-8-

    THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT AND
                               WAIVER OF DEFAULTS

                  This  Amendment,  dated as of March __,  1998,  is made by and
between THE LAMAUR  CORPORATION,  a Delaware  corporation (the "Borrower"),  and
NORWEST BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").

                                    Recitals

                  The  Borrower  and the Lender have entered into an Amended and
Restated Credit and Security Agreement dated as of May 16, 1997, as amended by a
First Amendment to Amended a Restated Credit and Security  Agreement dated as of
August 13,  1997 and a Second  Amendment  to  Amended  and  Restated  Credit and
Security  Agreement  dated as of November  13, 1997 (as so amended,  the "Credit
Agreement"). Capitalized terms used in these recitals have the meanings given to
them in the Credit Agreement unless otherwise specified.

                  The Borrower has requested that certain  amendments be made to
the Credit Agreement,  which the Lender is willing to make pursuant to the terms
and conditions set forth herein.

                  NOW,  THEREFORE,  in  consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:

                  1. Defined  Terms.  Capitalized  terms used in this  Amendment
which are  defined  in the Credit  Agreement  shall  have the same  meanings  as
defined therein,  unless otherwise defined herein.  In addition,  Section 1.1 of
the Credit  Agreement is amended by adding or amending,  as the case may be, the
following definitions:

                  "'Borrowing  Base'  means,  at any time and  subject to change
         from time to time at the Lender's sole discretion, the lesser of:

                  (a)      the Commitment, or

                  (b)      the sum of

                           (i)      75% of Eligible Accounts, plus

                           (ii)     the  lesser  of (A)  the  sum of (1)  54% of
                                    Eligible Finished Goods Inventory,  plus (2)
                                    44% of  Eligible  Raw  Materials  Inventory,
                                    plus (3) the  lesser of (I) 29% of  Eligible
                                    Carton  Inventory or (II)  $200,000,  or (B)
                                    the Inventory Sub-Limit, plus

                           (iii)    the  lesser  of  (A)  100%  of the  (i)  the
                                    purchase price of any United States Treasury
                                    Securities with an initial  maturity date of
                                    not  greater  than 90 days held from time to
                                    time in the Investment  Account and (ii) the
                                    cash  held in the  Investment  Account , (B)
                                    $6,000,000, or (C) after April 2, 1998, zero
                                    dollars ($0)."

                  "'Inventory Sub-Limit' means the following: (i) from the Third
         Amendment Effective Date up to and including June 29, 1998, $7,000,000,
         (ii)  from June 30,  1998,  up to and  including  September  30,  1998,
         $6,500,000, and (iii) after September 30, 1998, $6,000,000."

                  "'Revolving  Loan Floating Rate' means an annual rate equal to
         the sum of the Base Rate plus two and one-half percent  (2.50%),  which
         Revolving  Loan  Floating  Rate shall  change when and as the Base Rate
         Changes."

                  "'Revolving  Note  Indebtedness'  means all amounts owing from
         the Borrower to the Lender under the Revolving Note."

                  "'Term  Note  Indebtedness'  means the  amount  owing from the
         Borrower to the Lender under the Term Note."

                  "'Third  Amendment'  means that  certain  Third  Amendment  to
         Amended and Restated Credit and Security  Agreement,  dated as of March
         __, 1998, by and between the Borrower and Lender."

                  "'Third Amendment  Effective Date' means the date on which all
         of the  items  listed  in  paragraph  15 of  the  Third  Amendment  are
         satisfied in full."

                  "'Term Loan  Floating  Rate' means an annual rate equal to the
         sum of the Base Rate plus two and three-quarters  percent (2.75%) which
         Term  Loan  Floating  Rate  shall  change  when  and as the  Base  Rate
         Changes."

                  2.  Advances.  Section 2.1 of the Credit  Agreement  is hereby
amended by  deleting  the first  sentence  thereto,  and  replacing  it with the
following:

                           "2.1 Advances.  Provided that the Borrower  maintains
                  Availability  of One Million  Dollars  ($1,000,000) or greater
                  the Lender agrees,  on the terms and subject to the conditions
                  herein set forth,  to make  Advances to the Borrower from time
                  to time during the period from the Third  Amendment  Effective
                  Date to and  including  the  Termination  Date, or the earlier
                  date of termination in whole of the Credit  Facility  pursuant
                  to Sections 2.6 or 8.2 hereof.  In the event that the Borrower
                  requests  any Advance  which would  result in, if such Advance
                  were made, the Borrower's  Availability becoming less than One
                  Million  Dollars  ($1,000,000),  the Lender may or may not, in
                  the  Lender's  sole  discretion,  make  such  Advance  to  the
                  Borrower.   In  no  event  shall  the   aggregate   amount  of
                  outstanding  Advances  exceed the Borrowing  Base less the L/C
                  Amount.  The Advances  shall be secured by the  Collateral  as
                  provided in Article III hereof."

                  3. Voluntary Prepayment; Termination of Agreement by Borrower;
Permanent  Reduction  of  Commitment.  Section  2.6 of the Credit  Agreement  is
amended as follows:

                  a.)  Subsection  (a) of Section 2.6 is amended by deleting the
reference  to  "prepayment  fee  under  Sections  2.6  (d)  and  (e)  below,  if
applicable"  in the last line  thereto and  replacing  it with "any fee required
under the terms of the Credit Agreement."

                  b.)  Subsection  (b) of Section 2.6 is amended by deleting the
reference to "provided  for in  subsection  (d) and (e) below" in the third line
thereto and replacing it with "provided for in the Credit Agreement."

                  c.)  Subsections  (d) and (e) to  Section  2.6 are  deleted in
their entirety,

                  d.)  Subsection (f) to Section 2.6 is amended by relabeling it
as subsection "(d)."

                  4. Fees.  Section  2.13 of the Credit  Agreement is amended by
deleting the reference to "three (3)" in the second line of  Subsection  (a) and
inserting "six (6)" in its place.

                  5. Reporting Requirements. Section 6.1 of the Credit Agreement
is hereby  amended by deleting  subsection (c) thereto and replacing it with the
following:

                  "(c) within (i) 15 days after the end of each month, agings of
                  the Borrower  accounts  receivable and its accounts payable as
                  of the end of such  month,  and (ii) 3 days  after  the end of
                  each week an inventory  certification  report as of the end of
                  such week, which inventory  certification report shall contain
                  a break-out of the Eligible  Finished Goods Inventory by brand
                  name and any other itemization requested by the Lender."

                  6.  Waiver of  Defaults.  The  Borrower  is in  default of the
following provisions of the Credit Agreement (collectively, the "Defaults"):

-------------------------------- ------------- --------------- ----------------
         Section/Covenant             Date         Required        Actual
-------------------------------- ------------- --------------- ----------------
-------------------------------- ------------- --------------- ----------------
ss. 6.1 Monthly Reporting              1/98      2/20/98          Not yet
Requirements                                                     delivered
-------------------------------- ------------- --------------- ----------------
-------------------------------- ------------- --------------- ----------------
ss. 6.13 Debt Service              12/31/97      1.1 to 1.0        (3.7)
Coverage Ratio
-------------------------------- ------------- --------------- ----------------
-------------------------------- ------------- --------------- ----------------
ss. 6.13 Minimum Book Net
Worth Plus Subordinated Debt       12/31/97      $30,050,000     $11,627,000
-------------------------------- ------------- --------------- ----------------
-------------------------------- ------------- --------------- ----------------
ss. 6.14 Maximum Leverage Ratio    12/31/97      1.20 to 1.00    4.05 to 1.00
-------------------------------- ------------- --------------- ----------------
-------------------------------- ------------- --------------- ----------------
ss. 6.15 Minimum Net Income        12/31/97      $200,000        ($18,677,000)
-------------------------------- ------------- --------------- ----------------

Upon the terms and subject to the  conditions set forth in this  Amendment,  the
Lender hereby waives the Defaults.  This waiver shall be effective  only in this
specific  instance and for the specific  purpose for which it is given, and this
waiver  shall not  entitle the  Borrower  to any other or further  waiver in any
similar or other circumstances.

                  7. Financial Covenants.  Section 6.12, 6.13, 6.14, and 6.15 of
the Credit Agreement are hereby amended as follows:

                  "Section 6.12 Debt Service  Coverage Ratio. The Borrower shall
         maintain (exclusive of any Subsidiaries or Affiliates unless the Lender
         specifically   consents   in  writing  to  their   inclusion   in  such
         calculation) a Debt Service Coverage Ratio of at least 3.00 to 1.00 for
         the twelve month period ending December 31, 1998."

                  "Section 6.13 Book Net Worth Plus  Subordinated  Indebtedness.
         The Borrower shall at all times maintain (exclusive of any Subsidiaries
         or  Affiliates  unless the Lender  specifically  consents in writing to
         their inclusion in such calculation),  Book Net Worth plus Subordinated
         Indebtedness  of at least the following,  calculated  monthly as of the
         following dates:

---------------------------------- ---------------------------------------------
      For the Month Ending           Minimum Book Net Worth Plus Subordinated
                                  Indebtedness
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             3/31/98                               $10,300,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             4/30/98                               $10,200,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             5/31/98                               $10,401,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             6/30/98                               $10,800,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             7/31/98                               $10,800,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             8/31/98                               $10,800,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
             9/30/98                               $11,000,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
            10/31/98                               $11,100,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
            11/30/98                               $11,400,000
---------------------------------- ---------------------------------------------
---------------------------------- ---------------------------------------------
            12/31/98                               $11,500,000
---------------------------------- ---------------------------------------------

                  "Section 6.14 Leverage Ratio.  The Borrower shall at all times
         maintain (exclusive of any Subsidiaries or Affiliates unless the Lender
         specifically   consents   in  writing  to  their   inclusion   in  such
         calculation)  a  Leverage  Ratio of not  greater  than  the  following,
         calculated monthly as of the following dates:

--------------------------------------- ----------------------------------------
         For the Month Ending                       Leverage Ratio
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               3/31/98                               4.3 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               4/30/98                               4.3 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               5/31/98                               4.3 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               6/30/98                                4.3 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               7/31/98                                4.2 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               8/31/98                                4.0 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               9/30/98                                4.0 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               10/31/98                               4.0 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               11/30/98                               3.8 to 1.00
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
               12/31/98                               3.8 to 1.00
--------------------------------------- ----------------------------------------

                  "Section  6.15 Net  Income.  The  Borrower  shall at all times
         maintain (exclusive of any Subsidiaries or Affiliates unless the Lender
         specifically   consents   in  writing  to  their   inclusion   in  such
         calculation) Net Income calculated on a fiscal year-to-date basis of at
         least the following amounts for the following dates:

------------------------------ ------------------------------
    For the Month Ending                Net Income
------------------------------ ------------------------------
------------------------------ ------------------------------
           3/31/98                      ($500,000)
------------------------------ ------------------------------
------------------------------ ------------------------------
           4/30/98                      ($600,000)
------------------------------ ------------------------------
------------------------------ ------------------------------
           5/31/98                      ($400,000)
------------------------------ ------------------------------
------------------------------ ------------------------------
           6/30/98                          $0
------------------------------ ------------------------------
------------------------------ ------------------------------
           7/31/98                       $100,000
------------------------------ ------------------------------
------------------------------ ------------------------------
           8/31/98                       $200,000
------------------------------ ------------------------------
------------------------------ ------------------------------
           9/30/98                       $400,000
------------------------------ ------------------------------
------------------------------ ------------------------------
          10/31/98                       $600,000
------------------------------ ------------------------------
------------------------------ ------------------------------
          11/30/98                       $800,000
------------------------------ ------------------------------
------------------------------ ------------------------------
          12/31/98                      $1,000,000
------------------------------ ------------------------------


                  8.  Covenants  for  Subsequent  Periods.  Section  6.16 of the
Credit Agreement is hereby amended by deleting the reference to "May 1, 1998" in
the fourth line thereto and  replacing it with "January 1, 1999" and by deleting
the  reference to "April 30,  1998" in the final line  thereto and  replacing it
with "December 31, 1998".

                  9.  Additional  Events of  Default.  Section 8.1 of the Credit
Agreement is amended by adding the following subsection:

                           "(t) The Borrower  shall fail to reduce,  by April 2,
                  1998,  the amount of the  United  States  Treasury  Securities
                  maintained in the Investment Account to zero."

                  10.  Reduction  of Amounts  in  Investment  Account.  Borrower
shall,  on or before  April 2, 1998,  reduce the amount  held in the  Investment
Account to zero. In the event that,  after April 2, 1998, the amount held in the
Investment  Account is greater than zero,  Lender  shall have the right,  in the
Lender's  sole  discretion,  to apply the  amount  remaining  in the  Investment
Account to the outstanding Obligations.

                  11. Outside Consultant. Upon the occurrence of a Default or an
Event  of  Default,  the  Borrower  agrees  to  retain  an  outside  consultant,
acceptable to Lender,  within two weeks from the first day of the  occurrence of
such Event of Default.

                  12. No Other  Changes.  Except as  explicitly  amended  by the
Third  Amendment,  all of the terms and conditions of the Credit Agreement shall
remain in full  force and  effect  and shall  apply to any  Advance or Letter of
Credit thereunder.

                  13. Restructuring Fee. The Borrower shall pay the Lender as of
the date hereof a fully earned,  non-refundable  fee in the amount of $75,000 in
consideration of the Lender's execution of this Amendment.

                  14.   Continuation  Fee.  In  consideration  of  the  Lender's
execution of this  Amendment and continuing  the Credit  Facility,  the Borrower
shall pay the Lender a fully earned, non refundable fee, as follows:

                  (a) The Borrower  shall pay to the Lender a fee in  connection
                  with the payment in full of the Revolving  Note  Indebtedness,
                  or any reduction of the  Commitment,  which fee shall be fully
                  earned as of the Third  Amendment  Effective Date, but payable
                  upon the payment in full of the  Revolving  Note  Indebtedness
                  (or  reduction of the  Commitment,  as the case may be), in an
                  amount  equal  to one  and  one  half  percent  (1.5%)  of the
                  Commitment  (or the reduction of the  Commitment,  as the case
                  may  be),  provided,  however,  that  in the  event  that  the
                  Borrower pays the Revolving  Note  Indebtedness  in full on or
                  before  September  1,  1998,  than  the fee set  forth in this
                  subsection  (a) shall be an amount equal to one percent (1.0%)
                  of the Commitment.

                  (b) The Borrower  shall pay to the Lender a fee in  connection
                  with the payment in full of the Term Note Indebtedness, or any
                  reduction  of the Term  Note  Indebtedness  in  excess  of the
                  amount due under the amortization  schedule for the Term Note,
                  which  fee shall be fully  earned  as of the  Third  Amendment
                  Effective  Date,  but payable upon such payment in full of the
                  Term  Note  Indebtedness  (or any  reduction  of the Term Note
                  Indebtedness in excess of the  amortization  schedule,  as the
                  case may be) in an  amount  equal to one and one half  percent
                  (1.5%) of amount  of the Term  Note  Indebtedness  at the time
                  such  payment  in  full  is  made  (or  of the  amount  of any
                  reduction  of the Term  Note  Indebtedness  in  excess  of the
                  amortization  schedule,  as the case may), provided,  however,
                  that in the  event  that the  Borrower  repays  the Term  Note
                  Indebtedness in full on or before  September 1, 1998, than the
                  fee set forth in this  subsection (b) shall be an amount equal
                  to one  percent  (1.0%) of the Term Note  Indebtedness  at the
                  time such payment in full is made."

                  15. Conditions Precedent.  This Amendment,  and the waiver set
forth in  Paragraph  4 hereof,  shall be  effective  when the Lender  shall have
received an executed original hereof, together with each of the following,  each
in substance and form acceptable to the Lender in its sole discretion:

                  (Error!   Unknown  switch  argument.)  A  Certificate  of  the
         Secretary  of the  Borrower  certifying  as to (Error!  Unknown  switch
         argument.)  the  resolutions  of the board of directors of the Borrower
         approving the execution and delivery of this Amendment, (Error! Unknown
         switch  argument.)  the fact that the  Articles  of  Incorporation  and
         Bylaws of the  Borrower,  which were  certified  and  delivered  to the
         Lender  pursuant to the  Certificate  of  Authority  of the  Borrower's
         Secretary  dated as of May 16,  1997  continue in full force and effect
         and have not been amended or otherwise  modified except as set forth in
         the Certificate to be delivered,  and (Error! Unknown switch argument.)
         certifying  that the  officers and agents of the Borrower who have been
         certified to the Lender,  pursuant to the  Certificate  of Authority of
         the Borrower's  Secretary dated as of May 16, 1997, as being authorized
         to  sign  and to act  on  behalf  of  the  Borrower  continue  to be so
         authorized  or  setting  forth  the  sample  signatures  of each of the
         officers and agents of the Borrower  authorized  to execute and deliver
         this Amendment and all other documents,  agreements and certificates on
         behalf of the Borrower.

                  (b)      Payment of the fee described in Paragraph 13.

                  (c)      Such other matters as the Lender may require.

                  16.  Representations  and  Warranties.   The  Borrower  hereby
represents and warrants to the Lender as follows:

                  (Error!   Unknown  switch  argument.)  The  Borrower  has  all
         requisite  power and authority to execute this Amendment and to perform
         all of its  obligations  hereunder,  and this  Amendment  has been duly
         executed and delivered by the Borrower and constitutes the legal, valid
         and binding obligation of the Borrower,  enforceable in accordance with
         its terms.

                  (Error! Unknown switch argument.) The execution,  delivery and
         performance by the Borrower of this Amendment have been duly authorized
         by all necessary  corporate  action and do not (Error!  Unknown  switch
         argument.)  require  any  authorization,  consent  or  approval  by any
         governmental   department,   commission,   board,  bureau,   agency  or
         instrumentality, domestic or foreign, (Error! Unknown switch argument.)
         violate any  provision of any law,  rule or regulation or of any order,
         writ, injunction or decree presently in effect, having applicability to
         the  Borrower,  or the  articles  of  incorporation  or  by-laws of the
         Borrower, or (Error! Unknown switch argument.) result in a breach of or
         constitute a default under any indenture or loan or credit agreement or
         any other  agreement,  lease or  instrument  to which the Borrower is a
         party or by which it or its properties may be bound or affected.

                  (Error!  Unknown switch argument.) All of the  representations
         and  warranties  contained  in  Article V of the Credit  Agreement  are
         correct on and as of the date  hereof as though  made on and as of such
         date,  except to the extent that such  representations  and  warranties
         relate solely to an earlier date.

                  17.  References.  All  references  in the Credit  Agreement to
"this  Agreement"  shall be deemed to refer to the Credit  Agreement  as amended
hereby;  and any and all  references  in the  Security  Documents  to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

                  18.  No Other  Waiver.  Except  as set  forth in  Paragraph  5
hereof,  the execution of this  Amendment  shall not be deemed to be a waiver of
any Default or Event of Default under the Credit Agreement or breach, default or
event of default  under any  Security  Document  or other  document  held by the
Lender,  whether or not known to the Lender and  whether or not  existing on the
date of this Amendment.

                  19.   Release.    The   Borrower    hereby    absolutely   and
unconditionally  releases  and forever  discharges  the Lender,  and any and all
participants,   parent   corporations,   subsidiary   corporations,   affiliated
corporations,  insurers,  indemnitors,  successors and assigns thereof, together
with all of the present and former directors,  officers, agents and employees of
any of the  foregoing,  from any and all claims,  demands or causes of action of
any  kind,  nature  or  description,  whether  arising  in law or equity or upon
contract  or tort or under  any state or  federal  law or  otherwise,  which the
Borrower  has had, now has or has made claim to have against any such person for
or by reason of any act,  omission,  matter,  cause or thing whatsoever  arising
from the beginning of time to and including the date of this Amendment,  whether
such  claims,  demands and causes of action are matured or unmatured or known or
unknown.

                  20. Costs and  Expenses.  The Borrower  hereby  reaffirms  its
agreement  under the Credit  Agreement to pay or reimburse  the Lender on demand
for all fees,  costs and expenses  incurred by the Lender in connection with the
Credit Agreement,  the Security  Documents and all other documents  contemplated
thereby,  including without  limitation all reasonable fees and disbursements of
legal counsel.  Without  limiting the generality of the foregoing,  the Borrower
specifically  agrees to pay all fees and  disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby  agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement,  or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.

                  21.  Miscellaneous.  This  Amendment  may be  executed  in any
number of  counterparts,  each of which when so executed and delivered  shall be
deemed  an  original  and  all of  which  counterparts,  taken  together,  shall
constitute one and the same instrument.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment to be duly executed as of the date first written above.

THE LAMAUR CORPORATION                   NORWEST BUSINESS CREDIT, INC.

By _________________________________     By _________________________________
     John D. Hellmann                         Brian F. Fitzpatrick
     Its Vice President                       Its Vice President
M1:
3/31/98 12:45 AM


<PAGE>



                             CONSENT OF PARTICIPANT

This Consent is given effective as of the ____ day of March, 1998, by MERCANTILE
BUSINESS CREDIT,  INC.  ("Mercantile") in favor of NORWEST BUSINESS CREDIT, INC.
("Norwest").

1. Norwest and  Mercantile  entered into that  certain  Participation  Agreement
dated  February  10,  1997,  as  amended  by that  certain  First  Amendment  to
Participation  Agreement  dated as of May 16,  1997,  relating  to that  certain
Credit and  Security  Agreement  dated as of  November  16,  1995 by and between
Norwest and Electronic Hair Styling,  Inc., a Delaware  corporation now known as
The Lamaur  Corporation (the  "Borrower"),  as amended and restated  pursuant to
that certain Amended and Restated Credit and Security  Agreement dated as of May
16, 1997 by and between  Norwest and the  Borrower,  as amended by that  certain
First Amendment to Amended and Restated Credit  Agreement dated as of August 13,
1997, and that certain Second Amendment to Amended and Restated Credit Agreement
dated as of November 13, 1997 (the "Participation Agreement").

2.  Mercantile  hereby  consents to the terms of that certain Third Amendment to
Amended and Restated  Credit and Security  Agreement in the form attached hereto
as Exhibit A, and all other  documents,  instruments and agreements  executed in
connection therewith.

                                            MERCANTILE BUSINESS CREDIT, INC.


                                            By__________________________________
                                                 Its____________________________