FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED LOAN
           AGREEMENT AND TWELFTH REPLACEMENT REVOLVING CREDIT NOTE


      This Fifth  Amendment to Third  Amended and Restated  Loan  Agreement  and
Twelfth Replacement  Revolving Credit Note ("Fifth Amendment") is made this 17th
day of December,  1996 by and between  Piercing  Pagoda,  Inc.  ("Borrower"),  a
Delaware  corporation  having its chief  executive  office at 3910 Adler  Place,
Bethlehem,  Pennsylvania 18017, and Summit Bank,  successor-in-interest to First
Valley Bank ("Bank"), a Pennsylvania bank having offices at One Bethlehem Plaza,
Bethlehem, Pennsylvania 18018.

BACKGROUND

      A. Pursuant to the terms and subject to the  conditions  set forth in that
certain Third Amended and Restated Loan Agreement dated February 13, 1995 by and
between  Borrower  and Bank (under its former  name),  as amended  pursuant to a
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), that certain Third Amendment to Third Amended and Restated Loan Agreement
dated  September 5, 1996  between  Borrower  and Bank,  and that certain  Fourth
Amendment to Third  Amended and Restated Loan  Agreement  dated October 18, 1996
between  Borrower  and Bank (as  amended,  the  "Loan  Agreement")  and  related
instruments,  agreements  and  documents  (collectively,  along  with  the  Loan
Agreement, the "Financing  Agreements"),  Borrower is currently indebted to Bank
for repayment of various  loans,  advances and extensions of credit made by Bank
from time to time to or for the  benefit of Borrower  under a certain  revolving
credit facility in the sum of up to Sixty Million  ($60,000,000.00) Dollars (the
"Revolving  Loan"),  which  indebtedness  is evidenced  by that certain  Twelfth
Replacement  Revolving  Loan Note dated October 18, 1996 in the principal sum of
Sixty  Million  ($60,000,000.00)  Dollars  executed and delivered by Borrower to
Bank (the "Twelfth Replacement Revolving Loan Note").

      B.  Borrower  has  requested  that Bank  extend the  maturity  date of the
Revolving  Loan, and Bank is willing to do so under the terms and subject to the
conditions  set forth in this Amendment and in the  instruments,  agreements and
documents to be executed and/or delivered pursuant to this Amendment.

      NOW,  THEREFORE,   with  the  foregoing   Background  deemed  incorporated
hereinafter by this reference and hereby made a part hereof, the parties hereto,
intending to be legally bound, hereby further covenant and agree as follows:

SECTION 1.  DEFINITIONS.

      1.01  Capitalized  Terms.  All capitalized  terms not otherwise  defined
in this Amendment  shall have the meanings  ascribed to such terms in the Loan
Agreement.

SECTION 2.  CONFIRMATION  OF  EXISTING   INDEBTEDNESS   AND   RATIFICATION  OF
      FINANCING AGREEMENTS.

      2.01    Confirmation   of   Existing    Indebtedness.    Borrower   hereby
unconditionally  acknowledges  and  confirms  that:  the  outstanding  principal
balance of Borrower to Bank evidenced by the Twelfth Replacement  Revolving Loan
Note is, as of the date hereof,  Twenty-Seven  Million  Five Hundred  Forty Nine
Thousand  Eight  Hundred  Seventeen  and 05/100  ($27,549,817.05)  Dollars;  the
aggregate  face amount of Letters of Credit issued by Bank or  CoreStates  Bank,
N.A.,  successor-in-interest  to Meridian Bank for the account of Borrower under
the Revolving Loan is, as of the date hereof, Twenty-Seven Million Three Hundred
Sixty Two  Thousand  Four  Hundred  Four and  43/100  ($27,362,404.43)  Dollars;
interest on the  Obligations  has been paid through  November 30, 1996;  and the
foregoing indebtedness,  together with continually accruing interest and related
costs,  fees and  expenses  is,  as of the date  hereof,  owing  without  claim,
counterclaim,  right of  recoupment,  defense  or  set-off of any kind or of any
nature whatsoever.


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      2.02  Ratification of Financing Agreements.

            (A)  Borrower  hereby  unconditionally  ratifies  and  confirms  and
reaffirms in all respects and without condition, all of the terms, covenants and
conditions  set forth in the  Financing  Agreements,  and agrees that it remains
unconditionally  liable  to  Bank  in  accordance  with  the  respective  terms,
covenants and conditions of such instruments, agreements and documents.

            (B) Without  limiting the  generality of the  immediately  preceding
Subparagraph 2.02(A), the Borrower hereby unconditionally  ratifies and confirms
and  reaffirms in all  respects and without  condition,  the  provisions  of the
Financing Agreements permitting Bank to Confess Judgment against the Borrower.

SECTION 3.  AMENDMENTS TO FINANCING AGREEMENTS.

      3.01  The Revolving Loan.

            (A) The text of Paragraph  1.2.1 of the Loan Agreement is deleted in
its entirety and replaced with the following:

      "Revolving  Loan  Termination  Date" means February 28, 1997,  unless such
      date is extended by Bank and evidenced by a confirming  written  notice to
      Borrower.

      3.02 The Twelfth Replacement  Revolving Loan Note. The Twelfth Replacement
Revolving Loan Note is hereby amended to provide for the indebtedness  evidenced
thereby to be due and payable,  without further notice to Borrower,  on February
28,  1997,  unless such date is extended by Bank and  evidenced  by a confirming
written notice to Borrower.

SECTION 4.  WARRANTIES AND REPRESENTATIONS.

      4.01 Reaffirmation of Warranties and  Representations.  All warranties and
representations  set  forth  in the  Loan  Agreement  and  the  other  Financing
Agreements are hereby  reasserted and restated by Borrower as of the date hereof
as if set forth at length herein,  except as modified by information  previously
provided,  in writing,  to Bank or acknowledged,  in writing,  by Bank. Borrower
hereby acknowledges that such warranties and representations, and the warranties
and  representations set forth below, are being specifically relied upon by Bank
as a material  inducement to Bank to enter into this Fifth  Amendment and extend
the maturity of the Revolving Loan.

      4.02  Additional  Warranties  and  Representations.  To  induce  Bank to
enter into this Fifth  Amendment,  Borrower  represents  and  warrants to Bank
that:

            (A) Borrower has the power, authority and capacity to enter into and
perform  this  Fifth  Amendment  and all  related  instruments,  agreements  and
documents,  and to incur the  Obligations  herein and therein  provided for, and
Borrower has taken all proper and  necessary  corporate  action to authorize the
execution,  delivery  and  performance  of this  Fourth  Amendment  and  related
instruments, agreements and documents;

            (B) This Fifth Amendment is valid,  binding and enforceable  against
Borrower in accordance with its terms; and

            (C)  No   consent,   approval  or   authorization   of,  or  filing,
registration  or  qualification  with,  any Person is required to be obtained by
Borrower in connection  with the execution and delivery of this Fifth  Amendment
or any related instrument,  agreement or document, or undertaking or performance
of any Obligation hereunder or thereunder.

SECTION 5.  CONDITIONS PRECEDENT.

      This Fifth Amendment is subject to the following conditions precedent (all
instruments,  agreements and documents to be in form and substance  satisfactory
to Bank and its counsel):


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      5.01  Documents   Required  for  Closing.   Borrower   shall  have  duly
executed and/or delivered (or caused to be duly executed and/or  delivered) to
Bank the following:

      (A) This Amendment and each other instrument, agreement and document to be
executed and/or  delivered  pursuant to this Amendment  and/or the  instruments,
agreements and documents referred to in this Amendment;

      (B) A  certified  (as of  the  date  of  this  Fifth  Amendment)  copy  of
resolutions of Borrower's Board of Directors authorizing the execution, delivery
and  performance of this Fifth  Amendment and each other document to be executed
and/or delivered pursuant hereto and any other instrument, agreement or document
referred to herein;

      (C) A  certification  that  Borrower's  certificate of  incorporation  and
by-laws remain unchanged from Closing;

      (D) A certificate  (dated the date of this Fifth  Amendment) of Borrower's
corporate secretary as to the incumbency and specimen signatures of the officers
of  Borrower  executing  this  Fifth  Amendment  and each other  document  to be
executed and/or delivered pursuant hereto; and

      (E) Such other instruments, agreements and documents as may be required by
Bank and/or its counsel.

SECTION 6.  MISCELLANEOUS.

      6.01  Integrated   Agreement.   This  Fourth  Amendment  and  all  of  the
instruments,  agreements and documents  executed and/or delivered in conjunction
with this Fourth  Amendment shall be effective upon the date of execution hereof
and thereof by all parties hereto and thereto,  and shall be deemed incorporated
into and made a part of the Loan Agreement and the other  Financing  Agreements.
All such instruments, agreements and documents, and this Fourth Amendment, shall
be construed as integrated and  complementary  of each other,  and as augmenting
and not restricting Bank's rights,  remedies,  benefits and security.  If, after
applying the foregoing,  an inconsistency  still exists,  the provisions of this
Fourth  Amendment  shall  constitute  an amendment  thereto and shall govern and
control.
      6.02  Expenses  of Bank.  Borrower  will pay,  on demand,  all  reasonable
out-of-pocket  expenses,  including  the  reasonable  fees and expenses of legal
counsel for Bank,  incurred in  connection  with this Fourth  Amendment  and all
instruments,  agreements and documents  executed and/or  delivered in connection
with this Fourth  Amendment.  Subject to Paragraph  2.07 of the Loan  Agreement,
Bank may charge any deposit  account of Borrower  maintained  at Bank for all or
any part of any amount due hereunder.

      IN WITNESS  WHEREOF,  the parties hereto have caused this Fourth Amendment
to Third Amended and Restated  Loan  Agreement to be duly executed and exchanged
as of the day and year first above written.

                                    PIERCING PAGODA, INC.,
                                    a Delaware corporation

                                    By:__/s/ John F. Eureyecko__________
                                          Name: John F. Eureyecko
                                          Title:   President

                                    Attest:_ /s/ Brandon R. Lehman_______
                                               Name: Brandon R. Lehman
                                               Title:  Treasurer

                                                       (Corporate Seal)

                                   SUMMIT BANK

                                    By: /s/ Ammon J. Baus_____
                                          Ammon J. Baus,
                                          Vice President


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