DELTA FUNDING RESIDUAL EXCHANGE COMPANY, LLC
OFFER TO EXCHANGE
CLASS A VOTING MEMBERSHIP INTERESTS IN DELTA FUNDING RESIDUAL EXCHANGE
COMPANY, LLC,
COMMON STOCK OF DELTA FUNDING RESIDUAL MANAGEMENT, INC.,
AND
SERIES A PREFERRED STOCK OF DELTA FINANCIAL CORPORATION
FOR
ALL ISSUED AND OUTSTANDING
9 1/2% SENIOR NOTES DUE 2004
AND
9 1/2% SENIOR SECURED NOTES DUE 2004
OF
DELTA FINANCIAL CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON AUGUST 20,
2001, UNLESS EXTENDED OR EARLIER TERMINATED. HOLDERS OF NOTES (AS DEFINED
BELOW) MUST TENDER THEIR NOTES ON OR PRIOR TO THE EXPIRATION DATE IN ORDER TO
PARTICIPATE IN THE EXCHANGE OFFER (AS DEFINED BELOW).
July 23, 2001
TO OUR CLIENTS:
Delta Funding Residual Exchange Company, LLC, a Delaware limited liability
company ("Delta"), is offering, subject to the terms and conditions set forth
in the enclosed prospectus dated July 23, 2001 (the "Prospectus") and the
accompanying letter of transmittal and consent dated July 23, 2001 (the
"Letter of Transmittal and Consent" and, together with the Prospectus, the
"Exchange Offer"), to issue up to 150,000 Class A Voting Membership Interests
(the "Membership Interests") in Delta and deliver up to 150,000 shares of
common stock (the "Common Stock") of Delta Funding Residual Management, Inc.
(the "Delta Managing Member") and up to 150,000 shares of Series A Preferred
Stock (the "Preferred Stock") of Delta Financial Corporation ("DFC"), in
exchange for the entire aggregate principal amount of DFC's outstanding 9 1/2%
Senior Notes due 2004 (the "Senior Notes") and 9 1/2% Senior Secured Notes due
2004 (the "Senior Secured Notes" and, collectively with the Senior Notes, the
"Notes"). Subject to the terms and conditions of the Exchange Offer, Delta
will issue one Membership Interest and deliver one share of Common Stock and
one share of Preferred Stock for each $1,000 principal amount Note that is
properly tendered and not withdrawn pursuant to the Exchange Offer. In
addition, as part of the Exchange Offer, Delta is soliciting consents from the
holders of the Notes to certain proposed amendments (the "Proposed
Amendments") to the Indenture governing the Senior Secured Notes. Holders
desiring to accept the Exchange Offer must also consent to the Proposed
Amendments.
Holders of Notes that participate in the Exchange Offer will release and
waive any and all claims or causes of action arising out of such holder's
ownership of the Notes that such holder may have against DFC, Delta, the Delta
Managing Member or any of their respective subsidiaries or affiliates, and all
of their
respective stockholders, members, directors, officers, employees, attorneys,
accountants, advisors, agents and representatives, in each case whether
current or former.
The Exchange Offer is subject to the satisfaction or waiver of certain
conditions that are described in the Prospectus under the caption "The
Exchange Offer--Conditions to the Exchange Offer."
These materials are being forwarded to you as the beneficial owner of the
Notes held by us for your account but not registered in your name. A TENDER OF
THE NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Notes held by us for your account and to consent to the
Proposed Amendments, pursuant to the terms and conditions set forth in the
enclosed Prospectus and Letter of Transmittal and Consent.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on August 20, 2001, unless the Exchange Offer is extended.
Any Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
before the expiration of the Exchange Offer or at any time after August 31,
2001 if Delta has not accepted the tendered Notes for exchange and you have
not received the Membership Interests, Common Stock and Preferred Stock in
exchange by that date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions to the Exchange
Offer."
3. Any transfer taxes incident to the transfer of Notes from the holder to
Delta will be paid by Delta, except as otherwise provided in Instruction 4 of
the Letter of Transmittal and Consent.
If you wish to have us tender your Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL AND CONSENT IS FURNISHED TO YOU FOR
INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER NOTES.
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INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the Exchange Offer made by Delta
Funding Residual Exchange Company, LLC with respect to the 9 1/2% Senior Notes
due 2004 and 9 1/2% Senior Secured Notes due 2004 of Delta Financial
Corporation ("DFC").
This will instruct you to tender the Notes held by you for the account of
the undersigned, to consent to the Proposed Amendments and to release and
waive any and all claims against DFC, Delta, the Delta Managing Member or any
of their respective subsidiaries or affiliates, and all of their respective
stockholders, members, directors, officers, employees, attorneys, accountants,
advisors, agents and representatives, in each case whether current or former,
except for claims under the federal securities laws, subject to the terms and
conditions set forth in the Prospectus and the related Letter of Transmittal
and Consent.
Please tender the Notes held by you for my account and consent to the
Proposed Amendments as indicated below:
9 1/2% Senior Notes due 2004
$____________ (Aggregate Principal Amount)
9 1/2% Senior Secured Notes due 2004
$____________ (Aggregate Principal Amount)
|_| Please do not tender any Notes held by you for my account.
Dated:_____________, 2001
Signature(s):___________________________________________________________________
Print Name(s) here:_____________________________________________________________
Print Address(es):______________________________________________________________
Area Code and Telephone Number(s):______________________________________________
Tax Identification or Social Security Number(s):________________________________
Your Account Number:____________________________________________________________
NONE OF THE NOTES HELD BY US FOR YOUR ACCOUNT WILL BE TENDERED UNLESS WE
RECEIVE WRITTEN INSTRUCTIONS FROM YOU TO DO SO. UNLESS A SPECIFIC CONTRARY
INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR SIGNATURE(S) HEREON SHALL
CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL THE NOTES HELD BY US FOR YOUR
ACCOUNT.
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