Document:

EXHIBIT 4.9

ENZO BIOCHEM, INC.

                             1994 STOCK OPTION PLAN

1.        PURPOSE.

          The purpose of this plan (the "Plan") is to secure for Enzo Biochem,
Inc. (the "Company") and its shareholders the benefits arising from capital
stock ownership by employees, officers and directors of, and consultants or
advisors to, the Company and its subsidiary corporations who are expected to
contribute to the Company's future growth and success. Those provisions of the
Plan which make express reference to Section 422 shall apply only to Incentive
Stock Options (as that term is defined in the Plan).

2.        TYPE OF OPTIONS AND ADMINISTRATION.

          (a) TYPES OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code") or non-statutory options which are not intended to meet the requirements
of Section 422 of the Code.

          (b) ADMINISTRATION. The Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company, whose
construction and interpretation of the terms and provisions of the Plan shall be
final and conclusive. The delegation of powers to the Committee shall be
consistent with applicable laws or regulations (including, without limitation,
applicable state law and Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3")). The
Committee may in its sole discretion grant options to purchase shares of the
Company's Common Stock, $.01 par value per share ("Common Stock") and issue
shares upon exercise of such options as provided in the Plan. The Committee
shall have authority, subject to the express provisions of the Plan, to construe
the respective option agreements and the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements, which need not be identical, and
to make all other determinations in the judgment of the Committee necessary or
desirable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency. No director or person acting pursuant to authority delegated by the
Board of Directors shall be liable for any action or determination under the
Plan made in good faith. Subject to adjustment as provided in Section 15 below,
the aggregate number of shares of Common Stock that may be subject to options
granted to any person in a calendar year shall not exceed 20% of the maximum

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number of shares which may be issued and sold under the Plan, as set forth in
Section 4 hereof, as such section may be amended from time to time.

          (c) APPLICABILITY OF RULE 16B-3. Those provisions of the Plan which
make express reference to Rule 16b-3 shall apply to the Company only at such
time as the Company's Common Stock is registered under the Exchange Act, subject
to the last sentence of Section 3(b), and then only to such persons as are
required to file reports under Section 16(a) of the Exchange Act (a "Reporting
Person").

3.        ELIGIBILITY.

          (a) GENERAL. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company or any subsidiaries of the Company as defined in Sections 424(e) and
424(f) of the Code ("Participants") PROVIDED, that Incentive Stock Options may
only be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an option
may, if he or she is otherwise eligible, be granted additional options if the
Committee shall so determine.

          (b) GRANT OF OPTIONS TO REPORTING PERSONS. The selection of a director
or an officer who is a Reporting Person (as the terms "director" and "officer"
are defined for purposes of Rule 16b-3) as a recipient of an option, the timing
of the option grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of Directors,
of which all members shall be "disinterested persons" (as hereinafter defined),
(ii) by a committee consisting of two or more directors having full authority to
act in the matter, each of whom shall be a "disinterested person" or (iii)
pursuant to provisions for automatic grants set forth in Section 3(c) below. For
the purposes of the Plan, a director shall be deemed to be a "disinterested
person" only if such person qualifies as a "disinterested person" within the
meaning of Rule 16b-3, as such term is interpreted from time to time. If at
least two of the members of the Board of Directors do not qualify as a
"disinterested person" within the meaning of Rule 16b-3, as such term is
interpreted from time to time, then the granting of options to officers and
directors who are Reporting Persons under the Plan shall not be determined in
accordance with this Section 3(b) but shall be determined in accordance with the
other provisions of the Plan.

          (c) DIRECTORS' OPTIONS. Commencing on June 30, 1995, directors of the
Company who are not employees or principal stockholders of the Company
("Eligible Directors") will receive an option ("Director Option") to purchase
7,500 shares of Common Stock. Commencing July 19, 1995, future Eligible
Directors of the Company will be granted a Director Option to purchase 15,000
shares of Common Stock on the date that such person is first elected or
appointed a director ("Initial Director Option"). Commencing on the day
immediately following the date of the annual meeting of stockholders for the
Company's fiscal year ending July 31, 1995, each Eligible Director will receive
an automatic grant

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("Automatic Grant") of a Director Option to purchase 7,500 shares of Common
Stock, other than Eligible Directors who received an Initial Director Option
since the most recent Automatic Grant, on the day immediately following the date
of each annual meeting of stockholders, as long as such director is a member of
the Board of Directors. The exercise price for each share subject to a Director
Option shall be equal to the fair market value of the Common Stock on the date
of grant. Director Options shall become exercisable in four equal annual
installments commencing one year from the date the option is granted and will
expire the earlier of 10 years after the date of grant or 90 days after the
termination of the director's service on the Board unless such Director Option
is an Incentive Stock Option in which case such Director Option shall be subject
to the additional terms and conditions set forth in Section 11.

4.        STOCK SUBJECT TO PLAN.

          The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 950,000 shares. If an
option granted under the Plan shall expire, terminate or is cancelled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.

5.        FORMS OF OPTION AGREEMENTS.

          As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan as may be approved by the Board of Directors. Such
option agreements may differ among recipients.

6.        PURCHASE PRICE.

          (a) GENERAL. The purchase price per share of stock deliverable upon
the exercise of an option shall be determined by the Board of Directors at the
time of grant of such option; PROVIDED, HOWEVER, that in the case of an
Incentive Stock Option, the exercise price shall not be less than 100% of the
Fair Market Value (as hereinafter defined) of such stock, at the time of grant
of such option, or less than 110% of such Fair Market Value in the case of
options described in Section 11(b). "Fair Market Value" of a share of Common
Stock of the Company as of a specified date for the purposes of the Plan shall
mean the closing price of a share of the Common Stock on the principal
securities exchange (including the Nasdaq National Market) on which such shares
are traded on the day immediately preceding the date as of which Fair Market
Value is being determined, or on the next preceding date on which such shares
are traded if no shares were traded on such immediately preceding day, or if the
shares are not traded on a securities exchange, Fair Market Value

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shall be deemed to be the average of the high bid and low asked prices of the
shares in the over-the-counter market on the day immediately preceding the date
as of which Fair Market Value is being determined or on the next preceding date
on which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of shares, any distributions with respect thereto which
would be repurchased with the shares) shall be determined in good faith by the
Board of Directors. In no case shall Fair Market Value be determined with regard
to restrictions other than restrictions which, by their terms, will never lapse.

          (b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board of Directors determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board).

7.        OPTION PERIOD.

          Subject to earlier termination as provided in the Plan, each option
and all rights thereunder shall expire on such date as determined by the Board
of Directors and set forth in the applicable option agreement, PROVIDED, that
such date shall not be later than (10) ten years after the date on which the
option is granted.

8.        EXERCISE OF OPTIONS.

          Each option granted under the Plan shall be exercisable either in full
or in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. No option granted to a Reporting Person for purposes of the
Exchange Act, however, shall be exercisable during the first six months after
the date of grant. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option, provide for
the acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.

9.        NONTRANSFERABILITY OF OPTIONS.

          No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. An option may be exercised during the lifetime of the optionee only
by the optionee. In the event an optionee dies during

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his employment by the Company or any of its subsidiaries, or during the
three-month period following the date of termination of such employment, his
option shall thereafter be exercisable, during the period specified in the
option agreement, by his executors or administrators to the full extent to which
such option was exercisable by the optionee at the time of his death during the
periods set forth in Section 10 or 11(d).

10.       EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

          Except as provided in Section 11(d) with respect to Incentive Stock
Options and except as otherwise determined by the Committee at the date of grant
of an option, and subject to the provisions of the Plan, an optionee may
exercise an option at any time within three (3) months following the termination
of the optionee's employment or other relationship with the Company or within
three (3) months if such termination was due to the death or disability of the
optionee or within one (1) year if such termination was due to the disability of
the optionee but, except in the case of the optionee's death, in no event later
than the expiration date of the option. If the termination of the optionee's
employment is for cause or is otherwise attributable to a breach by the optionee
of an employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of Directors shall
have the power to determine what constitutes a termination for cause or a breach
of an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.

11.       INCENTIVE STOCK OPTIONS.

          Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and conditions:

          (a) EXPRESS DESIGNATION. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.

          (b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock Option
is to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:

               (i) The purchase price per share of the Common Stock subject to
          such Incentive Stock Option shall not be less than 110% of the Fair
          Market Value of one share of Common Stock at the time of grant; and

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               (ii) the option exercise period shall not exceed five years from
          the date of grant.

          (c) DOLLAR LIMITATION. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.

          (d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:

               (i) an Incentive Stock Option may be exercised within the period
          of ninety (90) days after the date the optionee ceases to be an
          employee of the Company (or within such lesser period as may be
          specified in the applicable option agreement), PROVIDED, that the
          agreement with respect to such option may designate a longer exercise
          period and that the exercise after such ninety (90) day period shall
          be treated as the exercise of a non-statutory option under the Plan;

               (ii) if the optionee dies while in the employ of the Company, or
          within three months after the optionee ceases to be such an employee,
          the Incentive Stock Option may be exercised by the person to whom it
          is transferred by will or the laws of descent and distribution within
          the period of three (3) months after the date of death (or within such
          lesser period as may be specified in the applicable option agreement);
          and

               (iii) if the optionee becomes disabled (within the meaning of
          Section 22(e)(3) of the Code or any successor provisions thereto)
          while in the employ of the Company, the Incentive Stock Option may be
          exercised within the period of one (1) year after the date the
          optionee ceases to be such an employee because of such disability (or
          within such lesser period as may be specified in the applicable option
          agreement).

For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.

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12.       ADDITIONAL PROVISIONS.

          (a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its
sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of options, or such other provisions as shall be
determined by the Board of Directors; PROVIDED, that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code.

          (b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its
sole discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; PROVIDED, HOWEVER, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable).

13.       GENERAL RESTRICTIONS.

          (a) INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option, for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws, or with covenants or representations made by
the Company in connection with any public offering of its Common Stock,
including any "lock-up" or other restriction on transferability.

          (b) COMPLIANCE WITH SECURITIES LAW. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or automated quotation system or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification, or to satisfy such condition.

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14.       RIGHTS AS A SHAREHOLDER.

          The holder of an option shall have no rights as a shareholder with
respect to any shares covered by the option (including, without limitation, any
rights to receive dividends or non-cash distributions with respect to such
shares) until the date of issue of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.

15.       ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS, REORGANIZATIONS AND
          RELATED TRANSACTIONS.

          (a) RECAPITALIZATIONS AND RELATED TRANSACTIONS. If, through or as a
result of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional shares or
new or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (i) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.

          (b) REORGANIZATION, MERGER AND RELATED TRANSACTIONS. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event, whether or not such options
are then exercisable under the provisions of the applicable agreements relating
thereto. For purposes of the Plan, a "Trigger Event" is any one of the following
events:

               (i) the date on which shares of Common Stock are first purchased
     pursuant to a tender offer or exchange offer (other than such an offer by
     the Company, any Subsidiary, any employee benefit plan of the Company or of
     any Subsidiary or any entity holding shares or other securities of the
     Company for or pursuant to the terms of such plan), whether or not such
     offer is approved or opposed by the Company and regardless of the number of
     shares purchased pursuant to such offer;

               (ii) the date the Company acquires knowledge that any person or
     group deemed a person under Section 13(d)-3 of the Exchange Act (other than
     the Company, any Subsidiary, any employee benefit plan of the Company or of
     any

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     Subsidiary or any entity holding shares of Common Stock or other securities
     of the Company for or pursuant to the terms of any such plan or any
     individual or entity or group or affiliate thereof which acquired its
     beneficial ownership interest prior to the date the Plan was adopted by the
     Board), in a transaction or series of transactions, has become the
     beneficial owner, directly or indirectly (with beneficial ownership
     determined as provided in Rule 13d-3, or any successor rule, under the
     Exchange Act), of securities of the Company entitling the person or group
     to 30% or more of all votes (without consideration of the rights of any
     class or stock to elect directors by a separate class vote) to which all
     shareholders of the Company would be entitled in the election of the Board
     of Directors were an election held on such date;

               (iii) the date, during any period of two consecutive years, when
     individuals who at the beginning of such period constitute the Board of
     Directors of the Company cease for any reason to constitute at least a
     majority thereof, unless the election, or the nomination for election by
     the shareholders of the Company, of each new director was approved by a
     vote of at least two-thirds of the directors then still in office who were
     directors at the beginning of such period; and

               (iv) the date of approval by the shareholders of the Company of
     an agreement (a "reorganization agreement") providing for:

                    (A) The merger or consolidation of the Company with another
          corporation where the shareholders of the Company, immediately prior
          to the merger or consolidation, do not beneficially own, immediately
          after the merger or consolidation, shares of the corporation issuing
          cash or securities in the merger or consolidation entitling such
          shareholders to 80% or more of all votes (without consideration of the
          rights of any class of stock to elect directors by a separate class
          vote) to which all shareholders of such corporation would be entitled
          in the election of directors or where the members of the Board of
          Directors of the Company, immediately prior to the merger or
          consolidation, do not, immediately after the merger or consolidation,
          constitute a majority of the Board of Directors of the corporation
          issuing cash or securities in the merger or consolidation; or

                    (B) The sale or other disposition of all or substantially
          all the assets of the Company.

          (c) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this
Section 15 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.

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16.       MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.

          (a) GENERAL. In the event of any sale, merger, transfer or acquisition
of the Company or substantially all of the assets of the Company in which the
Company is not the surviving corporation, and provided that after the Company
shall have requested the acquiring or succeeding corporation (or an affiliate
thereof), that equivalent options shall be substituted and such successor
corporation shall have refused or failed to assume all options outstanding under
the Plan or issue substantially equivalent options, then any or all outstanding
options under the Plan shall accelerate and become exercisable in full
immediately prior to such event. The Committee will notify holders of options
under the Plan that any such options shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the options will terminate
upon expiration of such notice.

          (b) SUBSTITUTE OPTIONS. The Company may grant options under the Plan
in substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.

17.       NO SPECIAL EMPLOYMENT RIGHTS.

          Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.

18.       OTHER EMPLOYEE BENEFITS.

          Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.

19.       AMENDMENT OF THE PLAN.

          (a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect; provided, however, that if at any time
the approval of the shareholders of the Company is required under Section 422 of
the Code or any

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successor provision with respect to Incentive Stock Options, or under Rule
16b-3, the Board of Directors may not effect such modification or amendment
without such approval; and provided, further, that the provisions of Section
3(c) hereof shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employer Retirement Income Security Act of
1974, as amended, or the rules thereunder.

          (b) The modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option previously
granted to him or her. With the consent of the optionee affected, the Board of
Directors may amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to amend or modify
(i) the terms and provisions of the Plan and of any outstanding Incentive Stock
Options granted under the Plan to the extent necessary to qualify any or all
such options for such favorable federal income tax treatment (including deferral
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code and (ii) the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3.

20.       WITHHOLDING.

          (a) The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a Fair
Market Value equal to such withholding obligation as of the date that the amount
of tax to be withheld is to be determined. An optionee who has made an election
pursuant to this Section 20(a) may only satisfy his or her withholding
obligation with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.

          (b) The acceptance of shares of Common Stock upon exercise of an
Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two years from the date the option was granted or within one year from
the date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.

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          (c) Notwithstanding the foregoing, in the case of a Reporting Person
whose options have been granted in accordance with the provisions of Section
3(b) herein, no election to use shares for the payment of withholding taxes
shall be effective unless made in compliance with any applicable requirements of
Rule 16b-3.

21.       CANCELLATION AND NEW GRANT OF OPTIONS, ETC.

          The Board of Directors shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
cancelled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such
outstanding options.

22.       EFFECTIVE DATE AND DURATION OF THE PLAN.

          (a) EFFECTIVE DATE. The Plan shall become effective when adopted by
the Board of Directors, but no Incentive Stock Option granted under the Plan
shall become exercisable unless and until the Plan shall have been approved by
the Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no options
previously granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter. Amendments to the
Plan not requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as provided
in Section 21) shall become effective when adopted by the Board of Directors,
but no Incentive Stock Option granted after the date of such amendment shall
become exercisable (to the extent that such amendment to the Plan was required
to enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.

          (b) TERMINATION. Unless sooner terminated in accordance with Section
16, the Plan shall terminate upon the earlier of (i) the close of business on
the day next preceding the tenth anniversary of the date of its adoption by the
Board of Directors, or (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise or cancellation
of options granted under the Plan. If the date of termination is

                                      -12-
<PAGE>

determined under (i) above, then options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the instruments
evidencing such options.

23.       PROVISION FOR FOREIGN PARTICIPANTS.

          The Board of Directors may, without amending the Plan, modify awards
or options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.

24.       GOVERNING LAW.

          The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of laws.

              Adopted by the Board of Directors on November 8, 1994

                                      -13-EXHIBIT

10.4

 

EMPLOYMENT

AGREEMENT 

 

  AGREEMENT

made as of the 24th day of

March,

2005, by and

between DELTA FINANCIAL CORPORATION, a Delaware corporation (the “Corporation”),

and Richard Blass (the “Executive”).  

 

W I T N E

S S E T H: 

 

  In

consideration of the representations, warranties and conditions contained

herein, the parties

hereto agree as follows: 

 

1.  Position

and Responsibilities.

 

1.1  The

Executive shall serve in an executive capacity as Chief Financial Officer and

Executive Vice President of the Corporation. The

Executive shall perform such functions and undertake such responsibilities as

are customarily associated with such capacity. The

Executive shall hold such directorships and executive officerships in the

Corporation and any subsidiary to which, from time to time, he may be elected or

appointed during the term of this Agreement.

 

1.2  The

Executive shall devote his full time and best efforts to the business

and

affairs of the Corporation and to the promotion of its interests. 

 

1.3  The

principal executive offices of the Corporation shall be maintained in either

Nassau or

Suffolk counties, New

York and the Executive shall not be required to relocate outside of Nassau or

Suffolk counties, New

York without his consent. 

 

2.  Terms

of Employment .

 

2.1  The term

of employment shall be five years, commencing with the date hereof, unless

sooner terminated as provided in this Agreement. The

initial term of employment and any extension thereof is herein referred to as

the “Term.”

 

2.2  Notwithstanding

the provisions of Section 2.1 hereof, the Corporation shall

have the right, on written notice to the Executive, to terminate the Executive’s

employment for

Reasonable Cause, such termination to be effective as of the date on which

notice is given or as of

such later date otherwise specified in the notice. 

 

1

  

   

2.3  For

purposes of this Agreement, the term “Reasonable Cause” shall mean any of the

following actions by the Executive: (a) failure to comply with any of the

material terms of this Agreement, which shall not be cured within 30 days after

the Executive’s receipt of written notice from the Board of Directors; (b)

engagement in gross misconduct injurious to the Corporation or an affiliate of

the Corporation, which shall not be cured within 30 days after the Executive’s

receipt of written notice from the Board of Directors; (c) knowing and willful

neglect or refusal to attend to the material duties reasonably assigned to him

by the Board of Directors, which shall not be cured within 30 days after the

Executive’s receipt of written notice from the Board of Directors; (d)

intentional misappropriation of property of the Corporation or an affiliate of

the Corporation to the Executive’s own use; (e) the commission by the Executive

of an act of embezzlement; (f) Executive’s conviction for a felony or if

criminal penalties are imposed on Executive relating to any individual income

taxes due and owing by Executive; or (g) Executive’s engaging in any activity

which would constitute a material conflict of interest with the Corporation

which shall not be cured within 30 days after the Executive’s receipt of written

notice from the Board of Directors. If the

provisions contained in subsections (a), (b), (c) or (g) above cannot be cured

within 30 days due to the nature of the breach, the cure period shall then be

extended for a reasonable period of time; provided, however, the Executive

undertakes and continues in good faith to cure the same.

 

2.4  No later

than six months prior to the end of the Term, the Corporation and the Executive

shall meet to discuss the terms and conditions of an extension of the Term. If

the Term of this Agreement shall not be extended, at the end of the Term the

Corporation shall pay as severance pay to the Executive (1) his annual salary at

the rate in effect as of the termination, plus (2) an amount equal to the

average of his annual bonuses over the last five years. All such payments shall

be made within fifteen days of such termination. In addition, for a period of

one year following such termination, the Corporation shall provide the Executive

all benefits (including medical coverage) which may be in effect at such time

which are generally available to other senior executives of the Corporation or

its subsidiaries. Health benefits otherwise receivable by the Executive pursuant

to this Section 2.4 shall be reduced to the extent comparable benefits are

actually available to the Executive during such period from a subsequent

Employer. 

 

2

2.5  If the

Executive’s employment with the

Corporation shall be

terminated prior to the expiration of the Term (a) by the Corporation other than

pursuant to Sections 2.2, 4.1 or 4.2 hereof or (b) by the Executive for Good

Reason (as defined herein), then the Corporation shall pay to the Executive as

severance an amount equal to the product of (1) the lesser of (A) the remaining

Term in years plus 1, multiplied by 100% or (B) 299%, multiplied by (2) the last

five years’average annual compensation as calculated in accordance with Section

280G of the Internal Revenue Code of 1986, as

amended (the “Code”). All such

payments shall be made within fifteen days of such termination. In

addition, for the balance of the Term following such termination (or for a

period of one year following such termination, if greater), the Corporation

shall provide the Executive all benefits (including medical coverage) which may

be in effect at such time which are generally available to other senior

executives of the Corporation or its subsidiaries; provided, however that the

Executive shall only be entitled to such payments and benefits as long as he is

in compliance with the provisions of Section 5 below, to the extent applicable.

Health

benefits otherwise receivable by the Executive pursuant to this Section

2.5 shall be

reduced to the extent comparable benefits are actually available to the

Executive during such period from a subsequent Employer. The

Executive shall have the right for a period of 30 days after he

becomes aware of a

Good Reason event to terminate this Agreement for Good Reason. 

 

2.6  For

purposes of this Section, “Good Reason” shall mean any of the following,

which occurs subsequent to the date of this Agreement: 

 

(i)  any

material change is made to the

Executive’s duties,

responsibilities,

authority, reporting requirements or title to a

level materially below, or that

are otherwise inconsistent with, those

normally associated with the position held by the Executive on the date hereof;

 

(ii)  a

reduction by the Corporation of the Executive’s base

salary as then

in effect,

without the Executive’s written consent; 

 

(iii)  a

relocation or an actual change in the Executive’s place of employment

or the

Corporation’s principal executive offices outside

of Nassau or

Suffolk counties, New

York, without

Executive’s prior consent; 

 

3

(iv)  prior to

a Change in Control, failure of the Corporation to continue to maintain the same

medical or other

benefit

plans covering the Executive as are made available to other senior executives of

the Corporation;  

 

(v)  any

material breach by the Corporation of any provision of this Agreement which

shall not be cured to the

reasonable satisfaction of the Executive within 30

days after the Board of Directors’receipt of written notice from the

Executive;

 

(vi)  any

failure by the Corporation to obtain the written

assumption

of this Agreement by any

successor entity. 

 

3.  Compensation .

 

3.1   (a)    

The

Corporation shall pay or cause Delta Funding Corporation to pay to the Executive

for the services to be rendered by the Executive hereunder a salary at the rate

of $350,000 per annum. The

salary shall be payable in equal installments in accordance with the

Corporation’s normal payroll practices. Such

salary will be reviewed at least annually and shall be increased (but not

decreased) by the Board of Directors of the Corporation in such amount as

determined in its sole discretion.

 

(b)  In

addition, at the discretion of the Compensation Committee of the Board of

Directors (the “Compensation Committee”), after consideration of the

Corporation’s actual performance relative to its financial and operational

objectives for any particular period, and the performance of the Executive, as

well as such other factors deemed appropriate by the Compensation Committee in

its discretion, the Corporation may also pay the Executive an annual bonus with

respect to each fiscal year of the Corporation. Such

Bonus, if any, may be paid in cash, in shares of Delta Financial Corporation’s

Common Stock, par value $.01 per share (the “Common

Stock”) or in

any combination of cash and shares of Common Stock, as determined in the

discretion of the Compensation Committee. Nothing

herein contained shall, however, obligate

the Corporation to pay any annual bonus to the Executive, it being understood

that any such bonus shall be in the sole discretion of the Compensation

Committee and that the amount thereof, if any, may vary depending upon actual

performance of the Corporation and the Executive as determined in the discretion

of the Board. 

 

4

(c)  In

addition to the Bonus described in Section 3.1(b), the Corporation may pay the

Executive at the Board of Directors’discretion additional cash bonuses.

Nothing

set forth in this Section 3.1(c) shall, however, obligate the Corporation to pay

any bonus described in this Section 3.1(c) to the Executive, it being understood

that any such bonus shall be in the sole discretion of the Board of Directors

and that the amount thereof, if any, may vary depending upon actual performance

of the Corporation and the Executive as determined in the discretion of the

Board. 

 

(d)  On the

date of this Agreement, the Executive shall be granted non-qualified stock

options pursuant to Delta Financial Corporation’s 1996 Stock Option Plan (the

“1996 Option Plan”) to purchase 100,000 shares of Common Stock, at a price per

share equal to the per share closing price of the Common Stock on the date

hereof. The

foregoing options shall vest 1/3 on the grant date, and 1/3 on each succeeding

anniversary of the grant date, and have a term of seven years.  

 

(e) Also on

the date of this Agreement, all of the Executive’s existing unvested stock

options shall immediately become exercisable. 

 

3.2  The

Executive shall be entitled to participate in, and receive benefits from, any

insurance, medical, disability, bonus, incentive compensation (including

additional grants of non- qualified

stock options under any of Delta’s stock

option plans, as

determined by the Corporation) or other employee benefit plan, if any are

adopted, of the Corporation or any subsidiary which may be in effect at any time

during the course of his employment by the Corporation and which shall be

generally available to the Executive on terms no less favorable than to other

senior executives of the Corporation or its subsidiaries. The

Corporation agrees to reimburse Executive for all medical costs and expenses

incurred by him which are not covered by the Corporation’s group medical plans,

up to an aggregate maximum amount of $100,000 per annum, upon submission of

appropriate and itemized documentation.  

 

3.3  The

Corporation agrees to pay the Executive a car allowance of $1,000 per

month.

 

3.4  The

Corporation agrees to reimburse the Executive for all reasonable and necessary

business expenses incurred by him on behalf of the Corporation in the course of

his duties hereunder upon the presentation by the Executive of appropriate

vouchers therefor.

 

5

3.5  The

Executive will be entitled each year of this Agreement to a paid vacation

of five weeks, no more than half of which can be carried forward to future

years. 

 

3.6  Upon

termination of this Agreement for Reasonable

Cause or

due to death or incapacity of the Executive (as defined in Section 4.1), the

Executive (or his estate) shall be entitled to all unpaid compensation

(including pro-rata Bonus) and benefits accrued to the date of termination.

 

3.7  The

Executive shall not be required to mitigate damages or the amount of

any

payment provided to him under this Agreement by seeking other employment or

otherwise. 

 

3.8  If the

Executive’s employment with the Corporation shall be terminated by the

Corporation due to death or incapacity of the Executive (as defined in Section

4.1), then, effective upon the date of termination, all stock options and

restricted stock held by the Executive beneficially (in trust or otherwise)

and/or of record, including, without limitation, all stock options and

restricted stock held in trust for the benefit of the Executive in any

stock

option plan or

similar plan as may

be established at the Corporation’s discretion, shall vest and become

immediately exercisable (and in the case of stock options, shall remain

exercisable by the Executive or his estate for one year following such

termination). 

 

4.  Incapacity;

Death .

 

4.1  If,

during the period of employment hereunder, because of illness or other

incapacity, the Executive shall fail for a period of 120 consecutive days, or

for shorter periods aggregating more than 120 days during any twelve month

period, to render the services contemplated hereunder, then the Corporation, at

its option, may terminate the term of employment hereunder, upon not less than

30 days written notice from the Corporation to the Executive, effective on the

30th day

after giving of such notice; provided, however, that no such termination will be

effective if prior to the 30th day

after giving such notice, the Executive’s illness or incapacity shall have

terminated and he shall be physically and mentally able to perform the services

required hereunder.

 

4.2  In the

event of the death of the Executive during the term hereof, the employment

hereunder shall terminate on the date of death of the Executive. 

 

6

4.3  The

Corporation (or its designee) shall have the right to obtain for its benefit an

appropriate life insurance policy on the life of the Executive, naming the

Corporation (or its designee) as the beneficiary. If

requested by the Corporation, the Executive agrees to cooperate with the

Corporation in obtaining such policy.

 

4.4  In the

event the employment of Executive is terminated by the Corporation as the result

of the death or incapacity of the Executive, the Corporation agrees to make a

payment to the Executive (or his estate) within 15 days of such termination

equal to the Executive’s annual salary in effect as of the date of such

termination. 

 

5.  Other

Activities During Employment; Non-Competition; Solicitation

 

5.1  The

Executive shall not during the Term of this Agreement undertake or engage in

other employment, occupation or business enterprise. Subject

to compliance with the provisions of this Agreement, the Executive may engage in

reasonable activities with respect to personal investments of the Executive.

 

 

5.2  During

the Term of this Agreement, and for a period of one year after the Executive

leaves the employ of the Corporation, in the event that (a) the Corporation

terminates the Executive’s employment with the Corporation pursuant to Sections

2.2 or 4.1, (b) the Executive terminates his employment with the Corporation for

any reason other than Good Reason, or (c) the Term of this Agreement shall not

be extended in accordance with Section 2.4 hereof and Executive receives

severance pay as set forth therein, then: 

 

5.2.1  Neither

the Executive nor any entity in which he may be interested as a partner,

trustee, director, officer, employee, shareholder, option holder, lender of

money, guarantor or consultant, shall be engaged directly or indirectly in any

business engaged in by the Corporation, or any subsidiary, in any area where the

Corporation, or any subsidiary, conducts such business at any time during this

Agreement; provided however, that the foregoing shall not be deemed to prevent

the Executive from investing in securities if such class of securities in which

the investment is so made is listed on a national securities exchange or is

issued by a company registered under Section 12(g) of the Securities Exchange

Act of 1934 (“Exchange Act”), so long as such investment holdings do not, in the

aggregate, constitute more than 5% of the voting stock of any company’s

securities; and

 

7

5.2.2  The

Executive shall not solicit (or assist or encourage the solicitation of) any

employee of the Corporation or any of its subsidiaries or affiliates to work for

Executive or for any business, firm corporation or other entity in which the

Executive, directly or indirectly, in any capacity described in Section 5.2

hereof, participates or engages (or expects to participate or engage) or has (or

expects to have) a financial interest or management position.

 

5.3  The

Executive shall not at any time during this Agreement or after the termination

hereof directly or indirectly divulge, furnish, use, publish or make accessible

to any person or entity any Confidential Information (as hereinafter defined).

Any

records of Confidential

Information prepared by the Executive or which come into Executive’s possession

during

this Agreement are and remain the property of the Corporation and upon

termination of Executive’s

employment all such records and copies thereof shall be either left with or

returned to the

Corporation.

 

5.4  The term

“Confidential Information” shall mean information disclosed to the Executive or

known, learned, created or observed by him as a consequence of or through his

employment by the Corporation, not generally known in the relevant trade or

industry, about the Corporation’s or any of its subsidiaries’or affiliates’business activities, services and processes, including but not limited to

information concerning advertising, sales promotion, publicity, sales data,

research, finances, accounting, methods, processes, business plans, broker or

correspondent lists and records and potential broker or correspondent lists and

records. 

 

6.  Change

in Control.

 

6.1  For

purposes hereof, a “Change in Control” shall be deemed to have occurred if (a)

during any period of 12 months, individuals who at the beginning of such period

constitute the Board of Directors of the Corporation cease for any reason to

constitute a majority thereof unless the election, or the nomination for the

election by the Corporation’s stockholders of each new director was approved by

a vote of at least a majority of all of

the

directors then still in office who were directors at the beginning of the

period, (b) a person or group of persons acting in concert (as defined in

Section 13 (a) of the Exchange Act), other than one or more members of the

Miller Family (hereinafter defined), acquires beneficial ownership, within the

meaning of Rule 13 (d) (3) of the Rules and Regulations of the United States

Securities and Exchange Commission promulgated pursuant to the Exchange Act, of

a number of voting shares of the Corporation which constitutes 35% or more

of the Corporation’s outstanding voting shares,

(c) the

Corporation

is merged, consolidated or reorganized into or with another corporation or

another legal entity and, as a result of such merger, consolidation or

reorganization, less than 50% of the combined voting power of the

then-outstanding securities of such corporation or entity immediately after such

transaction is held in the aggregate by the holders of the combined voting power

of the securities of the Corporation entitled to vote generally in the election

of directors of the

Corporation immediately prior to such transaction, or (d)

the Corporation undergoes a liquidation or dissolution or, in one or more

related

transactions or one or more transactions

occurring within a consecutive 12-month period, a sale of all or substantially

all of the assets of the Corporation. No

merger, consolidation or corporate reorganization in which the owners of the

combined voting power of the Corporation’s then outstanding voting securities

entitled to vote generally prior to said combination, own 50% or more of the

resulting entity’s outstanding voting securities shall, by itself, be considered

a Change in Control. 

 

8

6.1.1  For

purposes of this Agreement, the term “Miller Family” shall mean Hugh Miller,

Marc E. Miller, Sidney Miller and Lee Miller, any of their respective spouses or

lineal descendants, or any trust (a)

the

beneficial interests of which are directly

or indirectly held by

such persons or (b)

of which any of such persons serves as a trustee.  

 

6.2  If, upon

a Change in Control, as defined under Section 6, the Executive’s employment with

the Corporation is terminated by the Corporation, or the Executive terminates

his employment with the Corporation for Good Reason (as defined in Section

2.5), in

each case within a twenty-four (24) month period following a Change in Control

(each a “Change in Control Termination”), the Executive shall be entitled to the

following severance compensation and benefits in lieu of any payments which

would otherwise be payable under Section 2.5: 

 

(a)  within 15

days of the date of the Change in Control Termination the “Change in Control

Termination Date”), the Corporation shall pay the Executive all amounts of

earned or accrued compensation through the Executive’s termination date,

including reasonable business expenses; 

 

(b)  within 15

days of the Change in Control Termination Date, the Corporation shall pay the

Executive as severance and in lieu of any further compensation for periods

subsequent to the Change in Control Termination Date an amount equal to the

product of (1) 299%, multiplied by (2) the last five years’average annual

compensation as calculated in accordance with Section 280G of the Code;

and 

 

(c)  the

Corporation shall continue on behalf of the Executive and his dependents and

beneficiaries the life insurance, disability, medical, dental, prescription drug

and hospitalization coverages and benefits provided to the Executive immediately

prior to the Change in Control Termination Date or, if greater, the coverages

and benefits generally provided at any time thereafter by the Corporation to its

senior officers for the remaining Term of this Agreement following the Change in

Control Termination Date. Health

benefits otherwise receivable by the Executive pursuant to this Section 6.2

shall be reduced to the extent substantially

comparable

benefits are actually provided to the

Executive during such period from a subsequent Employer. 

 

9

6.3  Executive

shall not be required to mitigate the amount of any payment provided

for in this Section 6 by seeking employment or otherwise.

 

6.4  Upon the

occurrence of a Change in Control, all stock options and restricted stock

(and any

other equity-linked award that may be granted by the Corporation in the future)

held by

the Executive beneficially (in trust or otherwise) and/or of record, including,

without limitation, all such

awards held in

trust for the benefit of the Executive in any share

option plan or

similar plan, as may be established at the Corporation’s discretion, shall vest

and become immediately exercisable on the date of the Change in Control (and in

the case of stock options, shall remain exercisable by the Executive until the

termination date stated in the related award

documentation), and the Corporation shall take all such actions as may be

necessary to release any then existing restrictions imposed by the Corporation

and waive any rights to repurchase such awards.  

 

6.5      

(a)   

   Anything

in this Agreement to the contrary notwithstanding, in the event that it shall be

determined that any payment, distribution, acceleration of vesting of equity

awards, continuation of benefits, or other compensation from the Corporation to

or for the benefit of the Executive, whether paid or payable or distributed or

distributable pursuant to the terms of this Agreement or otherwise (each, a

“Payment”, and in the aggregate, the “Payments”), would constitute an “excess

parachute payment” within the meaning of Section 280G of the Code, and thus be

subject to the excise tax imposed by Section 4999 of the Code, and that it would

be economically advantageous to the Executive on an after-tax basis to reduce

the Payments to avoid or reduce the excise tax on excess parachute payments

under Section 4999 of the Code, the aggregate present value of amounts payable

or distributable to or for the benefit of the Executive pursuant to this

Agreement (such payments or distributions pursuant to this Agreement being

hereinafter referred to as “Agreement Payments”) shall be reduced (but not below

zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed

in present value which maximizes the aggregate net amount available to the

Executive from Agreement Payments after reduction for all Federal, state and

local income and payroll taxes, Social Security taxes (including Medicare) and

the excise tax under Section 4999. In applying this Subsection (a), except as

may otherwise be mutually agreed upon by the Corporation and the Executive, the

Agreement Payments under Section 6.2(b) shall be reduced before reducing any

other Payments to be made to the Executive. For purposes of this Section 6.5,

present value shall be determined in accordance with Section 280G(d)(4) of the

Code.

 

10

  

(a)  All

determinations to be made under this Section 6.5 shall be made by the

Corporation’s independent public accountant immediately prior to the Change in

Control (the “Accounting Firm”), which firm shall provide its determinations and

any supporting calculations both to the Corporation and the Executive within 10

days of the Change in Control Termination Date. Any such determination by the

Accounting Firm shall be binding upon the Corporation and the Executive. Within

five days after this determination, the Corporation shall pay (or cause to be

paid) or distribute (or cause to be distributed) to or for the benefit of the

Executive such amounts as are then due to the Executive under this

Agreement.

 

(b)  As a

result of the uncertainty in the application of Section 280G of the Code at the

time of the initial determination by the Accounting Firm hereunder, it is

possible that Agreement Payments, as the case may be, will have been made by the

Corporation which should not have been made (“Overpayment”) or that additional

Agreement Payments which have not been made by the Corporation could have been

made (“Underpayment”), in each case, consistent with the calculations required

to be made hereunder. Accordingly, within two years after the Change in Control

Termination Date, the Accounting Firm shall review the determination made by it

pursuant to Subsection (b), above. In the event that the Accounting Firm

determines that an Overpayment has been made, any such Overpayment shall be

treated for all purposes as a loan by the Corporation to the Executive, which

the Executive shall repay to the Corporation, together with interest at the

applicable federal rate provided for in Section 7872(f)(2) of the Code (the

“Federal Rate”); provided, however, that no amount shall be payable by the

Executive to the Corporation if and to the extent such payment would not reduce

the amount which is subject to the excise tax under Section 4999 of the Code. In

the event that the Accounting Firm determines that an Underpayment has occurred,

any such Underpayment shall be promptly paid by the Corporation to or for the

benefit of the Executive together with interest at the Federal

Rate.

 

11

All of

the fees and expenses of the Accounting Firm in performing the determinations

referred to in Subsections (b) and (c), above, shall be borne solely by the

Corporation. The Corporation agrees to indemnify and hold harmless the

Accounting Firm of and from any and all claims, damages and expenses resulting

from or relating to its determinations pursuant to Subsections (b) and (c),

above, except for claims, damages or expenses resulting from the gross

negligence or willful misconduct of the Accounting Firm.

 

7.  Assignment.

The

Corporation shall require any successor or assign to all or substantially all

the assets of the Corporation (whether by merger or by acquisition of stock,

assets or otherwise) prior to consummation of any transaction therewith, to

expressly assume and agree to perform in writing this Agreement in the same

manner and to the same extent that the Corporation would be required to perform

it if no such succession or assignment had taken place. This

Agreement shall inure to the benefit of and be binding upon the Corporation, its

successors and assigns, and upon the Executive and his heirs, executors,

administrators and legal representatives. This

Agreement shall not be assignable by the Executive.

 

8.  No

Third Party Beneficiaries. 

This

Agreement does not create, and shall not be construed as creating, any rights

enforceable by any person not a party to this Agreement, except as provided in

Section 7 hereof.

 

9.  Headings. 

The

headings of the sections hereof are inserted for convenience only and shall not

be deemed to constitute a part hereof nor to affect the meaning

thereof.

 

10.  

Interpretation.   In case

any one or more of the provisions contained in this Agreement shall, for any

reason, be held to be invalid, illegal or unenforceable in any respect, such

invalidity, illegality or unenforceability shall not affect any other provisions

of this Agreement, and this Agreement shall be construed as if such invalid,

illegal or unenforceable provision

had never been contained herein. If,

moreover, any one or more of the provisions contained in this Agreement shall

for any reason be held by a court of competent jurisdiction to be unenforceable

because it is excessively broad as to duration, geographical scope, activity or

subject, it shall be construed by limiting and reducing it, so as to be

enforceable to the extent compatible with the applicable law as it shall then

appear. 

 

12

11.  Notices.

All

notices under this Agreement shall be in writing and shall be deemed to have

been given at the time when mailed by registered or certified mail, addressed to

the address below stated party to which notice is given, or to such changed

address as such party may have fixed by notice given as set forth

herein: 

 

To the

Corporation: 

 

Delta

Financial Corporation 

1000

Woodbury Road 

Suite 200

Woodbury,

NY

11797

Attn:

General

Counsel 

 

        

And

 

      To the

Executive: 

 

Richard

Blass

22

Wharton Place 

Melville,

NY 11747

 

provided,

however, that any notice of change of address shall be effective only upon

receipt.

 

12.  Waivers.

If either

party should waive any breach of any provision of this Agreement, he or it shall

not thereby be deemed to have waived any preceding or succeeding breach of the

same or any other provision of this Agreement.

 

13.  Complete

Agreement; Amendments.

The

foregoing is the entire agreement of the parties with respect to the subject

matter hereof and may not be amended, supplemented, canceled or discharged

except by written instrument executed by both parties hereto. This

Agreement shall supersede and replace any and all prior agreements between the

parties, including that certain

agreement dated

February 27, 2002 . 

 

13

14.  Equitable

Remedies. The

Executive acknowledges that he has been employed for his unique talents and that

his leaving the employ of the Corporation would seriously hamper the business of

the Corporation and that the Corporation will suffer irreparable damage if any

provisions of Section 5 hereof are not performed strictly in accordance with

their terms or are otherwise breached. The

Executive hereby expressly agrees that the Corporation shall be entitled as a

matter of right to injunctive or other equitable relief, in addition to all

other remedies permitted by law, to prevent a breach or violation by the

Executive and to secure enforcement of the provisions of Section 5. Resort to

such equitable relief, however, shall not constitute a waiver or any other

rights or remedies, which the Corporation may have.

 

15.  Governing

Law.

This

Agreement is to be governed by and construed in accordance with the laws of the

State of New York, without giving effect to principles of conflicts of

law.

 

14

     

 

IN

WITNESS WHEREOF, the parties hereto have executed this Agreement as the date

first above written.

	 	 	 
	 	

      DELTA

      FINANCIAL CORPORATION

	 
 	 
 	 
 
		By:  	/s/ HUGH

      MILLER 
	 	

      

    
	 	Title:  President

  

	 	 	 
	Date:  March 30,

    2005	By:  	/s/ RICHARD

BLASS
	 	

      

    
	 	Title: 

 

15

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