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Form Of Tax Indemnification Agreement

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FORM OF TAX INDEMNIFICATION AGREEMENT


This Tax Indemnification Agreement (this "Agreement"), is entered into this ___ day of ____________, 1996, by and between DELTA FUNDING CORPORATION, a New York corporation ("Delta"), and each of SIDNEY A. MILLER, HUGH I. MILLER, the SIDNEY A. MILLER GRANTOR RETAINED ANNUITY TRUST and the RONA V. MILLER GRANTOR RETAINED ANNUITY TRUST ("collectively, the "Shareholders").


W I T N E S S E T H:


WHEREAS, Delta was an S corporation within the meaning of Section 1361 of the Internal Revenue Code of 1986, as amended (the "Code"), and the corresponding provisions of state income tax law, for the period July 1, 1985 through the day preceding the date of this Agreement (the "S Period");


WHEREAS, immediately prior to the date of this Agreement the Shareholders held all the outstanding shares of capital stock, no par value, of Delta (the "Capital Stock");


WHEREAS, as of the date of this Agreement the Shareholders have contributed all of the shares of Capital Stock held by them to Delta Financial Corporation, a Delaware corporation, in exchange for shares of common stock, $.01 par value per share, of Delta Financial Corporation;


WHEREAS, Delta will be a C corporation within the meaning of Section 1361 of the Code and the corresponding provisions of state income tax law from the date of this Agreement and thereafter;


NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto agree as follows:


1. Representations and Warranties of the Parties. The Shareholders jointly and severally represent and warrant to Delta that:


(a) During the S Period, the Shareholders duly and timely filed all tax reports and returns required to be filed by them ("Shareholder Tax Returns").


(b) The Shareholders have duly included, or will duly include, in their Shareholder Tax Returns their allocable share of Delta's taxable income from all sources through and including the last business day of the S Period (the "S Corporation Taxable


Income").


(c) There are no audits, inquiries, investigations or examinations relating to any of the Shareholder Tax Returns pending, and there are no claims which have been asserted relating to any of the Shareholder Tax Returns which if determined adversely would result in the assertion by any entity of the federal government or New York State government of any federal or New York State income tax ("Tax") deficiency against Delta.


2. Indemnifications. (a) The Shareholders, jointly and severally, shall be responsible for and shall indemnify and save and hold harmless Delta against all Tax imposed on Delta resulting from a final determination of an adj
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