Exhibit 4.3



 Exhibit 4.3



WARRANT AGREEMENT


          THIS
WARRANT AGREEMENT (this "Agreement") dated as of December 21, 2000, is
made by and between DELTA FINANCIAL CORPORATION, a Delaware corporation (the
“Company”), and MELLON INVESTOR SERVICES LLC, a New Jersey limited
liability company (the “Warrant Agent”). 


          WHEREAS,
contemporaneously with the execution of this Agreement, the Company is entering
into that certain Indenture dated as of the date hereof (the
“Indenture”) among the Company, as issuer, each of Delta Funding
Corporation, a New York corporation, DF Special Holdings Corporation, a Delaware
corporation, Fidelity Mortgage, Inc., a Delaware corporation, DFC Financial of
Canada Limited, an Ontario, Canada corporation, DFC Funding of Canada Limited,
an Ontario, Canada corporation, Continental Property Management Corp., a New
York corporation (collectively, the “Subsidiary Guarantors”) and U.S.
Bank Trust National Association, as trustee; 


          WHEREAS,
pursuant to the terms and conditions of the Indenture, the Company is issuing
its 91⁄2% Senior Secured Notes due 2004 (the “Senior Notes”), which
notes will be exchanged (the “Exchange”) for the Company’s
outstanding 91⁄2% Senior Notes due 2004 (the “Old Notes”); 


          WHEREAS,
the Company is issuing to the holders of the Senior Notes warrants (the
“Warrants”) to subscribe in the aggregate for up to 10% of the Common
Stock (as defined in Section 5 hereof) issued and outstanding on the date of
this Agreement; 


          
WHEREAS, as of the date of this Agreement, there are 15,920,869 shares of Common
Stock issued and outstanding;


          WHEREAS,
the Company will issue to each holder of Senior Notes 10.6 Warrants for each
$1,000 principal amount of Senior Notes issued in connection with the Exchange. 


          WHEREAS,
the Warrant Agent, at the request of the Company, has agreed to act as the agent
of the Company in connection with the issuance, registration, transfer, exchange
and exercise of the Warrants. 


          NOW
THEREFORE, in consideration of the premises and mutual agreements herein set
forth: 


          SECTION
1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions
hereinafter set forth, and the Warrant Agent hereby accepts such appointment. 


          SECTION
2. FORM OF WARRANT CERTIFICATES. The certificates evidencing the Warrants
(the “Warrant Certificates”) (and the form of election to purchase
shares of Common Stock and the form of assignment printed on the reverse
thereof) shall be substantially as set forth in Exhibit A hereto and may
have such letters, numbers or other marks of identification or designation or
such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate (but which do not affect the rights,
duties and obligations of the Warrant Agent) and as are not inconsistent with
the provisions of this Agreement or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Warrants may from time to time be listed, or
to conform to usage. Each Warrant Certificate shall be dated as of the date of
issuance thereof by the Warrant Agent, whether upon initial issuance or upon
transfer or exchange, and each Warrant initially shall entitle the holder
thereof to purchase an aggregate of one share of Common Stock, but the number of
such shares and the Exercise Price (as defined in Section 6) shall be subject to
adjustments as provided herein. 


          
SECTION 3. COUNTERSIGNATURE AND REGISTRATION.


          (a)
     The Warrant Agent, upon receipt of written instructions provided by the Chairman
of the Board of Directors, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company (“Company
Instructions”) and Warrant Certificates executed on behalf of the Company,
shall countersign and deliver such Warrant Certificates to holders of the Old
Notes in accordance with such written instructions (which shall include names,
addresses and delivery instructions). 


          (b)
     The Warrant Certificates shall be executed on behalf of the Company by the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President, by facsimile signature, and have affixed thereto a facsimile of the
Company’s seal which shall be attested by the Secretary or an Assistant
Secretary of the Company by facsimile signature. The Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In the event that any officer of the Company
who shall have signed any of the Warrant Certificates shall cease to be such
officer of the Company before countersignature by the Warrant Agent and issuance
and delivery by the Company, such Warrant Certificates, nevertheless, may be
countersigned by the Warrant Agent, issued and delivered with the same force and
effect as though the person who signed such Warrant Certificates had not ceased
to be such officer of the Company; and any Warrant Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificates, shall be a proper officer of the Company to sign such
Warrant Certificates, although at the date of the execution of this Warrant
Agreement any such person was not such an officer. 


          (c)
     The Warrant Agent will keep or cause to be kept, at its office in New York, New
York, books for registration and transfer of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Warrant Certificates, the number of Warrants evidenced on its
face by each of the Warrant Certificates and the date of each of the Warrant
Certificates. 


          (d)
     Prior to due presentment for registration of transfer of the Warrant
Certificates, the Company and the Warrant Agent may deem and treat the
registered holder thereof as the absolute owner of the Warrant Certificates
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company (provided the Company has provided the Warrant
Agent with a copy of such notice or writing) or the Warrant Agent) for the
purpose of any exercise thereof and of any distribution to the holder thereof
and for all other purposes. 


          (e)
     The Warrant Agent shall countersign a Warrant Certificate only (i) upon initial
issuance of the Warrants in accordance with written instructions as provided in
subsection (a) hereof or (ii) upon exchange, transfer or substitution for one or
more previously countersigned Warrant Certificates as hereinafter provided. 


          SECTION
4. TRANSFER AND EXCHANGE. Subject to Section 6 hereof, the Warrant Agent
shall, from time to time, register the transfer of any outstanding Warrant
Certificate upon the books to be maintained by the Warrant Agent for that
purpose, upon surrender thereof for transfer properly endorsed or accompanied by
appropriate instruments of transfer and written instructions for transfer, duly
signed by the registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney, such signature to
be guaranteed by a commercial bank or trust company having an office in the
United States, by a broker or dealer that is a member of the National
Association of Securities Dealers, Inc., or by a member of a national securities
exchange. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee and the surrendered Warrant Certificate shall
be canceled by the Warrant Agent. After the date of this Agreement, any Warrant
Certificate may be exchanged at the option of the holder thereof, upon surrender
at the office or agency of the Warrant Agent maintained for that purpose in New
York, New York (the “Warrant Agent Office”), for another Warrant
Certificate, or other Warrant Certificates of different denominations,
representing in the aggregate the right to purchase a like number of shares of
Common Stock, and the surrendered Warrant Certificate shall be canceled by the
Warrant Agent. No fractional Warrant Certificates will be issued. In the event,
a holder of warrants is entitled to a fractional warrant such fractional warrant
shall be rounded up to the nearest whole warrant. The Company may require from
the transferor payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Warrant Certificates and shall notify the Warrant Agent of any applicable
amounts payable hereunder. The Warrant Agent shall have no duty or obligation to
take any action under any section of this Agreement which requires the payment
by a holder of a Warrant of applicable taxes and governmental charges unless and
until the Warrant Agent is satisfied that all such taxes and/or charges have
been paid. No service charge shall be required of a transferor or transferee in
connection with any transfer or exchange of a Warrant. 


          SECTION
5. COMMON STOCK AND WARRANT COMMON STOCK. As hereinafter used in this
Agreement, “Common Stock” shall mean the Common Stock, par value $.01
per share, of the Company as authorized at the date hereof and stock of any
other class into which such presently authorized Common Stock may hereafter be
changed, and “Warrant Common Stock” shall mean the Common Stock
issuable upon exercise of Warrants. In case, by reason of the operation of
Section 7, the Warrants shall entitle the registered holders thereof to purchase
any other shares of stock or other securities or property of the Company or of
any other corporation, any reference in this Agreement to the exercise of
Warrants shall be deemed to refer to and include the purchase of such other
shares of stock or other securities or property upon such exercise. 


          
SECTION 6. EXERCISE PRICE OF WARRANTS.


          (a)
     The registered holder of any Warrant Certificate may exercise the Warrants
evidenced thereby, in whole or in part and in accordance with the provisions of
Section 9, at any time after the date of this Agreement, upon surrender of the
Warrant Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Warrant Agent at the Warrant Agent Office,
together with payment of the purchase price for each share of Common Stock as to
which the Warrants are exercised, at or prior to 5:00 p.m. (New York City time)
on the earlier to occur of (i) the tenth anniversary date of the date of this
Agreement or (ii) the date on which all obligations of the Company and the
Subsidiary Guarantors under the Indenture and the Senior Notes are satisfied in
full (such earlier date, the “Expiration Date”), at which time all
rights evidenced by the Warrant Certificates shall cease and the Warrants shall
become void. 


          (b)
     The purchase price for each share of Common Stock pursuant to the exercise of a
Warrant (the “Exercise Price”) shall initially be $9.10 and shall be
subject to adjustment as provided in the following sub-clauses (c) and (d) and
in Section 7 hereof and shall be payable in lawful money of the United States of
America. 


          (c)
     Each time prior to the second anniversary of the date of this Agreement that one
or more persons or entities purchases Common Stock or Common Stock Equivalents
in the Company in a single transaction or in a series of related transactions
(the “Equity Buy-In”) for a purchase price equal to or greater than
$15 million in the aggregate, the Exercise Price shall be adjusted to a price
equal to the product of (i) (A) in cases where the security issued in connection
with the Equity Buy-In is Common Stock, the per share consideration paid in
connection the Equity Buy-In or (B) in cases where the security issued in
connection with the Equity Buy-In is a Common Stock Equivalent (as defined
below), the per share consideration for which additional shares of Common Stock
may be issuable thereafter pursuant to such Common Stock Equivalent and (ii)
1.10. The purchase price per share of Common Stock issued or issuable in
connection with an Equity Buy-In shall not be more than 300% of the Average
Market Price immediately prior to such Equity Buy-In. In the event that the
consideration delivered to the Company in connection with an Equity Buy-In is
other than cash, the Company shall engage an investment banking firm or an
accounting firm of national reputation to determine the value of such non-cash
consideration. If one or more Equity Buy-Ins are consummated, the Exercise Price
as adjusted pursuant to this Section 6(c) shall not be subject to further
adjustment as provided in the following sub-clause (d), but shall be subject to
further adjustment from time to time as provided in Section 7. For purposes of
this Agreement, the term “Common Stock Equivalent” shall mean any
security which is or may be at any time convertible into or exchangeable for
shares of Common Stock. 


          (d)
     Except as set forth in sub-clause (c) above, from and after the second
anniversary of the date of this Agreement, the Exercise Price shall be $0.01.
and shall be subject to further adjustment from time to time as provided in
Section 7. 


          
SECTION 7. WARRANT ADJUSTMENTS. The Exercise Price and the number of shares
purchasable upon exercise of a Warrant shall be subject to adjustment as
follows:


          (a)
     STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND RECLASSIFICATIONS. In case the
Company shall at any time after the date of this Agreement (i) declare a
dividend on the Common Stock payable in shares of Common Stock, (ii) subdivide
or reclassify the outstanding Common Stock or (iii) combine or reclassify the
outstanding Common Stock into a smaller number of shares, the Exercise Price in
effect on the record date for such dividend or on the effective date of such
subdivision, combination or reclassification shall be adjusted by multiplying
such Exercise Price by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event. Such adjustment shall be made successively
immediately after the record date, in the case of a dividend or distribution, or
on the effective date, in the case of a subdivision, combination or
reclassification. In connection with any such adjustment, the number of shares
of Common Stock issuable upon exercise of the Warrants also shall be
simultaneously adjusted by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Common Stock issuable upon
the exercise of each Warrant immediately prior to the adjustment required by the
first sentence of this paragraph, and dividing the product so obtained by the
adjusted Exercise Price after giving effect to the adjustment required by the
first sentence of this paragraph. 


          (b)
     SALES OF COMMON STOCK. If at any time after the date of this Agreement the
Company shall issue Common Stock (other than a Permitted Issuance as defined
below) at a price per share less than the lesser of the Average Market Price per
share of Common Stock (as determined in the manner prescribed in Section 8
hereof) or, if the Exercise Price has been adjusted pursuant to Section 6(c),
91% of such adjusted Exercise Price, the Exercise Price shall be decreased to an
amount determined by multiplying such Exercise Price in effect immediately prior
to the date on which such issuance occurred by a fraction, the numerator of
which is the sum of (x) the total number of shares of Common Stock outstanding
on such issue date and (y) the number of shares of Common Stock which the
aggregate consideration received by the Company for shares of Common Stock so
issued would purchase at the greater of such Average Market Price or, if the
Exercise Price has been adjusted pursuant to Section 6(c), 91% of such Adjusted
Exercise Price, as the case may be, and the denominator of which shall be the
sum of (a) the number of shares of Common Stock outstanding on such record date
and (b) the number of additional shares of Common Stock issued. In the event
such purchase price was paid, in whole or in part, with consideration other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be conclusive
and described in a statement filed with the Warrant Agent. The number of shares
purchasable upon the exercise of each Warrant on such record date shall be
increased to a number of shares equal to (i) the number of shares purchasable on
such record date multiplied by the Exercise Price in effect immediately prior to
the adjustment required by the preceding sentence, divided by (ii) the adjusted
Exercise Price computed pursuant to the preceding sentence. Such adjustment
shall be made successively whenever such issuances are consummated. 


          For
purposes of this Agreement, “Permitted Issuances” shall mean (i) the
issuance during each annual period described below of up to a designated number
of rights, stock options or shares of Common Stock to the Company’s
employees and regularly engaged consultants pursuant to the Company’s
existing stock option plans or any stock option plans hereafter adopted by the
Company or pursuant to any restricted share agreement adopted by the Company:
(A) during the period beginning on the date of this Agreement and ending on the
first anniversary of the date of this Agreement, up to 1,592,087 of such rights,
stock options or shares; and (B) during each subsequent annual period beginning
on the day following an anniversary of this Agreement and ending on the next
succeeding anniversary of this Agreement, up to additional 796,044 of such
rights, stock options or shares; provided, however, that the
number of rights, stock options or shares covered by this clause (i) shall not
exceed 3,184,175; (ii) issuance of shares of capital stock upon exercise of the
rights and stock options referred to in clause (i), and (iii) the issuance of
the Warrants and capital stock issuable upon exercise thereof upon the
occurrence of any adjustment required by Section 7 hereof. 


          (c)
     ISSUANCES TO HOLDERS OF COMMON STOCK. If at any time after the date of this
Agreement the Company shall fix a record date for the issuance of rights or
warrants to all holders of its Common Stock entitling them (for a period
expiring within 45 days after such record date) to subscribe for or to purchase
shares of Common Stock (or securities convertible into shares of Common Stock)
at a price per share, or having a conversion price per share of Common Stock (if
a security is convertible into Common Stock), less than the lesser of the
Average Market Price per share of Common Stock on such record date (as
determined in the manner prescribed in Section 8 hereof) or, if the Exercise
Price has been adjusted pursuant to Section 6(c), 91% of such adjusted Exercise
Price, the Exercise Price shall be decreased to an amount determined by
multiplying such Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which is the sum of (x) the total number of
shares of Common Stock outstanding on such record date and (y) the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock to be so offered (or the aggregate subscription or
purchase price for such convertible securities plus the aggregate amount of
additional consideration, if any, payable upon the conversion thereof) would
purchase at the greater of such Average Market Price or, if the Exercise Price
has been adjusted pursuant to Section 6(c), 91% of such Adjusted Exercise Price,
as the case may be, as the case may be) and the denominator of which shall be
the sum of (a) the number of shares of Common Stock outstanding on such record
date and (b) the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible). In the event such subscription or purchase
price is paid, in whole or in part, with consideration other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and described
in a statement filed with the Warrant Agent. The number of shares purchasable
upon the exercise of each Warrant on such record date shall be increased to a
number of shares equal to (i) the number of shares purchasable on such record
date multiplied by the Exercise Price in effect immediately prior to the
adjustment required by the preceding sentence, divided by (ii) the adjusted
Exercise Price computed pursuant to the preceding sentence. Such adjustment
shall be made successively whenever such a record date is fixed and, in the
event that such rights or warrants are not issued, the Exercise Price and the
number of shares of Common Stock purchasable upon exercise of the Warrants shall
be readjusted to the price and the number of shares which were in effect prior
to such record date. 


          (d)
     COMMON STOCK EQUIVALENTS. If at any time after the date of this Agreement the
Company shall issue Common Stock Equivalents (other than Permitted Issuances)
entitling the holders thereof to subscribe for or to purchase shares of Common
Stock at a price per share, or having a conversion price per share of Common
Stock (if a security is convertible into Common Stock), less than the lesser of
the Average Market Price per share of Common Stock or, if the Exercise Price has
been adjusted pursuant to Section 6(c), less than 91% of such adjusted Exercise
Price, the Exercise Price shall be decreased to an amount determined by
multiplying such Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which is the sum of (x) the total number of
shares of Common Stock outstanding on the issuance date of such Common Stock
Equivalent and (y) the number of shares of Common Stock which the aggregate
subscription or purchase price for such Common Stock Equivalents (plus the
aggregate amount of additional consideration, if any, payable upon the exercise
or conversion thereof) would purchase at the greater of such Average Market
Price or, if the Exercise Price has been adjusted pursuant to Section 6(c), 91%
of such Adjusted Exercise Price, as the case may be, and the denominator of
which shall be the sum of (a) the number of shares of Common Stock outstanding
date of issuance of such Common Stock Equivalents and (b) the number of
additional shares of Common Stock to be offered for subscription or purchase (or
into which the convertible securities to be so offered are initially
convertible). In the event such subscription or purchase price is paid, in whole
or in part, with consideration other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive and described in a statement filed with
the Warrant Agent. The number of shares purchasable upon the exercise of each
Warrant outstanding on the issuance date of such Common Stock Equivalents shall
be increased to a number of shares equal to (i) the number of shares purchasable
on such date multiplied by the Exercise Price in effect immediately prior to the
adjustment required by the preceding sentence, divided by (ii) the adjusted
Exercise Price computed pursuant to the preceding sentence. Such adjustment
shall be made successively whenever Common Stock Equivalents are issued and, in
the event that such rights or warrants are not issued, the Exercise Price and
the number of shares of Common Stock purchasable upon exercise of the Warrants
shall be readjusted to the price and the number of shares which were in effect
prior to issuance of such Common Stock Equivalents. 


          (e)
     CONSOLIDATION, MERGER OR SALE OF ASSETS. In case the Company shall be a party to
any transaction (including, without limitation, a merger, consolidation, sale of
all or substantially all of the Company’s assets or recapitalization of the
Common Stock but excluding any transaction to which Section 7(a) applies) in
which the previously outstanding Common Stock shall be changed into or, pursuant
to the operation of law or the terms of the transaction to which the Company is
a party, exchanged for different securities of the Company or common stock or
other securities of another corporation or interests in a noncorporate entity or
other property (including cash) or any combination of any of the foregoing,
then, as a condition of the consummation of such transaction, lawful and
adequate provision shall be made so that the holders of Warrants shall be
entitled, upon the exercise thereof, to an amount per share equal to (A) the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged times (B) the number of shares of Common Stock for which
each Warrant is exercisable immediately prior to the consummation of such
transaction. In case the Company shall be a party to a transaction described in
this Section 7(e), effective provision shall be made by way of a supplemental
agreement to this Agreement so that the provisions set forth herein for the
protection of the exercise rights of the Warrants shall thereafter be
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon exercise of the Warrants; and
the resulting or surviving corporation or other corporation or noncorporate
entity issuing or delivering such shares, other securities or property shall
expressly assume the obligation to deliver, upon the exercise of the Warrants,
such shares, securities or property as the holders of the Warrants shall be
entitled to receive, pursuant to the provisions hereof, and to make provision
for the protection of the exercise right as above provided. In case shares,
securities or property other than Common Stock shall be issuable or deliverable
upon exercise as aforesaid, then all references to Common Stock in this Section
7 shall be deemed to apply, so far as provided and as nearly as is reasonable,
to any such shares, other securities or property. Such adjustment shall be made
successively in the case of any transaction to which this Section 7(e) applies. 


          (f)
     CALCULATIONS TO THE NEAREST CENT AND ONE-HUNDREDTH OF A SHARE. No adjustment in
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 7(f) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 7 shall be made to
the nearest cent and to the nearest one-hundredth of a share, as the case may
be. 


          (g)
     NOTICE OF WARRANT ADJUSTMENT. Whenever the Exercise Price or the number of
shares purchasable upon exercise of a Warrant shall be adjusted as provided in
this Section 7, the Company shall forthwith file with the Warrant Agent a
certificate, signed by a firm of independent public accountants, showing in
detail the facts and computations requiring such adjustment and the Exercise
Price and number of shares so purchasable that will be effective after such
adjustment. Such certificate shall be conclusive evidence of the correctness of
such adjustment. The Company shall also cause a notice setting forth any
adjustments to be sent by mailing first-class, postage prepaid, to each
registered holder of a Warrant Certificate or Warrant Certificates at its
address appearing on the Warrant register, provided, that the failure to give
such notice or any defect therein shall not affect the legality or validity of
such adjustment or the action giving rise thereof. The Warrant Agent shall have
no duty with respect to any certificate filed with it except to keep the same on
file and available for inspection by registered holders of Warrant Certificates
during reasonable business hours and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate. The
Warrant Agent shall not at any time be under any duty or responsibility to any
holder of a Warrant certificate to determine whether any facts exist which may
require any adjustment of the Exercise Price, or with respect to the nature of
any adjustment of the Exercise Price when made, or with respect to the method
employed in making such adjustment. 


          (h)
     OTHER NOTICES. In case the Company after the date hereof shall propose to take
any action of the type described in subsection (a), (b), (c), (d) or (e) of this
Section 7, the Company shall file with the Warrant Agent a certificate, signed
(i) by the Chairman of the Board, the Chief Executive Officer, the President or
any Vice President of the Company and (ii) by its Treasurer or Assistant
Treasurer or Secretary or Assistant Secretary specifying the date on which such
action shall take place and shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such action (to the
extent such fact may be known on the date of such notice) on the Exercise Price
and the number, or kind, or class of shares or other securities or property
which shall be purchasable upon exercise of Warrants. Such certificate shall be
given at least 10 days prior to the record date with respect thereto. The
Company shall cause the Warrant Agent to promptly mail by first class mail,
postage prepaid, to each Warrant holder a copy of the certificate described in
the first sentence of this sub-paragraph (h). Failure to give such certificate
or any defect therein shall not affect the legality or validity of such action. 


          (i)
     NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of any of the adjustments
in the Exercise Price or the number of shares of Warrant Common Stock, Warrant
Certificates theretofore or thereafter issued may continue to express the same
prices and number of shares as are stated in a similar Warrant Certificate
issuable initially, or at some subsequent time, pursuant to this Agreement and
such number of shares specified therein shall be deemed to have been so
adjusted. 


          (j)
     OPTIONAL REDUCTION IN EXERCISE PRICE. The Company may, at its option, at any
time until the Expiration Date, reduce the then current Exercise Price to any
amount deemed appropriate by the Board of Directors of the Company for any
period of at least 20 consecutive days (as evidenced in a resolution adopted by
such Board of Directors), but only upon giving the notice required by Section
7(h) at least 20 days prior to taking such action. 


          (k)
     ADJUSTMENTS UPON EXPIRATION OF CERTAIN UNEXERCISED SECURITIES. Upon the
expiration of any rights, options, warrants or convertible securities the
issuance of which resulted in an adjustment of the Exercise Price and the number
of shares of Common Stock purchasable upon the exercise of a Warrant pursuant to
this Section 7, if any thereof shall not have been exercised or converted, the
Exercise Price and the number of shares of Common Stock purchasable upon the
exercise of a Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had
the original adjustment not been required, as the case may be) on the basis of
(i) the only shares of Common Stock so issued were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such rights, options,
warrants or the conversion of such convertible securities and (ii) such shares
of Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise or conversion plus the consideration,
if any, actually received by the Company for the issuance, sale or grant of all
such rights, warrants or convertible securities whether or not exercised;
provided, however, that no such readjustment shall have the effect
of increasing the Exercise Price by an amount in excess of the amount of the
adjustment initially made in respect of the issuance, sale or grant or such
rights, options, warrants or convertible securities. 


          (l)
     NOTICE OF DIVIDENDS. In addition to any other notice requirements prescribed by
this Agreement, the Company shall cause the Warrant Agent promptly to mail by
first class mail, postage prepaid, to each Warrant holder a notice of the record
date of each dividend to be paid (whether or not in cash) by the Company on its
capital stock. 


          (m)
     TAG ALONG RIGHTS. Other than transfers to his or
their respective Permitted Transferees, if one or more Miller Stockholders (as
defined below) desires to transfer beneficial ownership of shares of Common
Stock or any other security into which any such Common Stock may have been
converted or for which it may have been exchanged in a single transaction or
series of related transactions (a “Transfer”), then such Transfer may
be made only when in compliance with the provisions of this Section 7(m).



          Whenever one or more Miller
Stockholders desires to effect such a Transfer, such Miller Stockholders will
provide written notice to the Company’s Board of Directors. Upon receipt of
such notice the Company will send a notice (“Transfer Notice”) to the
Warrant Agent. The Transfer Notice shall set forth the consideration for the
Common Stock being transferred by the Miller Stockholders, the identity of the
third party acquiring such shares and the other terms and conditions of the
proposed transaction (“Tag Offer”). The Warrant Agent shall
disseminate the Tag Notice to each registered holder of Warrants in the manner
proscribed in this Agreement. Any registered holder of a Warrant Certificate,
may, within 30 days of the receipt of the Transfer Notice, give written notice
(“Tag Notice”) to the Company and the Warrant Agent (which shall be
irrevocable after delivery thereof) stating that such registered holder wishes
to participate in such sale by exercising his, her or its Warrants in sufficient
number so that such holder can sell a number of shares of Common Stock not to
exceed such holder’s pro rata portion of the total amount of Common Stock
to be eventually included in the sale to the third party described in such Tag
Offer, on terms and conditions not less favorable to such registered holders of
Warrant Certificates than those set forth in the Transfer Notice. If the third
party transferee is unwilling to purchase all of the Common Stock which have
been identified for sale, then the amount of Common Stock which the third party
transferee is willing to acquire shall be allocated pro rata among the Miller
Stockholders and those registered holders of Warrant Certificates who have given
timely Tag Notices. Each registered holder of Warrant Certificates electing to
participate in such sale (a “Tagging Warrantholder”) will deliver to
an Escrow Agent (the cost of which Escrow Agent will be borne by the Company),
not less than five Business Days before the proposed date of consummation of the
Tag Offer, the duly endorsed Warrant Certificates and proscribed instructions
for exercise representing all Warrant Common Stock being sold by such Tagging
Warrantholder. The Warrants shall not be deemed exercised until immediately
prior to the consummation of the Tag Offer. If such Tagging Warrantholder fails
to deliver such certificates to the Escrow Agent, the Company will cause the
books and records of the Company to show that such Warrants are subject to the
provisions of this Section 7(m) of this Agreement and may be transferred only to
the third party purchaser upon payment of the cash purchase price without
interest and upon surrender for transfer by such Tagging Warrantholder to the
Escrow Agent. The Miller Stockholders will have six months from the date on
which the Transfer Notice is given to sell to the third party purchaser, at the
price set forth in the Transfer Notice, all of the Common Stock subject to the
Tag Offer. Immediately after completion of any such sale pursuant to this
Section 7(m), the Escrow Agent will notify each Tagging Warrantholder and will
remit to such Tagging Warrantholder the total sales price attributable to the
Warrant Common Stock of such Tagging Warrantholder sold pursuant thereto less a
pro rata portion of the reasonable expenses and taxes among all stockholders of
the Company selling in the transaction, if any, incurred in connection with such
sale; provided, however, that if such Tagging Warrantholder failed
to deliver the Warrant Certificates to the Escrow Agent in accordance with the
terms hereof, the third party purchaser will hold such proceeds in escrow (with
no interest) until such Tagging Warrantholder so delivers such certificates. If
any sale to the third party purchaser is not completed on substantially the same
terms as set forth in the Tag Offer by the expiration of the six month period
referred to herein, then, the Company will cause the Escrow Agent to return to
each Tagging Warrantholder all Warrant Certificates of such Tagging
Warrantholder. Notwithstanding anything in this Section 7(m) to the contrary,
there will be no liability on the part of the Miller Stockholders to the Tagging
Warrantholders if any sale of Common Stock pursuant to this Section 7(m) is not
consummated for whatever reason. The tag-along rights granted pursuant to this
Section 7(m) shall apply only to the first transaction or series of related
transactions that does not constitute a transfer to a Permitted Transferee. 


          For
the purposes of this Agreement, “Permitted Transferee” means with
respect to any Miller Stockholder (i) any spouse or lineal descendant of such
Miller Stockholder, (ii) any trust all of the beneficial interests in which are
held by such Miller Stockholder and/or such Miller Stockholder’s spouse
and/or lineal descendants and (iii) any person or entity if, after giving effect
to the Transfer to such person or entity, the Miller Stockholders in the
aggregate would continue to be the record and beneficial owners of at least a
majority of the outstanding shares of Common Stock (or other equity interests)
of the Company or of any corporation or other entity which is the surviving
entity in any merger or consolidation to which the Company is a party;
provided, however, that each such transferee described in clauses
(i) and (ii) will be a Permitted Transferee for purposes of this Section 7(m)
only if such transferee shall have executed and delivered to the Company an
instrument reasonably satisfactory to the Board of Directors pursuant to which
the transferee shall have agreed to be bound by the terms of this Section 7(m)
as a “Miller Stockholder.” For the purposes of this Agreement,
“Miller Stockholder” means each of Hugh Miller, Lee Miller, Marc E.
Miller and Sidney Miller and their respective Permitted Transferees to the
extent set forth in the proviso of the preceding sentence. 


          SECTION
8.  AVERAGE MARKET PRICE. For all purposes of this Agreement, the
Average Market Price per share of Common Stock on any date shall be deemed to be
the average of the Market Prices (as defined below) for the 20 consecutive
Business Days (as defined below) before such date. The “Market Price”
for each day shall be the last reported sale price or, in case no such sale
takes place on such day, the average of the closing bid and asked prices of the
Common Stock, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the Common Stock
is listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such other system then
in use, or, if on any such date the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If the Common Stock is not publicly held or
so listed or publicly traded, the “Market Price” shall be the fair
market value per share as determined in good faith by the Board of Directors of
the Company. For the purposes of this Agreement, “Business Day” shall
mean any day other than a Saturday, Sunday or legal holiday in the State of New
York or any other day on which securities are not traded in the system or on the
exchange that is the principal market for the Common Stock. 


          
SECTION 9. EXERCISE OF WARRANTS AND STOCK CERTIFICATES


          (a)
     Subject to the provisions of this Agreement, each registered holder of a Warrant
Certificate shall have the right, which may be exercised as provided in such
Warrant Certificate, to purchase from the Company (and the Company shall issue
and sell to such registered holder) all or part of the number of fully paid and
nonassessable shares of Warrant Common Stock specified in such Warrant
Certificate (subject to the adjustments as herein provided), upon surrender to
the Company at the Warrant Agent Office, of such Warrant Certificate with the
exercise form on the reverse thereof duly and properly filled in and signed
(with any required signature guarantee), and upon payment to the Warrant Agent
to the account of the Company of the Exercise Price for the number of shares of
Warrant Common Stock in respect of which such Warrants are then exercised. Upon
surrender of such Warrant Certificate, it shall be canceled by the Warrant
Agent. The date of exercise of any Warrant shall be deemed to be the date of its
receipt by the Warrant Agent duly and properly filled in and signed and
accompanied by proper funds as hereinafter provided. Payment of the Exercise
Price may be made in cash or by certified or official bank check. No adjustment
shall be made for any cash dividends declared or paid on shares of Common Stock
prior to the exercise of a Warrant. Upon such surrender of Warrants, and payment
of the Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants, and in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
shares of Warrant Common Stock so purchased upon the exercise of such Warrants
together with cash in respect of any fraction of a share of such stock issuable
upon such surrender, as provided in Section 10 of this Agreement. 


          (b)
     Each certificate evidencing shares of Common Stock issued upon the exercise of
Warrants shall have such letters, numbers or other marks of identification or
designation or such legends (including restrictive legends), summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock may from time to time be listed, or to
conform to usage. 


          (c)
     Each person in whose name any certificate for shares of Common Stock is issued
upon the exercise of Warrants shall for all purposes be deemed to have become
the holder of record of the Common Stock represented thereby on, and such
certificate shall be dated, the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered and payment of the Exercise Price
(and any applicable taxes and governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the Common Stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding day on which the Common Stock
transfer books of the Company are open. 


          SECTION
10. ELIMINATION OF FRACTIONS. The Company shall not be required to issue
fractional shares of Common Stock upon any exercise of Warrants. As to any final
fraction of a share which the same registered holder of one or more Warrant
Certificates, the rights under which are exercised in the same transaction or
series of related transactions, would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Market Price on the
Business Day which next precedes the day of exercise. The Warrant Agent shall
have no duty or obligation with respect to this Section or any other section
hereof regarding fractional shares unless and until it has received specific
instructions (and sufficient cash, if required) from the Company with respect to
its duties and obligations under such sections. 


          SECTION
11. ISSUE TAXES. The Company will pay all documentary stamp taxes
attributable to the initial issuance of shares of Warrant Common Stock upon the
exercise of any Warrant; provided, however, that neither the
Company nor the Warrant Agent shall be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue or delivery of
any certificates for shares of Warrant Common Stock in a name other than that of
the registered holder of the Warrant Certificate representing the Warrant in
respect of which such shares are initially issued. 


          SECTION
12. RESERVATION OF SHARES. The Company shall, from the date hereof through
the date on which all Warrants shall have been exercised or shall have expired,
reserve and keep available out of its authorized but unissued stock, for the
purpose of effecting the issuance of stock upon exercise or conversion of
Warrants, such number of shares of its duly authorized Common Stock as shall
from time to time be sufficient to effect the issuance of shares of Warrant
Common Stock upon exercise of all Warrants at the time outstanding. 


          
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.


          (a)
     Any entity into which the Warrant Agent may be merged or with which it may be
consolidated, or any entity resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any entity succeeding to the business of
the Warrant Agent, shall be the successor to the Warrant Agent hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding. In the case
of Warrant Certificates which have been countersigned by the Warrant Agent, but
not delivered at the time any such successor to the Warrant Agent succeeds to
the agency created by this Agreement, any such successor may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of such successor Warrant Agent; and in
all such cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates and in this Agreement. 


          (b)
     In case at any time the name of the Warrant Agent shall be changed and at such
time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement. 


          
SECTION 14. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS, ETC.


          (a)
     The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the Warrant
Agent for the purchase of shares of Common Stock through the exercise of such
Warrants. 


          (b)
     The Warrant Agent shall keep copies of this Agreement available for inspection
by holders of Warrant Certificates during normal business hours at the Warrant
Agent Office. 


          SECTION
15. SUPPLEMENTS AND AMENDMENTS. The parties hereto may from time to time
make supplements or amendments to this Agreement without the approval of any
holders of Warrant Certificates which they have been advised by counsel are
necessary to cure any ambiguity or to correct or supplement any provision
contained in this Agreement which may be defective or inconsistent with any
other provision contained herein which, in any case, shall not adversely affect
the interests of the registered holders of the Warrant Certificates. All other
supplements and/or amendments may be made only with the prior written consent of
the holders of not less than a majority of the Warrants. 


          SECTION
16. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant Certificate
shall be mutilated, lost, stolen or destroyed, the Warrant Agent shall deliver a
new Warrant Certificate of like tenor and denomination in exchange and
substitution therefor upon surrender and cancellation of the mutilated Warrant
Certificate or, in the case of a lost, stolen or destroyed Warrant Certificate,
upon receipt of evidence satisfactory to the Company and the Warrant Agent of
the loss, theft or destruction of such Warrant Certificate and, in either case,
upon receipt of such indemnity as the Company or the Warrant Agent may require.
Applicants for substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Warrant
Agent or the Company may prescribe. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at
any time enforceable by anyone. 


          SECTION
17. DUTIES OF THE WARRANT AGENT. The Warrant Agent undertakes only the
duties and obligations expressly imposed by this Warrant Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Warrant Certificates, by their acceptance thereof, shall be bound: 


          (a)
     The Warrant Agent shall not be liable for or by reason of any of the statements
of fact or recitals contained in this Agreement or in the Warrant Certificates
(except its countersignature thereof and except such as describes the Warrant
Agent or action taken by it) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only. The Warrant Agent shall not be under any responsibility in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate
to be complied with by the Company; nor shall it be responsible for the making
of any adjustment in the Exercise Price or the number of shares issuable upon
the exercise of a Warrant required under the provisions of Section 7 or
responsible for the manner, method or amount of any such change or the
ascertaining of the existence of facts that would require any such change; nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares to be issued pursuant to
this Agreement or any Warrant or as to whether any shares will, when issued, be
validly issued and fully paid and nonassessable. 


          (b)
     The Warrant Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys, agents or employees. 


          (c)
     The Warrant Agent may consult at any time with legal counsel satisfactory to it
(who may be legal counsel for the Company) and the advice of such counsel shall
be full and complete authorization and protection to the Warrant Agent as to any
action taken, suffered or omitted by it to be taken in accordance with such
advice. Whenever in the performance of its duties hereunder, the Warrant Agent
is unsure of the current Exercise Price or how many shares of Common Stock are
purchasable upon the exercise of a Warrant, the Warrant Agent may seek
clarification thereof from the Company, and the Warrant Agent shall be fully
protected and shall incur no liability in not taking any action under this
Agreement prior to receiving a written response from the Company. 


          (d)
     The Warrant Agent shall incur no liability or responsibility to the Company or
to any holder of a Warrant Certificate for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate or other paper, document
or instrument believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties. 


          (e)
     The Company agrees to pay to the Warrant Agent the fees set forth in Schedule I
hereto for all services rendered by the Warrant Agent in the execution and
administration of this Warrant Agreement, to reimburse the Warrant Agent for all
expenses (including reasonable counsel fees), disbursements, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the preparation, execution, delivery, amendment and
administration of this Warrant Agreement and to indemnify the Warrant Agent and
save it harmless against any and all liabilities, including judgments, costs,
losses, damages, fines, penalties, claims, demands, settlements and reasonable
counsel fees, for any action taken, suffered or omitted to be taken by the
Warrant Agent in connection with the execution and administration of this
Warrant Agreement except as a result of the Warrant Agent’s gross
negligence, wilful misconduct or bad faith (each as finally determined by a
court of competent jurisdiction). The foregoing indemnities in this paragraph
shall survive termination or removal of the Warrant Agent or termination of this
Agreement. The cost and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. Any liability of the Warrant Agent
under this Agreement will be limited to the amount of fees paid by the Company
to the Warrant Agent. 


          (f)
     The Warrant Agent and any stockholder, affiliate, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Warrant Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity. 


          (g)
     The Warrant Agent shall act hereunder solely as agent for the Company and in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for any action taken,
suffered or omitted to be taken in connection with this Agreement except for its
own gross negligence, wilful misconduct or bad faith (each as may be finally
determined by a court of competent jurisdiction). Notwithstanding anything
herein to the contrary, in no event shall the Warrant Agent be liable for
special, indirect, punitive, incidental or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits) even if the
Warrant Agent has been advised of the likelihood of such loss or damage. 


          SECTION
18. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be effectively
discharged from its duties under this Agreement upon 30 days’ prior notice
in writing mailed to the Company by registered or certified mail, and to the
holders of the Warrant Certificates by first-class mail. The Company may remove
the Warrant Agent or any successor Warrant Agent upon 30 days’ prior notice
in writing, mailed to the Warrant Agent or successor Warrant Agent, as the case
may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Warrant Certificates by first-class
mail. If the Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant Agent.
If the Company shall fail to make such appointment within a period of 30 days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Warrant Agent or by the holder
of a Warrant Certificate (who shall, with such notice, submit his Warrant
Certificate for inspection by the Company), then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. The holders of a majority of the Warrants
may with the consent of the Company appoint a successor Warrant Agent to replace
the successor Warrant Agent appointed by the Company. Any successor Warrant
Agent, whether appointed by the Company, the holders of a majority of the
Warrants or by such a court, shall be an entity organized and doing business
under the laws of the United States or of any state thereof, in good standing,
which is authorized under such laws to exercise stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Warrant Agent a combined capital and
surplus of at least $10,000,000. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; and,
upon payment in full of amounts owed to the predecessor Warrant Agent, the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of such appointment the Company shall file notice
thereof in writing with the predecessor Warrant Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Warrant Certificates. Failure to give any notice provided for in this
Section 18, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be. 


          SECTION
19. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment of any
subsequent transfer agent for shares of the Common Stock, the Company will file
with the Warrant Agent a statement setting forth the name and address of such
transfer agent. 


          SECTION
20. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier (i) the date of transmission, if such
notice or such communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., New York City time, on any
date and earlier than 11:59 p.m., New York City time, on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice or communication is required to be given. The addresses and facsimile
numbers for all such notices, communication and/or deliveries shall be as
follows: 


		
if to the Company,



Delta Financing Corporation

1000 Woodbury Road

Woodbury, New York 11797

Attention: Marc E. Miller

Fax: (516) 812-8850



with a copy to:



Stroock & Stroock & Lavan, LLP

180 Maiden Lane

New York, New York 10038-4982

Attn: Bradley Kulman, Esq.

Fax: (212) 806-6006



if to the Warrant Agent,



Mellon Investor Services LLC

44 Wall Street, 6th Floor

New York, New York 10005

Attn: Ms. Cynthia Gonzalez

Fax: (917) 320-6318
	





          or
to such other addresses or facsimile numbers as any party may most recently have
designated in writing to the other parties hereto by such notice. The Company
shall cause the Warrant Agent to promptly mail by first class mail, postage
prepaid, to each Warrant holder any and all notices or other communications or
deliveries required or permitted to be provided hereunder to the Warrant
holders. 


          
SECTION 21. SUCCESSORS. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.


          SECTION
22. GOVERNING LAW. This Agreement and each Warrant issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of the State of New York
without regard to the conflicts of laws principles thereof. 


          SECTION
23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company, the Warrant Agent
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement. 


          SECTION
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument. 


          
SECTION 25. REGISTRATION RIGHTS. Holders of the Warrants are entitled to the
rights and benefits of that certain Registration Rights Agreement of even date
herewith.


          SECTION
26. REMEDIES. In addition to any other rights and remedies the Holders may
have hereunder, one or more of the Holders of at least 20% of the Warrants shall
be entitled to obtain immediate preliminary and permanent injunctive relief
(including a any ex parte temporary restraining order) without having to post a
bond in connection with any judicial action taken by any such Holders to
vindicate their rights hereunder. 











           IN
WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
executed and delivered as of the day and year first above written.


		
COMPANY:



DELTA FINANCIAL CORPORATION, a

Delaware corporation





By:            
              
               
               

     Name:

     Title:



WARRANT AGENT:



MELLON INVESTOR SERVICES LLC, a

New Jersey limited liability company





By:            
              
               
               

     Name:

     Title:



MILLER STOCKHOLDERS

(signing with respect to Section 7(m) only)





            
              
               
               

Hugh Miller





            
              
               
               

Lee Miller





            
              
               
               

Marc E. Miller





            
              
               
               

Sidney A. Miller









SCHEDULE I



Mellon Investor Services LLC

Schedule of Fees

as

Warrant Agent for Delta Financial Corporation





		I.

                         

                         

                         II.

                         

                         

                         III.

                         

                         IV.

                         

                         

                         

                         V.

                         

                         

                         

                         	Acceptance Fee (One time fee)

                         

                         

                         Reviewing Warrant Agent Agreement and appointment documents

                         

                         

                         Annual fee for acting as Warrant Agent (this applies to coupled rights)



                        Conversion of Warrants (per item)

                        (includes the receipt of warrants and necessary funds,

                        cancellation of warrant, issuance of new security and wiring of funds to issuer)

                         

                         Special Services (Mailing of materials to holders), Minimum

                         

                         Mechanically affixing labels to envelopes or enclosures, each

                    Mechanically inserting enclosures into envelopes (letter size), each  	$2,500.00





 By Appraisal





$2,500.00



$50.00







$250.00



$.03

$.05











EXHIBIT A



FORM OF WARRANT CERTIFICATE


EXERCISABLE ONLY ON OR AFTER DECEMBER __, 2000

(as provided in the Warrant Agreement

referred to below)


	NUMBER

W__________		WARRANTS

_______________

CUSIP:






DELTA FINANCIAL CORPORATION


This Warrant Certificate Certifies that





or registered assigns is the registered holder of



Warrants (the
“Warrants”) expiring on the Expiration Date (as defined in Section 6
of the Warrant Agreement and described on the reverse hereof) to purchase shares
of the common stock (the “Common Stock”), par value $0.01 per share,
of Delta Financial Corporation, a Delaware corporation (the
“Company”). Each Warrant entitles the holder thereof to purchase from
Company one fully paid and nonassesable share of Common Stock at the Exercise
Price (as defined in the Warrant Agreement) at the time in effect under the
Warrant Agreement ($9.10 per share, at the time of the initial issuance of the
Warrants), payable in lawful money of the United States of America by certified
or official bank check payable to the order of the Company, upon surrender of
this Warrant Certificate and payment of such Exercise Price to the Company at
the designated office of the Warrant Agent in New York or at another office or
agency to be maintained by the Company, but only subject to the conditions set
forth herein and in the Warrant Agreement, provided, however, that
no fractional shares shall be issued on exercise of the Warrant and that the
number of kind of shares (or in certain events other property) purchasable upon
exercise of the Warrants and the Exercise Price referred to on the reverse
hereof may as of the date of this Warrant Certificate have been, or may after
such date be, adjusted as a result of the occurrence of certain events, as more
fully provided in the Warrant Agreement. 


           No Warrant may
be exercised after 5:00 p.m. on the Expiration Date.


           Reference is
hereby made to the further provisions of this Warrant Certificate set forth on
the reverse hereof and such further provisions shall for all purposes have the
same effect as though fully set forth at this place.


          This
Warrant Certificate shall not be valid unless countersigned by the Warrant Agent
(or an authenticating agent of the Warrant Agent appointed pursuant to Section 1
of the Warrant Agreement) by the manual signature of one of its authorized
officers.


          
IN WITNESS WHEREOF, DELTA FINANCIAL CORPORATION has caused facsimile signatures
of its duly authorized officers to be printed hereon and the facsimile of its
corporate seal to be affixed hereunto.


		
Dated:





Countersigned:





By:             
               
                
                
	
DELTA FINANCIAL CORPORATION





By:             
               
                
                

     Name:

     Title:





By:             
               
                
                

     Name:

     Title:











DELTA FINANCIAL CORPORATION


          The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to a Warrant Agreement dated as of December
21, 2000 (the “Warrant Agreement”), duly executed and delivered by the
Company to Mellon Investor Services LLC, as warrant agent (the “Warrant
Agent”), which Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a description of
the rights, imitation of rights, obligations, duties and immunities thereunder
of the Warrant Agent, the Company and the holders (the words “holders”
or “holder” meaning the registered holders or registered holder) of
the Warrants and a copy of which Warrant Agreement will be available at the
office of the Secretary of the Company for inspection by holders of Warrants
during normal business hours. 


          The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering the Warrant Certificate, with the Form of Exercise set forth hereon
properly completed and executed, together with payment of the Exercise Price at
the time in effect, to the Company at the designated office of the Warrant Agent
in New York. In the event that upon any exercise of Warrants evidenced hereby
the number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised. 


          The
Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price may, subject to certain conditions, be adjusted and under certain
circumstances the Warrant may become exercisable for securities or other assets
other than the shares referred to on the face hereof. If the Exercise Price is
adjusted, the Warrant Agreement provides that the number of Common Shares
purchasable upon the exercise of each Warrant shall be adjusted in certain
circumstances. 


          This
Warrant Certificate is transferable, in whole or in part, on the register
maintained by the Company at the designated office of the Warrant Agent for such
purpose, upon surrender of this Warrant Certificate at the office of the Warrant
Agent, or at another office or agency to be maintained by the Company, together
with a written assignment of the Warrant Certificate, on the Form of Assignment
set forth hereon or in other form satisfactory to the Warrant Agent, duly
executed by the holder or his duly appointed legal representative, and together
with funds to pay any applicable taxes or governmental charges payable in
connection with such transfer. Upon such surrender and payment, a new Warrant
Certificate shall be issued and delivered, in the name of the assignee and in
the denomination or denominations specified in such instrument of assignment. If
less than all of this Warrant Certificate is being transferred, a new Warrant
Certificate or Certificates shall be issued of the portion of this Warrant
Certificate not being transferred. 


          This
Warrant Certificate may be divided or combined with other Warrant Certificates
upon surrender hereof to the Company at the designated office of the Warrant
Agent, or at another office or agency to be maintained by the Company, together
with a written notice specifying the names and denominations in which new
Warrant Certifications are to be issued, signed by the holder hereof or his duly
appointed legal representative, and together with the funds to pay any
applicable taxes or governmental charges payable in connection with such
transfer. Upon such surrender and payment, a new Warrant Certificate or
Certificates shall be issued and delivered in accordance with such notice. 


          The
Company shall make no service or other charge in connection with any such
transfer or exchange of this Warrant Certificate, except for any applicable
taxes or governmental charges payable in connection therewith. 


          The
Company and the Warrant Agent may deem and treat the registered holder hereof as
the absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise or conversion hereof, any distribution to the holder hereof, and for
all other purposes, and neither the Company nor the Warrant Agent shall be
affected by an notice to the contrary. 






 ELECTION TO EXERCISE

To be executed upon exercise of Warrant


          The
undersigned hereby irrevocable elects to exercise the right, represented by this
Warrant Certificate, to purchase __ shares of Common Stock and herewith tenders
payment for such Common Stock to the order of Delta Financial Corporation in the
amount of $______ in accordance with the terms hereof. The undersigned requests
that a certificate for such Common Stock be registered in the name of 




Name (Please Print)





Whose address is




Address (Please Print)





Delivery Address (if different) (Please Print)




          If
said number of shares of Common Stock is less than all of the Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of the shares of Common Stock be registered
in the name of 




Name (Please Print)

Whose address is




Address (Please Print)




and that such Warrant Certificate be delivered to




Delivery Address (if different) (Please Print)






            
             
              
               
              
              
                
               
               
                

(Insert Social Security or Taxpayer Identification Number of Holder)


Signature Guaranteed:



_____________________________________________________

ASSIGNMENT



To be executed to transfer the Warrant Certificate



FOR VALUE RECEIVED ___________ hereby sells, assigns and transfer unto





Whose address is ___________________________________________________________________________________



this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _______________

__________________________________________________________________________________________________________attorney
to transfer the within Warrant Certificate on the books of the within-named Corporation, with full power of
substitution.


	Dated:_________________________	(Signature_____________________

must conform in all respects to name of holder as

 specified on the face of the Warrant Certificate.)







____________________________________________________

(Insert Social Security or Taxpayer Identification Number of Holder)