1 "LFA LETTERHEAD" July 15, 1997 VIA FACSIMILE & FIRST CLASS MAIL Mr. Walter Kaye President Merchant Factors Corp. 1430 Broadway New York, NY 10018 Re: Discount Factoring Agreement dated January 25, 1996 Dear Walter: This letter is to confirm that...

   1
                              "LFA LETTERHEAD"


                                July 15, 1997

VIA FACSIMILE & FIRST CLASS MAIL


Xx. Xxxxxx Xxxx
President
Merchant Factors Corp.
0000 Xxxxxxxx
Xxx Xxxx, XX   00000

     Re:  Discount Factoring Agreement dated January 25, 1996

Dear Xxxxxx:

     This letter is to confirm that under the terms specified in item 14 of the
Discount Factoring Agreement dated January 25, 1996  (the "Factoring
Agreement"), the Factoring  Agreement has been renewed, and continues in full
force and effect.  Item 14 is amended so that the next renewal date will be
December 31, 1998.


                                       Very truly yours,


                                       /s/ Xxxxxxx X. Xxxxxxxxx /s/
                                       Xxxxxxx X. Xxxxxxxxx
                                       Chief Financial Officer and
                                       Treasurer


ACCEPTED:

MERCHANT FACTORS CORP.



By:  /s/ Xxxxxx Xxxx /s/
   ------------------------
   Xxxxxx Xxxx
   President