Amendments To Credit Agreement

FIRST AMENDMENT TO CREDIT AGREEMENT
AND
CONFIRMATION OF GUARANTY


THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND CONFIRMATION OF GUARANTY (this "Amendment") is made as of October 1, 1997, among AMERICAN BUSINESS CREDIT, INC., a Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT, INC., a Pennsylvania corporation d/b/a Upland Mortgage ("HAC"), AMERICAN BUSINESS LEASING, INC., a Pennsylvania corporation ("ABL"), NEW JERSEY MORTGAGE & INVESTMENT CORP., a New Jersey corporation d/b/a Ocean to Ocean Financial Group, Inc. ("NJMI") and FEDERAL LEASING CORP., a New Jersey corporation ("Federal Leasing") (ABC, HAC, and ABL are "Co-Borrowers"); AMERICAN BUSINESS FINANCIAL SERVICES, INC., a Delaware corporation ("Parent"); the Lenders (herein so called) described below; and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Administrative Agent for Lenders ("Agent").


R E C I T A L S:


A. ABC, HAC, ABL, Parent, Lenders and Agent are parties to a certain Credit Agreement (as amended and supplemented, herein so called) dated as of July 31, 1997.


B. Parent has executed an unconditional continuing guaranty agreement, dated as of July 31, 1997, guarantying full payment of certain guaranteed obligations defined therein, including without limitation, the obligations (the "Obligation") of the Co-Borrowers arising under the Credit Agreement and related Credit Documents (the "Guaranty Agreement").


C. Parent desires to acquire New Jersey Mortgage & Investment Corp., a residential lender with its principal place of business in Roseland, New Jersey, and its wholly owned subsidiary, Federal Leasing Corp., an equipment lessor with its principal place of business in Roseland, New Jersey (the "Acquisition").


D. The Acquisition will require Parent to assume certain indebtedness of NJMI (the "Additional Indebtedness").


E. Federal Leasing and NJMI desire to assume all rights, duties and obligations of a Co- Borrower under the Credit Agreement and become a Co-Borrower for all purposes under the Credit Agreement.


F. Co-Borrowers, Parent and Lenders wish to enter into this Amendment to permit the incurrence of the Additional Indebtedness, to add NJMI and Federal Leasing as additional Co-Borrowers under the Credit Agreement, and to make certain other modifications to the Credit Agreement.


NOW, THEREFORE, in consideration of the premises and the agreements herein set forth and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, Lenders, Agent, Co-Borrowers, and Parent covenant and agree as follows:


1. Definitions. Terms used herein and defined in the Credit Agreement shall have the meanings set forth in the Credit Agreement, except as otherwise provided herein. All references to "Sections" herein are references to Sections of the Credit Agreement.


2. Consents. Agent and each Lender, subject to the terms and conditions set forth herein, hereby consent to the Acquisition and agree and acknowledge that (i) the Acquisition is a Permitted Acquisition under the terms of the Credit Agreement and (ii) the indebtedness assumed by Parent in connection with the Acquisition, up to a maximum amount of $20,000,000 of indebtedness currently owed by NJMI and Federal Leasing, is Debt acceptable to Required Lenders and constitutes Permitted Debt under the Credit Agreement pursuant to Section 8.1(j) thereof. The foregoing consent is expressly conditioned upon the following terms and conditions:


(a) within sixty (60) days following the closing of the Acquisition, all Debt of NJMI pursuant to a working capital line of credit extended to NJMI by Rothchild & Sons Limited shall be repaid in full and such facility shall be terminated;


(b) promptly following the closing of the Acquisition, the Debt of NJMI under the "Warehouse Lines of Credit" (herein so called) extended by CoreStates Bank, N.A. and Bank of Boston, N.A. shall be refinanced with Borrowings under the Credit Agreement and the Warehouse Lines of Credit shall be terminated;


(c) the remaining Debt assumed by Parent and not repaid pursuant to clauses (a) and (b) above shall be either (i) Debt subordinated in right of payment to the Obligation pursuant to subordination agreements executed by the holders of such Debt (the "Junior Lenders") in form and substance acceptable to Agent and its counsel (the "Subordination Agreements"), which subordinated debt is payable to the Junior Lenders, assuming no Default Condition or Event of Default exists, in accordance with its scheduled amortization over a five year period, or (ii) the capital lease described on Exhibit A attached hereto.


3. Credit Agreement Amendments. The Credit Agreement shall be and hereby is amended as follows:


(a) NJMI and Federal Leasing are each hereby added to the Credit Agreement as a Co- Borrower and each reference in this Amendment, the Credit Agreement and other related Credit Documents and all schedules and exhibits thereto to Co-Borrowers shall be references to ABC, HAC, ABL, NJMI and Federal Leasing. Each of NJMI and Federal Leasing hereby assumes all of the obligations and duties of the Co-Borrowers under the Credit Agreement and agrees to be bound by all of the covenants and agreements set forth therein. Each of NJMI and Federal Leasing hereby makes and affirms, as to itself, and as of the date hereof, each representation and warranty of the Co- Borrowers set forth in the Credit Agreement. For purposes of Section 12.2 of the Credit Agreement, the addresses and fax numbers for NJMI and Federal Leasing are those set forth beside their names on the signature pages below.


(b) The definitions of "Borrowing Base" and "Co-Borrowers" are hereby amended in their entirety to read as follows:


"Co-Borrowers" means ABC, HAC, ABL, NJMI and Federal Leasing.


"Borrowing Base" means, at any time, the sum of:


(a) the total collateral value of each
Eligible-Mortgage Loan and each Eligible-Commercial Loan,
equal to 98% of the lowest of (i) the unpaid principal balance
of the underlying promissory note, (ii) the actual amount
funded by ABC, HAC or NJMI, as the case may be, with respect
to that Eligible-Mortgage Loan or Eligible-Commercial Loan, or
(iii) the Market Value thereof, as determined by
Administrative Agent; plus


(b) the total collateral value of each
Eligible-Seasoned Loan, equal to 90% of the lowest of (i) the
unpaid principal balance of the underlying promissory note,
(ii) the actual amount funded by ABC, HAC, or NJMI, as the
case may be, with respect to that Eligible-Seasoned Loan, or
(iii) the Market Value thereof, as determined by
Administrative Agent; plus


(c) the total collateral value of each Eligible Lease
and Eligible-Seasoned Lease, equal to 85% of the lower of (i)
the actual amount funded by ABL or Federal Leasing with
respect to that Eligible Lease or Eligible-Seasoned Lease, or
(ii) the net present value of the current lease balance
determined in accordance with the discounting methods agreed
upon in writing by ABL or Federal Leasing and Administrative
Agent from time to time.


(c) The definition of "Note Payment Accounts" is hereby amended to change the Account Number information for ABC, HAC and ABL as follows and to add the following non-interest bearing restricted checking accounts maintained with Administrative Agent:


o For ABC, Account No. 0010-267-2640, styled "American Business
Financial Services, Inc. - Note Payment Account."


o For HAC, Account No. 0010-267-2640, styled "American Business
Financial Services, Inc. - Note Payment Account."


o For ABL, Account No. 0010-267-2640, styled "American Business
Financial Services, Inc. - Note Payment Account."


o For NJMI, Account No. 0010-267-2640 styled "New Jersey Mortgage and
Investment - Note Payment Account"


o for Federal Leasing, Account No. 0010-267-2640 styled "Federal
Leasing - Note Payment Account"


(d) The following definitions are hereby added to the Credit Agreement to read as follows:


"Federal Leasing" means Federal Leasing Corp., a New Jersey corporation.


"NJMI" means New Jersey Mortgage and Investment Corp., a New Jersey corporation d/b/a Ocean to Ocean Financial Group, Inc.


(e) Section 9.1 is hereby amended in its entirety to read as follows:


Section 9.1 Tangible Net Worth. During the time periods set forth below, Tangible Net Worth may never be less than the amounts set forth opposite such time periods: ________________________________________________________________________________
Time Periods Minimum Tangible Net Worth ________________________________________________________________________________ July 31, 1997 - October 1, 1997 $25,000,000 ________________________________________________________________________________ October 1, 1997 - 12/30/97 $15,000,000 ________________________________________________________________________________ 12/31/97 - 3/30/98 $16,500,000 ________________________________________________________________________________ 3/31/98 - 6/29/98 $19,000,000 ________________________________________________________________________________ 6/30/98 - 9/29/98 $21,500,000 ________________________________________________________________________________ 9/30/98 and thereafter $25,000,000 ________________________________________________________________________________


(f) Schedule 6.2 of the Credit Agreement is hereby revised in its entirety and replaced with the Schedule 6.2 attached hereto.


(g) Paragraph D. 4. of Schedule 4.1 of the Credit Agreement is hereby amended to add the following provision to the end of such Paragraph:


"; provided, however, that UCC financing statements need not be
filed of record for any such Lease under which the aggregate
original equipment cost is less than $10,000."


(h) Exhibit D-3 of the Credit Agreement is hereby revised in its entirety and replaced with Exhibit D-3 attached hereto.


(i) Each schedule and exhibit to the Credit Agreement is amended as necessary to reflect the addition of NJMI and Federal Leasing as Co-Borrowers under the Credit Agreement and each reference to Co-Borrower therein shall be deemed to include references to NJMI and Federal Leasing and each reference to the Credit Agreement shall be deemed to be a reference to the Credit Agreement, as amended hereby.


4. Confirmation of Guaranty Agreement. Parent agrees, accepts and consents to the terms and provisions hereof and each other Credit Document in effect as of the date hereof and confirms the continued validity of the Guaranty Agreement including, but not limited to the application of the Guaranty Agreement to the indebtedness of each of NJMI and Federal Leasing.


5. Conditions Precedent. The obligation of Agent and each Lender to be bound by the provisions hereof shall be subject to the fulfillment of the following conditions precedent, in a manner satisfactory to Agent:


(a) Agent shall have received the following, duly executed by
each party thereto, other than Agent, each in form and substance
satisfactory to Agent:


(i) This Amendment;


(ii) Warehouse Notes in the following original principal
amounts executed by Co-Borrowers, payable to the order of the following
Lenders, in substantially the form of Exhibit A-1 to the Credit
Agreement: ________________________________________________________________________________ Texas Commerce Bank, National $55,000,000.00 Association ________________________________________________________________________________ The Bank of New York $15,000,000.00 ________________________________________________________________________________ CoreStates Bank $10,000,000.00 ________________________________________________________________________________ FirstTrust Bank $ 5,000,000.00 ________________________________________________________________________________ National City Bank $15,000,000.00 ________________________________________________________________________________


(iii) Swing note in the original principal amount of
$30,000,000.00, executed by Co-Borrowers, payable to the order of
Administrative Agent and in substantially the form of Exhibit A-2 to
the Credit Agreement;


(iv) Security Agreements executed by NJMI and Federal
Leasing as debtors and Administrative Agent as secured party, and in
substantially the form of Exhibit C-1 to the Credit Agreement;


(v) Financing Statements executed by NJMI and Federal
Leasing as debtors and Administrative Agent as secured party, for
filing with the following UCC filing offices, and in substantially the
form of Exhibit C-2 to the Credit Agreement: ________________________________________________________________________________


Name Jurisdiction ________________________________________________________________________________ NJMI New Jersey Secretary of State
Essex County ________________________________________________________________________________ Federal Leasing New Jersey Secretary of State
Essex County ________________________________________________________________________________


(vi) UCC search reports for financing statements filed
against NJMI or Federal Leasing as debtor with the relevant UCC filing
offices as of the indicated dates together with appropriate UCC-3
Termination Statements releasing such liens as Administrative Agent
shall require:


________________________________________________________________________________


Name Jurisdiction ________________________________________________________________________________


NJMI New Jersey Secretary of State
Essex County, New Jersey
Orange County, New Jersey
Georgia Secretary of State
Fulton County, Georgia
Illinois Secretary of State
Cook County, Illinois
Missouri Secretary of State
Fulton County, Missouri
Boone County, Missouri
Ohio Secretary of State
Stark County, Ohio
Pennsylvania Secretary of State
Allegheny County, Pennsylvania
Montgomery Country, Pennsylvanian ________________________________________________________________________________


Federal Leasing New Jersey Secretary of State
Essex County, New Jersey
California Secretary of State
Placer County, Californian
Colorado Secretary of State
Arapahoe County, Colorado
Florida Secretary of State
Palm Beach County, Florida
Illinois Secretary of State
Du Page County, Illinois ________________________________________________________________________________


(vii) Officers Certificate for NJMI, executed by the
President and Secretary of NJMI as to (a) the due incumbency of its
officers authorized to execute or attest to the Credit Documents, (b)
resolutions duly adopted by its directors approving and authorizing the
execution of the Credit Documents, (c) its bylaws, and (d) its
corporate charter accompanied by Annex A-Resolutions, Annex B-Bylaws,
Annex C-Corporate Charter;


(viii) Officers Certificate of Federal Leasing, executed
by the President and Secretary of Federal Leasing as to (a) the due
incumbency of its officers authorized to execute or attest to the
Credit Documents, (b) resolutions duly adopted by its directors
approving and authorizing the execution of the Credit Documents, (c)
its bylaws, and (d) its corporate charter accompanied by Annex
A-Resolutions, Annex B-Bylaws, Annex C-Corporate Charter;


(ix) Certificates of Qualification, Good Standing and
Authority for each of NJMI and Federal Leasing in the jurisdiction of
its incorporation;


(x) Articles of Incorporation for NJMI, certified as of
a recent date by the New Jersey Secretary of State;


(xi) Articles of Incorporation for Federal Leasing,
certified as of a recent date by the New Jersey Secretary of State;


(xii) Copies of the Subordinated Debt documents of NJMI
and Federal Leasing, certified as true and correct by a Responsible
Officer of Parent, NJMI and Federal Leasing;


(xiii) An Acquisition-Compliance Certificate;


(xiv) Certified copy of the resolutions adopted by the
Boards of Directors of each Co-Borrower and Parent, authorizing the
execution and delivery of this Amendment;


(xv) Subordination Agreements executed by each Junior
Lender; and


(xvi) All other documents Agent may reasonably request
with respect to any matter relevant to this Amendment or the
transactions contemplated hereby.


(b) The representations and warranties of the Co-Borrowers and
Parent contained in the Credit Agreement, as amended hereby, and the
other Credit Documents shall be true and correct in all material
respects on and as of the date hereof with the same effect as if made
on and as of the date hereof.


(c) All corporate and legal proceedings and all documents
required to be completed and executed by the provisions of, and all
instruments to be executed in connection with the transactions
contemplated by, this Amendment and any related agreements shall be
satisfactory in form and substance to Agent.


6. Representations and Warranties. Co-Borrowers and Parent, without in any way limiting the representations and warranties provided in the Credit Agreement, each hereby represent and warrant to Agent that:


(a) Co-Borrowers and Parent are authorized to enter into this
Amendment;


(b) The execution, delivery and performance of this Amendment
by Co-Borrowers and Parent do not violate, or conflict with, any law,
rule, regulation, order, agreement or contract binding upon such
parties, or to which such parties are subject; and


(c) This Amendment is valid and binding upon each of the
Co-Borrowers and Parent, respectively, in accordance with its terms,
except as limited by Debtor Laws. The execution, delivery and
performance of this Amendment by each Co-Borrower and Parent does not
require the consent of any other Person and does not and will not
constitute a violation of any law, agreement or understanding to which
any of the Co-Borrowers or Parent is a party or by which any of them is
bound.


(d) As of the date of this Amendment, no Default or Potential
Default has occurred and is continuing.


(e) The representations and warranties of the Co-Borrowers and
Parent contained in the Credit Agreement, as amended hereby,
and the other Credit Documents are true and correct in all
material respects on and as of the date hereof with the same
effect as if made on and as of the date hereof.


7. No Waivers. The entering into of this Amendment will not be deemed to be a waiver of any requirement or obligation under the Credit Agreement and Agent and Lenders reserve all of their rights thereunder.


8. Continued Effect. Each Co-Borrower and Parent acknowledges and confirms that, except to the extent amended hereby or in connection herewith, all terms, provisions and conditions of the Credit Agreement and the other Credit Documents, and all documents executed in connection therewith, shall continue in full force and effect and shall remain enforceable and binding in accordance with their respective terms and shall inure to the benefit of Agent and Lenders. The Collateral shall continue to secure the Obligation. Each party hereto acknowledges and agrees that Agent shall have all the rights of secured party, beneficiary, Agent, or payee under all security agreements, pledge agreements, memoranda of deposits, guaranties, financing statements and other documents relating to the Credit Agreement. From and after the effective date of this Amendment, all references in the Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby.


9. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall for all purposes be deemed an original and all of which are identical.


10. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.


11. Miscellaneous. The substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Amendment, except to the extent that the federal laws of the United States shall supersede. This Amendment embodies the entire Agreement between the parties hereto with respect to the amendment of the Credit Agreement and supersedes all oral agreements, conditions, and understandings with respect to the subject matter hereof.


12. Expenses. The Co-Borrowers agree to pay all reasonable costs incurred in connection with the execution and consummation of this Amendment.


[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the date first above written.


EFFECTIVE as of October 1, 1997.


(address)


American Business Credit, Inc. AMERICAN BUSINESS CREDIT, INC., as BalaPointe Office Centre a Co-Borrower 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin By /s/ Anthony J. Santill, Jr.
Chief Financial Officer -------------------------------
Anthony J. Santilli, Jr. Tel: 610/668-2440 Fax: 610/668-1132


(address)


HomeAmerican Credit, Inc. HOMEAMERICAN CREDIT, INC., as a BalaPointe Office Centre Co-Borrower 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin By /s/ Anthony J. Santilli, Jr.
Chief Financial Officer -------------------------------
Anthony J. Santilli, Jr. Tel: 610/668-2440 Fax: 610/668-1132



(address)


American Business Leasing, Inc. AMERICAN BUSINESS LEASING, INC., BalaPointe Office Centreas a Co-Borrower 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin /s/ Anthony J. Santilli, Jr.
Chief Financial Officer -------------------------------
Name: Anthony J. Santilli, Jr.
Title: Chairman Tel: 610/668-2440 Fax: 610/668-1132


(address)


New Jersey Mortgage & Investment Corp. NEW JERSEY MORTGAGE & BalaPointe Office Centre INVESTMENT CORP., as a Co-Borrower 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin By /s/ Anthony J. Santilli, Jr.
Chief Financial Officer -------------------------------
Name: Anthony J. Santilli, Jr.
Title: Chairman Tel: 610/668-2440 Fax: 610/668-1132


(address)


Federal Leasing Corp. FEDERAL LEASING CORP., BalaPointe Office Centre as a Co-Borrower 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin By: /s/ Anthony J. Santilli, Jr.
Chief Financial Officer ------------------------------
Name: Anthony J. Santilli, Jr.
Title: Chairman Tel: 610/668-2440 Fax: 610/668-1132


(address)


American Business Financial Services, Inc. AMERICAN BUSINESS FINANCIAL BalaPointe Office Centre SERVICES, INC., as Parent 111 Presidential Boulevard, Suite 215 Bala Cynwyd, Pennsylvania 19004 Attn: David M. Levin By /s/ Anthony J. Santilli, Jr.
Chief Financial Officer -------------------------------
Name: Anthony J. Santilli, Jr.
Title: Chairman Tel: 610/668-2440 Fax: 610/668-1132


(address)


Texas Commerce Bank National Association TEXAS COMMERCE BANK NATIONAL P.O. Box 337 ASSOCIATION, as Administrative Hurst, Texas 76053-0337 Agent and a Lender Attn: Pam Skinner Tel: (817) 656-67 ...