THE FIRST NATIONAL BANK OF BOSTON, as Agent
                               100 Federal Street
                                Boston, MA 02110

Allou Health & Beauty Care, Inc.                         as of February 14, 1997
  and its Subsidiaries
50 Emjay Boulevard
Brentwood, NY  11717

           Re:       Fourth 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 (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"),  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 (a) the  Agreement be amended to (i) revise
the  definition  of  Inventory  Turn  Average and (ii) change the ratio test set
forth in Section  5.27 of the  Agreement  as measured at the end of the calendar
quarter ending on March 31, 1997;  and (b) the Borrower's  failure to comply for
the fiscal  quarter  ending  December 31, 1996 with the terms of Section 5.27 of
the Agreement be waived.

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

1.         AMENDMENT TO AGREEMENT.  In compliance with the terms of Section 10.8
of the Agreement;

           1.1 Effective as of December 31, 1996,  Section 1.40 of the Agreement
is hereby amended to read in its entirety as follows:

           "1.40   'Inventory  Turn  Average'  shall  mean  (i)  the  Borrowers'
aggregate cost of goods sold on a consolidated basis for the twelve month period
ending at a particular  point in time,  divided by (ii) the aggregate sum of the
Borrowers'  Inventory on a  consolidated  basis as  reflected on the  Borrowers'
consolidated balance sheet as at the end


<PAGE>





of each of the twelve months in such twelve month period divided by twelve, all
determined in accordance with GAAP."

           1.2 Section 5.27 of the  Agreement  is hereby  amended to read in its
entirety as follows:

           "The Borrower will not permit the ratio of Cash  Equivalents  divided
by the sum of  Current  Liabilities  plus the  then  debit  balance  in the Loan
Account as of the end of each fiscal  quarter to be less than (i) .30 to 1 as of
the end of the fiscal  quarter ending on March 31, 1997, and (ii) .40 to 1 as of
the end of each fiscal quarter ending on or after June 30, 1997."

2.         WAIVER.  In  compliance  with  the  terms  of  Section  10.8  of  the
Agreement, and expressly conditioned upon representations that have been made by
the Borrowers to the Agent that the ratio of Cash Equivalents divided by the sum
of Current Liabilities plus the then debit balance on the Loan Account as of the
end of the fiscal  quarter  ending  December  31, 1996 is greater than .30 to 1,
compliance by the  Borrowers  with the terms of Section 5.27 of the Agreement as
measured  at the end of the  calendar  quarter  ending on  December  31, 1996 is
hereby waived.

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

           3.3 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.

           If the  foregoing  sets  forth  your  understanding  of  the  matters
addressed herein,  please evidence your agreement by countersigning  this letter
Agreement in the space set forth below,  whereupon this Letter  Agreement  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

                                            (Signatures continued on next page)

                                       -2-

<PAGE>





                                          IBJ SCHRODER BANK & TRUST COMPANY


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


                                          SANWA BUSINESS CREDIT CORPORATION


                                          By:/s/
                                             --------------------------------
                                               Title:

                                          LASALLE BUSINESS CREDIT, INC.


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

                                          THE BANK OF TOKYO - MITSUBISHI TRUST
                                          COMPANY


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


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.



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

                       (Signatures continued on next page)

                                       -3-

<PAGE>




                              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 it is a party,  and acknowledges and agrees to the terms and conditions of
this letter and the Agreement as so amended.

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

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

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

                                       -4-