyers' expense,  inspect at Sellers'  warehouse the Gold Inventory with
respect  to which any  Weaver's  Grams On Hand With Cost  Report  pertains,  for
purposes of verifying the quantity count of such Gold  Inventory,  and shall use
their reasonable best efforts to complete such verification within five (5) days
after  Buyers'  receipt  of each such  Report.  On the first day  following  the
completion of Buyers'  verification  of the quantity count of the Gold Inventory
specified  in any  Weaver's  Grams On Hand Cost Report  (each a "Gold  Inventory
Release  Date"),  Sellers  shall  release the Gold  Inventory  specified  in the
relevant Weaver's Grams On Hand With Cost Report to Buyers.

                                     Sellers    shall   perform   a   physical
inventory of the non-gold  Inventory of the Business (the "Non-Gold  Inventory")
which may, at Sellers' option, be performed in stages. At the conclusion of such
physical  inventory and any stage  thereof,  Sellers shall provide Buyers with a
written report

                                       28

<PAGE>


                           specifying   the  following  with  respect  to  the
Non-Gold Inventory to which the report pertains: (A) the quantity count, (B) the
extended  estimated  cost, (C) the SKU/BIN Number or other location  description
and (D) the vendor of the  Non-Gold  Inventory  (each a "Non-Gold To Be Produced
With Extended Cost Report"). Buyers may, at Buyers' expense, inspect at Sellers'
warehouse  the  Non-Gold  Inventory  with  respect to which any  Non-Gold  To Be
Produced  With  Extended  Cost Report  pertains,  for purposes of verifying  the
quantity count of such Non-Gold  Inventory,  and shall use their reasonable best
efforts to complete such  verification  with five (5) days after Buyers' receipt
of each such  Report.  On the first day  following  the  completion  of  Buyers'
verification  of the quantity count of the Non-Gold  Inventory  specified in any
Non-Gold To Be Produced With  Extended  Cost Report (each a "Non-Gold  Inventory
Release Date"),  Sellers shall release the Non-Gold  Inventory  specified in the
relevant Non-Gold To Be Produced With Extended Cost Report to Buyers.

                                     Sellers'    physical    inventory   shall
concentrate on the Gold Inventory  first, and Sellers shall use their reasonable
best  efforts to provide  the first  Weaver's  Grams On Hand With Cost Report to
Buyers on or before  February 7, 1997.  Sellers also shall use their  reasonable
best efforts to complete their physical  inventory of the Gold Inventory and the
Non-Gold  Inventory  (and provide to Buyers a final  Weaver's Grams On Hand With
Cost Report and Non-Gold To Be Produced With Extended Cost Report, respectively)
on or before February 24, 1997.  Buyers shall use their  reasonable best efforts
to  verify  the  quantity  count of the Gold  Inventory  specified  in the first
Weaver's  Grams On Hand With Cost Report by February 10, 1997, and to verify the
quantity count of the Gold Inventory and the Non-Gold Inventory specified in the
final  Weaver's  Grams On Hand With Cost Report and the  Non-Gold To Be Produced
With Extended Cost Report, respectively, on or before March 3, 1997. The date on
which Buyers  complete  their  verification  of all Gold  Inventory and Non-Gold
Inventory shall be referred to in this Agreement as the "Final Inventory Release
Date". If any Weaver's Grams On Hand With Cost Report or Non-Gold To Be Produced
With Extended Cost Report is submitted  during the period from February 10, 1997
until  February  24,  1997,  the period of time  within  which  Buyers  shall be
required to use their  reasonable  best  efforts to verify the  quantity  counts
specified therein shall not begin until February 25, 1997.

                                     Any dispute as to the  quantity  count of
the Gold Inventory or the Non-Gold Inventory  specified in any Weaver's Grams On
Hand  Cost  Report  or  Non-Gold  To Be  Produced  With  Extended  Cost  Report,
respectively, shall be reconciled by Sellers and Buyers.

                                     Sellers  shall  be  responsible  for  all
shipping costs and insurance for the Gold  Inventory and the Non-Gold  Inventory
prior to Closing,  and Buyers shall be  responsible  for all shipping  costs and
insurance for the Gold Inventory and the Non-Gold Inventory following Closing.

                                   WARN   Act   Liability;    Employees.   PPI
intends,  but shall have no  obligation,  to hire most of the  Employees  of the
Business other than those at Sellers'  headquarters  office. PPI shall indemnify
Sellers  for any  WARN  Act  liability  if more  than the  number  of  Employees
(excluding  Employees at Sellers'  headquarters  office) that would trigger such
Act (i) are not offered  employment by PPI or (ii) are offered employment by PPI
and are  terminated by it within sixty (60) days after the Closing Date.  Within
ten (10) days after the Closing Date,  Sellers shall provide  Buyers with a list
of all Employees which identifies their respective employment status (full-time,
part-time,  leave  of  absence,  etc.),  and  their  respective  gross  rate  of
compensation, title, original date of hire and accrued unused vacation time.

                                   Employee  Benefits.  PPI agrees to identify
to Sellers  all  Employees  of the  Business  which it will hire  following  the
Closing  Date.  PPI  agrees  to grant  credit  for time  subsequent  to the last
anniversary date with Sellers for all full-time  Employees hired by Buyers under
Buyers' vacation  policy.  With respect to Employees hired by Buyers who had, on
or  immediately  prior to the  Closing  Date,  been  receiving  health or dental
coverage with respect to themselves,  their spouses and/or  dependents  under an
employee  welfare  benefit plan  maintained by Sellers,  PPI agrees to cover, or
make coverage  available to, such  Employees,  spouses and/or  dependents  under
Buyers' existing health and dental benefit arrangements, under the same terms as
available to Buyers' other employees;  provided,  however, that such individuals
shall  not  be  subjected  to  any  waiting  period  or  preexisting  condition,
limitation or exclusion.  Sellers shall have no responsibilities  for any claims
incurred under or premium payments with respect to such plans or arrangements.

                                   Gift  Certificates.  For a  period  of  one
(1) year  following the Closing Date,  Sellers  shall  reimburse  Buyers for the
amounts  of any gift  certificates  issued by Sellers  conducted  under the name
Gemstone prior to Closing which gift  certificates were issued not more than one
year prior to the date of honor

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<PAGE>


                  and which have been  honored  by Buyers,  within ten (10) days
after Buyers have submitted proof that such gift certificates were issued within
one (1) year prior to the date of honor and have been honored.

                                   Lay-Away   and  Store   Deposits;   Store
Credits.  For a period of ninety (90) days  following the Closing date,  Sellers
shall  reimburse  Buyers for any  verifiable  lay-away  deposits,  special order
deposits  or store  credits  accepted  or issued  prior to Closing by any of the
Stores which are honored by Buyers  during such period,  within ten (10) days of
Sellers' receipt of proof from Buyers that such lay-away deposits, special order
deposits or store credits have been honored by Buyers.

                                   Security   Deposits.   Sellers   shall  use
reasonable  efforts to obtain  reimbursement from the landlords of the Stores of
the security deposits and construction  deposits made pursuant to the leases for
such Stores and listed on the schedule  delivered on the Closing Date;  however,
if  Sellers  are  unable  to  obtain  such   reimbursement,   but  the  landlord
acknowledges  in writing  that Buyers  will  receive  credit for such  deposits,
Buyers shall pay the amount of such security deposits and construction  deposits
to Sellers.

                                   Store   Leases.   PPI  shall   assume   the
obligations  and  liabilities of Sellers under those Store leases  identified on
Schedule 13,  notwithstanding  that the landlord parties to such leases have not
consented  to the  assignment  of such  leases  to PPI as of the  Closing  Date.
Sellers shall pay all amounts owed to landlords  under the Store leases  through
January  31,  1997.  PPI and  Sellers  shall use their  best  efforts  to obtain
landlord consents from the remaining  landlords within sixty (60) days following
the Closing Date.

                                   Corporate   Name   Change.   As   soon   as
practicable following Closing, Gemstone agrees to change its corporate name to a
name that does not include  "Gemstone" or any similar name, and provide evidence
of such name change to Buyers.

                            Indemnification by Sellers and Buyers.

                                   Indemnification  by Sellers.  Sellers shall
defend, indemnify and hold Buyers and their officers, directors and shareholders
harmless from and against any damage, claim,  liability,  loss, expense, cost or
deficiency, including reasonable attorneys' fees and costs ("Damages") resulting
from (i) any breach of any representation or warranty made by Sellers in Section
10, (ii) any claims incurred or benefits accrued on or prior to the Closing Date
with respect to employee  benefits and employee  benefit  plans under ERISA (the
"Benefit  Plans")  maintained,  sponsored  or  contributed  to by  Sellers,  any
premiums or contributions due with respect to the Benefit Plans based on service
on or prior to the Closing Date or the  requirement to provide or make available
to any employee who is  terminated  on or prior to the Closing Date any benefits
under the Benefit Plans,  including COBRA  continuation  coverage required under
Section  4980B of the  Internal  Revenue  Code of 1986 and  (iii)  the  Retained
Liabilities..

                                   Indemnification  by  Buyers.  Buyers  shall
defend,   indemnify  and  hold  Sellers  and  their   officers,   directors  and
shareholders harmless from and against any Damages resulting from (i) any breach
of any  representation  or warranty  made by Buyers in Section 11, (ii) any WARN
Act  liability  if more than the number of  Employees  (excluding  Employees  at
Sellers' headquarters office) that would trigger such Act either are not offered
employment  by PPI or are offered  employment  by PPI and are  terminated by PPI
within sixty (60) days after the Closing  Date,  (iii) the  liabilities  assumed
pursuant to Section 3 and (iv) the operation of the Business, the Assets and the
Stores after Closing (each an "Indemnity Claim").

                                   Notice  to  Indemnifying  Party.   Promptly
after the  assertion of any claim by any  governmental  authority or other third
party ("Third Party Claim") or the  occurrence of any event which may arise to a
claim for  indemnification  under this Section 16, the  indemnified  party shall
give the  indemnifying  party written notice of such event or Third Party Claim,
including copies of any summons, complaint or other pleading which may have been
served on the indemnified party and any written claim, demand, invoice,  billing
or other document evidencing or asserting a Third Party Claim.

                                   Third   Party   Claims.   The   rights   of
indemnification  under this  Section 16 with  respect to any Third  Party  Claim
shall be subject to the following terms and conditions:

                                   The  indemnifying  party,  at its  expense,
shall  have  the sole  and  exclusive  right  to pay,  compromise,  settle  or
otherwise dispose of any Third Party Claim.  Unless the indemnified party

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<PAGE>


                         otherwise agrees,  however,  no such settlement shall
limit, restrict or otherwise adversely affect the right of the indemnified party
to carry on or conduct  its  business  (then or in the  future),  or require any
payment to be made by the indemnified party (except as may be paid or reimbursed
by the  indemnifying  party).  In addition,  no settlement shall be entered into
which  does not  include  the  delivery  by the Third  Party of a full and final
release of the  indemnified  party from all  liability  in respect of such Third
Party Claim.

                                   The  indemnifying  party,  at its  expense,
shall be entitled to participate  in and to the extent it wishes,  to direct the
defense,  including  the  selection of counsel  reasonably  satisfactory  to the
indemnified  party, of any such Third Party Claim.  The indemnified  party shall
cooperate  in all  reasonable  respects  with the  indemnifying  party  and such
counsel in the investigation,  discovery and pre-trial phases,  trial and appeal
of such Third Party  Claim.  The  indemnified  party shall at all times have the
right to  participate  in the defense of any Third Party Claim and to employ its
own counsel,  but the fees and expenses of such counsel shall be the indemnified
party's  own  expense  unless the  employment  of such  counsel  shall have been
authorized by the indemnifying  party in connection with the defense of any such
Third Party  Claim,  or unless and so long as the  indemnifying  party shall not
have  employed  counsel to have  charge of the  defense of any such Third  Party
Claim within a  reasonable  period  after  notice  thereof,  in neither of which
events such fees and expenses shall be borne by the indemnifying party.

                                   Notwithstanding  anything  in this  Section
16(d) to the contrary, if there is a reasonable probability that any Third Party
Claim may materially and adversely affect the indemnified party, other than as a
result of money damages or other money  payments,  the  indemnified  party shall
have the right,  at its own cost and expense,  to defend,  compromise  or settle
such Third  Party  Claim;  provided,  that the  indemnifying  party shall not be
liable for any payment in  settlement of any Third Party Claim without its prior
consent, which shall not be unreasonably withheld.

                                   Limitations  on  Liability.  The  liability
of the parties  hereto under this  Section 16 shall be subject to the  following
limitations:

                                   The   indemnifying   party   shall  not  be
obligated to indemnify the  indemnified  party under this Section 16 for Damages
resulting  from a breach or alleged  breach of a  representation  or warranty in
this Agreement if the  indemnified  party has not given the  indemnifying  party
notice of such Damages prior to the  expiration of the survival  period for such
representation or warranty as stated in Section 12.

                                   The   indemnifying   party   shall  not  be
obligated  to  indemnify  the  indemnified  party under this  Section 16 for any
Damages  resulting  from a breach  or  alleged  breach  of a  representation  or
warranty in this Agreement  unless the aggregate  amount of payments owed by the
indemnifying  party hereunder equals or exceeds Ten Thousand Dollars  ($10,000),
whereupon  only  the  aggregate  payments  in  excess  of Ten  Thousand  Dollars
($10,000) shall be made.

                                   The  aggregate  liability of Sellers  under
this  Section 16 for  breaches of  representations  shall not exceed One Million
Dollars ($1,000,000).

                                   No liability shall be enforced  against the
indemnifying  party to the extent of any insurance proceeds that the indemnified
party receives with respect to any Damages.

                                   Sole  Remedy.  The sole  remedy of  Buyers,
on the one hand,  and  Sellers,  on the other hand,  for any and all claims of a
nature described in Section 16(a) and Section 16(b), respectively,  shall be the
indemnity set forth therein as limited by the provisions set forth  elsewhere in
this Section 16.

                            Miscellaneous.

                                   Indulgences,  Etc.  Neither the failure nor
any delay on the part of any party to exercise  any right  under this  Agreement
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any right  preclude  any other or further  exercise  of the same or of any other
right nor  shall any  waiver of any right  with  respect  to any  occurrence  be
construed  as a waiver of such right with  respect to any other  occurrence.  No
waiver  shall be  effective  unless it is in writing  and is signed by the party
asserted to have granted such waiver.

                                       31

<PAGE>


                                   Controlling  Law.  This  Agreement  and all
questions relating to its validity, interpretation, performance and enforcement,
shall  be  governed  by  and  construed  in  accordance  with  the  laws  of the
Commonwealth of Pennsylvania  (notwithstanding any conflict-of-law  doctrines of
any state to the contrary)  and without the aid of any canon,  custom or rule of
law requiring construction against the draftsman.

                                   Waiver. Any  failure  of  Sellers  or  Buyer
     to comply with any obligation,  covenant,  agreement or condition contained
herein  may be  expressly  waived in  writing  by Buyers in the case of any such
failure by Sellers or by Sellers in the case of any such failure by Buyers,  but
such waiver or failure to insist upon strict  compliance  shall not operate as a
waiver of, or  estoppel  with  respect  to,  any  subsequent  or other  failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto,  such consent shall be given in writing in a manner  consistent with the
requirements for a waiver of compliance as set forth in this Section 17(c).

                                   Notices.  All  notices,  requests,  demands
and other communications  required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received only when
delivered  (personally,  by courier service such as Federal Express, or by other
messenger)  or four (4) business days  following  the day when  deposited in the
United  States mails,  registered or certified  mail,  postage  prepaid,  return
receipt requested, addressed as set forth below:

                           (i)    If to Sellers:

                                  Weaver's Gems and Minerals, Inc.
                                  4251 Chestnut Street, Route 29
                                Emmaus, PA 18049
                                  Attention:  Ronald Weaver, President

                                 With a Copy to:

                                  Ballard Spahr Andrews & Ingersoll
                               1735 Market Street
                                   51st Floor
                           Philadelphia, PA 19103-7599
                       Attention: E. Carolan Berkley, Esq.

                           (ii)   If to PPI:

                                  Piercing Pagoda, Inc.
                                3910 Adler Place
                               Bethlehem, PA 18002
                                  Attention:    Richard   H.   Penske,   Chief
Executive
                                              Officer

                                 With a Copy to:

                                  Wolf, Block, Schorr and Solis-Cohen
                                  Twelfth Floor Packard Building
                                  S.E. Corner 15th and Chestnut Streets
                                  Philadelphia, PA  19102-2678
                                  Attention:  Jason M. Shargel, Esq.

                           (iii)  If to EARS:

                                   EARS, Inc.
                                900 Market Street
                                  Suite 200
                                 Wilmington, DE
                                  Attention:  Richard H. Penske, President


                                       32

<PAGE>


      Any party may alter the address to which  communications  or copies are to
be sent by  giving  notice of such  change of  address  in  conformity  with the
provisions of this paragraph for the giving of notice.

                           Exhibits   and   Schedules.    All   Exhibits   and
Schedules attached hereto are hereby  incorporated by reference into, and made a
part of, this Agreement.

                                   Binding    Nature   of   Agreement.    This
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective heirs, personal  representatives,  successors and permitted
assigns.  Sellers may not assign any of their rights or  obligations  hereunder.
Buyers may assign  any or all of their  rights  hereunder  to any  affiliate  of
Buyers;  provided,  however,  that  Buyers  shall  remain  responsible  for  the
performance of all of their obligations under this Agreement notwithstanding any
such assignment.

                                   Execution in  Counterparts.  This Agreement
may be executed in any number of counterparts,  each of which shall be deemed to
be an original as against any party whose signature appears thereon,  and all of
which shall  together  constitute  one and the same  instrument.  This Agreement
shall become binding when one or more counterparts hereof, individually or taken
together,  shall bear the signatures of all of the parties  reflected  hereon as
the signatories.

                                   Provisions  Separable.  The  provisions  of
this  Agreement  are  independent  of and  separable  from  each  other,  and no
provision shall be affected or rendered  invalid or  unenforceable  by virtue of
the fact that for any  reason  any other or  others  of them may be  invalid  or
unenforceable in whole or in part.

                                   Number of Days.  In  computing  the  number
of days for  purposes of this  Agreement,  all days shall be counted,  including
Saturdays, Sundays and holidays; provided, however, that if the final day of any
time period falls on a Saturday, Sunday or holiday on which federal banks are or
may  elect to be  closed,  then the final day shall be deemed to be the next day
which is not a Saturday, Sunday or such holiday.

                                   Entire     Agreement.     This    Agreement
(including the Exhibits and Schedules hereto) contains the entire  understanding
among the  parties  hereto  with  respect  to the  subject  matter  hereof,  and
supersedes  all  prior  and   contemporaneous   agreements  and  understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained.  The  express  terms  hereof  control  and  supersede  any  course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This  Agreement  may not be modified or amended  other than by an  agreement  in
writing.

                                   Paragraph    Headings.     The    paragraph
headings in this Agreement are for  convenience  only; they form no part of this
Agreement and shall not affect its interpretation.

                                   No   Third   Party   Beneficiaries.    This
Agreement  shall inure to the benefit of the parties to this  Agreement only and
not to the benefit of any third party, including Sellers' employees.

                                   Publicity.    Without    Buyers'    written
consent,  neither  Sellers,  nor any person acting on their behalf shall issue a
press  release or otherwise  publicize  the  execution of this  Agreement or the
consummation of the transaction  contemplated hereby. The parties shall mutually
agree on the form and content of any press release or other public  announcement
regarding the execution of this Agreement or the consummation of the transaction
contemplated hereby.

                                   Expenses.  The  parties  hereto  shall each
pay the expenses incurred by them in connection with the origin, negotiation and
performance of this Agreement and the agreements contemplated hereby;  provided,
however,  that Buyers are responsible for the administrative fees, if any, to be
paid to landlords of the Stores in connection with the assignment of the Stores'
leases.




                            [Signature Page Follows]

                                       33

<PAGE>


            IN WITNESS  WHEREOF,  the parties  have caused this  Agreement to be
executed and delivered as of the date first above written.

                                    PIERCING PAGODA, INC.

                                    By:/s/John F. Eureyecko
                                       John F. Eureyecko, President


                                   EARS, INC.

                                    By:/s/ John F. Eureyecko
                                    John F.Eureyecko,Executive Vice President


                                    WEAVER'S GEMS AND MINERALS, INC.

                                    By:/s/Ronald Weaver
                                       Ronald Weaver, President

                                    GEMSTONE JEWELRY, INC.

                                    By:/s/Ronald Weaver
                                       Ronald Weaver, President



                                       34