Document:

TENDER AND VOTING AGREEMENT

       TENDER  AND  VOTING  AGREEMENT,   dated  as  of  August  11,  2000  (this
"Agreement"),  between  Zale  Corporation,  a Delaware  corporation  ("Parent"),
Jewelry Expansion Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser") and each of the persons listed on Schedule A hereto (each a
"Stockholder" and, collectively, the "Stockholders").

                             W I T N E S S E T H :

       WHEREAS,  the Boards of  Directors  of  Parent,  Purchaser  and  Piercing
Pagoda,  Inc., a Delaware  corporation  (the "Company") deem it advisable and in
the best interests of the respective stockholders of such corporations to effect
the merger of the Purchaser with and into the Company upon the terms and subject
to the  conditions set forth in the Agreement and Plan of Merger dated as of the
date hereof (as the same may be amended or supplemented, the "Merger Agreement")
providing for, among other things,  the making of the Offer by Purchaser for all
of the issued and outstanding shares of common stock, par value $0.01 per share,
of the Company (referred to herein as either the "Shares" or "Common Stock") and
the merger of Purchaser with and into the Company (the "Merger");

       WHEREAS,  each  Stockholder  is the  beneficial  owner of the  Shares and
Options  set  forth  opposite  such  Stockholder's  name on  Schedule  A  hereto
(collectively referred to herein as the "Shares" of such Stockholder); and

       WHEREAS,  as a condition  to their  willingness  to enter into the Merger
Agreement,  Parent and Purchaser have requested that the Stockholders enter into
this Agreement;

       NOW,  THEREFORE,  to induce  Parent and  Purchaser to enter into,  and in
consideration of their entering into, the Merger Agreement, and in consideration
of the foregoing and the representations,  warranties,  covenants and agreements
hereinafter  contained  and  intending  to be  bound  hereby,  the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

       Section 1.  Certain Definitions. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to such terms in the
Merger Agreement.

       Section 2.  Representations  and  Warranties  of the  Stockholders.  Each
Stockholder,  severally and not jointly,  represents  and warrants to Parent and
Purchaser, as of the date hereof, as follows:

       (a) The Shares  (including the Options)  constitute all of the securities
(as  defined  in  Section   3(a)(10)  of  the  Exchange  Act),  of  the  Company
beneficially owned, directly or indirectly, by the Stockholder.

<PAGE>

       (b) Except for the Shares (including the Options),  such Stockholder does
not,  directly or indirectly,  beneficially  own or have any option,  warrant or
other right to acquire any  securities  of the Company  that are or may by their
terms  become  entitled  to vote  or any  securities  that  are  convertible  or
exchangeable  into or exercisable  for any securities of the Company that are or
may by their terms become entitled to vote, nor is such  Stockholder  subject to
any   contract,   commitment,   arrangement,   understanding,   restriction   or
relationship  (whether or not legally  enforceable),  other than this Agreement,
that  provides for such  Stockholder  to vote or acquire any  securities  of the
Company.  Except for the  provisions  of  Section  203 of the  Delaware  General
Corporation Law, such  Stockholder  holds exclusive power to vote and dispose of
the Shares free and clear of any security  interests,  liens,  claims,  pledges,
options, rights of first refusal,  agreement,  charge,  encumbrance or any other
restriction or limitation on such Stockholder's  right to vote or dispose of the
Shares  (including  those  issuable  upon  exercise  of the  Options),  and such
Stockholder  has not  granted  a proxy to any other  Person  to vote the  Shares
(including  those  issuable  upon  exercise  of  the  Options),  subject  to the
limitations  set forth in this  Agreement.  The transfer by such  Stockholder of
such Shares to Purchaser  hereunder shall pass to and vest in Purchaser good and
valid  title  to such  Shares  and  Options,  free  and  clear  of all  security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
charges,   encumbrances,  or  any  other  restrictions  or  limitations  on  the
Stockholder's  right to vote or dispose of the Shares  (including those issuable
upon exercise of the Options) and proxies, charges and other encumbrances of any
nature whatsoever, other than any such encumbrance created by Purchaser.

       (c) Such Stockholder has all necessary power and authority to execute and
deliver this Agreement and to consummate the transactions  contemplated  hereby.
This  Agreement has been duly executed and  delivered by such  Stockholder  and,
assuming due  authorization,  execution and delivery of this Agreement by Parent
and Purchaser,  is a valid and binding obligation of the Stockholder enforceable
against such Stockholder in accordance with its terms.

       (d)  None  of the  execution  and  delivery  of  this  Agreement  by such
Stockholder,   the   consummation  by  such   Stockholder  of  the  transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof  shall (i)  result in  violation  or breach  of, or  constitute  (with or
without  notice or lapse of time or both) a  default  (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms,  conditions or provisions of any note,  loan  agreement,
bond  mortgage,  indenture,   license,  contract,   commitment,  lease,  permit,
franchise,  arrangement,   understanding,   agreement  or  other  instrument  or
obligation  of any kind to which  such  Stockholder  is a party or by which such
Stockholder  or any of his  properties  or  assets  (including  the  Shares  and
Options) may be bound,  or (ii)  violate any order,  writ,  injunction,  decree,
judgment, law, statute, rule or regulation applicable to such Stockholder or any
of his  properties  or assets,  excluding  from the foregoing  such  violations,
breaches or defaults which would not,  individually or in the aggregate,  have a
material adverse effect on such Stockholder or which would materially impair the
ability of such Stockholder to consummate the transactions contemplated hereby.

<PAGE>

       (e) Except for any approvals  required in connection  with Section 203 of
the  Delaware  General  Corporation  Law,  the  execution  and  delivery of this
Agreement by such Stockholder does not, and the performance of this Agreement by
such  Stockholder  shall not,  require any consent,  approval,  authorization or
permit of, or filing with or  notification  to, any court or  arbitrator  or any
governmental  body,  agency or official except for applicable  requirements,  if
any, of the Exchange Act, and except where the failure to obtain such  consents,
approvals,  authorizations or permits, or to make such filings or notifications,
would  not  prevent  or  delay  the  performance  by  such  Stockholder  of  his
obligations under this Agreement.

       (f) Except for ING Barings LLC, no investment banker,  broker,  finder or
other  intermediary  is,  or  will  be,  entitled  to a fee or  commission  from
Purchaser,  Parent or the  Company  in respect  of this  Agreement  based on any
arrangement or agreement made by or on behalf of such  Stockholder in his or her
capacity as a stockholder of the Company.

       (g) Such Stockholder understands and acknowledges that Parent is entering
into, and causing Purchaser to enter into, the Merger Agreement in reliance upon
such Stockholder's execution and delivery of this Agreement.

       Section 3.  Transfer  of the Shares.  During the term of this  Agreement,
except as otherwise expressly provided herein, each Stockholder agrees that such
Stockholder  will not (a) tender into any tender or exchange  offer or otherwise
sell, offer for sale, transfer, pledge, assign, hypothecate or otherwise dispose
of, or encumber with any security interest,  lien, claim, pledge,  option, right
of first  refusal,  agreement,  charge or other  encumbrance  or  restriction or
limitation on such  Stockholder's  right to vote or dispose of, whether directly
or  indirectly,  any of the Shares,  (b)  acquire any shares of Common  Stock or
other securities of the Company (otherwise than in connection with a transaction
of the type  described  in  Section 4 or by  exercising  any of the  Options  or
otherwise  pursuant  to Company  Benefit  Plans),  (c) deposit the Shares into a
voting trust,  enter into a voting  agreement or arrangement with respect to the
Shares or grant any proxy or power of attorney  with respect to the Shares,  (d)
enter into any contract, commitment, arrangement,  understanding or relationship
(including  any  profit  sharing  arrangement)  with  respect  to the  direct or
indirect  acquisition  or sale,  transfer,  pledge,  assignment,  hypothecation,
disposition or encumbrance  with any security  interest,  lien,  claim,  pledge,
option,  right of first  refusal,  agreement,  charge  or other  encumbrance  or
restriction or limitation, or other disposition of any interest in or the voting
of any Shares or any other  securities  of the Company,  (e) exercise any rights
(including,  without  limitation,  under  Section  262 of the  Delaware  General
Corporation  Law) to demand appraisal of any Shares which may arise with respect
to the  Merger,  or (f) take any other  action  that would in any way  restrict,
limit  or  interfere  with the  performance  of such  Stockholder's  obligations
hereunder  or the  transactions  contemplated  hereby or which  would  otherwise
diminish the benefits of this Agreement to Parent or Purchaser.

       Section 4.  Adjustments; Stop Transfer.

       (a)   In  the   event   (i)  of  any   stock   dividend,   stock   split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of

<PAGE>

the Company on, of or affecting  the Shares or the like or any other action that
would have the effect of changing a  Stockholder's  ownership  of the  Company's
capital stock or other  securities or (ii) a Stockholder  becomes the beneficial
owner of any additional  Shares of or other securities of the Company,  then the
terms of this  Agreement  will apply to the shares of capital stock held by such
Stockholder  immediately  following the effectiveness of the events described in
clause  (i) or such  Stockholder  becoming  the  beneficial  owner  thereof,  as
described in clause (ii), as though they were Shares hereunder.

       (b) Each Stockholder hereby agrees, while this Agreement is in effect, to
promptly notify Parent and Purchaser of the number of any new Shares acquired by
such Stockholder, if any, after the date hereof.

       (c) Each Stockholder  agrees with, and covenants to, Parent and Purchaser
that such  Stockholder  shall not request that the Company register the transfer
(book-entry  or  otherwise)  of  any  certificate  or  uncertificated   interest
representing any of the Shares,  unless such transfer is made in compliance with
this Agreement.

       Section 5. Tender of Shares.  Each  Stockholder  hereby  agrees that such
Stockholder  will  validly  tender (or cause the record  owner of such shares to
validly  tender) and sell (and not withdraw)  pursuant to and in accordance with
the terms of the Offer not later than the tenth business day after  commencement
of the Offer (or if the Stockholder  acquires Shares after the date hereof,  the
earlier of the  expiration  date of the Offer and the tenth  business  day after
such Shares are acquired by such  Stockholder),  or, if the  Stockholder has not
received the Offer  Documents by such time,  within five business days following
receipt of such documents,  all of the then  outstanding  shares of Common Stock
beneficially  owned by such  Stockholder  (including  the shares of Common Stock
outstanding  as of the date hereof and shares  issued upon  exercise (if any) of
the  Options,  in each  case as set forth on  Schedule  A hereto  opposite  such
Stockholder's name). Upon the purchase by Parent of all of such then outstanding
shares of Common Stock  beneficially  owned by such Stockholder  pursuant to the
Offer in accordance  with this Section 5, this  Agreement  will  terminate as it
relates to such Stockholder. In the event, notwithstanding the provisions of the
first sentence of this Section 5, any Shares beneficially owned by a Stockholder
are for any reason withdrawn from the Offer or are not purchased pursuant to the
Offer,  such  Shares will remain  subject to the terms of this  Agreement.  Each
Stockholder  acknowledges that Parent's obligation to accept for payment and pay
for the shares of Common Stock tendered in the Offer is subject to all the terms
and conditions of the Offer.

       Parent and Purchaser hereby agree that, without the prior written consent
of the Company, they shall not (i) decrease the Transaction Consideration,  (ii)
decrease  the number of Shares to be  purchased  in the Offer,  (iii) change the
form of consideration  payable in the Offer or the Merger, (iv) add to or change
the  conditions to the Offer set forth in Annex A to the Merger  Agreement,  (v)
waive  the  Minimum  Condition  or (vi)  make any  other  change in the terms or
conditions of the Offer in any manner materially adverse to the Stockholders.

       Section 6.  Voting Agreement.  Each Stockholder, by this Agreement,
does hereby (a) agree to appear (or not appear, if requested by Parent or
Purchaser) at any annual, special, postponed or adjourned meeting of the
stockholders of the Company or

<PAGE>

otherwise cause the Shares such Stockholder beneficially owns on the record date
of any such meeting to be counted as present (or absent,  if requested by Parent
or  Purchaser)  thereat  for  purposes of  establishing  a quorum and to vote or
consent,  and (b) constitute  and appoint  Parent and Purchaser,  or any nominee
thereof,  with  full  power  of  substitution,  during  and for the term of this
Agreement, as his true and lawful attorney and proxy for and in his or her name,
place and stead, to vote all the Shares such  Stockholder  beneficially  owns at
the time of the record date for such vote, at any annual, special,  postponed or
adjourned  meeting of the stockholders of the Company (and this appointment will
include  the  right to sign his or her name  (as  stockholder)  to any  consent,
certificate or other document  relating to the Company that laws of the State of
Delaware may require or permit),  in the case of both (a) and (b) above,  (x) in
favor of approval and adoption of the Merger Agreement and approval and adoption
of the Merger and the other transactions  contemplated  thereby, (y) against any
action, transaction or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement, and (z) except as otherwise agreed to in
writing in advance by Purchaser,  against the following  actions (other than the
Merger  and the  transactions  contemplated  by the Merger  Agreement):  (A) any
extraordinary  corporate transaction,  such as a merger,  consolidation or other
business  combination  involving the Company or any of its  subsidiaries;  (B) a
sale,  lease or transfer of a material amount of assets of the Company or any of
its  subsidiaries,  or  a  reorganization,   recapitalization,   dissolution  or
liquidation of the Company or any of its  subsidiaries;  (C) (1) any change in a
majority of the Persons who  constitute  the board of  directors of the Company;
(2) any change in the present  capitalization of the Company or any amendment of
the Company's  Restated  Certificate of Incorporation or By-Laws;  (3) any other
material  change in the Company's  corporate  structure or business;  or (4) any
other action involving the Company or any of its subsidiaries which is intended,
or could reasonably be expected, to impede,  interfere with, delay, postpone, or
materially  adversely affect the Merger or any of the transactions  contemplated
by this Agreement or the Merger Agreement. This proxy and power of attorney is a
proxy and power coupled with an interest,  and each Stockholder declares that it
is  irrevocable  until this  Agreement  shall  terminate in accordance  with its
terms. Each Stockholder hereby revokes all and any other proxies with respect to
the Shares that such Stockholder may have heretofore made or granted. For Shares
as to which a  Stockholder  is the  beneficial  but not the record  owner,  such
Stockholder  shall use his or its commercially  reasonable  efforts to cause any
record  owner of such  Shares to grant to  Parent a proxy to the same  effect as
that  contained  herein.  Each  Stockholder  hereby  agrees to permit Parent and
Purchaser  to  publish  and  disclose  in the  Offer  Documents  and  the  Proxy
Statement,  any related  filings under the securities laws and any press release
or   announcement   issued  in  accordance   with  the  Merger   Agreement  such
Stockholder's identity,  intent in and ownership of Shares and the nature of his
or her commitments, arrangements and understandings under this Agreement.

       Section 7.  Termination.  This  Agreement  will terminate on the first to
occur  of:  (a) as to any  Stockholder  upon  the  purchase  of all  the  Shares
beneficially owned by such Stockholder  pursuant to the Offer in accordance with
Section 5, or (b) on the earlier to occur of (i) the Effective  Time or (ii) the
date the Merger Agreement is terminated in accordance with its terms.

<PAGE>

       Section 8. Fees and  Expenses.  Except as  otherwise  expressly  provided
herein or in the Merger Agreement, whether or not the Merger is consummated, all
costs  and  expenses   incurred  in  connection  with  this  Agreement  and  the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.

       Section 9. Further Assurances. Each party hereto will execute and deliver
all such further  documents and  instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.

       Section 10. Publicity. A Stockholder shall not issue any press release or
otherwise  make any public  statements  with  respect to this  Agreement  or the
Merger  Agreement  or the other  transactions  contemplated  hereby  or  thereby
without  the  consent  of Parent and  Purchaser,  except as may be  required  by
applicable law or applicable stock exchange rules.

       Section 11.  Stockholder  Capacity.  No person  executing  this Agreement
makes any agreement or understanding herein in such Stockholder's  capacity as a
director  or  officer of the  Company or any  subsidiary  of the  Company.  Each
Stockholder signs solely in such Stockholder's  capacity as the beneficial owner
of such  Stockholder's  Shares  and  nothing  herein  shall  limit or affect any
actions taken by a Stockholder in such  Stockholder's  capacity as an officer or
director  of  the  Company  or  any  subsidiary  of the  Company  to the  extent
specifically permitted by the Merger Agreement.

       Section 12. Enforcement. The parties hereto agree that irreparable damage
may occur in the event that any of the  provisions  of this  Agreement  were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and provisions hereof in any Delaware Court, this being in addition to
any other  remedy to which they are  entitled at law or in equity for damages or
otherwise.

       Section 13.  Miscellaneous.

       (a) All representations and warranties  contained herein will survive for
twelve months after the  termination  hereof.  The covenants and agreements made
herein will survive in accordance with their respective terms.

       (b) Any  provision  of this  Agreement  may be  waived at any time by the
party that is entitled to the benefits  thereof.  No such  waiver,  amendment or
supplement  will be  effective  unless  in  writing  and  signed by the party or
parties sought to be bound  thereby.  Any waiver by any party of a breach of any
provision of this  Agreement  will not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this  Agreement.  The failure of a party to insist upon strict  adherence to any
term of this  Agreement or one or more sections  hereof will not be considered a
waiver or  deprive  that party of the right  thereafter  to insist  upon  strict
adherence to that term or any other term of this Agreement.

<PAGE>

       (c) This Agreement  constitutes  the entire  agreement  among the parties
hereto with  respect to the subject  matter  hereof,  and  supersedes  all prior
agreements  among the parties with respect to such matters.  This  Agreement may
not be amended, changed, supplemented, waived or otherwise modified, except upon
the delivery of a written agreement executed by the parties hereto.

       (d) This Agreement  shall be governed by and construed in accordance with
the laws of the State of  Delaware  without  regard to its rules of  conflict of
laws.  Each of the  Stockholders,  Parent and Purchaser  hereby  irrevocably and
unconditionally  consents to submit to the exclusive  jurisdiction of the United
States  District  Court for the State of  Delaware  or any court of the State of
Delaware (the "Delaware  Courts") for any litigation  arising out of or relating
to this Agreement and the  transactions  contemplated  hereby (and agrees not to
commence any  litigation  relating  thereto  except in such courts),  waives any
objection to the laying of venue of any such  litigation in the Delaware  Courts
and agrees  not to plead or claim in any  Delaware  Court  that such  litigation
brought  therein  has been  brought  in an  inconvenient  forum.  Parent  hereby
appoints  The  Corporation  Trust  Company as agent for service of process.  The
address of such agent for service of process is Corporation  Trust Center,  1209
Orange Street, Wilmington, Delaware 19801.

       (e) The  descriptive  headings  contained  herein are for convenience and
reference only and will not affect in any way the meaning or  interpretation  of
this Agreement. In this Agreement,  unless the context otherwise requires, words
describing  the  singular  number shall  include the plural and vice versa,  and
words denoting any gender shall include all genders and words  denoting  natural
persons shall include corporations and partnerships and vice versa. Whenever the
words  "include,"  "includes" or "including"  are used in this  Agreement,  they
shall be understood to be followed by the words "without limitation."

       (f) All notices and other communications hereunder will be in writing and
will be given  (and will be deemed to have been  duly  given  upon  receipt)  by
delivery in person,  by telecopy,  or by registered or certified  mail,  postage
prepaid, return receipt requested, addressed as follows:

              If to Parent or Purchaser to:

              Zale Corporation
              961 West Walnut Hill Lane
              Irving, Texas  75038-1003
              Attention:  Alan Shor
              Fax:  (972) 580-5336

<PAGE>

              with a copy to:

              Zale Corporation
              901 West Walnut Hill Lane
              Irving, Texas  75038-1003
              Attention:  Susan Lanigan
              Fax:  (972) 580-5336

              and a copy to:

              Troutman Sanders LLP
              600 Peachtree Street, NE
              Suite 5200
              Atlanta, Georgia  30308-2216
              Attention:  W. Brinkley Dickerson, Jr.
              Fax:  (404) 962-6743

       If to a Stockholder,  at the address set forth on Schedule A hereto or to
such  other  address  as any party may have  furnished  to the other  parties in
writing in accordance herewith.

       (g) This  Agreement  may be executed  by the  parties  hereto in separate
counterparts,  each of  which,  when so  executed  and  delivered,  shall  be an
original.  All such  counterparts  shall  together  constitute  one and the same
instrument.  Each  counterpart  may consist of a number of copies  hereof,  each
signed by less than all, but together signed by all, of the parties hereto.

       (h) This  Agreement  is binding upon and is solely for the benefit of the
parties  hereto  and their  respective  successors,  legal  representatives  and
assigns.  Neither this Agreement nor any of the rights, interests or obligations
under this  Agreement  will be assigned by any of the parties hereto without the
prior  written  consent of the other  parties,  except that Parent and Purchaser
will have the right to assign to any direct or indirect wholly owned  subsidiary
of Parent or Purchaser  any and all rights and  obligations  of Parent or Parent
under this Agreement,  provided that any such assignment will not relieve either
Parent or Purchaser from any of its obligations hereunder.

       (i)  Any  term  or  provision  of  this  Agreement  that  is  invalid  or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or  unenforceability  without rendering invalid
or  unenforceable  the  remaining  terms and  provisions  of this  Agreement  or
affecting  the validity or  enforceability  of any of the terms or provisions of
this Agreement in any other jurisdiction.  If any provision of this Agreement is
so broad as to be  unenforceable,  the provision shall be interpreted to be only
so broad as is enforceable.

       (j) All rights,  powers and  remedies  provided  under this  Agreement or
otherwise available in respect hereof at law or in equity will be cumulative and
not  alternative,  and the  exercise  of any  thereof  by either  party will not
preclude the  simultaneous  or later exercise of any other such right,  power or
remedy by such party.

<PAGE>

       IN WITNESS  WHEREOF,  each of the Parent and  Purchaser  has caused  this
Agreement to be signed by its officer or director  thereunto duly authorized and
each  Stockholder  has signed this  Agreement,  all as of the date first written
above.

                     ZALE CORPORATION

                     By:  /s/ Beryl  Raff
                     Name: Beryl Raff
                     Title:  President and Chief Executive Officer

                     JEWELRY EXPANSION CORP.

                     By:  /s/ Alan P. Shor
                     Name:  Alan P. Shor
                     Title:  President

                   [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Richard H. Penske
Richard H. Penske

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

PATRICK CAPITAL, FLP

/s/ Richard H. Penske
By:  Richard H. Penske

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ John F. Eureyecko
John F. Eureyecko

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Barry R. Clauser
Barry R. Clauser

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Sharon J. Zondag
Sharon J. Zondag

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Gilbert P. Hollander
Gilbert P. Hollander

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Brandon R. Lehman
Brandon R. Lehman

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

Susan S. Iseminger

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Alan R. Hoefer
Alan R. Hoefer

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

/s/ Mark A. Randol
Mark A. Randol

                       [Signatures continued on following page]

<PAGE>

STOCKHOLDERS:

GRAT 0119 FBO RICHARD H. PENSKE

GRAT 1221 FBO RICHARD H. PENSKE

GRAT 1223 FBO RICHARD H. PENSKE

GRAT 1225 FBO PATRICIA L. PENSKE

GRAT 1227 FBO PATRICIA L. PENSKE

TRUSTS FBO VICTORIA L. PENSKE

TRUSTS FBO CRISLYN A. PENSKE

TRUSTS FBO LISA P. PENSKE

TRUSTS FBO R. STEPHEN PENSKE

/s/ Crislyn A. Penske
By:  Crislyn A. Penske

/s/ Victoria Penske Aitchison
By:  Victoria Penske Aitchison

<PAGE>

  SCHEDULE A

Stockholder                         Number of Shares    Number of
                                                         Options

Richard H. Penske                       214,389           42,500
3910 Adler Place
Bethlehem, PA
18017

GRAT 0119 FBO                           42,462             -
RICHARD H. PENSKE
3910 Adler Place
Bethlehem, PA
18017

GRAT 1221 FBO                           218,938             -
RICHARD H. PENSKE
3910 Adler Place
Bethlehem, PA
18017

GRAT 1223 FBO                           244,453             -
RICHARD H. PENSKE
3910 Adler Place
Bethlehem, PA
18017

GRAT 1225 FBO                           260,032             -
PATRICIA L. PENSKE
3910 Adler Place
Bethlehem, PA
18017

GRAT 1227 FBO                           267,154             -
PATRICIA L. PENSKE
3910 Adler Place
Bethlehem, PA
18017

Patrick Capital,                      2,000,000             -
FLP
3910 Adler Place
Bethlehem, PA
18017

<PAGE>
                                   Number of Shares    Number of
                                                        Options

Stockholder

Trusts FBO                               51,288             -
Victoria L. Penske
3910 Adler Place
Bethlehem, PA
18017

Trusts FBO                               51,288             -
Crislyn A. Penske
3910 Adler Place
Bethlehem, PA
18017

Trusts FBO Lisa                          51,288             -
P. Penske
3910 Adler Place
Bethlehem, PA
18017

Trusts FBO R.                            51,288             -
Stephen Penske
3910 Adler Place
Bethlehem, PA
18017

John F. Eureyecko                        50,261             -
2723 Bridle Path
Plc.
Bethlehem, PA
18017

<PAGE>

                                     Number of Shares   Number of
                                                          Options

Stockholder

Barry R. Clauser                         64,434           67,997
3910 Adler Place
Bethlehem, PA
18017

Sharon J. Zondag                         30,578           67,997
3910 Adler Place
Bethlehem, PA
18017

Gilbert P.                                7,276           11,300
Hollander
3910 Adler Place
Bethlehem, PA
18017

Brandon R. Lehman                        18,425           18,800
3910 Adler Place
Bethlehem, PA
18017

Susan S. Iseminger                        2,109           18,800
3910 Adler Place
Bethlehem, PA
18017

Alan R. Hoefer                           71,834           18,000
3910 Adler Place
Bethlehem, PA
18017

Mark A. Randol                           28,236           15,000
3910 Adler Place
Bethlehem, PA
18017RESTRICTIVE COVENANT AGREEMENT

      THIS RESTRICTIVE  COVENANT AGREEMENT (the "Agreement") is made and entered
into this 11th day of August,  2000, by and among Zale  Corporation,  a Delaware
corporation  ("Parent"),  Piercing  Pagoda,  Inc., a Delaware  corporation  (the
"Company"), and Richard H. Penske, a Pennsylvania resident ("Shareholder").

                                   BACKGROUND:

      A.   Shareholder is the Chief Executive Officer and Chairman, and the
largest shareholder of, the Company.

      B.  Contemporaneously  with the  execution  of this  Agreement,  Parent is
agreeing to acquire the Company pursuant to the terms of that certain  Agreement
and Plan of Merger of even date herewith (the "Merger  Agreement")  by and among
Parent, Jewelry Expansion Corp. and the Company.

      C.   As a material inducement for Parent to enter into the Merger
Agreement, Shareholder has agreed to enter into this Agreement.

      NOW,  THEREFORE,  FOR AND IN  CONSIDERATION  of the  premises,  the mutual
promises,  covenants and agreements  contained  herein,  Ten Dollars ($10.00) in
hand  paid,  and  other  good  and  valuable  consideration,   the  receipt  and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

      1.   Definitions.  For purposes of this Agreement, the following terms
shall have the following respective meanings:

           (a)  "Competing  Business"  shall mean any business that engages,  in
      whole or in part, in the wholesale or retail sale of jewelry.

           (b) "Competitive  Position" shall mean: (i)  Shareholder's  direct or
      indirect equity  ownership  (excluding  ownership of less than one percent
      (1%) of the outstanding  common stock of any publicly held corporation) or
      control of any portion of any Competing Business; (ii) Shareholder serving
      as a director,  officer,  consultant,  lender,  joint  venturer,  partner,
      agent, advisor or independent  contractor of or to any Competing Business;
      or (iii) any employment  arrangement  with any Competing  Business whereby
      Shareholder  is required to perform  services for the  Competing  Business
      substantially similar to those that Shareholder performed for the Company.

           (c) "Confidential  Information" shall mean all valuable,  proprietary
      and confidential business information belonging to or pertaining to Parent
      or the Company that does not constitute a "Trade  Secret" (as  hereinafter
      defined)  and  that  is  not  generally  known  by  or  available  to  the
      competitors  of Parent or the Company but is  generally  known only to the
      employees,  independent  contractors,  clients  or agents of Parent or the
      Company to whom such  information  must be confided for internal  business
      purposes.

           (d)  "Restricted Territory" shall mean all of North America.

           (e) "Trade  Secrets" shall mean the "trade  secrets" of Parent or the
      Company as defined under applicable law.

      2.  Confidentiality.  Shareholder hereby  acknowledges and agrees that the
Trade Secrets and Confidential Information represent a substantial investment of
Parent and the Company and that any unauthorized disclosure or use of any of the
Trade  Secrets  or  Confidential  Information  or  any  other  violation  of the
confidentiality  provisions  of this Section 2 would be wrongful and could cause
immediate  and  irreparable  injury  to  Parent  and the  Company.  Accordingly,
Shareholder hereby agrees that he will not, without the prior written consent of
Parent in each instance,  distribute, sell, market, publish, disclose, transfer,
assign,  disseminate or otherwise  communicate to any other person or entity, or
use, copy or

<PAGE>

appropriate  for or on behalf of himself of any other person or entity:  (a) any
Confidential  Information  for a period of five (5)  years  from the date of the
purchase of shares in the tender  offer  pursuant to the Merger  Agreement  (the
"Effective  Date");  or (b) any  Trade  Secret  at any time  during  which  such
information  constitutes a trade secret under applicable law. Shareholder agrees
that he will adhere to all reasonable  confidentiality  requirements that Parent
may establish from time to time and promptly  notify Parent of any  unauthorized
disclosure  or use of any  Trade  Secret  or  Confidential  Information  by him.
Shareholder  also agrees to assist Parent and the Company,  at Parent's  expense
and to the extent necessary, in the procurement or any protection of Parent's or
the Company's rights in or to any Trade Secrets or Confidential Information.

      3.  Noncompetition.  Shareholder  hereby agrees that,  during the five (5)
year period  commencing  on the Effective  Date, he will not,  without the prior
written consent of Parent in each instance, either directly or indirectly, alone
or in conjunction  with any other person or entity,  accept,  enter into or take
any action in furtherance of a Competitive Position in the Restricted Territory.
Notwithstanding  the foregoing,  the parties hereto agree that  Shareholder may,
after a period of three years from the date hereof,  open one (1) retail jewelry
store.

      4. Nonsolicitation of Customers,  Suppliers and Distributors.  Shareholder
agrees  that,  during the five (5) year period  commencing  as of the  Effective
Date, he will not, without the prior written consent of Parent in each instance,
either directly or indirectly,  alone or in conjunction with any other person or
entity, for or on behalf of any Competing Business solicit, entice or induce any
customer,  supplier  or  distributor  of the  Company  (or any  actively  sought
prospective customer,  supplier or distributor of the Company) with whom or with
which Shareholder had direct contact prior to the date hereof.

      5. Nonsolicitation of Personnel.  Shareholder agrees that, during the five
(5) year period  commencing  as of the Effective  Date he will not,  without the
prior written consent of Parent in each instance, either directly or indirectly,
alone or in conjunction  with any other person or entity,  solicit or attempt to
solicit  any  "key  or  material"  employee,  consultant,  contractor  or  other
personnel  of Parent or the Company to  terminate,  alter or lessen that party's
affiliation  with  such  entity or to  violate  the  terms of any  agreement  or
understanding between such employee, consultant,  contractor or other person and
such  entity.  For  purposes  of this  Section 5, "key or  material"  employees,
consultants,  contractors  or other  personnel  shall mean those such persons or
entities  who  have  direct  access  to or  have  had  substantial  exposure  to
Confidential Information or Trade Secrets.

      6.  Acknowledgments.  Shareholder hereby  acknowledges and agrees that the
covenants  contained  in  Sections  2,  3,  4  and  5  hereof  (the  "Protective
Covenants")  are made by him (and shall be treated) as "ancillary to the sale of
the  Company's  business"  to Parent  under the  Merger  Agreement.  Shareholder
further  acknowledges and agrees that the Protective Covenants are reasonable as
to time, scope and territory given the need of Parent and the Company to protect
the Trade  Secrets  and  Confidential  Information  and  given  the  substantial
benefits  which  Shareholder  shall  receive  as a  result  of the  transactions
contemplated by the Merger Agreement.  In the event any covenant or agreement in
this Agreement shall be determined by any court of competent  jurisdiction to be
unenforceable  by reason of its extending for too great a period of time or over
too great a  geographical  area or by reason of its being too  extensive  in any
other respect, it shall be interpreted to extend only over the maximum period of
time for which it may be enforceable  and/or over the maximum  geographical area
as to which it may be  enforceable  and/or  to the  maximum  extent in all other
respects as to which it may be  enforceable,  all as determined by such court in
such action.

      7. Specific  Performance.  Shareholder hereby acknowledges and agrees that
any breach of a Protective  Covenant by him or it will cause irreparable  damage
to Parent  and the  Company,  the exact  amount of which  will be  difficult  to
ascertain,  and that the remedies at law for any such breach will be inadequate.
Accordingly,  Shareholder  agrees that, in addition to any other remedy that may
be available at law, in equity,  or  hereunder,  Parent and the Company shall be
entitled to specific performance and injunctive relief,  without posting bond or
other  security to enforce or prevent  any  violation  of any of the  Protective
Covenants by him.

<PAGE>

      8.   Miscellaneous.

           (a) This Agreement, together with the Merger Agreement and the Tender
      and Voting  Agreement,  contains the entire  agreement  and  understanding
      concerning  the subject  matter  hereof  between the  parties  hereto.  No
      waiver, termination or discharge of this Agreement, or any of the terms or
      provisions  hereof,  shall be binding  upon  either  party  hereto  unless
      confirmed  in  writing.  This  Agreement  may not be  modified or amended,
      except by a writing  executed by both parties hereto.  No waiver by either
      party hereto of any term or provision of this  Agreement or of any default
      hereunder shall affect such party's rights thereafter to enforce such term
      or  provision or to exercise any right or remedy in the event of any other
      default,  whether or not similar.  This  Agreement  shall  terminate  upon
      termination of the Merger Agreement

           (b) This  Agreement  shall be governed by and construed in accordance
      with the laws of the State of Delaware.

           (c) This  Agreement  may not be  assigned,  in  whole or in part,  by
      Shareholder without the prior written consent of Parent, and any attempted
      assignment  not in  accordance  herewith  shall be null and void and of no
      force or effect.

           (d) This  Agreement  shall be binding on and inure to the  benefit of
      the parties hereto and their respective successors and permitted assigns.

           (e) If any provision of this Agreement shall be held void,  voidable,
      invalid or  inoperative,  no other  provision of this  Agreement  shall be
      affected as a result thereof, and,  accordingly,  the remaining provisions
      of this  Agreement  shall  remain in full force and effect as though  such
      void,  voidable,  invalid or inoperative  provision had not been contained
      herein.

           (f) This Agreement  shall not be construed more strongly  against any
      party hereto regardless of which party is responsible for its preparation.

           (g) Upon the  reasonable  request  of any party,  each  party  hereto
      agrees to take any and all actions,  including,  without  limitation,  the
      execution  of  certificates,   documents  or  instruments,   necessary  or
      appropriate  to give effect to the terms and  conditions set forth in this
      Agreement.

           (h) All rights and  remedies of each party hereto are  cumulative  of
      each other and of every  other  right or remedy  such party may  otherwise
      have at law or in  equity,  and the  exercise  of one or  more  rights  or
      remedies  shall not  prejudice  or impair  the  concurrent  or  subsequent
      exercise of other rights or remedies.

           (i) This Agreement may be executed in one or more counterparts,  each
      of which  shall be deemed  to be an  original,  but all of which  together
      shall  constitute  the  same  Agreement.  Any  signature  page of any such
      counterpart,  or any  electronic  facsimile  thereof,  may be  attached or
      appended to any other counterpart to complete a fully executed counterpart
      of this Agreement, and any telecopy or other facsimile transmission of any
      signature shall be deemed an original and shall bind such party.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly
authorized  representative  to execute,  this  Agreement  as of the day and year
first above written.

                               "Parent"

                                ZALE CORPORATION

                               By:  /s/ Alan P. Shor
                                      Alan P. Shor,
                                      Executive Vice President and
                                      Chief Operating Officer

                               "Company"

                               PIERCING PAGODA, INC.

                               By:  /s/ John F. Eureyecko
                                      John F. Eureyecko,
                                      President and Chief Executive Officer

                                  "Shareholder"

                               /s/ Richard H. Penske
                                Richard H. Penske

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