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: Security Agreement dated August 18, 1995 Dear Walter: This letter is to confirm that under the...

   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:  Security Agreement dated August 18, 1995

Dear Xxxxxx:

     This letter is to confirm that under the terms specified in the tenth item
of the Security Agreement dated August 18, 1995  (the "Security Agreement"),
the Security Agreement has been renewed, and continues in full force and
effect.  The tenth item 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