Document:

INTERCREDITOR
                           AND SUBORDINATION AGREEMENT

                  This INTERCREDITOR AND SUBORDINATION  AGREEMENT is dated as of
March 16, 2001 by and among U.S. Bank Trust National Association,  as collateral
agent and not in its  individual  capacity  (the  "AGENT")  under those  certain
Pledge  Agreements  dated as of March 16,  2001 (the  "NEW  PLEDGE  AGREEMENTS")
between Delta Funding Corporation or DF Special Holdings Corporation in favor of
the Agent, DELTA FUNDING CORPORATION,  a New York corporation (together with its
successors and assigns,  "DELTA FUNDING"),  DF SPECIAL HOLDINGS  CORPORATION,  a
Delaware  corporation  (together with its  successors  and assigns,  "DF SPECIAL
HOLDINGS",  and together with Delta  Funding,  "DELTA"),  GOLDMAN SACHS MORTGAGE
COMPANY,  a New York  limited  partnership  (together  with its  successors  and
assigns,  "GOLDMAN SACHS") and GREENWICH  CAPITAL  FINANCIAL  PRODUCTS,  INC., a
Delaware corporation (together with its successors and assigns, "GREENWICH," and
together with Goldman Sachs, the "SENIOR LENDERS").

                                   WITNESSETH:

                  WHEREAS, Delta has requested that Senior Lenders make advances
of cash to Delta  pursuant to that certain  Master Loan and Security  Agreement,
dated as of September 30, 1999,  between Delta and  Greenwich,  as amended,  and
including  Goldman Sachs,  pursuant to that certain Amendment Number Nine, dated
as of the date hereof (as may be further amended, modified or restated from time
to time,  the "SENIOR  AGREEMENT")  secured by,  among other  certificates,  the
Pledged Residuals;

                  WHEREAS,  as a condition to making any such advances  pursuant
to the Senior Agreement, Senior Lenders require that Delta grant to them a first
priority  security  interest in the Pledged Residuals in order to secure certain
obligations of Delta owing to Goldman Sachs or Greenwich  pursuant to the Senior
Agreement;

                  WHEREAS,  the Pledged  Residuals  are  currently on deposit in
Delta Funding  Residual  Holding Trust 2000-1 or Delta Funding  Residual Holding
Trust 2000-2 (the "Residual  Collateral  Trusts") and pursuant to certain Pledge
Agreements  dated  as of  December  21,  2000  the  Agent  (in its  capacity  as
collateral agent  thereunder)  holds a perfected  security interest in the Owner
Trust Certificates  evidencing  beneficial  ownership  interests in the Residual
Collateral Trusts;

                  WHEREAS,  in order to induce  Goldman  Sachs and  Greenwich to
make the Advances  pursuant to the Senior  Agreement (i) the Beneficial  Holders
are executing a consent statement  pursuant to which the Beneficial  Holders are
consenting to the release of the Pledged Residuals from the Residual  Collateral
Trusts and (ii) the Agent pursuant to written  instructions  received by it from
the Beneficial Holders is executing a Third  Supplemental  Indenture dated as of
the date of the New Pledge  Agreements which permits the grant to Senior Lenders
of a senior  lien  thereon  and to the Agent of a junior and  subordinated  lien
thereon;

                  WHEREAS pursuant to the New Pledge  Agreements,  Delta Funding
and DF  Special  Holdings  are  granting  to the Agent a pledge of and  security
interest in the Pledged Residuals; and

                  WHEREAS,  Goldman Sachs, Greenwich,  Delta and Agent desire to
agree upon and set forth their  rights to payment from Delta with respect to the
Pledged  Residuals and the priority of their  respective  security  interests in
and/or liens upon the Pledged Residuals, and all proceeds thereof;

                  NOW, THEREFORE,  in consideration of the premises and for good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, Goldman Sachs, Greenwich, Delta and Agent hereby agree as follows:

                  1. DEFINITIONS.

                  (a) Unless otherwise  defined  herein, terms  defined  in  the
Senior  Agreement  and used herein shall have the meanings  given to them in the
Senior Agreement.

                  (b) The following terms  shall  have  the  following meanings:

                  "1996-2  RESIDUAL":  Delta  Funding  Home  Equity  Loan  Trust
1996-2,  Home Equity Loan  Pass-Through  Certificates,  Series 1996-2,  Class R,
representing percentage ownership of 99.999999% in such class.

                  "AGREEMENT":  This  Intercreditor and Subordination Agreement,
as the same may  be amended,  modified  or otherwise  supplemented  from time to
time.

                  "BENEFICIAL HOLDERS": The beneficial holders of a  majority in
principal amount of the Notes.

                  "NOTES":  Approximately  $150,000,000  in principal  amount of
9 1/2% Senior  Secured Notes due 2004 issued by Delta Financial Corporation.

                  "PLEDGED RESIDUALS": The  residual  receivables  set  forth on
Schedule I hereto.

                  "SENIOR  OBLIGATIONS": The obligation  of  Delta or its
affiliates to make payments to Greenwich or Goldman Sachs pursuant to the  terms
of the Senior Agreement.

                  "SUBORDINATED  RIGHTS":  All rights of the Agent with  respect
to the  Pledged  Residuals or any proceeds, payments or related distributions or
rights therefrom or thereunder.

                  (c) The  words  "hereof", "herein" and "hereunder"  and  words
of similar import when used in this Agreement  shall  refer to this Agreement as
a whole and not to any particular provision of this Agreement,  and section  and
paragraph  references  are  to  this  Agreement  unless  otherwise specified.

                  (d) The  meanings  given  to  terms defined  herein  shall  be
equally applicable to both the singular and plural forms of such terms.

                  2. SUBORDINATION.

                  (a) Each  of Agent and  Delta  agrees,  for  itself  and  each
future  holder of the  Subordinated  Rights,  that the  Subordinated  Rights are
expressly  "subordinate  and  junior  in right of  payment"  (as that  phrase is
defined in paragraph 2(b)) to all Senior Obligations.

                  (b) "Subordinate and junior in right of payment" means that:

                  (1) no part of the Subordinated Rights shall have any claim to
         any  Pledged  Residual  on a parity  with or prior to the  claim of any
         Senior Obligation which is secured by such Pledged Residual;

                  (2) unless and until the Senior  Obligations have been paid in
         full,  without the express  prior  written  consent of Senior  Lenders,
         Delta shall not be permitted to make and Agent shall not be entitled to
         receive any distribution in respect of the Pledged Residuals;

                  (c) The  expressions "prior to  payment  in full," "payment in
full," "paid in full" and  any  other  similar terms or phrases when used herein
with  respect  to the Senior  Obligations  shall  mean the  payment in full,  in
immediately  available funds, of all of the Senior Obligations then due or which
may become due at any future time.

                  (d) Agent   hereby  agrees  that,  prior  to  the  payment  in
full of the  Senior  Obligations  secured  by any  Pledged  Residual  or Pledged
Residuals,  the security  interest of Senior Lenders in such Pledged Residual or
Pledged  Residuals shall have priority over any security  interest Agent may now
have or hereafter acquire in such Pledged Residual or Pledged Residuals and that
Agent's  security  interest  in all  respects  shall  be,  and is,  subject  and
subordinate in all respects to Senior Lenders' security interest, whether or not
Senior Lenders' security interest is perfected or has priority by law.

                  3. ADDITIONAL PROVISIONS CONCERNING SUBORDINATION.

                  (a) Agent  and Delta  agree that all  Senior Obligations shall
be paid  in  full before any payment or distribution is made with respect to the
Subordinated Rights, and no default shall exist under the New  Pledge Agreements
in  respect  of  any  Subordinated  Rights  by  virtue of the application of the
provisions of this Agreement to the Subordinated Rights.

                  (b) Agent and Delta agree that any payment or distribution  of
assets in respect of the  Pledged Residuals, to  which Agent would  be  entitled
except for the  provisions  hereof,  shall be paid or delivered by Delta, or any
receiver, trustee in bankruptcy,  liquidating trustee, disbursing agent or other
Person  making such payment or  distribution,  directly to Senior Lenders to the
extent  necessary to pay in full all Senior  Obligations,  before any payment or
distribution shall be made to Agent.

                  (c) If  any  payment  or  distribution, whether consisting  of
money,  property or  securities,  be collected or received by the Agent from the
Pledged  Residuals  without the prior written consent of Senior  Lenders,  Agent
forthwith  shall deliver the same to Senior Lenders in the form  received,  duly
endorsed  to Senior  Lenders,  if  required,  to be  applied  to the  payment or
prepayment of the related Senior  Obligations until such Senior  Obligations are
paid in full. Until so delivered,  such payment or distribution shall be held in
trust by Agent as the property of Senior  Lenders,  segregated  from other funds
and property held by Agent.

                  4. RIGHTS IN PLEDGED RESIDUALS.

                  (a) Notwithstanding  anything  to  the  contrary  contained in
the Senior Agreement or the New Pledge Agreements and irrespective of:

                  (1) the time,  order or method of  attachment or perfection of
         the  security  interests  created  by the Senior  Agreement  or the New
         Pledge Agreements,

                  (2) the time or order of  filing  or  recording  of  financing
         statements  or other  documents  filed or recorded to perfect  security
         interests in the Pledged Residuals,

                  (3)  anything  contained  in any filing or  agreement to which
         Senior Lenders or Agent now or hereafter may be a party, and

                  (4) the  rules for  determining  priority  under  the  Uniform
         Commercial  Code or any other law governing the relative  priorities of
         secured creditors,

any security interest in the Pledged Residuals  pursuant to the Senior Agreement
has and shall have  priority,  to the extent of any unpaid  Senior  Obligations,
over any security interest in such Pledged Residuals  pursuant to the New Pledge
Agreements.

                  (b) So long as the  Senior Obligations have  not  been paid in
full and the Senior  Agreement remains in effect,

                  (1) Agent will not (A) exercise or seek to exercise any rights
         or  exercise  any  remedies  with  respect to any  Pledged  Residual or
         Pledged  Residuals which secure such Senior Obligation or (B) institute
         any  action or  proceeding  with  respect to such  rights or  remedies,
         including without limitation, any action of foreclosure or (C) contest,
         protest or object to any  foreclosure  proceeding or action  brought by
         Senior  Lenders or any other  exercise by Senior  Lenders of any rights
         and remedies  under the Senior  Agreement or (D) otherwise  take action
         against  the Pledged  Residuals  which  secure such Senior  Obligations
         which would interfere with the quiet enjoyment of the Pledged Residuals
         by the Senior  Lenders,  or delay or  otherwise  impede the  ability of
         Senior Lenders to collect or foreclose on the Pledged  Residuals  which
         secure such Senior Obligations;

                  (2) Senior  Lenders shall have the exclusive  right to enforce
         rights and  exercise  remedies  with  respect to the Pledged  Residuals
         which secure such Senior Obligations.

                  (c) In exercising  rights  and  remedies  with  respect to the
Pledged  Residuals,  Senior  Lenders may enforce  the  provisions  of the Senior
Agreement and exercise remedies thereunder, all in such order and in such manner
as they may  determine in the  exercise of their sole  business  judgment.  Such
exercise and enforcement shall include,  without limitation,  the rights to sell
or otherwise dispose of Pledged Residuals,  to incur expenses in connection with
such sale or  disposition  and to  exercise  all the  rights and  remedies  of a
secured lender under the Uniform Commercial Code of any applicable jurisdiction.
Senior Lenders shall give prior written  notice to the Agent in connection  with
any such sale or  disposition  of the Pledged  Residuals  by Senior  Lenders and
shall  provide  ten (10)  business  days for the Agent to  purchase  the Pledged
Residuals for a purchase price equal to the then outstanding Senior Obligations,
such  purchase to be effected not later than ten (10)  business  days  following
delivery of such written notice.  The Agent shall have no obligation to purchase
Pledged  Residuals  under this Section 4(c) unless it (i) shall receive  written
instructions from the Beneficial Holders to make such purchase,  (ii) shall have
in its possession as Agent or shall receive from the party or parties requesting
the purchase of Pledged  Residuals,  sufficient  funds to pay the purchase price
for such Pledged Residuals and (iii) shall receive an  indemnification  from the
Beneficial  Holders in form and substance  satisfactory to the Agent against any
and all liabilities arising from such purchase.

                  All amounts paid by the Agent in connection  with the purchase
of Pledged  Residuals  under this Section 4(c) shall be deemed an expense  under
Section 10 of the New Pledge  Agreements.  Pledged  Residuals  purchased  by the
Agent under this Section 4(c),  and all cash  proceeds  received by the Agent in
respect of any sale of,  collection from, or other  realization upon, all or any
part of such Pledged Residuals,  shall be held by the Agent subject to Section 8
of the New Pledge Agreements and shall be applied to the Obligations (as defined
in the New  Pledge  Agreements)  of DF  Special  Holdings  and Delta  Funding in
accordance therewith.

                  (d) Subject  to paragraphs (f) and (g) of this Section 4, when
all  Senior Obligations  which  are  secured by  any Pledged Residual or Pledged
Residuals  have  been  paid in full and the  Senior  Agreement  no  longer is in
effect,  then Senior  Lenders  shall  release any liens in and shall deliver the
Pledged  Residuals  to the Agent,  to be held by the Agent  pursuant  to the New
Pledge Agreements, and shall execute any and all documents and instruments which
may be  necessary  to  accomplish  the  purposes of this  paragraph,  including,
without  limitation,   any  financing  termination   statements,   endorsements,
assignments or other  instruments  of transfer or release,  and Agent shall have
the right to enforce the provisions of the New Pledge Agreements relating to the
Pledged Residuals and exercise remedies thereunder.

                  (e) Any  money,  property  or  securities  realized  upon  the
sale, disposition or other realization by Senior Lenders upon all or any part of
the  Pledged  Residuals,  shall be  applied by Senior  Lenders in the  following
order:

                  (1) First, to the payment in full of all reasonable  costs and
         expenses   (including,   without   limitation,   attorneys'   fees  and
         disbursements)  reasonably  paid  or  incurred  by  Senior  Lenders  in
         connection  with  such  realization  on the  Pledged  Residuals  or the
         protection of their rights and interests therein;

                  (2)  Second,  to the  payment  in full of all  related  Senior
         Obligations  in such  order as  Senior  Lenders  may  elect in its sole
         discretion;

                  (3) Third,  to the Agent to payment in full of all obligations
         secured by such Pledged Residuals under the New Pledge Agreements; and

                  (4) Fourth,  to pay to Delta,  or its  representative  or as a
         court of competent jurisdiction may direct, any surplus then remaining.

                  (f) Senior Lenders'  rights  with  respect  to   the   Pledged
Residuals  include  the right to  release  any or all of the  Pledged  Residuals
relating to the 1996-2  Residual  only from the lien of the Senior  Agreement or
the New Pledge Agreements in connection with the sale of such Pledged Residuals,
notwithstanding  that  the net  proceeds  of any  such  sale  may not be used to
permanently  prepay any Senior  Obligations or  Subordinated  Rights.  If Senior
Lenders  shall  determine,  in  connection  with any sale of  Pledged  Residuals
relating to the 1996-2 Residual only (including the sale by Delta of the Pledged
Residuals relating to the 1996-2 Residual only to the Senior Lenders pursuant to
a forward agreement,  purchase agreement or similar agreement), that the release
of the lien of the New Pledge Agreements on such Pledged  Residuals  relating to
the 1996-2 Residual only in connection with such sale is necessary or advisable,
Agent shall execute such release documents and instruments and shall at the cost
and  expense  of Delta  take  such  further  actions  as  Senior  Lenders  shall
reasonably  request.  Agent hereby  irrevocably  constitutes and appoints Senior
Lenders  and any  officer  or  agent  of  Senior  Lenders,  with  full  power of
substitution,  as its true and  lawful  attorney-in-fact  with full  irrevocable
power and  authority in the place and stead of Agent and in the name of Agent or
in Senior Lenders' own name,  from time to time in Senior  Lenders'  discretion,
for the purpose of carrying out the terms of this paragraph, to take any and all
appropriate  action and to execute any and all documents and  instruments  which
may be  necessary  to  accomplish  the  purposes of this  paragraph,  including,
without limitation, any financing statements, endorsements, assignments or other
instruments  of  transfer  or  release.  Agent  hereby  ratifies  all that  said
attorneys  shall  lawfully  do or  cause  to be done  pursuant  to the  power of
attorney granted in this paragraph.

                  (g) The Agent  hereby releases,  without  the  requirement  of
any further action,  any and all right, title and interest it may have in and to
the Pledged Residuals relating to the 1996-2 Residual only, effective,  however,
only upon the sale or other disposition of the Pledged Residuals relating to the
1996-2 Residual only by Delta to either Senior Lender or both Senior Lenders (or
any of their affiliates)  pursuant to any forward agreement,  purchase agreement
or similar agreement.

                  5. CONSENT OF AGENT. Agent consents that, without the
necessity of any  reservation of rights against Agent,  and without notice to or
further assent by Agent:

                  (1) any demand for payment of any Senior  Obligations  made by
         Senior Lenders may be rescinded in whole or in part by Senior  Lenders,
         and any Senior Obligation may be continued, and the Senior Obligations,
         or the  liability of Delta or any  guarantor or any other party upon or
         for any part thereof,  or any collateral security or guarantee therefor
         or right of offset with respect thereto, or any obligation or liability
         of Delta or any other  party  under the Senior  Agreement  or any other
         agreement,  may,  from time to time,  in whole or in part,  be renewed,
         extended, modified, accelerated,  compromised,  waived, surrendered, or
         released by Senior Lenders; and

                  (2) the Senior Agreement and any other Senior Agreement may be
         amended, modified,  supplemented or terminated, in whole or in part, as
         Senior Lenders may deem advisable from time to time, and any collateral
         security  at any time held by either  Senior  Lender for the payment of
         any  of  the  Senior  Obligations  may  be  sold,  exchanged,   waived,
         surrendered or released,

in each case all without notice to or further assent by Agent, which will remain
bound under this Agreement, and all without impairing,  abridging,  releasing or
affecting the subordination provided for herein.

                  (b) Agent waives any and all  notice of the creation, renewal,
modification, amendment  or  accrual of any of the Senior Obligations and notice
of or proof of reliance by Senior  Lenders  upon  this  Agreement.  All dealings
between Delta and Senior  Lenders in respect of the Pledged  Residuals shall  be
deemed  to  have  been  consummated  in  reliance  upon  this  Agreement.  Agent
acknowledges  and agrees that Senior Lenders have relied upon the  subordination
provided  for  herein  in  making  advances  to  Delta  secured  by the  Pledged
Residuals.  Agent waives  notice of or proof of reliance on this  Agreement  and
protest, demand for payment and notice of default.

                  6. NEGATIVE COVENANTS OF AGENT. So long as any of  the  Senior
Obligations shall remain outstanding, Agent shall not, without the prior written
consent of Senior Lenders:

                  (a) sell, assign, or otherwise transfer,  in whole or in part,
the  Subordinated  Rights  or any  interest  therein  to  any  other  Person  (a
"TRANSFEREE")  or  create,  any  security   interest,   lien,  charge  or  other
encumbrance  whatsoever upon the Subordinated  Rights in favor of any Transferee
unless (1) such action is made  expressly  subject to this Agreement and (2) the
Transferee  expressly  acknowledges to Senior Lenders,  by a writing in form and
substance  satisfactory to Senior Lenders, the subordination provided for herein
and agrees to be bound by all of the terms hereof, or

                  (b) permit the New Pledge  Agreements to be amended,  modified
or otherwise supplemented.

                  7. SENIOR OBLIGATIONS UNCONDITIONAL. All rights and  interests
of Senior Lenders hereunder,  and all agreements  and  obligations  of Agent and
Delta hereunder,  shall remain in full force and effect irrespective of:

                  (a) any lack of validity or enforceability of the Senior
                  Agreement;

                  (b) any  change in the time,  manner or place of  payment  of,
or in any other term of, all or any of the Senior Obligations, or any  amendment
or waiver or other  modification,  whether by course of conduct or otherwise, of
the terms of the Senior Agreement;

                  (c) any   exchange,  release or nonperfection of any  security
interest  in  any  Pledged Residuals, or any release, amendment, waiver or other
modification, whether in writing or by course of conduct or otherwise, of all or
any of the Senior Obligations or any guarantee thereof; or

                  (d) any other circumstances which otherwise  might  constitute
a  defense  available  to, or a discharge  of, Delta  in  respect of  the Senior
Obligations, or of either Agent or Delta in respect of this Agreement.

                  8. REPRESENTATIONS AND WARRANTIES. Agent represents and
warrants to Senior Lenders that:

                  (a) Agent has capacity and  the  legal  right  to  execute and
deliver and to perform its  obligations  under this  Agreement and has taken all
necessary  action to authorize its execution,  delivery and  performance of this
Agreement.

                  (b) This Agreement constitutes  a  legal,  valid  and  binding
obligation of Agent, as collateral agent under the New Pledge Agreements.

                  (c) The  Agent is the collateral  agent  under  the New Pledge
Agreements  and  is  executing the  New Pledge  Agreements  and  this  Agreement
pursuant to a written consent and direction executed by the Beneficial Holders.

                  9. NO REPRESENTATION BY SENIOR LENDERS. Senior   Lenders  have
not made, and  do  not  hereby  or  otherwise make to Agent, any representations
or warranties, express or implied, nor do Senior Lenders assume any liability to
Agent with respect to: (a) the  financial or other  condition of obligors  under
any instruments with respect to the Senior Obligations,  (b) the enforceability,
validity,  value or collectibility of the Senior Obligations or the Subordinated
Rights,  any  collateral  therefor,  or any guarantee or security which may have
been  granted  in  connection  with  any  of  the  Senior   Obligations  or  the
Subordinated  Rights  or (c)  Delta's  title or right to  transfer  the  Pledged
Residuals.

                  10. NO  REPRESENTATION BY AGENT:  Agent has not made, and does
not hereby or  otherwise   make  to  Senior  Lenders,  any  representations   or
warranties,  express or implied,  nor does Agent assume any  liability to Senior
Lenders with respect to: (a) the financial or other  condition of obligors under
any instruments with respect to the Subordinated Rights, (b) the enforceability,
validity,  value or collectibility of the Senior Obligations or the Subordinated
Rights,  any  collateral  therefor,  or any guarantee or security which may have
been  granted  in  connection  with  any  of  the  Senior   Obligations  or  the
Subordinated  Rights  or (c)  Delta's  title or right to  transfer  the  Pledged
Residuals.

                  11. WAIVER  OF CLAIMS. To  the  maximum  extent  permitted  by
law,  Agent waives any claim it might have against  Senior  Lenders with respect
to, or arising  out of,  any action or failure to act or any error of  judgment,
negligence,  or mistake or oversight whatsoever on the part of Senior Lenders or
their respective  directors,  officers,  employees or agents with respect to any
exercise of rights or remedies  under the Senior  Agreement  or any  transaction
relating  to the  Pledged  Residuals.  Neither  Senior  Lenders nor any of their
respective directors,  officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Pledged Residuals or for any delay
in doing so or shall be under any obligation to sell or otherwise dispose of any
Pledged  Residuals  upon the request of Delta or Agent or any other Person or to
take any other  action  whatsoever  with regard to the Pledged  Residuals or any
part thereof.

                  12. FURTHER  ASSURANCES. Agent and  Delta, at  Delta's expense
and at any time from time to time,  upon the  written request of Senior Lenders,
will promptly  and  duly  execute  and  deliver  such  further  instruments  and
documents and take such further actions as Senior Lenders reasonably may request
for the purposes of obtaining or preserving  the full benefits of this Agreement
and of the rights and powers herein granted.

                  13. EXPENSES.

                  (a) Delta  will pay or reimburse Senior Lenders,  upon demand,
for all its costs and expenses in connection  with  the  preparation of, and the
enforcement or preservation  of any  rights  under,  this  Agreement, including,
without  limitation,  fees and  disbursements  of  counsel to Senior Lenders.

                  (b) Delta  will pay or reimburse  Agent, upon demand, for  all
its  costs  and  expenses  in  connection  with  the  preparation  of,  and  the
enforcement or  preservation  of any rights under,  this  Agreement,  including,
without limitation, fees and disbursements of counsel to Agent.

                  (c) Delta  will   pay,  indemnify,  and  hold  Senior  Lenders
harmless from and against any and all other  liabilities,  obligations,  losses,
damages, penalties,  actions (whether sounding in contract, tort or on any other
ground),  judgments,  suits,  reasonable costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery,  enforcement,
performance  and  administration  of,  or in any  other  way  arising  out of or
relating to this  Agreement or any action taken or omitted to be taken by Senior
Lenders with respect to any of the foregoing.

                  (d) Delta  will pay,  indemnify, and hold Agent harmless  from
and against  any  and  all  other liabilities,  obligations,  losses,   damages,
penalties,  actions (whether sounding in contract, tort or on any other ground),
judgments,  suits,  reasonable  costs,  expenses or disbursements of any kind or
nature  whatsoever  with  respect  to  the  execution,  delivery,   enforcement,
performance  and  administration  of,  or in any  other  way  arising  out of or
relating to this  Agreement  or any action taken or omitted to be taken by Agent
with respect to any of the foregoing.

                  14. PROVISIONS DEFINE RELATIVE RIGHTS. This Agreement is
intended  solely  for the  purpose of  defining  the  relative  rights of Senior
Lenders on the one hand and Agent on the other,  and no other  Person shall have
any right, benefit or other interest under this Agreement.

                  15. POWERS COUPLED WITH AN INTEREST. All powers,
authorizations  and agencies  contained in  this Agreement are  coupled  with an
interest and are irrevocable until the Senior Obligations are paid in full.

                  16. NOTICES. All notices, requests  and  demands  to  or  upon
Senior Lenders or Delta or Agent to be effective  shall be in writing (or by fax
or similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (1) when delivered by hand or (2) if given by mail, when
deposited in the mails by certified mail, return receipt requested, or (3) if by
fax or similar  electronic  transfer,  when sent and receipt has been confirmed,
addressed as follows:

       If to Greenwich:       600 Steamboat Road
                              Greenwich, Connecticut  06830
                              Attention: General Counsel
                              Telecopier No.: (203) 618-2132
                              Telephone:  (203) 625-6072

       If to Goldman Sachs:   85 Broad Street
                              New York, New York 10004
                              Attention:  Sarah Gurley
                              Telecopier No.: (212) 902-1691
                              Telephone:  (212) 902-1020

                              and

                              85 Broad Street
                              New York, New York 10004
                              Attention: Sibyl Peyer
                              Telecopier No.: (212) 428-1899
                              Telephone: (212) 902-8191

       If to Delta:           1000 Woodbury Road, Suite 200
                              Woodbury, New York 11797
                              Attention: Richard Blass
                              Telecopier No.: (516) 812-8206
                              Telephone No.: (516) 364-9450

                              with a copy to:

                              Anna T. Pinedo, Esq.
                              Stroock & Stroock & Lavan LLP
                              180 Maiden Lane
                              New York, NY  10038
                              Telecopier:  (212) 806-6006
                              Telephone:  (212) 806-5400

       If to Agent:           U.S. Bank Trust National Association, as agent
                              100 Wall Street
                              16th Floor
                              New York, NY  10005
                              Attn:  Ms. Amy S. Roberts
                                     Vice President
                              Telecopier:  (212) 809-5459
                              Telephone:  (212) 361-2893

                              with a copy to:

                              Richard Hiersteiner, Esq.
                              Palmer & Dodge LLP
                              One Beacon Street
                              Boston, MA 02108
                              Telecopier:  (617) 227-4420
                              Telephone:  (617) 573-0100

Senior  Lenders,  Delta and Agent may change their  addresses  and  transmission
numbers for notices by notice in the manner provided in this Section.

                  17. COUNTERPARTS.  This  Agreement  may  be  executed  by  one
or more of the parties on any number of separate  counterparts,  and all of said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.

                  18. SEVERABILITY. Any provision  of  this  Agreement  which is
prohibited  or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the  extent  of such  prohibition or unenforceability  without
invalidating the remaining  provisions  hereof, and  any   such  prohibition  or
unenforceability    in   any   jurisdiction  shall   not  invalidate  or  render
unenforceable such provision in any other jurisdiction.

                  19. INTEGRATION. This  Agreement  represents  the agreement of
Senior  Lenders and  Agent  with  respect to the subject matter hereof and there
are no promises or  representations  by Senior  Lenders or Agent relative to the
subject matter hereof not reflected herein.

                  20. AMENDMENTS IN WRITING; NO WAIVER: CUMULATIVE REMEDIES.

                  (a) None of the terms or  provisions  of  this  Agreement  may
be waived,  amended,  supplemented  or  otherwise  modified  except by a written
instrument  executed  by Senior  Lenders,  Delta and Agent;  PROVIDED,  that any
provision  of this  Agreement  may be waived by  Senior  Lenders  in a letter or
agreement executed by Senior Lenders.

                  (b) No failure to exercise, nor  any  delay  in exercising, on
the part of Senior  Lenders,  any  right,  power  or  privilege  hereunder shall
operate as a waiver thereof.  No single or partial exercise of any right,  power
or privilege  hereunder shall preclude any other or further  exercise thereof or
the exercise of any other right, power or privilege.

                  (c) The rights and remedies  herein provided  are  cumulative,
may  be  exercised  singly  or  concurrently  and are not exclusive of any other
rights or remedies provided by law.

                  21. SECTION  HEADINGS.  The  section  headings  used  in  this
Agreement  are for  convenience  of  reference  only and are not to  affect  the
construction hereof or be taken into consideration in the interpretation hereof.

                  22. SUCCESSORS  AND  ASSIGNS. This Agreement shall  be binding
upon the  successors  and assigns of Delta and  Agent  and  shall  inure  to the
benefit of Senior Lenders and their successors and assigns.

                  23. GOVERNING  LAW.  THIS AGREEMENT   SHALL  BE  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK  (INCLUDING  SECTION 5-1401 OF
THE NEW YORK GENERAL  OBLIGATIONS  LAW) WITHOUT  REGARD TO ANY  CONFLICTS OF LAW
PROVISIONS  (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL  OBLIGATIONS LAW)
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  EXCEPT TO THE
EXTENT PREEMPTED BY FEDERAL LAW.

                  24. TERM.  This Agreement  shall  remain  in  full  force  and
effect until all of the Senior  Obligations shall have been paid in full in cash
and the Senior Agreement has been  terminated.  This Agreement shall continue to
be effective or be automatically  reinstated, as the case may be, if at any time
any payment,  or any part thereof, of any of the Senior Obligations is rescinded
or must  otherwise  be restored or returned by any Senior  Lender for any reason
whatsoever, whether upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization  of Delta or  otherwise,  all as though such payment had not been
made.   Section  4(d)  shall  survive  and  remain  in  full  force  and  effect
notwithstanding any termination of the Senior Agreement or of this Agreement.

<PAGE>

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

                                DELTA FUNDING CORPORATION

                                By: /S/ MARC E. MILLER
                                --------------------------------
                                  Name: Marc E. Miller
                                  Title: Senior Vice President

                                DF SPECIAL HOLDINGS CORPORATION

                                By: /S/ MARC E. MILLER
                                --------------------------------
                                  Name: Marc E. Miller
                                  Title: Vice President

                                GOLDMAN SACHS MORTGAGE
                                COMPANY

                                By: /S/ JONATHAN SOBEL
                                --------------------------------
                                  Name: Jonathan Sobel
                                  Title:

                                GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.

                                By: /S/ ANTHONY PARMISANO
                                --------------------------------
                                  Name: Anthony Parmisano
                                  Title: Vice President

                                U.S. BANK TRUST NATIONAL ASSOCIATION, as Agent

                                By: /S/ PATTY J. KAPSCH
                                --------------------------------
                                  Name: Patty J. Kapsch
                                  Title: Trust Officer

<PAGE>

<TABLE>
<CAPTION>

                                                SCHEDULE I

                                             PLEDGED RESIDUALS
                                             -----------------

               ISSUER                    SERIES           CLASS        PERCENTAGE INTEREST
               ------                    ------           -----        -------------------
    <S>                                 <C>               <C>          <C>

    Delta Funding Home Equity
    Loan Trust 1996-2, Home              1996-2             R               99.999999%
    Equity Loan Pass-Through
    Certificates

    Delta Funding Home Equity
    Loan Trust 1999-3, Home              1999-3            BIO                 100%
    Equity Loan Asset-Backed
    Certificates

    Delta Funding Home Equity
    Loan Trust 1999-3, Home              1999-3            R-1              99.999999%
    Equity Loan Asset-Backed
    Certificates

    Delta Funding Home Equity
    Loan Trust 1999-3, Home              1999-3            R-2              99.999999%
    Equity Loan Asset-Backed
    Certificates

    Delta Funding Home Equity
    Loan Trust 1999-3, Home              1999-3            R-3              99.999999%
    Equity Loan Asset-Backed
    Certificates
</TABLE>GRAND SLAM TREASURERS, INC.
                      2001 NON-QUALIFIED STOCK OPTION PLAN

         This 2001  Non-Qualified  Stock  Option Plan  correctly  sets forth the
provisions of the 2001 Non-Qualified Stock Option Plan.

                                    ARTICLE I
                            ESTABLISHMENT AND PURPOSE

         I.1  Establishment.  Grand Slam Treasurers,  Inc., a Nevada corporation
("Company"), hereby establishes a Non-Qualified stock option plan for employees,
independent  contractors and consultants  providing material services other than
those   independent   contractors  and  consultants   involved   capital-raising
activities  including  fundraising  public  relations,  to the  Company  and its
present and future  subsidiaries which shall be known as the "2001 NON-QUALIFIED
STOCK  OPTION  PLAN"  (the  "Plan").  None of the  options  issued to  employees
pursuant to the Plan may constitute  incentive  stock options within the meaning
of Section 422 of the Internal Revenue Code. Options issued pursuant to the Plan
shall constitute non-qualified options.

         I.2  Purpose.  The  purpose  of  this  Plan is to  enhance  shareholder
investment by attracting,  retaining and  motivating key employees,  independent
contractors and consultants of the Company,  and to encourage stock ownership by
such persons by providing them with a means to acquire a proprietary interest in
the Company's success.

                                   ARTICLE II
                                   DEFINITIONS

         II.1 Definitions.  Whenever used herein, the following terms shall have
the respective  meanings set forth below,  unless the context  clearly  requires
otherwise, and when said meaning is intended, the term shall be capitalized.

          (a)  "Board" means the Board of Directors of the Company.

          (b)  "Code" means the Internal Revenue Code, as amended.

          (c)  "Committee"  shall  mean the  Committee  provided  by  Article IV
               hereof, which may be created at the discretion of the Board.

          (d)  "Company" means Grand Slam Treasures, Inc., a Nevada corporation.

          (e)  "Consultant"  means any  person  or  entity,  including  a Parent
               Corporation or a Subsidiary  Corporation,  who provides  services
               (other than as an Employee) to the Company,  a Parent Corporation
               or  a  Subsidiary  Corporation,  and  shall  include  independent
               contractors, Non-Employee Officers and Non-Employee Directors, as
               defined subsequently.

          (f)  "Date of Exercise" means the date the Company receives notice, by
               an  Optionee,  of the  exercise of an Option  pursuant to Section
               VIII.1 of this Plan.  Such notice  shall  indicate  the number of
               shares of Stock the Optionee intends to exercise.

          (g)  "Employee" means any person,  including an officer or director of
               the Company or a Subsidiary  Corporation,  who is employed by the
               Company or a Subsidiary Corporation.

          (h)  "Fair  Market  Value"  means the fair market  value of Stock upon
               which an  option  is  granted  under  this  Plan,  determined  as
               follows:

          (i)  So long as the Stock is  listed  or  traded  on the OTC  Bulletin
               Board, the NASDAQ Stock Market or a national securities exchange,
               the Fair Market  Value shall be the average of the last  reported
               sale  prices of the Stock for the 20  trading  days  prior to the
               date of grant of this option, provided that if no sale is made on
               any such trading day, the last  reported  sale price shall be the
               average of the closing bid and asked prices for such day; or
<PAGE>

          (ii) Otherwise,  Fair Market  Value shall be an amount,  not less than
               book value,  determined by the Board,  such  determination  to be
               final and binding on the Holder.

          (i)  "Non-Employee Director" means a member of the Board who is not an
               employee  of the  Company  at  the  time  an  Option  is  granted
               hereunder.

          (j)  Non-Employee  Officer" means an officer of the Company who is not
               an  employee  of the  Company  at the time an Option  is  granted
               hereunder.

          (k)  "Non-qualified  Option"  means an Option  granted under this Plan
               which is not  intended to qualify as an  incentive  stock  option
               within  the  meaning of  Section  422 of the Code.  Non-qualified
               Options  may be  granted  at  such  times  and  subject  to  such
               restrictions as the Board shall determine  without  conforming to
               the  statutory  rules of Section  422 of the Code  applicable  to
               incentive stock options.

          (l)  "Option"  means the right,  granted  under this Plan, to purchase
               Stock of the Company at the option  price for a specified  period
               of  time.  For  purposes  of  this  Plan,  an  Option  may  be  a
               Non-qualified Option.

          (m)  "Optionee"  means an  Employee  or  Consultant  holding an Option
               under the Plan

          (n)  "Parent  Corporation" shall have the meaning set forth in Section
               424(e) of the Code with the Company being treated as the employer
               corporation for purposes of this definition.

          (o)  "Subsidiary  Corporation"  shall  have the  meaning  set forth in
               Section  424(f) of the Code with the Company being treated as the
               employer corporation for purposes of this definition.

          (p)  "Significant  Shareholder"  means an individual  who,  within the
               meaning of Section  422(b)(6) of the Code, owns stock  possessing
               more than ten percent of the total  combined  voting power of all
               classes of stock of the Company or of any Parent  Corporation  or
               Subsidiary  Corporation of the Company. In determining whether an
               individual is a Significant  Shareholder,  an individual shall be
               treated  as  owning  stock  owned  by  certain  relatives  of the
               individual and certain stock owned by  corporations  in which the
               individual is a shareholder, partnerships in which the individual
               is a partner,  and estates or trusts of which the individual is a
               beneficiary, all as provided in Section 424(d) of the Code.

          (q)  "Stock"  means the $.001 par value  common  stock of the Company.

         II.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology when used in this Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.

<PAGE>
                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

         III.1  Eligibility  and  Participation.  All  Employees are eligible to
participate in this Plan and receive  Non-qualified  Options under the Plan. All
Consultants  are eligible to participate in this Plan and receive  Non-qualified
Options hereunder.  Optionees in the Plan shall be selected by the Board, in its
sole discretion,  from among those Employees and Consultants who, in the opinion
of the Board,  are in a  position  to  contribute  materially  to the  Company's
continued growth and development and to its long-term financial success.

                                   ARTICLE IV
                                 ADMINISTRATION

          IV.1 Administration.  The Board shall be responsible for administering
the Plan.

                  (a)  The  Board  is  authorized  to  interpret  the  Plan;  to
         prescribe,  amend,  and rescind rules and  regulations  relating to the
         Plan; to provide for  conditions  and  assurances  deemed  necessary or
         advisable  to protect the  interests  of the  Company;  and to make all
         other  determinations  necessary or advisable for the administration of
         the Plan.  Determinations,  interpretations,  or other  actions made or
         taken by the Board,  pursuant to the provisions of this Plan,  shall be
         final and binding and conclusive for all purposes and upon all persons.

                  (b)  At  the  discretion  of  the  Board,  this  Plan  may  be
         administered  by a Committee  which shall be an executive  committee of
         the Board,  consisting  of not less than two members of the Board.  The
         members of such  Committee may be directors who are eligible to receive
         Options  under this Plan,  but Options  may be granted to such  persons
         only by action of the full Board and not by action of the Committee. At
         such time as the  Company  has any class of  equity  security  which is
         registered  pursuant to Section 12 of the  Securities  Exchange  Act of
         1934, the Committee  shall consist  solely of two or more  Non-Employee
         Directors  as that term is defined in Rule 16b-3  under that Act.  Such
         Committee  shall  have  full  power  and  authority,   subject  to  the
         limitations of the Plan and any  limitations  imposed by the Board,  to
         construe, interpret and administer this Plan and to make determinations
         which  shall  be  final,  conclusive  and  binding  upon  all  persons,
         including,  without  limitation,  the Company,  the  shareholders,  the
         directors and any persons having any interests in any Options which may
         be granted under this Plan, and, by resolution or resolution  providing
         for the creation and issuance of any such Option, to fix the terms upon
         which,  the time or times at or  within  which,  the price or prices at
         which  any such  shares  may be  purchased  from the  Company  upon the
         exercise of such Option.  Such terms, time or times and price or prices
         shall,  in every case, be set forth or incorporated by reference in the
         instrument  or  instruments   evidencing  such  Option,  and  shall  be
         consistent with the provisions of this Plan.

                  (c) If the  Committee has been  appointed,  the Board may from
         time to time remove members from, or add members to, the Committee. The
         Board  may  terminate  the  Committee  at any  time.  Vacancies  on the
         Committee,  howsoever  caused,  shall  be  filled  by  the  Board.  The
         Committee  shall select one of its members as Chairman,  and shall hold
         meetings  at such times and places as the  Chairman  may  determine.  A
         majority of the Committee at which a quorum is present, or acts reduced
         to or approved in writing by all of the members of the Committee, shall
         be  the  valid  acts  of the  Committee.  A  quorum  shall  consist  of
         two-thirds (2/3) of the members of the Committee.

                  (d)  Where  the  Committee  has  been  created  by the  Board,
         references  in this Plan to actions  to be taken by the Board  shall be
         deemed to refer to the Committee as well,  except where limited by this
         Plan or by the Board.

                  (e) The Board shall have all of the  enumerated  powers of the
         Committee,  but shall not be limited to such  powers.  No member of the
         Board or the Committee shall be liable for any action or  determination
         made in good faith with respect to the Plan or any Option granted under
         it.

<PAGE>
                                    ARTICLE V
                            STOCK SUBJECT TO THE PLAN

         V.1 Number.  The total number of shares of Stock hereby made  available
and reserved for issuance under the Plan upon exercise of Non-Qualified  Options
shall be 1,650,000. The aggregate number of shares of Stock available under this
Plan shall be subject to adjustment as provided in Section V.3. The total number
of shares of Stock may be  authorized  but unissued  shares of Stock,  or Shares
acquired  by  purchase  as  directed  by the  Board  from  time  to  time in its
discretion, to be used for issuance upon exercise of Options granted hereunder.

         V.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, the  unpurchased  shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.

         V.3  Adjustment  in  Capitalization.  In the event of any change in the
outstanding   shares  of  Stock  by  reason  of  a  stock   dividend  or  split,
recapitalization,  reclassification,  or other  similar  corporate  change,  the
aggregate  number  of  shares  of  Stock  set  forth  in  Section  V.1  shall be
appropriately  adjusted by the Board, whose  determination  shall be conclusive;
provided  however,  that fractional shares shall be rounded to the nearest whole
share.  In any such case,  the number and kind of shares that are subject to any
Option  (including any Option  outstanding  after termination of employment) and
the Option price per share shall be proportionately  and appropriately  adjusted
without  any  change in the  aggregate  Option  price to be paid  therefor  upon
exercise of the Option.

                                   ARTICLE VI
                              DURATION OF THE PLAN

         VI.1  Duration of the Plan.  Subject to approval of  shareholders,  the
Plan  shall be in effect  for ten  years  from the date of its  adoption  by the
Board. Any Options  outstanding at the end of said period shall remain in effect
in accordance with their terms.  The Plan shall terminate before the end of said
period if all Stock subject to it has been purchased pursuant to the exercise of
Options granted under the Plan.

                                   ARTICLE VII
                             TERMS OF STOCK OPTIONS

         VII.1 Grant of Options.  Subject to Section V.1, Options may be granted
to Employees or  Consultants  at any time and from time to time as determined by
the Board. The Board shall have complete discretion in determining the terms and
conditions  and  number of  Options  granted to each  Optionee.  In making  such
determinations,  the Board may take into account the nature of services rendered
by such Employees or Consultants,  their present and potential  contributions to
the Company and its Subsidiary Corporations, and such other factors as the Board
in its discretion shall deem relevant.

                  (a) The  Board  is  expressly  given  the  authority  to issue
         amended or replacement  Options with respect to shares of Stock subject
         to an Option previously granted hereunder. An amended Option amends the
         terms of an  Option  previously  granted  and  thereby  supersedes  the
         previous  Option.  A  replacement  Option is  similar  to a new  Option
         granted hereunder except that it provides that it shall be forfeited to
         the extent that a previously  granted  Option is  exercised,  or except
         that its issuance is conditioned  upon the  termination of a previously
         granted Option.

         VII.2 Option Agreement;  Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an Option  agreement  (the "Option  Agreement")  that  includes the
non-transferability  provisions  required by Section  X.2 hereof and  specifies:
whether the Option is a Non-qualified  Option; the Option price; the duration of
the  Option;  the  number of shares of Stock to which the  Option  applies;  any
vesting or  exercisability  restrictions  which the Board may  impose.  All such
terms and  conditions  shall be  determined by the Board at the time of grant of
the Option.

                  (a) If not  otherwise  specified by the Board,  the  following
         terms and conditions shall apply to Options granted under the Plan:
<PAGE>

          (i)  Term.  The  duration  of the Option  shall be five years from the
               date of grant.

          (ii) Exercise of Option.  Unless an Option is  terminated  as provided
               hereunder, an Optionee may exercise his Option for up to, but not
               in excess  of,  the  amounts  of  shares  subject  to the  Option
               specified  hereafter,  based on the Optionee's number of years of
               continuous  service with the Company or a Subsidiary  Corporation
               from the date on which the Option is  granted.  In the case of an
               Optionee  who  is an  Employee,  continuous  service  shall  mean
               continuous  employment;  in  the  case  of an  Optionee  who is a
               Consultant,   continuous   service  shall  mean  the   continuous
               provision of consulting  services.  In applying said limitations,
               the  amount  of  shares,  if  any,  previously  purchased  by the
               Optionee  under the Option  shall be counted in  determining  the
               amount of shares  the  Optionee  can  purchase  at any time.  The
               Optionee may exercise his Option in the following amounts:

               (A)  After one year of such continuous services, up to but not in
                    excess of twenty percent of the shares originally subject to
                    the Option;

               (B)  After two years of such continuous  services,  up to but not
                    in excess of forty percent of the shares originally  subject
                    to the Option;

               (C)  After three years of such continuous services, up to but not
                    in excess of sixty percent of the shares originally  subject
                    to the Option;

               (D)  After four years of such continuous services,  up to but not
                    in excess of eighty percent of the shares originally subject
                    to the Option; and

               (E)  At the  expiration  of the  fifth  year of  such  continuous
                    services, the Option may be exercised,  in whole or in part,
                    and at any time and from time to time within its term but it
                    shall not be  exercisable  after the expiration of six years
                    from  the  date on which it was  granted  (five  years  with
                    respect to Significant Shareholders).

                  (b) The Board  shall be free to specify  terms and  conditions
         other than those set forth above, in its discretion.

         VII.3 Option  Price.  The Option Price shall be determined by the Board
of  Directors,  except  that Option  Price for  consultants  and/or  independent
contractors  may not be less than Fair  Market  Value on the date of grant.  The
Option  exercise price shall be subject to adjustment as provided in Section V.3
above.

         VII.4 Term of  Options.  Each Option  shall  expire at such time as the
Board  shall  determine  when it is  granted,  provided  however  that  under no
circumstances  shall a Non-qualified  Option be exercisable later than the tenth
anniversary date of its grant.

         VII.5  Exercise of  Options.  Options  granted  under the Plan shall be
exercisable at such times and be subject to such  restrictions and conditions as
the Board  shall in each  instance  approve,  which need not be the same for all
Optionees.

         VII.6  Payment.  Payment  for all shares of Stock  shall be made at the
time that an Option, or any part thereof,  is exercised,  and no shares shall be
issued until full payment  therefor has been made.  Payment shall be made (i) in
cash, or (ii) if acceptable to the Board, in Stock or in some other form.
<PAGE>

                                  ARTICLE VIII
                        WRITTEN NOTICE, ISSUANCE OF STOCK
                      CERTIFICATES, SHAREHOLDER PRIVILEGES

         VIII.1 Written Notice.  An Optionee wishing to exercise an Option shall
give written  notice to the Company,  in the form and manner  prescribed  by the
Board.  Full  payment  for the shares  exercised  pursuant  to the  Option  must
accompany the written notice.

         VIII.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
or to a permitted  nominee of the Optionee a certificate or certificates for the
requisite number of shares of Stock.

         VIII.3  Privileges  of a  Shareholder.  An Optionee or any other person
entitled  to  exercise  an Option  under  this Plan  shall not have  stockholder
privileges  with  respect to any Stock  covered by the Option  until the date of
issuance of a stock certificate for such stock.

                                   ARTICLE IX
                      TERMINATION OF EMPLOYMENT OR SERVICES

         IX.1 Death. If an Optionee's  employment in the case of an Employee, or
provision of services as a Consultant in the case of a Consultant, terminates by
reason of death, the Option may thereafter be exercised at any time prior to the
expiration  date of the Option or within 12 months after the date of such death,
whichever  period is the  shorter,  by the person or persons  entitled  to do so
under the Optionee's  will or, if the Optionee shall fail to make a testamentary
disposition  of  an  Option  or  shall  die  intestate,   the  Optionee's  legal
representative or  representatives.  The Option shall be exercisable only to the
extent that such Option was exercisable as of the date of death.

         IX.2 Termination  other than for Cause or Due to Death. In the event of
an  Optionee's  termination  of  employment  in  the  case  of an  Employee,  or
termination  of the  provision  of  services  as a  Consultant  in the case of a
Consultant,  other  than by reason of death,  the  Optionee  may  exercise  such
portion of his Option as was exercisable by him at the date of such  termination
(the  "Termination  Date") at any time within  three  months of the  Termination
Date;  provided,  however,  that  where  the  Optionee  is an  Employee,  and is
terminated due to disability within the meaning of Code ss. 422, he may exercise
such portion of his Option as was  exercisable  by him on his  Termination  Date
within one year of his  Termination  Date.  In any event,  the Option  cannot be
exercised after the expiration of the term of the Option.  Options not exercised
within the applicable period specified above shall terminate.

                  (a) In the case of an Employee, a change of duties or position
         within the  Company or an  assignment  of  employment  in a  Subsidiary
         Corporation or Parent Corporation of the Company,  if any, or from such
         a Corporation to the Company,  shall not be considered a termination of
         employment for purposes of this Plan.

                  (b) The Option  Agreements may contain such  provisions as the
         Board shall approve with reference to the effect of approved  leaves of
         absence upon termination of employment.

         IX.3  Termination for Cause. In the event of an Optionee's  termination
of employment  in the case of an Employee,  or  termination  of the provision of
services as a Consultant in the case of a Consultant,  which  termination  is by
the Company or a Subsidiary Corporation for cause, any Option or Options held by
him under the Plan, to the extent not exercised before such  termination,  shall
terminate upon notice of termination for cause.

                                    ARTICLE X
                               RIGHTS OF OPTIONEES

         X.1 Service.  Nothing in this Plan shall interfere with or limit in any
way the right of the  Company  or a  Subsidiary  Corporation  to  terminate  any
Employee's  employment,  or any Consultant's  services,  at any time, nor confer
upon any  Employee  any right to  continue  in the  employ of the  Company  or a
Subsidiary Corporation,  or upon any Consultant any right to continue to provide
services to the Company or a Subsidiary Corporation.

         X.2  Non-transferability.  All Options granted under this Plan shall be
nontransferable  by the Optionee,  other than by will or the laws of descent and
distribution,  and shall be exercisable  during the Optionee's  lifetime only by
the Optionee.
<PAGE>
                                   ARTICLE XI
                          OPTIONEE-EMPLOYEE'S TRANSFER
                               OR LEAVE OF ABSENCE

XI.1 Optionee-Employee's  Transfer  or Leave of  Absence.  For  purposes of this
     Plan:

          (a) A transfer of an Optionee who is an Employee from the Company to a
     Subsidiary Corporation or Parent Corporation,  or from one such Corporation
     to another, or

          (b) A leave of absence for such an Optionee  which is duly  authorized
     in writing by the Company or a Subsidiary Corporation shall not be deemed a
     termination of employment.  However, under no circumstances may an Optionee
     exercise an Option  during any leave of absence,  unless  authorized by the
     Board.

                                   ARTICLE XII
                          AMENDMENT, MODIFICATION, AND
                             TERMINATION OF THE PLAN

XII.1 Amendment, Modification, and Termination of the Plan.

          (a) The  Board  may at any time  terminate,  and from time to time may
     amend or modify the Plan,  provided,  however,  that no such  action of the
     Board, without approval of the shareholders, may:

               (i)  increase  the total  amount of Stock which may be  purchased
          through Options granted under the Plan,  except as provided in Article
          V;

               (ii) change the class of  Employees  or  Consultants  eligible to
          receive Options;

          (b) No amendment,  modification,  or  termination of the Plan shall in
     any manner adversely  affect any outstanding  Option under the Plan without
     the consent of the Optionee holding the Option.

                           ARTICLE XIII ACQUISITION,
                              MERGER OR LIQUIDATION

         XIII.1   Acquisition.

                  (a) In the event that an  Acquisition  occurs with  respect to
         the Company, the Company shall have the option, but not the obligation,
         to cancel Options  outstanding as of the effective date of Acquisition,
         whether or not such Options are then exercisable, in return for payment
         to the  Optionees  of an amount  equal to a  reasonable  estimate of an
         amount  (hereinafter the "Spread") equal to the difference  between the
         net amount per share payable in the  Acquisition  or as a result of the
         Acquisition,  less the exercise price of the Option.  In estimating the
         Spread,  appropriate adjustments to give effect to the existence of the
         Options  shall  be made,  such as  deeming  the  Options  to have  been
         exercised,  with the  Company  receiving  the  exercise  price  payable
         thereunder,  and treating the shares  receivable  upon  exercise of the
         Options as being outstanding in determining the net amount per share.

                  (b) For purposes of this section,  an "Acquisition" shall mean
         any transaction in which  substantially all of the Company's assets are
         acquired or in which a controlling amount of the Company's  outstanding
         shares are  acquired,  in each case by a single  person or entity or an
         affiliated group of persons and entities. For purposes of this section,
         a  controlling  amount  shall  mean  more  than 50% of the  issued  and
         outstanding shares of stock of the Company. The Company shall have such
         an option regardless of how the Acquisition is effectuated,  whether by
         direct purchase, through a merger or similar corporate transaction,  or
         otherwise.  In cases where the acquisition  consists of the acquisition
         of assets of the Company,  the net amount per share shall be calculated
         on the basis of the net amount receivable with respect to shares upon a
         distribution  and  liquidation  by the Company  after giving  effect to
         expenses and charges,  including  but not limited to taxes,  payable by
         the Company before the liquidation can be completed.
<PAGE>

                  (c) Where the Company  does not exercise its option under this
         Section  XIII.1 the  remaining  provisions  of this  Article XIII shall
         apply, to the extent applicable.

         XIII.2 Merger or  Consolidation.  Subject to any required action by the
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation,  any Option granted  hereunder  shall pertain to and apply to the
securities  to which a holder of the  number of shares of Stock  subject  to the
Option would have been entitled in such merger or consolidation.

         XIII.3  Other  Transactions.  A  dissolution  or a  liquidation  of the
Company or a merger and  consolidation in which the Company is not the surviving
corporation  shall cause every Option  outstanding  hereunder to terminate as of
the effective date of such  dissolution,  liquidation,  merger or consolidation.
However,  the Optionee either (i) shall be offered a firm commitment whereby the
resulting or surviving  corporation in a merger or consolidation  will tender to
the Optionee an option (the "Substitute Option") to purchase its shares on terms
and  conditions  both  as  to  number  of  shares  and  otherwise,   which  will
substantially  preserve to the  Optionee  the rights and  benefits of the Option
outstanding  hereunder  granted  by the  Company,  or (ii)  shall have the right
immediately prior to such dissolution,  liquidation, merger, or consolidation to
exercise any unexercised Options whether or not then exercisable, subject to the
provisions  of this  Plan.  The  Board  shall  have  absolute  and  uncontrolled
discretion to determine  whether the Optionee has been offered a firm commitment
and whether the tendered  Substitute Option will  substantially  preserve to the
Optionee the rights and  benefits of the Option  outstanding  hereunder.  In any
event, any Substitute Option for an Incentive Stock Option shall comply with the
requirements of Code Section 424(a).

                                   ARTICLE XIV
                             SECURITIES REGISTRATION

         XIV.1 Securities Registration. In the event that the Company shall deem
it  necessary  or desirable to register  under the  Securities  Act of 1933,  as
amended, or any other applicable statute,  any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities  Act of 1933, as amended,  or any
other statute,  then the Optionee shall cooperate with the Company and take such
action as is necessary to permit  registration or  qualification of such Options
or Stock.

         XIV.2  Representations.  Unless the  Company  has  determined  that the
following representation is unnecessary,  each person exercising an Option under
the Plan may be required by the  Company,  as a condition to the issuance of the
shares pursuant to exercise of the Option,  to make a representation  in writing
(i) that he is acquiring  such shares for his own account for investment and not
with a view to, or for sale in connection  with,  the  distribution  of any part
thereof,  (ii) that before any  transfer in  connection  with the resale of such
shares, he will obtain the written opinion of counsel for the Company,  or other
counsel  acceptable  to the Company,  that such shares may be  transferred.  The
Company may also require that the certificates  representing such shares contain
legends reflecting the foregoing.

                                   ARTICLE XV
                                 TAX WITHHOLDING

         XV.1 Tax  Withholding.  Whenever  shares  of Stock  are to be issued in
satisfaction  of Options  exercised  under this Plan, the Company shall have the
power to require  the  recipient  of the Stock to remit to the Company an amount
sufficient to satisfy federal, state, and local withholding tax requirements.

                                   ARTICLE XVI
                                 INDEMNIFICATION

         XVI.1 Indemnification.  To the extent permitted by law, each person who
is or shall  have  been a member  of the  Board  shall be  indemnified  and held
harmless by the Company against and from any loss, cost,  liability,  or expense
that may be imposed upon or  reasonably  incurred by him in  connection  with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved  by reason of any action  taken or failure to act
under  the  Plan  and  against  and  from  any  and all  amounts  paid by him in
settlement thereof,  with the Company's approval, or paid by him in satisfaction
of judgment in any such action,  suit,  or proceeding  against him,  provided he
shall give the Company an opportunity,  at its own expense, to handle and defend
the same before he  undertakes  to handle and defend it on his own  behalf.  The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification  to which  such  persons  may be  entitled  under the  Company's
articles of  incorporation or bylaws,  as a matter of law, or otherwise,  or any
power that the Company or any Subsidiary  Corporation may have to indemnify them
or hold them harmless.
<PAGE>

                                  ARTICLE XVII
                               REQUIREMENTS OF LAW

         XVII.1 Requirements of Law. The granting of Options and the issuance of
shares  of  Stock  upon the  exercise  of an  Option  shall  be  subject  to all
applicable  laws,  rules,  and  regulations,   and  to  such  approvals  by  any
governmental agencies or national securities exchanges as may be required.

         XVII.2 Governing Law. The Plan, and all agreements hereunder,  shall be
construed in accordance with and governed by the laws of the State of Idaho.

                                  ARTICLE XVIII
                             EFFECTIVE DATE OF PLAN

         XVIII.1  Effective Date. The Plan shall be effective on March 15, 2001.

                                   ARTICLE XIX
                        NO OBLIGATION TO EXERCISE OPTION

         XIX.1 No Obligation to Exercise. The granting of an Option shall impose
no obligation upon the holder thereof to exercise such Option.

                                   ARTICLE XX
                              STOCKHOLDER APPROVAL

         XX.1  Stockholder  Approval.  This Plan shall be submitted for approval
and  ratification by a vote of the holders of a majority of the shares of Common
Stock of the Company no later than June,  2001 and shall not affect the validity
of any Option issued under this Plan.

         THIS 2001  NON-QUALIFIED  STOCK OPTION PLAN was adopted by the Board of
Directors  of Grand Slam  Treasurers,  Inc. on March 15, 2001 to be effective on
that date.

                                             GRAND SLAM TREASURES, INC.

                                           By:  /s/ Larry L. Eastland
                                                --------------------------------
                                                Larry L. Eastland, President and
                                                Chief Executive Officer

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