Document:

Exhibit 4.9

 Exhibit 4.9

PLEDGE AGREEMENT

          
PLEDGE AND SECURITY AGREEMENT dated as of December 21, 2000, made by DELTA
FUNDING CORPORATION, a New York corporation (the "Pledgor"), in
favor of U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral agent
(the "Agent") under that certain Indenture dated as of the date
hereof (the "Indenture") among DELTA FINANCIAL CORPORATION, as
issuer, the parties whose names and signatures appear on the signature pages
thereto under the heading "Subsidiary Guarantors" and the Agent.

W I T N E S S E T H:

          
WHEREAS, it is a condition precedent to the effectiveness of the Indenture that
the Pledgor shall have executed and delivered to the Agent a pledge and security
agreement providing for the pledge to the Agent of, and the grant to the Agent
of a security interest in one hundred percent (100%) by number all of the issued
and outstanding Owner Trust Certificates (as defined herein) from time to time
owned by the Pledgor;

          
WHEREAS, the Pledgor has determined that the execution, delivery and performance
of this Agreement directly benefits, and is in the best interest of the
Pledgor;

          
NOW, THEREFORE, in consideration of the premises and the agreements herein and
of other good and valuable consideration, the Pledgor hereby agrees with the
Agent as follows:  

          
SECTION 1. Definitions. As used in this Agreement, capitalized terms used
herein without definition have the meanings specified in the Indenture or if not
defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State
of New York, and the following terms shall have the following meanings:

          
"Deposit Trust Agreement" shall mean that Deposit Trust
Agreement dated as of December 22, 2000 by and between the Pledgor, as depositor
and Wilmington Trust Company, a Delaware banking corporation, as owner trustee.

          
"Governmental Authority" shall mean any nation or government,
any federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.

          
"Owner Trust Certificates" shall mean the certificates issued under
the Deposit Trust Agreement evidencing beneficial ownership interests in the
Trust described in Schedule I hereto. 

          
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, in its capacity as owner trustee under the Deposit Trust
Agreement. 

          
"Trust" shall mean the Delta Funding Residual Holding Trust 2000-2
established under the Deposit Trust Agreement.

          
SECTION 2. Pledge and Grant of Security Interest. As collateral security for all
of the Obligations (as defined in Section 3 hereof), the Pledgor hereby pledges
and collaterally assigns to the Agent, and grants to the Agent a continuing
security interest in all of the Pledgor's right, title and interest in and
to the Owner Trust Certificates, whether now owned or hereafter acquired by the
Pledgor and howsoever its respective interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise), all dividends,
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of the foregoing, whether now
owned or hereafter acquired, and all proceeds of any and all of the foregoing
(collectively, the "Pledged Collateral").

          
SECTION 3. Security for Obligations. The security interest created hereby
in the Pledged Collateral constitutes continuing collateral security for all of
the following obligations whether now existing or hereafter incurred
(collectively, the "Obligations"): 

          
(a) the due and punctual payment of any and all amounts due and owing by the
Pledgor under the Subsidiary Guarantee to which the Pledgor is a party;

          
(b)the due performance and observance by the Pledgor of all of its other
obligations from time to time existing in respect of the Indenture, the Senior
Notes, the Collateral Agreements and the Related Agreements; and 

          
(c) all fees, costs, charges and expenses paid or incurred by the Agent in
connection with the creation, protection and preservation or enforcement of its
rights under any of the Indenture, the Senior Notes, the Subsidiary Guarantees,
the Collateral Agreements and the Related Agreements, on a full indemnity basis.

          
SECTION 4. Delivery of the Owner Trust Certificates.

          
(a) All certificates evidencing the Pledged Collateral shall be delivered to the
Agent, together with any necessary endorsement and/or appropriate transfer form
duly executed in blank with respect to such Pledged Collateral, on or prior to
the execution and delivery of this Agreement. All certificates evidencing
Pledged Collateral hereafter owned by the Pledgor from time to time are hereby
pledged to the Agent pursuant to the terms of this Agreement (the "Additional
Collateral") shall be delivered to the Agent within ten (10) Business Days
of receipt thereof by or on behalf of the Pledgor. All such certificates
evidencing the Pledged Collateral held by or on behalf of the Agent pursuant
hereto shall be delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance reasonably satisfactory to the Agent. Within ten (10)
Business Days of the receipt by the Pledgor of any Additional Collateral, a
Pledge Amendment, duly executed by the Pledgor, in substantially the form of
Schedule II hereto (a "Pledge Amendment") shall be delivered to the
Agent, in respect of the Additional Collateral which are to be pledged pursuant
to this Agreement. The absence of any Pledge Amendment shall not in any way
effect the validity of the pledge of the Pledged Collateral made pursuant to
this Agreement. The Pledgor hereby authorizes the Agent to attach each Pledge
Amendment to this Agreement and agrees that all certificates or instruments
listed on any Pledge Amendment delivered to the Agent shall for all purposes
hereunder constitute Pledged Collateral and the Pledgor shall be deemed upon
delivery thereof to have made the representations and warranties set forth in
Section 5 with respect to such Additional Collateral. 

          
(b) If the Pledgor shall receive, by virtue of its being or having been an owner
of any Pledged Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off) or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Pledged Collateral, or
otherwise, (iii) dividends payable in cash (except such dividends permitted to
be retained by the Pledgor pursuant to Section 7 hereof) or in securities or
other property, or (iv) dividends or other distributions in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid in surplus, the Pledgor shall receive such
certificate, promissory note, instrument, option, right, payment or distribution
in trust for the benefit of the Agent, shall segregate it from the Pledgor's
other property and shall deliver it forthwith to the Agent in the exact form
received, with any necessary endorsement and/or appropriate transfer forms duly
executed in blank, to be held by the Agent as Pledged Collateral and as further
collateral security for the Obligations. 

          
SECTION 5. Representations and Warranties. The Pledgor represents and warrants
as follows:

          
(a) The Owner Trust Certificates pledged hereunder have been duly executed by
the Owner Trustee on behalf of the Trust and, when authenticated by the
certificate registrar in accordance with the Deposit Trust Agreement and
delivered pursuant the Deposit Trust Agreement, the Owner Trust Certificates
will be validly issued and outstanding and entitled to the benefits of the
Deposit Trust Agreement. The Owner Trust Certificates evidence 100% of the
beneficial ownership interests in the Trust. The Pledgor is the beneficial and
record owner of the Owner Trust Certificates pledged hereunder. All other
certificates evidencing beneficial ownership interests in the Trust will be,
when issued, validly issued and entitled to the benefits of the Deposit Trust
Agreement. 

          
(b) It is and will be at all times the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien, security interest, option or other charge
or encumbrance except for the security interest created by this Agreement. 

          
(c) The exercise by the Agent of any of its rights and remedies hereunder will
not contravene any law or any material contractual restriction binding on or
affecting it or any of its properties, and will not result in or require the
creation of any Lien, security interest or other charge or encumbrance upon or
with respect to any of its properties other than pursuant to this Agreement or
other Collateral Agreements. 

          
(d) No authorization or approval or other action by, and no notice to or filing
with, any Governmental Authority is required to be obtained or made by it for
(i) the due execution, delivery and performance of this Agreement,
(ii) the grant, or the perfection, of the security interest purported to be
created hereby in the Pledged Collateral, or (iii) the exercise by the
Agent of its rights and remedies hereunder, except as may be required in
connection with any sale of any Pledged Collateral by laws affecting the
offering and sale of securities generally. 

          
(e) This Agreement creates a valid security interest in favor of the Agent in
the Pledged Collateral, as security for the Obligations; provided,
however, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates constituting the
Pledged Collateral, and all other certificates constituting the Pledged
Securities from time to time, and the filing under the Code of the financing
statement(s) in the offices described in Schedule III hereto result in the
perfection of such security interest in any instruments and certificated
securities constituting Pledged Collateral. If any Pledged Collateral consists
of uncertificated securities, unless the immediately succeeding sentence is
applicable thereto, the Agent's security interest therein will be perfected
when the Agent (or its custodian, nominee or other designee ) becomes the
registered holder thereof, or upon the agreement of each issuer that it will
comply with instructions originated by the Agent with respect to such securities
without further consent by the Pledgor. If any Pledged Collateral consists of
security entitlements, the Agent's security interest therein will be
perfected upon the filing of appropriate UCC-1 Financing Statements, signed by
the Pledgor, or upon the agreement of any applicable securities intermediary to
comply with entitlement orders by the Agent without further consent by the
Pledgor. Such security interest is, or in the case of Pledged Collateral in
which the Pledgor obtains rights after the date hereof, will be, a perfected,
first priority security interest. All action necessary to perfect and protect
such security interest has been duly taken, except for the Agent's (or the
Agent's custodian, nominee or other designee ) having possession of the
certificated Owner Trust Certificates constituting the Additional Collateral,
after the date hereof and obtaining control of uncertificated securities and
securities entitlements constituting Additional Collateral after the date
hereof.  

          
(f) There is no pending or, to the best of its knowledge, threatened action,
suit, proceeding or claim before any court or other Governmental Authority or
any arbitrator, or any order, judgment or award by any court or other
Governmental Authority or arbitrator, that may adversely affect the grant or the
perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder. 

          
SECTION 6. Covenants as to the Pledged Collateral. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing: 

          
(a) keep adequate records concerning the Pledged Collateral and permit the Agent
or any agents or representatives thereof at any time or from time to time to
examine and make copies of and abstracts from such records;

          
(b) at its expense, upon the request of the Agent, promptly deliver to the Agent
a copy of each material notice or other communication received by it in respect
of the Pledged Collateral; 

          
(c) at its expense, defend the Agent's right, title and security interest in and
to the Pledged Collateral against the claims of any Person;

          
(d) at its expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary or that the Agent may reasonably request in order to (i)
perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral, or (iii) otherwise effect the
purposes of this Agreement, including, without limitation, delivering to the
Agent, after the occurrence and during the continuation of an Event of
Default, irrevocable proxies in respect of the Pledged Collateral;  

          
(e) not sell, assign (by operation of law or otherwise), exchange or otherwise
dispose of any Pledged Collateral or any interest therein except as permitted by
Section 7(a)(i) hereof;

          
(f) not create or suffer to exist any Lien, security interest or other charge or
encumbrance upon or with respect to any Pledged Collateral except for the
security interest created hereby; 

          
(g) not make or consent to any amendment or other modification or waiver with
respect to any Pledged Collateral or enter into any agreement or permit to exist
any restriction with respect to any Pledged Collateral other than pursuant to
the Collateral Agreements and applicable securities laws; 

          
(h) not permit the issuance of (i) any additional beneficial ownership interests
in the Trust or (ii) any securities convertible voluntarily by the holder
thereof or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any beneficial ownership interests in the
Trust; and 

          
(i) not take or fail to take any action which would in any manner impair the
enforceability of the Agent's security interest in any Pledged Collateral. 

          
SECTION 7. Voting Rights, Distributions, Agents Consent, Etc. in Respect of the
Pledged Collateral.

          
(a) So long as no Event of Default shall have occurred and be continuing:

                        
(i) except where the Deposit Trust Agreement requires the consent of the
Collateral Agent (the same being the Agent hereunder), in which case the consent
of the Agent shall be required, the Pledgor may exercise any and all voting and
other consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Deposit Trust Agreement, the
Indenture, the Senior Notes or the other Collateral Agreements; 

                        
(ii) the Pledgor may receive and retain any and all distributions, interest or
other amounts paid in respect of the Pledged Collateral; provided,
however, that any and all (A) distributions and interest paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of or in exchange for,
any Pledged Collateral, (B) distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, (C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, and (D) any
distribution and interest paid or payable when Section 4.17 of the Indenture is
not complied with, shall be, and shall forthwith be delivered to the Agent to
hold as, Pledged Collateral or be applied to the Obligations at the direction of
the Pledgor, and shall, if received by the Pledgor, be received in trust for the
benefit of the Agent, shall be segregated from the other property or funds of
the Pledgor, and shall be forthwith delivered to the Agent in the exact form
received with any necessary endorsement and/or appropriate transfer forms duly
executed in blank, to be held by the Agent as Pledged Collateral and as further
collateral security for the Obligations; 

                        
(iii) the Agent
will execute and deliver (or cause to be executed and delivered) to the Pledgor
all such proxies and other instruments as the Pledgor may reasonably request in
writing for the purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i) of this
Section 7(a) and to receive the dividends which it is authorized to receive and
retain pursuant to paragraph (ii) of this Section 7(a); 

                        
(iv) the Agent will not consent to any action or proposed action under the
Deposit Trust Agreement or any of the Related Agreements without obtaining the
prior consent of the Holders or Beneficial Holders of a majority of the
principal amount of the then outstanding Senior Notes; and 

                        
(v) the Agent shall promptly deliver to each Holder or Beneficial Holder who
requests the Agent to do so a copy of each Compliance Certification, Release
Certification, Certificate Schedule and any notices, communications or reports
received by the Agent with respect to the Trust or the administration thereof or
the Pledged Collateral. 

          
(b) Upon the occurrence and during the continuance of an Event of Default:

                        
(i) all rights of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to paragraph (i) of
subsection (a) of this Section 7, and to receive the distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant to paragraph (ii) of subsection (a) of this Section 7, shall
cease, and all such rights shall thereupon become vested in the Agent which
shall thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such dividends and interest
payments;

                        
(ii) without limiting the generality of the foregoing, the Agent may at its
option exercise any and all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to any of the Pledged Collateral
as if it were the absolute owner thereof, including, without limitation, the
right to exchange, in its discretion, any and all of the Pledged Collateral upon
the merger, consolidation, reorganization, recapitalization or other adjustment
of the Trust, or upon the exercise by the Trust of any right, privilege or
option pertaining to any Pledged Collateral, and, in connection therewith, to
deposit and deliver any and all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such terms
and conditions as it may determine; and 

                        
(iii) all distributions and interest payments which are received by the Pledgor
contrary to the provisions of paragraph (i) of this Section 7(b) shall be
received in trust for the benefit of the Agent, shall be segregated from other
funds of the Pledgor, and shall be forthwith paid over to the Agent as Pledged
Collateral in the exact form received with any necessary endorsement and/or
appropriate transfer forms duly executed in blank, to be held by the Agent as
Pledged Collateral and as further collateral security for the Obligations. 

          
SECTION 8. Additional Provisions Concerning the Pledged Collateral.

          
(a) The Pledgor hereby authorizes the Agent to file, without the signature of
the Pledgor where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Pledged Collateral. 

          
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same. 

          
(c) During the occurrence and continuance of an Event of Default, if the Pledgor
fails to perform any agreement or obligation contained herein, the Agent itself
may perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by the
Pledgor (such obligation being joint and several in nature) pursuant to Section
10 hereof. 

          
(d) Except as provided in Section 7(a)(iv) hereof, other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral while held
hereunder, the Agent shall have no duty or liability to preserve rights
pertaining thereto and shall be relieved of all responsibility for the Pledged
Collateral upon surrendering it or tendering surrender of it to the Pledgor. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property, it being understood that the Agent shall not have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or (ii) except as provided in Section 7(a)(iv) hereof, taking
any necessary steps to preserve rights against any parties with respect to any
Pledged Collateral. 

          
(e) The Agent may at any time after the occurrence and during the continuation
of an Event of Default in its discretion (i) without notice to the Pledgor,
transfer or register in the name of the Agent or any of its nominees any or all
of the Pledged Collateral, subject only to the revocable rights of the Pledgor
under Section 7(a) hereof, and (ii) exchange certificates or instruments
constituting Pledged Collateral for certificates or instruments of smaller or
larger denominations. 

          
(f) The Agent shall at all times during the term of this Agreement keep the
Pledged Collateral within the State of New York.

          
SECTION 9. Remedies Upon Event of Default. If any Event of Default shall have
occurred and be continuing:

          
(a) The Agent may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a secured party on default under the Code then in
effect in the State of New York; and without limiting the generality of the
foregoing and without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker's board or elsewhere, at such price or prices and on
such other terms as the Agent may deem commercially reasonable. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at least ten
(10) Business Days' notice to the Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. 

          
(b) The Pledgor recognizes that it is impracticable to effect a public sale of
all or any part of the Pledged Securities or any other securities constituting
Pledged Collateral and that the Agent may, therefore, determine to make one or
more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that the Agent shall have no obligation to
delay sale of any such securities for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
Securities Act of 1933, as amended (the "Securities Act"). The Pledgor
further acknowledges and agrees that any offer to sell such securities which has
been (i) publicly advertised on a bona fide basis in a newspaper
or other publication of general circulation in the financial community of New
York, New York (to the extent that such an offer may be so advertised without
prior registration under the Securities Act), or (ii) made privately in the
manner described above to not less than fifteen (15) bona fide offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities. 

          
(c) Any cash held by the Agent as Pledged Collateral 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 the Pledged Collateral shall be held by the
Agent as collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 10 hereof) in
whole or in part by the Agent against, all or any part of the Obligations as
directed by the Pledgor consistent with the provisions of the Indenture. Any
surplus of such cash or cash proceeds held by the Agent and remaining after
payment in full of all of the Obligations shall be paid over to the Pledgor or
to such person as may be lawfully entitled to receive such surplus. 

          
(d) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Agent is legally entitled, the
Pledgor shall be liable for the deficiency, together with interest thereon at
the highest rate specified in the Senior Notes for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees and expenses of any attorneys
employed by the Agent to collect such deficiency. 

          
SECTION 10. Indemnity and Expenses.

          
(a) The Pledgor agrees to indemnify the Agent from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from the Agent's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. 

          
(b) The Pledgor shall be obligated for, and will promptly pay to the Agent, the
amount of any and all reasonable costs and expenses, including the reasonable
fees and disbursements of the Agent's counsel and of any experts and agents,
which the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Agent hereunder, or (iv) the
failure by any of the Pledgor to perform or observe any of the provisions
hereof. 

          
SECTION 11. Notices, Etc.

          
(a) All notices and other communications provided for hereunder shall be in
writing and shall be mailed (by certified mail, postage prepaid and return
receipt requested), telecopied or delivered, if to the Pledgor, to the address
for the Pledgor specified in the Indenture, and if to the Agent, to it at its
address specified in the Indenture, or as to either such Person at such other
address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 11. All such
notices and other communications shall be effective (i) if sent by certified
mail, return receipt requested, when received or three (3) Business Days after
mailing, whichever first occurs, (ii) if telecopied, when transmitted and
confirmation is received, provided same is on a Business Day and, if not, on the
next Business Day, or (iii) if delivered, upon delivery, provided same is on a
Business Day and, if not, on the next Business Day. 

          
(b) The Agent shall furnish promptly to the Owner Trustee any and all notices
and other communications that are delivered to the Agent for delivery to the
Owner Trustee under Section 6.01 of the Indenture and shall direct the Owner
Trustee to act or forbear from acting under the Administration Agreement in
accordance with any direction received under Section 6.05 of the Indenture. 

          
SECTION 12. Consent to Jurisdiction, Etc.

          
(a) Any legal action or proceeding with respect to this Agreement or any
document related thereto may be brought in the courts of the State of New York
located in the borough of Manhattan or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Pledgor hereby accepts unconditionally the jurisdiction of the aforesaid
courts. The Pledgor hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which the Pledgor may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.  

          
(b) The Pledgor irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Pledgor at its
address referred to in Section 11 hereof. 

          
(c) Nothing contained in this Section 12 shall affect the right of the Agent to
serve legal process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Pledgor in any other jurisdiction.

          
SECTION 13. Waiver of Jury Trial. THE PLEDGOR AND THE AGENT (BY ACCEPTING
THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER COLLATERAL
AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND AGREE THAT ANY
SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. 

          
SECTION 14. Miscellaneous.

          
(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by the Pledgor, the Agent and the holders of more than
50% of the outstanding principal amount of the Senior Notes, and no waiver of
any provision of this Agreement, and no consent to any departure by the Pledgor
therefrom, shall be effective unless it is in writing and signed by the Agent
and the holders of more than 50% of the outstanding principal amount of the
Senior Notes, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. 

          
(b) No failure on the part of the Agent to exercise, and no delay in exercising,
any right hereunder or under any other document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of the Agent provided herein are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law. The rights of the
Agent under any document against any party thereto are not conditional or
contingent on any attempt by the Agent to exercise any of its rights under any
other document against such party or against any other person. 

          
(c) 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 portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction. 

          
(d) This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until the payment and
performance in full or release of the Obligations and the termination of the
Indenture, and (ii) be binding on the Pledgor and by its acceptance hereof,
the Agent, and their respective successors and assigns and shall inure, together
with all rights and remedies of the Agent hereunder, to the benefit of the
Pledgor, the Agent and their respective successors, transferees and assigns. The
Agent may resign at any time upon giving the Pledgor and the Trustee thirty (30)
days' prior written notice. The Agent shall continue to serve until its
successor, appointed by notice of the Pledgor, accepts appointment as successor
collateral agent and receives all property held by the Agent under this
Agreement. The holders of a majority in principal amount of the outstanding
Senior Notes may at any time remove the Agent by so notifying the Pledgor and
the Agent and may appoint a successor agent with the Pledgor's consent, provided
that after the occurrence of an Event of Default, the Pledgor's consent shall
not be required. The Pledgor may remove the Agent if: 

          
(1) the Agent fails to fulfill its obligations hereunder;

          
(2) the Agent is adjudged a bankrupt or an insolvent;

          
(3) a receiver or other public officer takes charge of the Agent or its
property; or

          
(4) the Agent becomes incapable of acting.

          
If the Agent resigns or is removed or if a vacancy exists in the office of Agent
for any reason, the Pledgor shall notify each Holder of such event and the
holders of a majority in principal amount of the Senior Notes shall promptly
appoint a successor Agent. A successor Agent shall deliver a written acceptance
of its appointment to the retiring Agent, the Trustee and the Pledgor.
Immediately after that, the retiring Agent shall transfer all property held by
the retiring Agent under this Agreement to the successor, the resignation or
removal of the retiring Agent shall become effective, and the successor Agent
shall have all the rights, powers and duties of the Agent under this Agreement.
If a successor Agent does not take office within 60 days after the retiring
Agent resigns or is removed, the retiring Agent, the Company or the holders of
at least 10% in principal amount of the outstanding Senior Notes may petition
any court of competent jurisdiction, at the expense of the Company, for the
appointment of a successor collateral agent. The terms and conditions of this
Agreement will remain unimpaired by resignation of the Agent or the appointment
of a successor collateral agent. Following the appointment of a successor
collateral agent, such person shall for all intents and purposes of this
Agreement be the "Agent" hereunder. None of the rights or obligations of the
Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent. 

          
(e) Upon the satisfaction in full of Obligations and the termination of the
Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination. 

          
(f) This Agreement shall be governed by and construed in accordance with the law
of the State of New York, except as required by mandatory provisions of law and
except to the extent that the validity and perfection or the perfection and the
effect of perfection or non-perfection of the security interest created hereby,
or remedies hereunder, in respect of any particular Pledged Collateral are
governed by the law of a jurisdiction other than the State of New York. 

          
(g) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. 

          
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written. 

	 	
PLEDGOR:

DELTA FUNDING CORPORATION

By:                                         
                   

        Name:

        Title:

ACCEPTED AND AGREED:

U.S. BANK TRUST NATIONAL ASSOCIATION,

as Agent

By:            
             
             
             
             

Name:

Title:

SCHEDULE I

TO

PLEDGE AGREEMENT

Owner Trust Certificates

	 	Name of Issuer	Percentage of Outstanding Security	Certificate No.(s)	 

	 	Delta Funding

Residual Holding

Trust 2000-2
	100%	1	 

SCHEDULE II

TO

PLEDGE AGREEMENT

PLEDGE AMENDMENT

          
This Pledge Amendment, dated ___________________, is delivered pursuant to
Section 4 of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated
December 21, 2000, as it may heretofore have been or hereafter may be
amended or otherwise modified or supplemented from time to time and that the
Owner Trust Certificates listed on this Pledge Amendment shall be and become
part of the Pledged Collateral referred to in said Pledge Agreement and shall
secure all of the Obligations referred to in said Pledge Agreement. 

Owner Trust Certificates

	 	
By:                                         
                             

      Name:                                   
                             

      Title:                                   
                                

SCHEDULE III

TO

PLEDGE AGREEMENT

UCC FILING OFFICES

	Delta Funding Residual Holding Trust 2000-2	
New York Secretary of State

County Clerk's Office, Nassau County, N.Y.

Delaware Secretary of StateExhibit 4.10

 Exhibit 4.10

                            SECURITY AGREEMENT

          SECURITY AGREEMENT dated as of December 21, 2000 (this "Agreement") made
by DELTA FINANCIAL CORPORATION, a Delaware corporation ("Delta"), and each of
DELTA FUNDING CORPORATION, a New York corporation, DF SPECIAL HOLDINGS
CORPORATION, a Delaware corporation, FIDELITY MORTGAGE INC., a Delaware
corporation, DFC FINANCIAL CORPORATION, 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 (individually a "Grantor" and collectively the "Grantor" or
"Grantors"), in favor of U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee (the
"Agent") under that certain Indenture dated as of the date hereof (the
"Indenture") among Delta, as issuer, the parties whose names and
signatures appear on the signature pages thereto under the heading "Subsidiary
Guarantors" and the Agent.

W I T N E S S E T H:

          
WHEREAS, the Indenture requires that the Grantors shall have executed and
delivered to the Agent a security agreement providing for the grant to the Agent
of a lien on and security interest in certain personal property of the Grantors
as set forth herein.

          NOW, THEREFORE,
in consideration of the premises and the agreements herein and of other good and
valuable consideration, each Grantor hereby agrees with the Agent as
follows:

          SECTION 1.
Defined Terms. As used in this Agreement, capitalized terms used herein
without definition have the meanings specified in the Indenture or if not
defined in the Indenture, then in Article 9 of the Uniform Commercial Code (the
"Code") currently in effect in the State of New York, and the following
terms have the following meanings:

          "Pooling
Agreements" means the Pooling Agreements set forth on Schedule I hereto and
all future pooling and serving agreements during the term of this Agreement
relating to public securitizations in which one or more Grantors is both the
sponsor and the servicer.

          "Pledged
Servicing Rights" means all Servicing Rights under the Pooling Agreements
relating to Residual Receivables (whether or not such are Senior Residual
Receivables) now or hereafter on deposit in any of the Residual Collateral
Trusts.

          "Servicing
Rights" means the contractual right, now existing or hereafter arising, of a
Grantor to be or to select the servicer, whether arising under any Pooling
Agreement or any other agreement.

          
"Proceeds" has the meaning assigned to it under the Code and, in any
event, shall include, but not be limited to, any and all other monies or other
property from time to time paid or payable or distributed or distributable under
or in connection with any of the Collateral.

          SECTION 2.
Grant of Security Interest. As collateral security for the payment and
performance of all of the Obligations (as defined in Section 3 hereof), each
Grantor to the extent of such Grantor's interest therein hereby pledges and
assigns to the Agent, and grants to the Agent a continuing security interest of
first priority in all Pledged Servicing Rights, now existing or hereafter
arising, and in and to the Back Up Servicing Agreement and in all Proceeds
thereof (collectively, the "Collateral").

          Notwithstanding
anything herein to the contrary, in no event shall the Collateral include, and
the Grantor shall not be deemed to have granted a security interest in (x) any
rights arising by virtue of a Grantor being the servicer (other than the Pledged
Servicing Rights) during the period the Debtor or such other Grantor is the
servicer, including, without limitation, Servicing Receivables compensation
payable to the servicer and optional purchase or repurchase rights and (y) any
rights or interests in any license, contract or agreement to which the Grantor
is a party or any of its rights or interests thereunder to the extent that such
a grant would, under the express terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under
such license, contract or agreement (other than to the extent that any such term
would be rendered ineffective pursuant to Section 9-318(4) of the Code of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided, however, that the
Collateral shall include (x) any and all Proceeds to the extent that the
assignment or encumbering of Proceeds is not so restricted, and (y) upon any
such licensor or other applicable party's consent with respect to any such
otherwise excluded item of Collateral being obtained, thereafter such item of
Collateral as well as any Proceeds thereof that might theretofore have been
excluded from such grant, assignment, transfer, and conveyance of a security
interest and the term Collateral.

          SECTION 3.
Security for Obligations. The security interests created hereby in the
Collateral constitute continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (the "Obligations"):

          (a) the due and
punctual payment of the principal and premium, if any, of, and interest on, the
Senior Notes when and as the same shall be due and payable, by acceleration,
repurchase, redemption or otherwise, interest on the overdue principal of and
interest (to the extent permitted by law), if any, on the Senior Notes and under
the Indenture (including, without limitation, all interest that accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of one or more Grantors);

          (b) the due
performance and observance by each Grantor of all of its other obligations from
time to time existing in respect of the Indenture, the Senior Notes, the
Collateral Agreements and the Related Agreements; and

          (c) all fees,
costs, charges and expenses paid or incurred by the Agent in connection with the
creation, protection and preservation or enforcement of its rights under the
Indenture, the Senior Notes, the Subsidiary Guarantees, the Collateral
Agreements or the Related Agreements, on a full indemnity basis.

          SECTION 4.
Representations and Warranties. Each Grantor jointly and severally
represents and warrants as follows:

          (a) It is and
will be at all times the sole and exclusive owner of the Collateral now or
hereafter owned by it free and clear of any Lien, except for Liens created
hereby. No effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording or filing
office except such as may have been filed in favor of the Agent relating to this
Agreement.

          (b) No
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority or other regulatory body, or any other Person, is
required for (i) the grant by it, or the perfection, of the security interest
purported to be created hereby in the Collateral or (ii) the exercise by the
Agent of any of its rights and remedies hereunder.

          (c) This
Agreement creates valid security interests of first priority in favor of the
Agent in the Collateral, as security for the Obligations. The Agent's filing of
the financing statements described in Schedule II hereto will result in the
perfection of such security interests. Upon such filings, such security
interests are, or in the case of Collateral in which it obtains rights after the
date hereof, will be perfected first priority security interests. Such filings
and all other action necessary or desirable to perfect and protect such security
interest have been duly taken.

          (d) The chief
place of business and chief executive office of each Grantor is listed on
Schedule III hereto.

          (e) As of the
date of this Agreement, neither DFC Financial of Canada Limited nor DFC Funding
of Canada Limited owns any right, title or interest in or to any Servicing
Rights.

          SECTION 5.
Covenants as to the Collateral. So long as any of the Obligations shall
remain outstanding, unless the Agent shall otherwise consent in writing:

          (a) Further
Assurances. Each Grantor will at its expense, at any time and from time to
time, promptly execute and deliver all further instruments and documents and
take all further action that may be reasonably necessary or reasonably desirable
or that the Agent may reasonably request in order (i) to perfect and protect the
security interest purported to be created hereby, (ii) to enable the Agent to
exercise and enforce its rights and remedies hereunder in respect of the
Collateral, or (iii) otherwise to effect the purposes of this Agreement,
including, without limitation (A) executing and filing such financing or
continuation statements, or amendments thereto, as may be necessary or desirable
or that the Agent may request in order to perfect and preserve the security
interest purported to be created hereby, and (B) furnishing to the Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the Agent
may reasonably request, all in reasonable detail. In addition to the foregoing,
the Grantors will at their expense, at the time that DFC Financial of Canada
Limited and/or DFC Funding of Canada Limited obtains any right, title or
interest in or to any Servicing Rights, deliver an opinion of Canadian counsel
reasonably satisfactory to the Agent setting forth such counsel's opinion that
the security interest granted by DFC Financial of Canada Limited and/or DFC
Funding of Canada Limited in such Servicing Rights is valid and enforceable and
any other opinions that the Agent may reasonably request.

          (b) 
Provisions Concerning Corporate Matters.

	 
	
          Each Grantor
     will (A) give the Agent at least thirty (30) days' prior written notice of
     any change in its name, identity or organizational structure and, in the
     event of any such change, shall take all actions necessary to preserve the
     Agent's rights in the Collateral, including, without limitation, the
     existence, perfection and priority of the security interest created hereby
     in such Collateral and (B) keep its chief place of business and chief
     executive office at the location(s) specified therefor in Schedule III
     hereof or at such other locations of which it has given the Agent thirty
     (30) days' prior written notice; provided,however, in the
     event of any such change, shall take all actions necessary to preserve the
     Agent's rights in the Collateral, including, without limitation, the
     existence, perfection and priority of the security interest created hereby
     in such Collateral.

                    (c) Transfers and Other Liens.

	 
	          (i) Each Grantor will not sell, assign (by operation of law or
          otherwise), lease, exchange or otherwise transfer or dispose of any of
          the Collateral.

	 
	          (ii) Each Grantor will not create or suffer to exist any Lien
          upon or with respect to any Collateral except for Liens created
          hereby. 

          
          SECTION 6. Additional Provisions Concerning the Collateral.

                    (a) Each Grantor hereby authorizes the Agent to file, without its
signature where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Collateral and to the
Pledged Collateral under the Pledge Agreements and to the collateral security
under the Escrow Agreement.

                    (b) Each Grantor hereby irrevocably appoints the Agent its
attorney-in-fact and proxy, with full authority in its place and stead and in
its name or otherwise, from time to time in the Agent's discretion, to take any
action and to execute any instrument which the Agent may deem reasonably
necessary or reasonably advisable to accomplish the purposes of this Agreement,
including, without limitation, (i) upon the occurrence and during the
continuance of an Event of Default, to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (ii) upon the occurrence and during
the continuance of an Event of Default, to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper in connection with
clause (i) above, and (iii) upon the occurrence of an Event of Default, to file
any claims or take any action or institute any proceedings which the Agent may
deem reasonably necessary or reasonably desirable for the collection of any
Collateral or otherwise to enforce the rights of the Agent with respect to any
Collateral.

          (c) If any Grantor fails to perform any agreement contained herein,
the Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of the Grantor or the Agent, and the expenses of the
Agent incurred in connection therewith shall be payable by the Grantor pursuant
to Section 8 hereof.

          (d) The powers conferred on the Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.

          SECTION 7. Remedies Upon Event of Default. If any Event of Default
shall have occurred and be continuing:

          (a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral), and also may (i)
require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place or places to be designated by the Agent which is reasonably convenient to
both parties, and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Agent may
deem commercially reasonable. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days' notice to it of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against the Agent and the Holders arising by
reason of the fact that the price at which the Collateral may have been sold at
a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, even if
the Agent accepts the first offer received and does not offer the Collateral to
more than one offeree and waives all rights which it may have to require that
all or any part of the Collateral be marshalled upon any sale (public or
private) thereof.

          (b) All Proceeds received by the Agent in respect of any sale or
collection from, or other realization upon, all or any part the Collateral,
shall be promptly applied by the Agent against all or any part of the
Obligations as follows:

	 
	          (i) first, to the payment of the reasonable costs and expenses of
such sale, collection or other realization, including the reasonable
out-of-pocket costs and expenses of the Agent and the reasonable fees,
costs, expenses and other client charges of counsel employed in
connection therewith, to the payment of all advances made by the Agent
for the account of the Grantor hereunder and to the payment of all
costs and expenses incurred by the Agent in connection with the
administration and enforcement of this Agreement;

	 
	          (ii) second, at the option of the Agent, to the payment or other
satisfaction of any Liens and other encumbrances upon any of the
Collateral;

	 
	          (iii) third, to the payment of all other Obligations then due and
payable under the Indenture, the Subsidiary Guarantee and the Senior
Notes;

	 
	          (iv) fourth, to the payment of any other amounts required by
applicable law; and

	 
	          (v) fifth, to the respective Grantor or to whomsoever shall be
lawfully entitled to receive the same or as a court of competent
jurisdiction shall direct.

          (c) In the event that the Proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Grantors, jointly and severally, shall be liable for the
deficiency, together with interest thereon at the rate specified in the Senior
Notes for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by the Agent to collect such deficiency.

          SECTION 8. Indemnity and Expenses.

          (a) Each Grantor, jointly and severally, agrees to indemnify and hold
the Agent harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, costs or expenses (including, without
limitation, legal fees, costs, expenses and other client charges) to the extent
that they arise out of or otherwise result from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from the Agent's gross negligence or
willful misconduct.

          (b) The Grantors, jointly and severally, will promptly pay to the
Agent and each Holder (i) the amount of any and all reasonable costs and
expenses, including the reasonable fees, costs, expenses and other client
charges of counsel for the Agent and each Holder and of any experts and agents
(including, without limitation, any Person which may act as agent of the Agent
or any Holder), which the Agent or any Holder may incur in connection with (A)
the preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement, or (B)
the custody, preservation, use or operation of, the Collateral, and (ii) the
amount of any and all costs and expenses, including the fees, costs, expenses
and other client charges of counsel for the Agent and each Holder and of any
experts and agents (including, without limitation, any Person which may act as
agent of the Agent or any Holder), which the Agent or any Holder may incur in
connection with (A) the sale of, collection from, or other realization upon, any
Collateral, (B) the exercise or enforcement of any of the rights of the Agent
and each Holder hereunder, or (C) the failure by a Grantor to perform or observe
any of the provisions hereof. In connection with any demand for payment under
this Section 8(b), the Agent shall deliver to the Grantor a certificate setting
forth in reasonable detail any amount or amounts that the Agent or any Holder is
entitled to receive pursuant to this Section 8(b) and shall be conclusive and
binding absent manifest error.

          SECTION 9. Notices, Etc. Any notices hereunder shall be
given and shall be effective in the manner set forth in the Indenture.

          SECTION 10. Miscellaneous.

          (a) No amendment of any provision of this Agreement shall be
          effective unless it is in writing and signed by the Grantors, the
Agent and the holders of more than 50% of the outstanding principal amount of
the Senior Notes, and no waiver of any provision of this Agreement, and no
consent to any departure by the Grantors therefrom, shall be effective unless it
is in writing and signed by the Agent and the holders of more than 50% of the
outstanding principal amount of the Senior Notes, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

          (b) No failure on the part of the Agent to exercise, and no delay
in exercising, any right hereunder or under the Indenture or any Collateral
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Agent provided
herein and in the Indenture or any Collateral Agreement are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of the Agent under the Indenture or any Collateral Agreement against
any party thereto are not conditional or contingent on any attempt by the Agent
to exercise any of its rights under the Indenture or any Collateral Agreement
against such party or against any other Person.

          (c) 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 portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.

          (d) This Agreement shall create a continuing security interest in
the Collateral and shall (i) remain in full force and effect until the payment
in full or release of the Obligations and (ii) be binding on each Grantor and
each of its successors and assigns and shall inure, together with all rights and
remedies of the Agent hereunder, to the benefit of the Agent and its respective
permitted successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence and subject to Sections
7.08 and 7.09 of the Indenture, the Agent may assign or otherwise transfer its
rights under this Agreement to any other Person who is the Trustee or successor
Trustee under the Indenture and such other Person shall thereupon become vested
with all of the benefits in respect thereof granted to the Agent herein or
otherwise. None of the rights or obligations of the Grantors hereunder may be
assigned or otherwise transferred without the prior written consent of the Agent
and the Holders of more than 50% of the outstanding amount of the Senior Notes,
and any such assignment or transfer without such consents shall be null and
void. The Agent may resign at any time upon giving the Grantors and the Trustee
thirty (30) days' prior written notice. The Agent shall continue to serve until
its successor, appointed by notice of the Grantors, accepts appointment as
successor collateral agent and receives all property held by the Agent under
this Agreement. The holders of a majority in principal amount of the outstanding
Senior Notes may at any time remove the Agent by so notifying the Grantors and
the Agent and may appoint a successor agent with the Grantors' consent, provided
that after the occurrence of an Event of Default the Grantors' consent shall not
be required. The Grantors may remove the Agent if:

                    (1) the Agent fails to fulfill its obligations hereunder;

                    (2) the Agent is adjudged a bankrupt or an insolvent;

                    (3) a receiver or other public officer takes charge of the Agent
          or its property; or

                    (4) the Agent becomes incapable of acting.

          If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, Delta shall notify each Holder of such event and
the holders of a majority in principal amount of the Senior Notes shall promptly
appoint a successor Agent. A successor Agent shall deliver a written acceptance
of its appointment to the retiring Agent, the Trustee and the Grantors.
Immediately after that, the retiring Agent shall transfer all property held by
the retiring Agent under this Agreement to the successor, the resignation or
removal of the retiring Agent shall become effective, and the successor Agent
shall have all the rights, powers and duties of the Agent under this Agreement.
If a successor Agent does not take office within 60 days after the retiring
Agent resigns or is removed, the retiring Agent, Delta or the holders of at
least 10% in principal amount of the outstanding Senior Notes may petition any
court of competent jurisdiction, at the expense of Delta, for the appointment of
a successor collateral agent. The terms and conditions of this Agreement will
remain unimpaired by resignation of the Agent or the appointment of a successor
collateral agent. Following the appointment of a successor collateral agent,
such person shall for all intents and purposes of this Agreement be the "Agent"
hereunder. None of the rights or obligations of the Grantors hereunder may be
assigned or otherwise transferred without the prior written consent of the
Agent.

          (e) Upon the satisfaction in full of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantors, and (ii) the
Agent will, upon any Grantor's request and at such Grantor's expense, (A) return
to such Grantor such of the Collateral as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof, and (B) execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination, all without any representation, warranty or recourse
whatsoever.

          (f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Collateral are governed by the law of a jurisdiction other than the State of New
York.

          (g) Each Grantor hereby expressly and irrevocably submits to the
jurisdiction of the courts of the State of New York located in the borough of
Manhattan and of the United States District Court for the Southern District of
New York for the purpose of any litigation arising out of, under or in
connection with, this Agreement, or any course of conduct, course of dealing,
statement (whether verbal or written) or action of it or of the Agent, and each
Grantor irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation; provided, however, any suit
seeking enforcement against any Collateral may be brought, at the Agent's
option, in the courts of any jurisdiction where such Collateral or other
property may be found. To the extent that any Grantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) with respect to itself or its property, such
Grantor hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and any other Collateral Agreement.

          (h) Each Grantor hereby expressly and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in an
inconvenient forum.

          (i) Each Grantor further irrevocably consents to the service of
process (i) by registered or certified mail, postage prepaid, to its address for
notices contained in the Indenture, such service to become effective five (5)
days after such mailing, or (ii) by personal service within or without the State
of New York. Nothing contained herein shall affect the right of the Agent to
serve process in any other manner permitted by law.

          (j) BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF THE
GRANTORS AND THE AGENT KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER
COLLATERAL AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF IT OR THE AGENT IN CONNECTION HEREWITH OR THEREWITH. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE GRANTORS TO ENTER INTO
THIS AGREEMENT.

          (k) This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.

          IN WITNESS WHEREOF, each of the signatories hereto has caused this
Agreement to be executed and delivered by its officer thereunto duly authorized
as of the date first above written.

	 
	
GRANTORS

DELTA FINANCIAL CORPORATION

By:                                         
    
       

      Name:

      Title:

	 
	
DELTA FUNDING CORPORATION

By:                                         
    
       

      Name:

      Title:

	 
	
DF SPECIAL HOLDINGS CORPORATION

By:                                         
    
       

      Name:

      Title:

	 
	FIDELITY MORTGAGE INC.

By:                                         
    
       

      Name:

      Title:

	 
	DFC FINANCIAL CORPORATION

By:                                         
    
       

      Name:

      Title:

	 
	DFC FINANCIAL OF CANADA LIMITED

By:                                         
    
       

      Name:

      Title:

	 
	DFC FUNDING OF CANADA LIMITED

By:                                         
    
       

      Name:

      Title:

	 
	CONTINENTAL PROPERTY MANAGEMENT CORP.

By:                                         
    
       

      Name:

      Title:

ACCEPTED AND AGREED:

U.S. BANK TRUST NATIONAL ASSOCIATION,

as Agent

By:                                         
    
       

      Name:

      Title:

SCHEDULE I

TO

SECURITY AGREEMENT

Pooling Agreements

Pooling and Servicing
Agreement, dated as of February 28, 1997, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of May 31, 1997, among Delta Funding Corporation, as Seller
and Servicer, and Wells Fargo Bank Minnesota, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of August 31, 1997, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of November 30, 1997, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of February 28, 1998, among Delta Funding Corporation, as
Seller and Servicer, and Bank One, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of May 31, 1998, among Delta Funding Corporation, as Seller
and Servicer, and Wells Fargo Bank Minnesota, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of August 31, 1998, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of November 30, 1998, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of February 28, 1999, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of May 31, 1999, among Delta Funding Corporation, as Seller
and Servicer, and Bank One, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of October 31, 1999, among Delta Funding Corporation, as
Seller and Servicer, and Bank One, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of February 29, 2000, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

Pooling and Servicing
Agreement, dated as of May 31, 2000, among Delta Funding Corporation, as Seller
and Servicer, and Wells Fargo Bank Minnesota, National Association, as Trustee. 

Pooling and Servicing
Agreement, dated as of September 1, 2000, among Delta Funding Corporation, as
Seller and Servicer, and Wells Fargo Bank Minnesota, National Association, as
Trustee. 

SCHEDULE II

TO

SECURITY AGREEMENT

Financing Statements

JURISDICTION            DEBTOR                                      SECURED PALRTY

 Delaware S\S     Delta Financial Corporation       U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     Delta Financial Corporation       U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau  Delta Financial Corporation       U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Delaware S\S     Delta Funding Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     Delta Funding Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau  Delta Funding Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Delaware S\S     DF Special Holdings Corporation   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     DF Special Holdings Corporation   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau  DF Special Holdings Corporation   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Delaware S\S     Fidelity Mortgage Inc.            U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     Fidelity Mortgage Inc.            U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau  Fidelity Mortgage Inc.            U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Delaware S\S     DFC Financial Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     DFC Financial Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau  DFC Financial Corporation         U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Canada\Ontario   DFC Financial of Canada Limited   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Canada\Ontario   DFC Financial of Canada Limited   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 Delaware S\S     Continental Property Management   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York S\S     Continental Property Management   U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

 New York\Nassau   Continental Property Management  U.S. Bank Trust National Association,
                                                    as trustee under the Indenture

SCHEDULE III

TO

SECURITY AGREEMENT

Chief Place of Business and Chief Executive Offices

1000 Woodbury Road

Woodbury, New York 11797

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