EXHIBIT 10.5

                                                  EXECUTION
                                        

WAIVER AND FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

     WAIVER AND FIRST AMENDMENT (this  Waiver and Amendment )
dated as of January
11, 1999, by and among BANKAMERICA BUSINESS CREDIT, INC., a
Delaware corporation, with
offices at 40 East 52nd Street, New York, New York 10022 (the 
Lender ); PENTECH
INTERNATIONAL, INC., a Delaware corporation with chief executive
offices at 195 Carter Drive,
Edison, New Jersey 08817 ( Pentech ); PENTECH COSMETICS, INC., a
Delaware corporation with
chief executive offices at 195 Carter Drive, Edison, New Jersey
08817 ( Cosmetics ); and SAWDUST
PENCIL CO., a Delaware corporation with chief executive offices
at 195 Carter Drive, Edison, New
Jersey 08817 ( Sawdust ) (Pentech, Cosmetics and Sawdust,
individually, a  Borrower,  and collectively,
the  Borrowers ). 
W I T N E S S E T H :
     WHEREAS, the Lender and the Borrowers have entered into a
Loan and Security Agreement
dated as of January 13, 1997 (as amended, restated, modified or
supplemented from time to time, the
 Loan Agreement ); and
     WHEREAS, the Borrowers have been in non-compliance (the 
Financial Covenant Non-
compliance ) with the Minimum Interest Coverage Ratio and
Tangible Net Worth covenants set forth
in Sections 10.21 and 10.22 of the Loan Agreement for the fiscal
quarter ending September 30, 1998 and
during the period from October 1, 1998 through December 30, 1998;
and
     WHEREAS, the Borrowers have requested that the Lender waive
the Financial Covenant Non-
compliance; and
     WHEREAS, the Borrowers have requested that the Lender agree
to provide new seasonal
overadvances, modify in certain respects certain of the financial
covenants set forth in the Loan
Agreement, provide a bankers  acceptance subfacility and modify
the Loan Agreement in certain other
respects; and
     WHEREAS, the Lender is willing to waive the Financial
Covenant Non-compliance and to
agree to such other modifications on the condition that certain
other amendments be made to the Loan
Agreement and otherwise on the terms and conditions herein set
forth.
     NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the
parties hereto hereby agree as follows:
     SECTION 1. Defined Terms.  Terms defined in the Loan
Agreement and not otherwise defined
herein shall have the meanings set forth in the Loan Agreement.
     SECTION 2.     Waiver of Financial Covenant Non-compliance.
The Lender hereby waives
compliance by the Borrowers with the provisions of Section 10.21
and 10.22 of the Loan Agreement
solely for and with respect to the fiscal quarter ending
September 30, 1998 and the period from October
1, 1998 through December 30, 1998; provided, however, that such
waiver is subject to the conditions
set forth in Section 5 of this Waiver and Amendment.
     SECTION 3.     Amendments to Loan Agreement.  Effective as
of December 31, 1998, the Loan
Agreement shall be amended in the following respects.
          3.1  Section 1.1 of the Loan Agreement is hereby
amended by adding the
     following new definitions thereto, in appropriate
alphabetical order:
                Applicable Inventory Advance Sublimit  means the
amount indicated below
          for the corresponding periods:
                         Period                           Amount
               Prior to January 15, 1999              $12,000,000
               January 15-May 31, 1999                $10,500,000
               June 1-June 30, 1999                   $10,000,000
               July 1-July 31, 1999                   $ 9,500,000
               August 1-August 31, 1999               $ 9,000,000
               At all times after August 31, 1999     $ 8,500,000
                Banker s Acceptance  means a banker s acceptance
issued or caused to be issued
          for the account of any Borrower pursuant to Section 2.5
to the beneficiary of a Letter
          of Credit upon such beneficiary s compliance with all
of the conditions required to
          draw upon such Letter of Credit.
                 Banker s Acceptance Fee  has the meaning
specified in Section 3.6.
          3.2  Section 1.1 of the Loan Agreement is hereby
amended by restating the
     definitions of  Aggregate Availability,   Aggregate Maximum
Revolver Amount,   Allowable
     Seasonable Overadvance,   Availability,   Loans,   Maximum
Revolver Amount, 
      Overadvance Repayment Date,   Seasonal Overadvance  and 
Seasonal Overadvance Limit 
     set forth therein in their entirety as follows:
                Aggregate Availability  means, at any time of
determination, (a) the Aggregate
          Maximum Revolver Amount minus (b) the sum of (i) the
unpaid principal balance of
          Revolving Loans outstanding to all Borrowers, (ii) the
aggregate undrawn face amount
          of all outstanding Letters of Credit which the Lender
has caused to be issued or
          obtained for the account of all Borrowers, and (iii)
the aggregate face amount of all
          outstanding Banker s Acceptances which the Lender has
caused to be issued or obtained
          for the account of all Borrowers.
                Aggregate Maximum Revolver Amount  means at any
time, for all Borrowers,
          the lesser of:
               (a)  The amount of the Total Facility,
                    or
               (b)  The sum of
                    (i)  up to eighty percent (80%) of the Net
Amount of Eligible
                         Accounts of all Borrowers;
                    the lesser of

                         a)   the Applicable Inventory Advance
Sublimit; or
                         the sum of:
                              (i) up to 65% of all Eligible
Inventory of all Borrowers
                         not covered by any outstanding
Merchandise Letter of Credit;
                         and (ii) up to 60% of all Eligible
Inventory of all Borrowers
                         covered by any outstanding Merchandise
Letter of Credit; and
                    (iii)     Allowable Seasonal Overadvances
available at such time;
          provided, however, that the aggregate amount of all
Loans outstanding at any one such
          time to all Borrowers shall not exceed an amount equal
to the respective percentages
          indicated below of the Net Amount of Eligible Accounts
of all Borrowers for the
          corresponding periods:
                  Period                          Percentage
               At all times before February 1999     80%
               February 1999                         85%
               March 1999                            90%
               April 1999                            90%
               May 1999                              85%
               At all times after May 1999           80%
          plus 65% of all Eligible Inventory of all Borrowers not
covered by any outstanding
          Merchandise Letter of Credit plus 60% of all Eligible
Inventory of all Borrowers
          covered by any outstanding Merchandise Letter of
Credit; and provided further,
          however, that at all times the Aggregate Maximum
Revolver Amount shall be reduced
          (without duplication) by the sum of:
               (A)  reserves for accrued interest on the
Revolving Loans;
               (B)  the Environmental Compliance Reserve;
               (C)  the ACH Settlement Risk Reserve;
               (D)  the Royalty Reserve; and
               (E)  all other reserves which the Lender in its
reasonable discretion deems
          necessary or desirable to maintain with respect to any
Borrower s account, including,
          without limitation, any amounts which the Lender may be
obligated to pay in the
          future for the account of any Borrower.
          The Lender agrees to give the Borrowers at least three
Business Day s notice prior to
          reducing any of the advance rates set forth above, but
the failure to give such notice
          shall not affect the Lender s right to make such
reduction or the validity thereof.
                Allowable Seasonal Overadvance  means, at any
time during the months of
          February through May, 1999, and prior to the
Overadvance Repayment Date, the
          Seasonal Overadvance Limit.
                Availability  means, at any time of
determination, with respect to any
          Borrower, (a) the Maximum Revolver Amount for such
Borrower at such time minus
          (b) the sum of (i) the unpaid principal balance of
Revolving Loans outstanding to such
          Borrower at such time, (ii) the aggregate undrawn face
amount of all outstanding
          Letters of Credit which the Lender has caused to be
issued or obtained for such
          Borrower s account at such time and (iii) the aggregate
face amount of all outstanding
          Banker s Acceptances which the Lender has caused to be
issued or obtained for such
          Borrower s account at such time.
                Loans  means, collectively, all loans and
advances provided for in Section 2
          (including the aggregate face amounts of all letters of
credit and banker s acceptances
          caused hereunder to be issued by the Lender and any
outstanding Seasonal
          Overadvances).
                Maximum Revolver Amount  means at any time, for
any Borrower, the lesser
          of:
               (a)  The amount of the Total Facility,
                    or
               (b)  The sum of
                    (i)  up to eighty percent (80%) of the Net
Amount of Eligible
                         Accounts of such Borrower;
                    the lesser of

                         a)   the Applicable Inventory Advance
Sublimit; or
                         the sum of:
                              (i) up to 65% of such Borrower s
Eligible Inventory not
                         covered by any outstanding Merchandise
Letter of Credit; and
                         (ii) up to 60% of such Borrower s
Eligible Inventory covered by
                         any outstanding Merchandise Letter of
Credit; and
                    (iii)     Allowable Seasonal Overadvances
available at such time;
          provided, however, that the aggregate amount of all
Loans outstanding at any one such
          time to such Borrower shall not exceed an amount equal
to the respective percentages
          indicated below of the Net Amount of Eligible Accounts
of such Borrower for the
          corresponding periods:
                  Period                          Percentage
               At all times before February 1999  80%
               February 1999                      85%
               March 1999                         90%
               April 1999                         90%
               May 1999                           85%
               At all times after May 1999        80%
          plus 65% of such Borrower s Eligible Inventory not
covered by any outstanding
          Merchandise Letter of Credit plus 60% of such Borrower
s Eligible Inventory covered
          by any outstanding Merchandise Letter of Credit; and
provided further, however, that
          at all times the Maximum Revolver Amount shall be
reduced (without duplication) by
          the sum of:
               (A)  reserves for accrued interest on the
Revolving Loans;
               (B)  the Environmental Compliance Reserve;
               (C)  the ACH Settlement Risk Reserve;
               (D)  the Royalty Reserve; and
               (E)  all other reserves which the Lender in its
reasonable discretion deems
          necessary or desirable to maintain with respect to any
Borrower s account, including,
          without limitation, any amounts which the Lender may be
obligated to pay in the
          future for the account of any Borrower.
          The Lender agrees to give the Borrowers at least three
Business Day s notice prior to
          reducing any of the advance rates set forth above, but
the failure to give such notice
          shall not affect the Lender s right to make such
reduction or the validity thereof.
                Overadvance Repayment Date  means May 31, 1999.
                Seasonal Overadvance  means special advances to
be made available to the
          Borrowers in each of the months of February through May
1999, up to the Seasonal
          Overadvance Limit.
                Seasonal Overadvance Limit  means $750,000.
          3.3  The last sentence of the definition of the term 
Obligations  set forth in
     Section 1.1 of the Loan Agreement is hereby amended to read
in its entirety as follows:
           Obligations  includes, without limitation, (a) all
debts, liabilities, and obligations now
          or hereafter owing from Borrower to Lender under or in
connection with the Letters
          of Credit, (b) all debts, liabilities, and obligations
now or hereafter owing from
          Borrower to Lender under or in connection with the
Banker s Acceptances, and (c) all
          debts, liabilities and obligations now or hereafter
owing from the Borrower to the
          Lender arising from or related to ACH Transactions.
          3.4  Clause (c)(ii) of the definition of the term 
Performance Pricing Period 
     is hereby amended in its entirety to read as follows:
          (ii) after taking into account the Revolving Loans and
the Letters of Credit and
          Banker s Acceptances issued or to be issued at each
such time and
          3.5  The caption to Article 2 of the Loan Agreement is
hereby amended to read in
     its entirety as follows:
               2    LOANS, LETTERS OF CREDIT AND BANKER S
                    ACCEPTANCES.
          3.6  Section 2.1 of the Loan Agreement is hereby
amended to read in its entirety as
     follows:
               2.1 Total Facility Subject to all of the terms and
conditions of this Agreement,
          the Lender shall make available a total credit facility
of up to $25,000,000 (the  Total
          Facility ) for Borrower s use from time to time during
the term of this Agreement. 
          The Total Facility shall be comprised of a revolving
line of credit up to the limits, for
          each Borrower, of such Borrower s Maximum Revolver
Amount, and for all Borrowers,
          of the Aggregate Maximum Revolver Amount, consisting of
revolving loans, seasonal
          overadvances, letters of credit and banker s
acceptances as described in Sections 2.2, 2.3
          and 2.5.
          3.7  Clause (i) of Section 2.3(a) of the Loan Agreement
is hereby amended to read
     in its entirety as follows:
          (i) the maximum face amount of the requested Letter of
Credit, plus the aggregate
          undrawn face amount of all outstanding Letters of
Credit, plus the aggregate face
          amount of all outstanding Banker s Acceptances, would
exceed $10,000,000;
          3.8  Clause (1) of Section 2.3(d) of the Loan Agreement
is hereby amended to read
     in its entirety as follows:
          (1)  Payment of Letter of Credit Obligations.  Each
Borrower agrees to reimburse
          the issuer for any draw (other than the unreimbursed
amount of drawings under Letters
          of Credit with respect to which Banker s Acceptances
have been issued at such time)
          under any Letter of Credit immediately upon demand, and
to pay the issuer of the
          Letter of Credit the amount of all other obligations
and other amounts payable to such
          issuer under or in connection with any Letter of Credit
immediately when due,
          irrespective of any claim, setoff, defense or other
right which such Borrower may have
          at any time against such issuer or any other Person.
          3.9  Subsection (g) of Section 2.3 of the Loan
Agreement is hereby deleted in its
     entirety.
          3.10 The Loan Agreement is hereby amended by adding a
new Section 2.5 thereto,
     which new section shall read in its entirety as follows:
               2.5  Banker s Acceptances.
               (a) Subject to the terms and conditions of this
Agreement, the Lender shall,
          upon Pentech s request on behalf of a Borrower, from
time to time, cause Banker s
          Acceptances to be issued for such Borrower s account. 
The Lender will not cause any
          Banker s Acceptance to be issued if:  (i) the face
amount of the requested Banker s
          Acceptance, plus the aggregate face amount of all
outstanding Banker s Acceptances,
          would exceed $4,000,000; (ii) the face amount of the
requested Banker s Acceptance,
          plus the aggregate undrawn face amount of all
outstanding Letters of Credit, plus the
          aggregate face amount of all outstanding Banker s
Acceptances, would exceed
          $10,000,000; (iii) the face amount of the requested
Banker s Acceptance, and all
          commissions, fees, and charges due from the Borrowers
to Lender in connection with
          the issuance thereof, would cause such Borrower s
Availability or the Aggregate
          Availability of all Borrowers to be exceeded at such
time; or (iv) the draft to which
          such Banker s Acceptance relates has a maturity later
than 90 days after the date of
          issuance thereof.  All payments made and expenses
incurred by the Lender pursuant to
          or in connection with the Banker s Acceptances will be
charged to the Borrowers  loan
          account as Revolving Loans.
               (b)  Other Conditions.  In addition to being
subject to the satisfaction of the
          applicable conditions precedent contained in Section
11, the obligation of the Lender
          to cause any Banker s Acceptance to be issued is
subject to the following conditions
          precedent having been satisfied in a manner
satisfactory to the Lender:
                    (1)  Pentech, on behalf of the Borrower
requesting a Banker s
               Acceptance, shall have delivered to the proposed
issuer of such Banker s
               Acceptance, at such times and in such manner as
such proposed issuer may
               prescribe, an application in form and substance
satisfactory to such proposed
               issuer and the Lender for the issuance of the
Banker s Acceptance and such
               other documents as may be required pursuant to the
terms thereof, and the
               form and terms of the proposed Banker s Acceptance
shall be satisfactory to the
               Lender and such proposed issuer;
                    (2)  As of the date of issuance, no order of
any court, arbitrator or
               Public Authority shall purport by its terms to
enjoin or restrain money center
               banks generally from issuing banker s acceptances
of the type and in the
               amount of the proposed Banker s Acceptance, and no
law, rule or regulation
               applicable to money center banks generally and no
request or directive
               (whether or not having the force of law) from any
Public Authority with
               jurisdiction over money center banks generally
shall prohibit, or request that
               the proposed issuer of such Banker s Acceptance
refrain from, the issuance of
               banker s acceptances generally or the issuance of
such Banker s Acceptance; and
                    (3)  Prior to the issuance of a Banker s
Acceptance, the beneficiary
               of the Letter of Credit to which such Banker s
Acceptance shall relate, shall
               have complied duly with all of the conditions
required to draw upon such
               Letter of Credit.
               (c)  Payments Pursuant to Banker s Acceptances.
                    (1)  Payment of Banker s Acceptance
Obligations.  Each Borrower
               agrees to reimburse the issuer for any draw or
payment under any Banker s
               Acceptance immediately upon demand, and to pay the
issuer of the Banker s
               Acceptance the amount of all other obligations and
other amounts payable to
               such issuer under or in connection with any Banker
s Acceptance immediately
               when due, irrespective of any claim, setoff,
defense or other right which such
               Borrower may have at any time against such issuer
or any other Person.
                    (2)  Revolving Loans to Satisfy Reimbursement
Obligations.  In the
               event that the issuer of any Banker s Acceptance
honors a draw or makes
               payment under such Banker s Acceptance and the
relevant Borrower shall not
               have repaid such amount to the issuer of such
Banker s Acceptance pursuant to
               Section 2.5(c)(1), the Lender shall pay the issuer
and such amount when paid
               shall constitute a Revolving Loan which shall be
deemed to have been requested
               by such Borrower.
               (d)  Compensation for Banker s Acceptances.
                    (1)  Banker s Acceptance Fee.  Each Borrower
agrees to pay to the
               Lender, with respect to each Banker s Acceptance,
the Banker s Acceptance Fee
               specified in, and in accordance with the terms of,
Section 3.6.
                    (2)  Issuer Fees and Charges.  Each Borrower
shall pay to the issuer
               of any Banker s Acceptance, or to the Lender, for
the account of the issuer of
               any such Banker s Acceptance, solely for such
issuer s account, such fees and
               other charges as are charged by such issuer for
banker s acceptances issued by
               it, including, without limitation, its standard
fees for issuing, administering,
               amending, renewing, paying and canceling banker s
acceptances and all other
               fees associated with issuing or servicing banker s
acceptances, as and when
               assessed.
               (e)  Indemnification; Exoneration; Power of
Attorney
                    (1)  Indemnification.  In addition to amounts
payable as elsewhere
               provided in this Section 2.5, each Borrower hereby
agrees to protect,
               indemnify, pay and save the Lender harmless from
and against any and all
               claims, demands, liabilities, damages, losses,
costs, charges and expenses
               (including reasonable attorneys  fees) which the
Lender may incur or be subject
               to as a consequence, direct or indirect, of the
issuance of any Banker s
               Acceptance or the provision of any credit support
or enhancement in
               connection therewith.  The agreement in this
Section 2.5(e)(1) shall survive
               payments of all Obligations and the termination of
this Agreement.
                    (2)  Assumption of Risk by the Borrowers.  As
between the
               Borrowers and the Lender, the Borrowers assume all
risks of the acts and
               omissions of, or misuse of any of the Banker s
Acceptances by, the respective
               beneficiaries or holders of such Banker s
Acceptances.  In furtherance and not
               in limitation of the foregoing, the Lender shall
not be responsible for:  (A) the
               form, validity, sufficiency, accuracy, genuineness
or legal effect of any
               document submitted by any Person in connection
with the application for and
               issuance of and presentation of, or of drafts with
respect to, any of the Banker s
               Acceptances, even if it should prove to be in any
or all respects invalid,
               insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of
               any instrument transferring or assigning or
purporting to transfer or assign any
               Banker s Acceptance or the rights or benefits
thereunder or proceeds thereof,
               in whole or in part, which may prove to be invalid
or ineffective for any
               reason; (C) the failure of the beneficiary or
holder of any Banker s Acceptance
               to comply duly with conditions required in order
to draw upon or receive
               payment under such Banker s Acceptance; (D)
errors, omissions, interruptions,
               or delays in transmission or delivery of any
messages, by mail, cable, telegraph,
               telex or otherwise, whether or not they be in
cipher; (E) errors in
               interpretation of technical terms; (F) any loss or
delay in the transmission or
               otherwise of any document required in order make a
drawing or receive
               payment under any Banker s Acceptance or of the
proceeds thereof; (G) the
               misapplication by the beneficiary or holder of any
Banker s Acceptance of the
               proceeds of any drawing or payment under such
Banker s Acceptance; or (H)
               any consequences arising from causes beyond the
control of the Lender,
               including, without limitation, any act or
omission, whether rightful or
               wrongful, of any present or future de jure or de
facto Public Authority.  None
               of the foregoing shall affect, impair or prevent
the vesting of any rights or
               powers of the Lender under this Section 2.5.
                    (3)  Exoneration.  In furtherance and
extension, and not in
               limitation, of the specific provisions set forth
above, any action taken or
               omitted by the Lender under or in connection with
any of the Banker s
               Acceptances or any related certificates, if taken
or omitted in the absence of
               gross negligence or willful misconduct, shall not
put the Lender under any
               resulting liability to any Borrower or relieve any
Borrower of any of its
               obligations hereunder to any such Person.
                    (4)  Power of Attorney.  In connection with
all Inventory financed
               by Banker s Acceptances, each Borrower hereby
appoints the Lender, or the
               Lender s designee, as its attorney, with full
power and authority:  (a) to sign
               and/or endorse such Borrower s name upon any
warehouse or other receipts;
               (b) to sign such Borrower s name on bills of
lading and other negotiable and
               non-negotiable documents; (c) to clear Inventory
through customs in the
               Lender s or such Borrower s name, and to sign and
deliver to customs officials
               powers of attorney in such Borrower s name for
such purpose; (d) to complete
               in such Borrower s or the Lender s name, any
order, sale, or transaction, obtain
               the necessary documents in connection therewith,
and collect the proceeds
               thereof; and (e) to do such other acts and things
as are necessary in order to
               enable the Lender to obtain possession of the
Inventory and to obtain payment
               of the Obligations.  Neither the Lender nor its
designee, as each Borrower s
               attorney, will be liable for any acts or
omissions, nor for any error of judgment
               or mistakes of fact or law.  This power, being
coupled with an interest, is
               irrevocable until all Obligations have been paid
and satisfied.
                    (5)  Control of Inventory.  In connection
with all Inventory
               financed by Banker s Acceptances, each Borrower
will, at the Lender s request,
               instruct all suppliers, carriers, forwarders,
warehouses or others receiving or
               holding cash, checks, Inventory, documents or
instruments in which the Lender
               holds a security interest to deliver them to the
Lender and/or subject to the
               Lender s order, and if they shall come into any
Borrower s possession, to
               deliver them, upon request, to the Lender in their
original form.  Each
               Borrower shall also, at the Lender s request,
designate the Lender as the
               consignee on all bills of lading and other
negotiable and non-negotiable
               documents.
          3.11 The Loan Agreement is hereby amended by adding a
new Section 2.6 thereto,
     which new section shall read in its entirety as follows:
               2.6  Supporting Letter of Credit; Cash Collateral. 
If, notwithstanding the
          provisions of Sections 2.3, 2.5 and 14, any Letter of
Credit or Banker s Acceptance is
          outstanding upon the termination of this Agreement,
then upon such termination the
          Borrowers shall deposit with the Lender, at its
discretion, with respect to each Letter
          of Credit and Banker s Acceptance then outstanding,
either (A) a standby letter of
          credit (a  Supporting Letter of Credit ) in form and
substance satisfactory to the
          Lender, issued by an issuer satisfactory to the Lender
in an amount equal to the greatest
          amount for which such Letter of Credit or Banker s
Acceptance may be drawn, under
          which Supporting Letter of Credit the Lender is
entitled to draw amounts necessary to
          reimburse the Lender for payments made by the Lender
under such Letter of Credit
          or Banker s Acceptance or under any credit support or
enhancement provided through
          the Lender with respect thereto, or (B) cash in amounts
necessary to reimburse the
          Lender for payments made by the Lender under such
Letter of Credit or Banker s
          Acceptance or under any credit support or enhancement
provided through the Lender. 
          Such Supporting Letter of Credit or deposit of cash
shall be held by the Lender, as
          security for, and to provide for the payment of, the
aggregate undrawn amount of such
          Letters of Credit and Banker s Acceptances remaining
outstanding.
          3.12 Subsection (b) of Section 3.1 of the Loan
Agreement is hereby amended to read
     in its entirety as follows:
               (b) If any Event of Default occurs, then, from the
date such Event of Default
          occurs until it is cured, or if not cured until all
Obligations are paid and performed in
          full, the Borrowers will pay (A) interest (including
the margin applicable thereto) on
          the unpaid principal balances of the Loans, (B) the
Letter of Credit Fee and (C) the
          Banker s Acceptance Fee at a per annum rate two percent
(2%) greater than otherwise
          specified herein for interest, the Letter of Credit Fee
and the Banker s Acceptance Fee.
          3.13.     The first sentence of subsection (c) of
Section 3.1 of the Loan Agreement is
     hereby amended to read in its entirety as follows:
          For every month during the term of this Agreement, the
Borrowers shall pay to the
          Lender a fee (the  Unused Line Fee ) in an amount equal
to three-eighths of one
          percent (0.375%) per annum, multiplied by the average
daily amount by which the
          Maximum Revolving Credit Line exceeds the sum of (i)
the average daily outstanding
          amount of all Revolving Loans during such month, (ii)
the average daily undrawn face
          amount of all outstanding Letters of Credit during such
month and (iii) the average
          daily face amount of all outstanding Banker s
Acceptances during such month, with the
          unpaid balance calculated for this purpose by applying
payments immediately upon
          receipt.
          3.14 The Loan Agreement is hereby amended by adding a
new Section 3.6 thereto,
     which new section  shall read in its entirety as follows:
               3.6  Banker s Acceptance Fees. The Borrowers agree
to pay to the Lender,
          for each Banker s Acceptance, a fee (the  Banker s
Acceptance Fee ) equal to two
          percent (2.00%) per annum of the face amount of each
Banker s Acceptance plus all out-
          of-pocket costs, fees and expenses incurred by the
Lender in connection with the
          application for, issuance of, or amendment to any
Banker s Acceptance, which costs,
          fees and expenses could include a  fronting fee 
required to be paid by the Lender to
          such issuer for the assumption of the settlement risk
in connection with the issuance
          of such Banker s Acceptance and any charge associated
with the discount of such
          Banker s Acceptance.  The Banker s Acceptance Fee shall
be payable monthly in arrears
          on the first day of each month following any month in
which a Banker s Acceptance
          was issued and/or in which a Banker s Acceptance
remains outstanding.  The Banker s
          Acceptance Fee shall be computed on the basis of a year
of three hundred sixty (360)
          days for the actual number of days elapsed.
          3.15.     The words  or Banker s Acceptance  or  or
Banker s Acceptances  are hereby
     added immediately after the words  Letter of Credit  or 
Letters of Credit,  as the respective
     cases may be, wherever set forth in the last sentence of
Section 9.25, in the preamble to Section
     11.2, in clause (ii) of Section 13(a), in the penultimate
sentence of Section 14, and in Sections
     15.7(h) and 15.17.
          3.16 Sections 10.21 and 10.22 of the Loan Agreement are
hereby amended to read
     in their entirety as follows:
               10.21     Minimum EBITDA.  The Borrowers will
maintain a cumulative
          EBITDA, as determined at the end of each fiscal quarter
set forth below, for the
          preceding fiscal quarter in the case of the fiscal
quarter ending December 31, 1998, for
          the preceding two fiscal quarters in the case of the
fiscal quarter ending March 31, 1999,
          for the preceding three fiscal quarters in the case of
the fiscal quarter ending June 30,
          1999, and the preceding four fiscal quarters in the
case of the fiscal quarter ending
          September 30, 1999 and each fiscal quarter ending
thereafter, of not less than the
          amounts indicated below:
               Quarter Ending                  Amount
               December 31, 1998                  ($  250,000)
               March 31, 1999                ($  500,000)
               June 30, 1999                       $2,400,000
               September 30, 1999,
                 and each fiscal
                 quarter thereafter                    
$3,300,000
               10.22     Adjusted Tangible Net Worth.  The
Borrowers will have Tangible Net
          Worth of not less than the following amounts at the end
of each of the following fiscal
          quarters:
               Fiscal Quarter Ending                      Amount
               December 31, 1998                      $14,000,000
               March 31, 1999                         $13,000,000
               June 30, 1999                          $14,000,000
               September 30, 1999, 
                  and each fiscal
                  quarter thereafter                  $14,537,000
     SECTION 4.     Waiver and Amendment Fee.  In order to induce
the Lender to enter into this
Waiver and Amendment, the Borrowers jointly and severally shall
pay to the Lenders a waiver and
amendment fee (the  Waiver and Amendment Fee ) in the amount of
$175,000.  The Waiver and
Amendment Fee shall be deemed fully earned upon the effectiveness
of this Waiver and Amendment,
shall be non-refundable when paid and shall be payable as
follows:
          4.1  $25,000 of the Waiver and Amendment Fee shall be
paid simultaneously  with
the effectiveness of this Waiver and Amendment; and
          4.2  the remaining $150,000 of the Waiver and Amendment
fee shall be due and
     payable in six consecutive monthly installments in the
amount of $25,000 each, payable on the
     last day of each month, commencing February 28, 1999;
provided, however, that the entire
     unpaid amount of the Waiver and Amendment Fee shall be due
and payable immediately upon
     the occurrence of an Event of Default or the termination of
the Loan Agreement for any
     reason whatsoever.
     SECTION 5.     Conditions to Effectiveness.  This Waiver and
Amendment shall be effective as
of the date first above written when the Lender  shall have
received the following:
          5.1  counterparts of this Waiver and Amendment executed
by the Borrowers;
          5.2  such other certificates, representations,
instruments and other documents as the
     Agent and the Majority Lenders may require, in form and
substance satisfactory to the Agent;
     and
          5.3  payment of the $25,000 portion of the Waiver and
Amendment Fee referred to
     in Section 4.1 of this Waiver and Amendment.
     SECTION 6.     Representations and Warranties.  The
Borrowers hereby each represent and
warrant to the Lender that (i) the execution, delivery and
performance of this Waiver and Amendment
by each of the Borrowers are within their respective corporate
powers and have been duly authorized
by all necessary corporate action; (ii) no consent, approval,
authorization of, or declaration or filing
with, any Public Authority, and no consent of any other Person,
is required in connection with the
execution, delivery and performance of this Waiver and Amendment,
except for those already duly
obtained; (iii) this Waiver and Amendment has been duly executed
by each of the Borrowers and
constitutes the legal, valid and binding obligation of each of
the Borrowers, enforceable against them
in accordance with its terms; (iv) the execution, delivery and
performance by each of the Borrowers
of this Waiver and Amendment does not and will not conflict with,
or constitute a violation or breach
of, or constitute a default under, or result in the creation or
imposition of any Lien upon the property
of any Borrower or any of its Subsidiaries (except as
contemplated by the Loan Agreement and the
other Loan Documents) by reason of the terms of (a) any contract,
mortgage, lease, agreement, or
instrument to which such Borrower or such Subsidiary is a party
or which is binding upon it, (b) any
Requirement of Law applicable to such Borrower or such
Subsidiary, or (c) the Certificate or Articles
of Incorporation or By-Laws of such Borrower or such Subsidiary;
(v) after giving effect to this Waiver
and Amendment, the representations and warranties contained in
the Loan Agreement and in each
other document or instrument delivered by Borrower are true and
correct in all material respects as
though made on and as of the date hereof, except to the extent
that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties were true
and accurate on and as of such earlier date); and (vi) after
giving effect to this Waiver and Amendment,
there exists no Event of Default or condition which would result
in an Event of Default.
     SECTION 7.     Reference to and Effect on Loan Documents.
          7.1  On and after the date hereof, each reference in
the Loan Agreement to  this
     Agreement ,  hereunder ,  hereof ,  herein  or words of like
import, and each reference in the
     other Loan Documents to the Loan Agreement, shall mean and
be a reference to the Loan
     Agreement as amended hereby.
          7.2  Except as specifically amended above, all of the
terms of the Loan Agreement
     shall remain unchanged and in full force and effect.
          7.3  The execution, delivery and effectiveness of this
Waiver and Amendment shall
     not operate as a waiver of any right, power or remedy of any
Lender or the Agent under the
     Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision
     of the Loan Agreement or any of the other Loan Documents.
     SECTION 8.     Execution in Counterparts.  This Waiver and
Amendment may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which
when so executed and delivered shall be deemed to be an original
and all of which taken together shall
constitute one and the same instrument.
     SECTION 9.     Governing Law.  This Waiver and Amendment
shall be governed by, and shall
be construed and enforced in accordance with, the laws of the
State of New York.
     SECTION 10.    Headings.  Section headings in this Waiver
and Amendment are included
herein for convenience of reference only and shall not constitute
a part of this Waiver and Amendment
or be given any substantive effect.
     IN WITNESS WHEREOF, this Waiver and Amendment has been duly
executed as of the date
first above written.
                         PENTECH INTERNATIONAL, INC.
                         By: ____________________________
                         Title:___________________________
                         PENTECH COSMETICS, INC.
                         By: ____________________________
                         Title:___________________________
                         SAWDUST PENCIL CO.
                         By: ____________________________
                         Title:___________________________
                         BANKAMERICA BUSINESS CREDIT, INC.
                         By: ____________________________
                              Louis Alexander,
                              Vice President