THIRD AMENDMENT
                                       TO
                           SECOND RESTATED AND AMENDED
                     REVOLVING CREDIT AND SECURITY AGREEMENT

           This Third  Amendment to the Second  Restated  and Amended  Revolving
Credit and Security Agreement (this  "Amendment"),  made as of December 6, 1996,
among the undersigned  amends that certain Second Restated and Amended Revolving
Credit and Security  Agreement,  dated June 6, 1996, as previously amended as of
June 28, 1996 and October 15,  1996,  (as  amended  previously  and hereby,  the
"Agreement"),  among the Borrowers and the Lenders (as such terms are defined in
the Agreement).

                                   WITNESSETH:

           WHEREAS,  the  Borrowers  and the Lenders  entered into the Agreement
pursuant to which the Lenders have,  on the terms and subject to the  conditions
stated therein, made Loans to Borrowers;

           WHEREAS,  the  Borrowers  have  identified an  opportunity  to make a
$13,000,000 special purchase of inventory  consisting of Ralph Lauren Fragrances
from Cosmair, Inc., such acquisition to be paid for in several installments (the
"Special RL Purchase");

           WHEREAS,  the Borrowers have  requested  that Lenders  consent to the
Special RL Purchase and that the Agreement be amended in certain respects as set
forth in this Amendment,  including,  without limitation,  so as to extend usage
beyond the 30 day limit imposed in the Agreement under the Borrowers' $6,500,000
Overadvance sublimit in order to accommodate the Special RL Purchase;

           WHEREAS,  in  furtherance  of the Special RL Purchase,  the Borrowers
have  requested  that the Loan Agreement be amended to include in the definition
of the Borrowers an additional Subsidiary; and

           WHEREAS,  the  Lenders  have  agreed  to add  the  Subsidiary  to the
definition of the Borrowers  solely in accordance  with the terms and conditions
of this Amendment;

           NOW,  THEREFORE,  in  consideration  of the  premises and of good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
severally acknowledged, the parties hereto agree as follows:

           Section 1.  Definitions.  All capitalized terms used herein which are
defined in the Agreement shall have the same meanings herein as therein,  except
as otherwise specifically provided herein.

           SECTION 2. CONSENT TO SPECIAL RL PURCHASE.  Notwithstanding the terms
of the Agreement,  including without limitation Section 5.8 thereof, the Lenders
hereby consent


<PAGE>





to the  Special  RL  Purchase  solely  in  accordance  with  and  to the  extent
consistent with the terms of this Amendment.

           SECTION  3.  AMENDMENTS  TO THE  AGREEMENT.  From and  after the date
hereof, the Agreement is hereby amended as follows:

                      3.1 The $55,000,000 ceiling for the value of the Borrowing
Base Percentage of the Net Security Value of Base Inventory set forth in Section
1.11 is hereby increased to $64,000,000  solely for the period commencing on the
date  hereof and ending on the  earlier to occur of (i) such time as the Special
RL Purchase  Overadvance is reduced to $0, or (ii) July 1, 1997.  From and after
such time as such period shall end, such ceiling  shall cease to be  $64,000,000
and shall revert to $55,000,000,  unless further modified in accordance with the
terms of the Agreement.

                      3.2 Section 2.7 of the Agreement is hereby  amended by the
addition of the following clause (iii):

                      "(iii) In order to facilitate the Borrowers  accomplishing
           the Special RL Purchase,  the Borrowers and Lenders hereby  establish
           the 'Special RL Purchase Overadvance Period.' The Special RL Purchase
           Overadvance Period shall commence on the date hereof and extend until
           ninety (90) days (the "Ninety Day Period")  following  the earlier to
           occur of (i) such time as the Overadvance  outstanding from and after
           the date hereof is reduced to $0, and (ii) July 1, 1997.  Pursuant to
           clause (ii) of Section 2.7 hereof,  the Agent hereby  consents to the
           Borrowers'   requests  for   Overadvances   in  connection  with  the
           Borrowers'   consummation  of  the  Special  RL  Purchase,  and  such
           Overadvances  shall constitute  Overadvances  made pursuant to clause
           (i)(a) of this Section 2.7. For the entire duration of the Special RL
           Purchase Overadvance Period, no other Overadvances shall be permitted
           pursuant  to  Sections  2.7(i)(a),  (b) or  (c),  provided,  however,
           Overadvances not to exceed  $2,000,000 at any time outstanding may be
           made  pursuant  to Section  2.7(i)(b)  during the Ninety Day  Period.
           Notwithstanding  Section  2.7(ii)(f),  Overadvances  made pursuant to
           Section  2.7(i)(a) to facilitate  the Special RL Purchase  during the
           Special RL Purchase  Overadvance  Period may remain outstanding until
           July 1, 1997 and shall not exceed  the  maximum  aggregate  amount of
           $6,500,000  for the period  from the date  hereof  through  March 31,
           1997; shall not exceed $4,500,000 during the month of April, 1997;

                                       -2-

<PAGE>





           shall not exceed  $3,500,000 during the month of May, 1997; shall not
           exceed  $2,500,000  during  the  month of June,  1997;  and shall not
           exceed $0 during the period  commencing on July 1, 1997 and ending on
           September  29,  1997.   Notwithstanding  the  immediately   preceding
           sentence,  from  and  after  such  time as the  Special  RL  Purchase
           Overadvance balance has been reduced to $0 prior to July 1, 1997, the
           maximum   aggregate  amount  of  Overadvances   pursuant  to  Section
           2.7(i)(a)  shall not  exceed $0 for the  duration  of the  Special RL
           Purchase Overadvance Period."

                      3.3  Notwithstanding  the terms of Sections  2.8.2(ii) and
(iii) of the Agreement,  the Borrowers shall pay to the Agent for the benefit of
the  Lenders  in  proportion  to their  respective  commitment  percentages  for
issuance of Letters of Credit issued in connection  with the Special RL Purchase
a fee  quarterly  in  arrears  that is  either in  accordance  with the terms of
Section 2.8.2(i) or (y) a fee equal to the greater of 1/2% of the face amount of
each sight documentary Letter of Credit or such minimum fee for each such Letter
of Credit as may be generally in affect from time to time, or (z) a fee equal to
the greater of 2% per annum of the face amount of each time  documentary  Letter
of Credit or such minimum fee for each such Letter of Credit as may be generally
in effect  from time to time;  plus such  fees and  charges  as are  customarily
charged by the Agent.

           SECTION  4.  FEE.  Simultaneously  with the  execution  and  delivery
hereof,  the Borrowers shall pay to the Agent for the benefit of the Lenders pro
rata in proportion to their respective Commitment  Percentages an administrative
fee of $20,000 in the aggregate.

           SECTION 5. Conditions Precedent to this Amendment.  The Agreements of
the Lenders set forth in this Amendment are subject to the  satisfaction  of the
conditions precedent to the Agreements set forth in that certain Third Amendment
to Subsidiary Tie-In Agreement,  of even date herewith,  among the Borrowers and
the Lenders.

           SECTION 6. ADDITIONAL  REPORTING.  In addition to such information as
is  required  from time to time  pursuant  to  Section 5 of the  Agreement,  the
Borrowers  shall  provide  to the Agent by the 15th day of each  calendar  month
reports  of sales and gross  profits  on a  divisional  basis for the  immediate
preceding month.

           SECTION 7.  GENERAL.

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

                      7.2 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

                                       -3-

<PAGE>





condition which with the giving of notice or the passage of time, or both, would
result in a default or an Event of Default under the Agreement or any instrument
or document executed in connection with the Agreement.

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

                      7.4 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.,  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.

                      7.5 All of the  Obligations  undertaken  hereunder  by the
Borrowers are hereby undertaken by each of them jointly and severally.

           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 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/Brent E. Shay
                                             ---------------------------------
                                               Title: Director

                                          IBJ SCHRODER BANK & TRUST COMPANY

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

                                          SANWA BUSINESS CREDIT CORPORATION

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


                                          LASALLE BUSINESS CREDIT, INC.

                                          By: /s/ Lawrence P. Garni
                                             ---------------------------------
                                               Title: Vice President


                       (Signatures continued on next page)


                                       -4-

<PAGE>




                                          THE BANK OF TOKYO - MITSUBISHI TRUST
                                          COMPANY

                                           By:/s/ G Stewart
                                             ---------------------------------
                                                Title: SVP and Manager

                                          ALLOU & 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 CORPORATION
                                          HBA DISTRIBUTORS, INC.
                                          RUSS KALVIN PERSONAL CARE
                                               CORPORATION
                                          STANFORD PERSONAL CARE
                                               MANUFACTURING, INC.
                                          COSMETIC PLUS TWO, INC.

                                          By:./s/ David Shamilzadeh
                                             ---------------------------------
                                               Title: SVP and 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


                                       -5-