BANKBOSTON, N.A. (f/k/a The First National Bank of Boston), as Agent
                               100 Federal Street
                                Boston, MA 02110



                                                                    May 21, 1997

Allou Health & Beauty Care, Inc.
  and its Subsidiaries
50 Emjay Boulevard
Brentwood, NY 11717


           Re:       Fifth Amendment to Second Restated and Amended Revolving
                     Credit and Security Agreement, dated as of June 6, 1996
                     -------------------------------------------------------


Gentlemen:

           Reference is made to the Second Restated and Amended Revolving Credit
and Security Agreement (as amended from time to time, the "Agreement"), dated as
of June 6, 1996 among Allou Health & Beauty Care,  Inc. (the "Parent") and Allou
Distributors, Inc. ("Distributors") (collectively, including Subsidiaries of the
Parent and Distributors who have executed and delivered that certain  Subsidiary
Tie-In  Agreement  dated  December 10, 1991,  as amended from time to time,  the
"Borrowers"),  BankBoston,  N.A. (f/k/a The First National Bank of Boston),  IBJ
Schroder  Bank & Trust  Company,  Sanwa  Business  Credit  Corporation,  Lasalle
Business  Credit,  Inc.  and  The  Bank  of  Tokyo -  Mitsubishi  Trust  Company
(collectively the "Lenders"), and The First National Bank of Boston as Agent for
the Lenders (the  "Agent").  Capitalized  terms used and not  otherwise  defined
herein  shall  have the same  respective  meanings  herein  as set  forth in the
Agreement.

           You have  requested that the Agreement be amended (i) to increase the
Maximum Amount set forth in Section 1.49 to $110,000,000.00, and (ii) to reflect
the addition of Bank Leumi Trust Company of New York ("BLT") as a Lender.

           Accordingly, in consideration of these premises, the promises, mutual
covenants and agreements contained in this Amendment,  and fully intending to be
legally bound by this Amendment, we hereby agree with you as follows:

1.         AMENDMENTS TO AGREEMENT. In compliance with the terms of Section 10.8
of the Agreement:


<PAGE>



           1.1 (i) The first sentence of the preamble to the Agreement is hereby
amended to read as  follows  after zip code  "10116-3138":  ",BANK  LEUMI  TRUST
COMPANY OF NEW YORK ('BLT'),  562 Fifth Avenue,  New York, New York,  10036; and
BKB as agent for the Lenders (the 'Agent')."

                      (ii) The second  sentence of the preamble to the Agreement
is hereby  amended to read as follows after "LBC":  ", BOT and BLT are hereafter
referred to collectively as the 'Lenders'."

           1.2 Section 1.20 of the  Agreement  is hereby  amended to read in its
entirety as follows:

           "1.20  'Commitment  Percentage' shall mean in relation to each Lender
the percentage set forth opposite its name below:

                        Lender                         Percentage
                        ------                         ----------

                        BKB                           31.8181820%
                        SBC                           24.5454545%
                        IBJS                          12.7272728%
                        LBC                           18.1818182%
                        BOT                            8.1818181%
                        BLT                            4.5454545%
                                                       ----------

                                                             100%"

11.3       Section  1.49  of the  Agreement  is  hereby  amended  to read in its
entirety as follows:

           "1.49     'Maximum Amount' shall mean $110,000,000.00."

1.4        Section  1.65  of the  Agreement  is  hereby  amended  to read in its
entirety as follows:

           "1.65 'Revolving  Credit  Commitment' shall mean, in relation to each
of the Lenders,  the maximum amount of Revolving Loans that such Lender shall be
committed to make to the Borrowers  upon the terms and subject to the conditions
contained in this  Agreement,  which amount shall be equal to the product of the
Maximum  Amount  times  such  Lender's  Commitment  Percentage  (i.e.  for  BKB:
$110,000,000 x 31.8181820% = $35,000,000;  for SBC: $110,000,000 x 24.5454545% =
$27,000,000;  for  IBJS:  $110,000,000  x  12.7272728%  =  $14,000,000;  for LBC
$110,000,000 x 18.1818182% = $ 20,000,000;  for BOT: $110,000,000 x 8.1818181% =
$9,000,000 and for BLT $110,000,000 x 4.5454545% =$5,000,000)."

1.5        The Agreement is hereby amended to include Section 4.5 as follows:

                                       -2-

<PAGE>



"4.5       Heter Iska. This Agreement is being entered into by BLT in accordance
with BLT's heter iska."

1.6        Section 10.1 of the  Agreement  is hereby  amended to read as follows
after "Attn:  Christopher  Young, Vice President":  "(vi) if to BLT to it at 562
Fifth Avenue,  New York, New York 10036 Attn:  Paul Tine, Vice President or such
other officers as may be designated by the Agreement or the Lenders. Any notice,
unless otherwise specified, may be given orally or in writing."

2.         CONDITIONS PRECEDENT TO THIS AMENDMENT. The Agreements of the Lenders
set forth in this  Amendment  are  subject to the  receipt by (i) the Agent,  on
behalf of the Lenders, and (ii) BLT, respectively,  of the following in form and
substance  satisfactory  to the  respective  recipient  and  duly  executed  and
delivered by the Borrowers:

           (a) BLT shall have received a Second  Restated and Amended  Revolving
Credit Note in the form of Exhibit A attached hereto;

           (b)  The  Agent  shall  have  received  multiple  counterparts  of an
Amendment to Guaranty and Subsidiary  Tie-In  Agreement in the form of Exhibit B
attached hereto in sufficient numbers for itself and each of the other Lenders;

           (c) The Agent shall have received  certified copies of resolutions of
the Borrowers' respective boards of directors,  in sufficient numbers for itself
and  each  of the  other  Lenders,  evidencing  the  due  authorization  of this
Amendment and the entering into of the transactions contemplated hereby;

           (d) The Agent shall have received  certificates as of the date hereof
signed by the Secretary of each of the Borrowers  regarding the  incumbency  and
true  signature of the officers  authorized to sign this Amendment in sufficient
numbers for itself and each of the other Lenders; and

           (e)  The  Agent  shall  have  received  multiple  counterparts  of  a
favorable  legal  opinion  addressed  to the Agent and each of the Lenders  from
Parker Chapin, Flattau and Klimpl, LLP, counsel to the Borrowers,  in sufficient
quantities for itself and each of the other Lenders.

3.         GENERAL.

           3.1 The Agreement is hereby ratified and confirmed and shall continue
in full force and effect as amended hereby.

           3.2 The  Borrowers  hereby  represent  and  warrant  that there is no
default or Event of Default outstanding or continuing under the Agreement or any
instrument or document  executed in connection with the Agreement,  or any event
or  condition  which with the giving of notice or the passage of time,  or both,
would result in a default or an

                                       -3-

<PAGE>



Event of Default under the Agreement or any  instrument or document  executed in
connection with the Agreement.

           3.3 This Amendment may be signed in any number of  counterparts  with
the same  effect as if the  signatures  hereto  and  thereto  were upon the same
instrument.

           3.4 Allou Personal Care Corporation,  M. Sobol, Inc., Superbuy of New
York, In., Rona Beauty  Supplies,  Inc.,  Hempstead  Health & Beauty Aids, Inc.,
Pastel  Cosmetic  and  Beauty  Aids,   Inc.,  HBA  National  Sales  Corp.,   HBA
Distributors,  Inc., Russ Kalvin Personal Care  Corporation,  Stanford  Personal
Care  Manufacturing,  Inc.,  and Cosmetic Plus Two, Inc. are each  executing and
delivering this Amendment as a Borrower  pursuant to the terms of the Subsidiary
Tie-In Agreement, as amended through the date hereof.

           If the  foregoing  sets  forth  your  understanding  of  the  matters
addressed  herein,   please  evidence  your  agreement  by  countersigning  this
Amendment in the space set forth

                                       -4-

<PAGE>



below,  whereupon this Amendment shall take effect as an agreement under seal as
of the day first written above.

                                           THE FIRST NATIONAL BANK OF BOSTON


                                           By:/s/
                                              --------------------------------
                                                Title: Vice President

                                           IBJ SCHRODER BANK & TRUST COMPANY


                                           By:/s/
                                              --------------------------------
                                                Title: Vice President


                                           SANWA BUSINESS CREDIT CORPORATION


                                           By:/s/
                                              --------------------------------
                                                Title: Vice President

                                           LASALLE BUSINESS CREDIT, INC.


                                           By:/s/
                                              --------------------------------
                                                Title: First Vice President

                                           THE BANK OF TOKYO - MITSUBISHI TRUST
                                           COMPANY


                                           By:/s/ Amanda S. Ryan
                                              --------------------------------
                                                Title: Vice President

                                           BANK LEUMI TRUST COMPANY OF NEW
                                           YORK


                                           By:/s/
                                              --------------------------------
                                                Title: First Vice President, 
                                                       Vice President


                       (Signatures continued on next page)


                                       -5-

<PAGE>




ALLOU HEALTH & BEAUTY CARE, INC.
ALLOU DISTRIBUTORS, INC.
ALLOU PERSONAL CARE CORPORATION
M. SOBOL, INC.
SUPERBUY OF NEW YORK, INC.
RONA BEAUTY SUPPLIES, INC.
HEMPSTEAD HEALTH & BEAUTY AIDS, INC.
PASTEL COSMETIC AND BEAUTY AIDS, INC.
HBA NATIONAL SALES CORP.
HBA DISTRIBUTORS, INC.
RUSS KALVIN PERSONAL CARE CORP.
STANFORD PERSONAL CARE MANUFACTURING, INC.
COSMETIC PLUS TWO, INC.

By:/s/David Shamilzadeh
   -----------------------------
   Title: Senior Vice President, CFO



                              CONSENT OF GUARANTORS

           Each of Victor Jacobs,  Herman Jacobs and Jacob Jacobs (collectively,
the "Guarantors") has guaranteed  certain of the Obligations under the Agreement
by  executing  separate  Limited  Guaranties  dated  as  of  December  10,  1991
(collectively,  as amended, the "Guaranties"). By executing this letter, each of
the Guarantors hereby absolutely and  unconditionally  reaffirms the Guaranty to
which he is a party,  and acknowledges and agrees to the terms and conditions of
this Amendment and the Agreement as so amended.

                                                    /s/ Victor Jacobs
                                              --------------------------------
                                                    Victor Jacobs

                                                    /s/ Jacob Jacobs
                                              --------------------------------
                                                    Jacob Jacobs

                                                    /s/ Herman Jacobs
                                              --------------------------------
                                                    Herman Jacobs


                                       -6-

<PAGE>



                                    EXHIBIT A
                                    ---------


                Second Restated and Amended Revolving Credit Note
                -------------------------------------------------


$5,000,000.00                                             Boston,  Massachusetts
                                                          May 21, 1997


           FOR  VALUE   RECEIVED,   the   undersigned   hereby   absolutely  and
unconditionally,  jointly  and  severally,  promise to pay to Bank  Leumi  Trust
Company of New York, a national  bank with its head office at 562 Fifth  Avenue,
NewYork,  New York 10036 (the  "Lender"),  or order,  on the Maturity  Date, the
principal amount of Five Million and 00/100 Dollars ($5,000,000.00) or, if less,
the aggregate  unpaid principal amount of all Revolving Loans and other advances
made by the Lender to the Borrowers  pursuant to the  Agreement (as  hereinafter
defined) and noted on the records of the Agent in  accordance  with the terms of
the  Agreement,  together  with  interest  (computed  on the basis of the actual
number of days  elapsed  over a 360-day  year) on the  unpaid  principal  amount
hereof  until  paid in full at the times  and  rates set forth in the  Agreement
referred to below.

           All payments  under this Note shall be made at the head office of the
Agent at 100 Federal Street, Boston, Massachusetts 02110 (or at such other place
as the Agent may designate  from time to time in writing) in lawful money of the
United States of America in federal or other  immediately  available  funds. The
Borrowers  may prepay  this Note in whole or in part at any time  subject to the
terms and  conditions  set  forth in the  Agreement.  Amounts  so paid and other
amounts may be borrowed and  reborrowed by the Borrowers  hereunder from time to
time as provided in the Agreement.

           This Note is issued  pursuant to, is entitled to the benefits of, and
is subject to the provisions of a certain Second Restated and Amended  Revolving
Credit  and  Security  Agreement,  dated June 6, 1996 (as  amended  from time to
time),  among the  undersigned,  the Lender,  BankBoston,  N.A. (f/k/a The First
National Bank of Boston),  IBJ Schroder Bank and Trust  Company,  Sanwa Business
Credit  Corporation,  LaSalle Business Credit,  Inc., Bank of Tokyo - Mitsubishi
Trust Company, and BankBoston,  N.A. as Agent (herein, as the same may from time
to time have been or may be amended,  restated or  extended,  referred to as the
"Agreement"),  but neither this  reference to the  Agreement  nor any  provision
thereof shall affect or impair the absolute and unconditional  joint and several
obligation of each of the  undersigned  makers of this Note to pay the principal
of and  interest on this Note as herein  provided.  All  capitalized  terms used
herein shall have the meanings set forth herein or in the Agreement.

           Upon an Event of Default,  the aggregate  unpaid balance of principal
plus accrued interest may become or may be declared to be due and payable in the
manner and with the effect provided in the Agreement.

                                       -7-

<PAGE>



           Except as may  otherwise  be provided in the  Agreement,  each of the
undersigned makers of this Note, hereby waives  presentment,  demand,  notice of
dishonor,  protest  and all other  demands and  notices in  connection  with the
delivery, acceptance, performance and enforcement of this Note.

           WITNESS  the  execution  of this Note under seal on the date  written
above.

                                       ALLOU DISTRIBUTORS, INC.


                                       By:
                                              --------------------------------
                                              Title:

                                       ALLOU HEALTH & BEAUTY CARE, INC.


                                       By:
                                              --------------------------------
                                              Title:


                                       -8-

<PAGE>



                                    EXHIBIT B
                                    ---------

              AMENDMENT TO GUARANTY AND SUBSIDIARY TIE-IN AGREEMENT
              -----------------------------------------------------


           THIS AMENDMENT TO GUARANTY AND SUBSIDIARY TIE-IN  AGREEMENT,  made as
of May 21 1997,  among the  undersigned  Borrowers  and  Guarantors,  is for the
benefit of the Lenders and Agent.  All  capitalized  terms used herein which are
not otherwise  defined herein shall have the same meanings herein as ascribed to
them in the Second Restated and Amended Revolving Credit and Security Agreement,
dated as of June 6, 1996,  as amended from time to time,  among the  undersigned
Borrowers, the Agent and the Lenders (the "Loan Agreement").

                                   WITNESSETH:

           WHEREAS,  the  Borrowers,  the Agent and the Lenders have  previously
executed and delivered  that certain  Revolving  Credit and Security  Agreement,
dated  December  10,  1991,  as amended and restated by the Restated and Amended
Revolving  Credit  and  Security  Agreement,  dated as May 9,  1994,  as further
amended as of August 24, 1994, March 23, 1995, August 7, 1995,  October 2, 1995,
February  27,  1996  and  March  12,  1996  (as  so  amended,  the  "Prior  Loan
Agreement");

           WHEREAS, as contemplated by the terms of the Prior Loan Agreement and
the Loan Agreement,  the Borrowers  executed and delivered with the Lenders that
certain  Subsidiary Tie-In Agreement,  dated as of December 10, 1991, as amended
from time to time (as amended, the "Subsidiary Tie-In Agreement");

           WHEREAS,  also  as  contemplated  by  the  terms  of the  Prior  Loan
Agreement and the Loan  Agreement,  the Guarantors  executed and delivered those
certain Limited Guaranties,  dated as of December 10, 1991, as amended from time
to  time  (as  amended,   individually,  a  "Guaranty"  and  collectively,   the
"Guaranties"); and

           WHEREAS,  the Fifth Amendment to the Loan Agreement is a continuation
of the Loan  Agreement  and further  amends the Loan  Agreement  to increase the
Maximum  Amount to  $110,000,000.00  and to reflect  the  addition of Bank Leumi
Trust Company of New York as one of the Lenders.

           NOW, THEREFORE, for good and valuable consideration,  the receipt and
adequacy  of which is hereby  acknowledged,  the  Borrowers  and the  Guarantors
hereby agree as follows:

           1. From and after the date hereof,  each of the Guaranties are hereby
amended as follows:

                      (i) The first  sentence of the preamble to the Guaranty is
           hereby  further  amended to insert the  following  after the zip code
           "10116-3138,": "; Bank

                                       -9-

<PAGE>



           Leumi Trust Company of New York ("BLT"),  562 Fifth Avenue, New York,
           New York, 10036."; and

                      (ii) Section 12 of the Guaranty is hereby further  amended
           to insert the following  immediately after the zip-code  "10116-3138,
           Attention  Mr.  Christopher  Young,  Assistant  Vice  President":  ";
           Attention:  Mr.  Paul  Tine,  Vice  President,  if to BLT,  562 Fifth
           Avenue, New York, New York 10036.";

                      (iii) The Guaranty is hereby amended to include Section 15
           as follows:

                      HETER  ISKA.  This  Guaranty  is being  provided to BLT in
accordance with BLT's heter iska.

           2. From and after the date hereof, the Subsidiary Tie-In Agreement is
hereby further amended as follows:

                     The first sentence of the preamble to the Subsidiary Tie-In
           Agreement is hereby further amended to insert the following after the
           zip code  "10116-3138":  ";  Bank  Leumi  Trust  Company  of New York
           ('BLT'),  with an address at 562 Fifth  Avenue,  New York,  New York,
           10036.  (BKB,  IBJS, SBC, LBC, BOT and BLT are hereafter  referred to
           collectively as the 'Lenders')".

           IN  WITNESS   WHEREOF,   the  parties   hereto  have   executed  this
Acknowledgment and Agreement under seal on the day and year first above written.

                                        THE BORROWERS:
                                        --------------
                                        ALLOU HEALTH & BEAUTY CARE, INC.
                                        ALLOU DISTRIBUTORS, INC.
                                        ALLOU PERSONAL CARE CORPORATION
                                        M. SOBOL, INC.
                                        SUPERBUY OF NEW YORK, INC.
                                        RONA BEAUTY SUPPLIES, INC.
                                        HEMPSTEAD HEALTH & BEAUTY AIDS, INC.
                                        PASTEL COSMETIC AND BEAUTY AIDS, INC.
                                        HBA NATIONAL SALES CORP.
                                        HBA DISTRIBUTORS, INC.
                                        RUSS KALVIN PERSONAL
                                        CARE CORP.
                                        STANFORD PERSONAL CARE
                                        MANUFACTURING, INC.
                                        COSMETIC PLUS TWO, INC.
                                       By: ___________________________________
                                           In his capacity as ________________
                                           of each of the above-named entities

                       (Signatures continued on next page)

                                      -10-

<PAGE>




                                                    GUARANTORS:
                                                    -----------

                                                    ____________________________
                                                    Victor Jacobs


                                                    ____________________________
                                                    Herman Jacobs


                                                    ____________________________
                                                    Jacob Jacobs


ACKNOWLEDGED AS OF THE DATE
FIRST SET FORTH ABOVE


THE FIRST NATIONAL BANK OF BOSTON


By: ____________________________
    Title:


IBJ SCHRODER BANK & TRUST COMPANY


By: ____________________________
    Title:


SANWA BUSINESS CREDIT CORPORATION


By: ____________________________
    Title:


LASALLE BUSINESS CREDIT, INC.


By: ____________________________
    Title:



                                      -11-

<PAGE>


THE BANK OF TOKYO - MITSUBISHI TRUST COMPANY


By: ____________________________
    Title:

BANK LEUMI TRUST COMPANY OF NEW YORK


By: ____________________________
    Title:



                                      -12-