<PAGE>






================================================================================




                              INTERIM WAREHOUSE AND
                        SECURITY AGREEMENT FOR CONTRACTS


                                      among


                              PRUDENTIAL SECURITIES
                               CREDIT CORPORATION,
                                   as Lender,


                        AMERICAN BUSINESS LEASING, INC.,
                                   as Borrower


                                       and


                             FEDERAL LEASING CORP.,
                                   as Borrower


                            Dated as of April 3, 1998


================================================================================


<PAGE>

                                Table of Contents


                                                                            Page
                                                                            ----

Section 1.   The Loan.........................................................2
Section 2.   Additional Conditions Precedent to Advance.......................5
Section 3.   Contract Files and Custodian.....................................7
Section 4.   Representations, Warranties and Covenants........................8
Section 5.   Mandatory Prepayment of Loan....................................16
Section 6.   Release of Contract Files following Payment of Loan.............17
Section 7.   Servicing.......................................................17
Section 8.   No Oral Modifications; Successors and Assigns; Assignment of
             Collateral......................................................17
Section 9.   Reports.........................................................17
Section 10.  Events of Default...............................................19
Section 11.  Remedies Upon Default...........................................20
Section 12.  Indemnification.................................................21
Section 13.  Power of Attorney...............................................21
Section 14.  Agreement Constitutes Security Agreement........................22
Section 15.  Lender May Act Through Affiliates...............................22
Section 16.  Notices.........................................................22
Section 17.  Severability....................................................24
Section 18.  Counterparts....................................................24
Section 19.  Certain Definitions.............................................24



<PAGE>

             INTERIM WAREHOUSE AND SECURITY AGREEMENT FOR CONTRACTS


                  This INTERIM WAREHOUSE AND SECURITY AGREEMENT FOR CONTRACTS,
dated as of April 3, 1998 (as amended or otherwise modified from time to time,
this "Agreement") among PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware
corporation, having an office at One Seaport Plaza, New York, New York 10292
(the "Lender"), AMERICAN BUSINESS LEASING, INC., a Pennsylvania corporation,
having its principal office at 111 Presidential Boulevard, Bala Cynwyd,
Pennsylvania 19004 ("ABL"), and FEDERAL LEASING CORP., a New Jersey corporation,
having its principal office at 111 Presidential Boulevard, Bala Cynwyd,
Pennsylvania 19004 ("Federal Leasing", and together with ABL, the "Borrowers").

                  WHEREAS, the Lender intends to lend and the Borrowers intend
to borrow up to $50,000,000 (fifty million dollars) to fund the purchase or
origination by the Borrowers of conditional sale contracts, loan and security
agreements, operating leases, direct financing equipment leases, software and
network licensing agreements and promissory notes, in each case, under which the
Borrowers finance the purchase of specified Equipment by a third-party obligor
or a third-party obligor leases specified Equipment from either of the Borrowers
as lessor or as successor in interest to an originating lessor, at a specified
monthly rate (each, a "Contract"). Each Contract shall be substantially in the
form of one of the Contracts attached hereto as Exhibit G, or shall be in a form
approved by the Lender in its sole, good faith discretion. For purposes of this
Agreement, "Equipment" means either medical equipment, hospital laundry
equipment, computer equipment (including, without limitation, software and
network licensing agreements), telecommunications equipment, furniture, fixtures
and equipment, machinery, facsimile machines, general business office equipment,
modular buildings and any other collateral in the Lender's sole discretion; and

                  WHEREAS, the Lender's affiliate, Prudential Securities
Incorporated ("PSI") will act as the sole or lead manager on an equipment
lease-backed securities issuance (a "Securitization") to be sponsored by the
Borrowers (or by an affiliate thereof) from time to time and collateralized by
the Pledged Contracts.

                  An index to the location of the definitions of the defined
terms used herein is set forth in Section 19 hereof.

                  NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties hereto hereby agree as follows:
<PAGE>

                  Section 1. The Loan.

                  A. Subject to the terms of this Agreement:

                  1. The Lender agrees to lend to the Borrowers up to
         $50,000,000 (such borrowing, the "Loan") to be made in one or more
         advances (each, an "Advance"); provided, however, that, in no event
         shall the outstanding debt owed to the Lender by the Borrowers or any
         of their Affiliates (including, without limitation, American Business
         Credit, Inc., HomeAmerican Credit, Inc. d/b/a Upland Mortgage, and New
         Jersey Mortgage and Investments Corp.) under any loan agreement
         (including, without limitation, this Agreement) exceed $50,000,000;
         provided, further, that at any time when funds are on deposit in a
         Pre-Funding Account (as defined herein), the amount of the Loan shall
         not exceed the amount on deposit in such Pre-Funding Account. The
         Borrower agrees that the Loan shall be used to warehouse Contracts that
         are to be included in a Securitization, as such Contracts are
         identified to the Lender in writing and in electronic form from time to
         time. Such Contracts may be (a) included at the time of closing of the
         Securitization or (b) purchased by the Securitization trust subsequent
         to closing with funds on deposit in an account (a "Pre-Funding
         Account") relating to the Securitization and designated for such
         purpose. The Lender may refuse to lend against any Contract(s) which
         the Lender in its sole, good faith discretion believes will not be
         eligible for inclusion in a securitized pool either (x) due to the
         characteristics of such Contract or (y) due to the expected aggregate
         characteristics of the pool of Contracts.

                  2. Each Advance shall be made on a date prior to the Maturity
         Date referred to below (each such date, a "Funding Date"); provided,
         that:

                            (i) the conditions precedent to the making of
         Advances set forth in Section 2 hereof shall have been satisfied, and
         the representations and warranties of the Borrowers in Section 4 hereof
         shall be true and correct on and as of such Funding Date as if made on
         and as of such date;

                            (ii) no Event of Default shall have occurred and be
         continuing or would exist after the making of the Advance on such
         Funding Date;

                            (iii) the Lender shall have received (A) in
         connection with each Advance, no later than 12:00 noon (Eastern
         Standard Time) on the related Funding Date, a certificate from the
         Custodian referred to below to the effect that it has in its possession
         and has reviewed the contract files relating to the Contracts being
         pledged in connection with the Advance being made on such Funding Date
         and has found no material deficiencies in such contract files (the
         "Custodian's Certification") and (B) prior to the initial Advance,
         legal opinions from counsel (which may be in-house counsel) to ABL and
         Federal Leasing in the form of Exhibit B-1 and Exhibit B-2,
         respectively, attached hereto;

                                       2
<PAGE>

                            (iv) the Borrowers shall have delivered or caused to
         be delivered to the Custodian all required documents with respect to
         the Contracts being pledged on such Funding Date;

                            (v) the applicable Borrower shall deliver evidence
         of the release of any prior security interest that may have been
         granted with respect to the Pledged Contracts and the related
         Equipment.

                            (vi) the Lender shall have received acknowledgment
         copies of the following filings, registrations and recordations stamped
         by the appropriate filing, registration or recording officer (or, in
         lieu thereof, other evidence satisfactory to the Lender that all such
         filings, registrations and recordations have been made): (a) with
         respect to the assignment of the Contracts by the related Borrower to
         the Custodian, UCC-1 financing statements naming the related Borrower,
         as debtor, and the "Chase Bank of Texas, N.A., as custodian and trustee
         under the applicable custodial or trust agreement", as secured party,
         (b) with respect to the Equipment subject to Contracts which are "true"
         or "operating" leases, UCC-1 financing statements in each jurisdiction
         in which such Equipment is located naming the related Borrower, as
         debtor, and the "Chase Bank of Texas, N.A., as custodian and trustee
         under the applicable custodial or trust agreement", as secured party,
         and (c) with respect to the Equipment subject to Contracts which are
         "finance" leases, (i) with respect to Contracts originated by a
         Borrower relating to Equipment with an Original Equipment Cost of
         greater than $10,000 or with respect to Contracts originated by a
         source other than a Borrower relating to Equipment with an Original
         Equipment Cost of greater than $10,000 for which a prior UCC-1
         financing statement was not filed, UCC-1 financing statements filed in
         the jurisdiction where the Equipment is located naming the user, as
         debtor, and the related Borrower, as secured party, and (ii) with
         respect to Contracts originated by a source other than a Borrower
         relating to Equipment with an Original Equipment Cost of greater than
         $25,000 for which a prior UCC-1 financing statement was filed, UCC-3
         amendments filed in the jurisdiction where the Equipment is located
         amending such filing to name the user, as debtor, and the related
         Borrower, as secured party (the Equipment referenced in (b), (c)(i) and
         (c)(ii) above is collectively referred to as the "Perfected
         Equipment"). The filings referenced in clause (a) shall include all
         related rights relating to such Contracts, including the security
         interests in the Equipment subject to this Section 1(A)(2)(vi) and the
         other Secured Obligations.

                            (vii) to the extent described in Section 5(C)
         hereof, no notice described in said Section 5(C) shall have been
         received by PSI; and

                           (viii) there shall be in full force and effect from
         American Business Financial Services, Inc. (the "Guarantor") a Guaranty
         (the "Guaranty") in the form attached hereto as Exhibit D.



                                       3
<PAGE>

                  3. The Loan shall accrue interest daily on its outstanding
         principal amount, with interest calculated for the actual number of
         days elapsed, based on a 360-day year. The interest rate shall be
         (except as otherwise provided in Section 1(E)(2) or Section 11(D)
         hereof) LIBOR plus 1.25%, and shall be reset on each business day.
         Interest which accrues during each calendar month shall be payable on
         the 3rd (third) business day of the following month, with any
         outstanding interest due and payable in its entirety on the date of
         termination of this warehouse facility (including the Maturity Date).

                  "LIBOR" shall mean, the London interbank offered rate for
         one-month U.S. dollar deposits, as reported on the display designated
         as "Page 3750" on the Telerate Service (or such other display as may
         replace Page 3750 on the Telerate Service).

                  Any amounts pre-paid under this Agreement prior to the
         Maturity Date may be re-borrowed, subject to the terms and conditions
         of this Agreement, until the Maturity Date.

                  B. The amount of each Advance shall not be less than
$1,000,000 and, after the making of such Advance, the outstanding principal
amount of the Loan shall not exceed the lesser of (i) 88% of the Collateral
Value, (ii) the aggregate Original Equipment Cost of the Equipment related to
the Contracts then so pledged to the Lender hereunder and (iii) the expected net
proceeds from the sale of the investment grade securities (such investment grade
rating to be provided by any of Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Duff & Phelps Credit Rating Co. ("DCR") or Fitch IBCA, Inc.
("Fitch")) in the Securitization, as determined by PSI in its sole, good faith
discretion (such lesser amount, the "Maximum Loan Amount"). For purposes of this
Agreement, "Collateral Value" shall be equal to the aggregate Contract Value of
the Pledged Contracts. The Lender may, in its sole, good faith discretion, make
a determination of the Collateral Value of the Collateral weekly or daily to
ensure that the outstanding principal amount of the Loan does not exceed the
Maximum Loan Amount.

                  For purposes of this Agreement:

                  Maturity Date means, (i) if no Pre-Funding Account is utilized
         in the Securitization the earlier of (a) June 30, 1998 and (b) the date
         on which such Securitization occurs and (ii) if a Pre-Funding Account
         is utilized in the Securitization, the earlier of (a) September 30,
         1998 and (b) the date on which the funds in the Pre-Funding Account are
         reduced to zero. The Maturity Date may be extended by the Lender, in
         the Lender's sole and unreviewable discretion, on any date by the
         execution and delivery of a Credit Increase Confirmation and Note
         Amendment in the form of Exhibit C hereto.

                  Pledged Contracts means, as of any date of determination, any
         Contracts then held by the Custodian on behalf of the Lender to secure
         the Loan.



                                       4
<PAGE>

                  C. The Loan evidenced hereby shall mature on the Maturity Date
and all amounts outstanding hereunder shall be due and payable on the Maturity
Date.

                  D. The Loan is pre-payable at any time without premium or
penalty, in whole or in part; provided, that Pledged Contracts may not be
removed from this warehouse facility (including in connection with any
prepayment of the Loan in part) with the result that, in the Lender's sole, good
faith discretion, the remaining Pledged Contracts, are, in the aggregate,
materially inferior as collateral as compared to the pool of Pledged Contracts
immediately prior to such removal. In addition, no Pledged Contracts may be
removed from this warehouse facility with the result that the outstanding amount
of the Loan exceeds the Maximum Loan Amount. Notwithstanding the foregoing,
however, a Pledged Contract, may in any event be removed from this facility if
such Pledged Contract has been paid in full by the lessor. If the Borrowers
intend to prepay the Loan in whole or in substantial part from a source other
than the proceeds of the Securitization, the Borrowers shall give two business
days' written notice to the Lender.

                           E. 1. If the Loan is not extended by means of a
         Credit Increase Confirmation and Note Amendment, the Loan shall
         immediately and automatically become due and payable without any
         further action by the Lender on the then scheduled Maturity Date, and
         in the event of non-payment in full on such Maturity Date the Lender
         may exercise all rights and remedies available to it as the holder of a
         first priority perfected security interest under the Uniform Commercial
         Code of the State of New York (the "New York UCC").

                  2. If the Borrowers award a Securitization or whole-loan trade
         involving any Pledged Contracts to an investment banking house, agent,
         broker or underwriter other than PSI or to a group of managers for
         which PSI is not the lead manager, then the interest rate on the Loan
         shall increase to LIBOR plus 500 basis points, which higher rate shall
         retroactively be applied as of the related Funding Date for all prior
         Advances or Pledged Contracts so involved; provided, however, that if
         the Borrowers had first offered such Securitization or whole-loan trade
         to PSI at a reasonable market price and PSI refused such offer, then
         this subsection 2 shall have no effect.

                  F. The Loan shall be evidenced by the secured promissory note
of the Borrowers in the form attached hereto as Exhibit A (the "Secured Note").

                  Section 2. Additional Conditions Precedent to Advance.

                  A. Not later than two business days prior to the proposed
Funding Date for an Advance the applicable Borrower shall deliver to the Lender
(x) a written notice in the form of Exhibit E hereto or, with respect to
Contracts already pledged hereunder, a Borrowing Base Report substantially in
the form of Exhibit F and (y) an electronic disk or tape, in a mutually
satisfactory form to be agreed upon detailing certain specified characteristics,

                                       5
<PAGE>

as of a date no more than seven days prior to the proposed Funding Date for such
Advance (such date, the "Contract Schedule Cut-Off Date"), of the Contracts
proposed to be pledged in connection with such Advance and the Contracts
previously pledged (each such schedule, a "Contract Schedule") setting forth the
following information as to each Contract pledged to the Lender hereunder (such
Contract Schedule to be delivered to the Custodian, who shall deliver such
Contract Schedule to the Lender): (i) the Contract identifying number; (ii) the
user's name; (iii) the street address of the user and the street address where
the Equipment is in use, including the zip code; (iv) the description of the
related Equipment; (v) the original number of months to maturity and the number
of months remaining to maturity from the Contract Schedule Cut-Off Date; (vi)
the Contract yield; (vii) amount of the monthly payment; (viii) the original
cost of the related Equipment inclusive of amounts, if any, paid for taxes,
warranty extensions or service contracts (the "Original Equipment Cost"); (ix)
the present value (using a discount rate equal to the yield on the United States
treasury obligation having a three-year maturity as quoted in the Wall Street
Journal on the business day on which the Notice of Borrowing or Borrowing Base
Report, as applicable, is to be delivered to the Lender) plus a credit spread
equal to 2.50% (which spread may be adjusted, from time to time, by the Lender,
in its sole unreviewable discretion, to account for market movements or changes
in the structure or subordination levels of the Securitization) (the "Discount
Rate") of the remaining scheduled contract payments of the Contract (the
"Contract Value") as of the close of business on the Contract Schedule Cut-Off
Date; (x) the paid through date of such Contract; (xi) the delinquency status of
each such Contract, together with a separate schedule setting forth the future
payment stream (i.e., a debt service schedule) for each Contract then being
pledged, as of the Contract Schedule Cut-Off Date; (xii) the first payment date
of such Contract; and (xiii) the last payment date of such Contract; provided
that if such Advance relates to Contracts acquired by the Borrowers from other
originators in a bulk acquisition and either (A) such Contracts have an
aggregate principal amount in excess of $1,000,000 but less than $5,000,000 (any
such acquisition by the Borrowers, a "Small Bulk Acquisition"), such items shall
be furnished at least four business days prior to the requested Funding Date or
(B) such Contracts have an aggregate principal amount in excess of $5,000,000
(any such acquisition by the Borrowers, a "Large Bulk Acquisition"), such items
shall be furnished at least ten business days prior to the requested Funding
Date.

                  B. Prior to the initial Funding Date, the Lender shall have
received:

                  1. Duly executed originals of (i) this Agreement, (ii) the
         Custodial Agreement, (iii) the Secured Note and (iv) the Guaranty.

                  2. A certificate of the Secretary of each Borrower certifying
         (i) a copy of such Borrower's articles of incorporation; (ii) a copy of
         such Borrower's by-laws; (iii) the names and signature of officers of
         such Borrower authorized on its behalf to execute this Agreement and
         any other documents to be delivered by it hereunder (on which the
         Lender may conclusively rely until such time as the Lender shall
         receive from such Borrower a revised certificate); and (iv) a copy of


                                       6
<PAGE>

         minutes of a meeting of such Borrower's board of directors authorizing
         the authorized signatories to enter into this Agreement.

                  3. The Lender shall have received a certificate of the
         Secretary of the Guarantor certifying (i) a copy of the Guarantor's
         articles of incorporation; (ii) a copy of Guarantor's by-laws; (iii)
         the names and signatures of the officers authorized on its behalf to
         execute the Guaranty, and any other documents to be delivered by it
         thereunder (on which the Lender may conclusively rely until such time
         as the Lender shall receive from the Guarantor a revised certificate);
         and (iv) a copy of the resolutions of the executive committee of the
         board of directors of the Guarantor authorizing the Guarantor to
         deliver the Guaranty.

                  4. The Lender shall have received an opinion of the counsel of
         each of ABL and Federal Leasing which may be an attorney employed by
         one of its affiliates, in substantially the form of Exhibit B-1 and
         Exhibit B-2, respectively, attached hereto.

                  5. The Lender shall have received an opinion of the counsel to
         the Guarantor in substantially the form of Exhibit B-3 hereto.

                  6. The Lender shall have received the most recent available
         servicing reports, if any, with respect to the Contracts.

                  7. The Lender and/or any independent contractor appointed by
         the Lender shall have completed such investigation as the Lender may
         reasonably require with respect to each Contract which is the subject
         of any funding and the results of such investigation (and all other
         legal and documentary matters with respect to such Contract) shall be
         satisfactory to the Lender.

                  8. The related Borrower shall have executed all documents,
         including but not limited to financing statements under the Uniform
         Commercial Code as in effect in any applicable jurisdictions, as the
         Lender may reasonably require to effectively perfect and evidence the
         Lender's first priority security interest in the Contracts and the
         related Perfected Equipment.

                  9. A copy of the blanket Insurance Policy or Insurance
         Certificate referred to in Section 4(B)(35).

                  10. The Borrowers shall deliver to the Lender a copy of any
         back-up servicing agreement, including, without limitation, the back-up
         servicing agreement with SunGard Recovery Services Inc. (each, a
         "Servicing Agreement").

                  Section 3. Contract Files and Custodian.

                  The related Borrower shall deliver to Chase Bank of Texas,
N.A., as custodian (the "Custodian") on behalf of the Lender, the documents and


                                       7
<PAGE>

instruments listed in Section 2 of that certain Custodial Agreement for
Contracts dated as of April 3, 1998 (the "Custodial Agreement") among the
Lender, the Borrowers, and the Custodian. Such documents and instruments
evidencing and relating to the Contracts and the related Equipment, including,
without limitation, the proceeds of any Insurance Policy or Insurance
Certificate which relate to a Pledged Contract, together with any proceeds
thereof, are hereinafter referred to as the "Collateral". Each Borrower hereby
pledges and grants a first priority security interest in all of its right, title
and interest in and to the Collateral to the Lender to secure the repayment of
principal of and interest on the Loan and all other amounts owing by the
Borrowers to the Lender hereunder or under any other agreement or arrangement
among either Borrower or its Affiliates and the Lender or its affiliates now
existing or hereafter entered into by such parties (collectively, the "Secured
Obligations").

                  Section 4. Representations, Warranties and Covenants.

                  A. Each of the Borrowers represents and warrants to the Lender
that:

                  1. ABL and Federal Leasing have each been duly organized and
         are validly existing as corporations in good standing under the laws of
         their respective states of incorporation.

                  2. It is duly licensed as a "Licensee" or is otherwise
         qualified in each state in which it transacts business and is not in
         default of such state's applicable laws, rules and regulations, except
         where failure to so qualify or such default would not have a material
         adverse effect on the ability of such Borrower to conduct its business
         or to perform its obligations under this Agreement. It has the
         requisite power and authority and legal right to own and grant a lien
         on all of its right, title and interest in and to the Collateral, and
         to execute and deliver, engage in the transactions contemplated by, and
         perform and observe the terms and conditions of, this Agreement, the
         Custodial Agreement and the Secured Note.

                  3. At all times after the Custodian has received a Contract
         from such Borrower and until payment in full of the Loan, such Borrower
         will not knowingly and intentionally commit any act in violation of
         applicable laws, or regulations promulgated with respect thereto.

                  4. Such Borrower is solvent and is not in default under any
         mortgage, borrowing agreement or other instrument or agreement
         pertaining to indebtedness for borrowed money, and the execution,
         delivery and performance by such Borrower of this Agreement, the
         Custodial Agreement, and the Secured Note do not conflict with any term
         or provision of the certificate of incorporation or by-laws of such
         Borrower or any law, rule, regulation, order, judgment, writ,
         injunction or decree applicable to such Borrower of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over such Borrower and will not result in any violation of
         any such mortgage, instrument or agreement.



                                       8
<PAGE>

                  5. All financial statements or certificates of such Borrower,
         any Affiliate of such Borrower or any of its officers furnished to the
         Lender are true and complete and do not omit to disclose any material
         liabilities or other facts relevant to such Borrower's or such
         Affiliate's condition. As used in this Agreement, "Affiliate" means (i)
         American Business Financial Services, Inc., Processing Service Center,
         Inc., American Business Credit, Inc., HomeAmerican Credit, Inc. d/b/a
         Upland Mortgage, New Jersey Mortgage and Investments, Inc., ABC
         Holdings Corporation and HomeAmerican Consumer Discount Company and
         (ii) any person directly or indirectly controlling, controlled by, or
         under common control (within the definition of "control" set forth in
         the Securities and Exchange Act of 1934, as amended) with such
         Borrower, who, in accordance with GAAP, can be consolidated with such
         Borrower for financial reporting purposes. All such financial
         statements have been prepared in accordance with GAAP. No financial
         statement or other financial information as of a date later than that
         supplied to the Lender, has been furnished by such Borrower or any of
         its Affiliates to another lender of such Borrower or any of its
         Affiliates that has not been furnished to the Lender.

                  6. No consent, approval, authorization or order of,
         registration or filing with, or notice to any governmental authority or
         court is required under applicable law in connection with the
         execution, delivery and performance by such Borrower of this Agreement,
         the Custodial Agreement and the Secured Note.

                  7. There is no action, proceeding or investigation pending
         with respect to which such Borrower has received service of process or,
         to the best of such Borrower's knowledge threatened against it before
         any court, administrative agency or other tribunal (A) asserting the
         invalidity of this Agreement, the Custodial Agreement or the Secured
         Note, (B) seeking to prevent the consummation of any of the
         transactions contemplated by this Agreement, the Custodial Agreement or
         the Secured Note, or (C) which would materially and adversely affect
         the validity of the Contracts or the performance by it of its
         obligations under, or the validity or enforceability of, this
         Agreement, the Custodial Agreement or the Secured Note.

                  8. There has been no material adverse change in the business,
         operations, financial condition, properties or prospects of such
         Borrower or any Affiliate since the date set forth in the financial
         statements supplied to the Lender.

                  9. This Agreement, the Custodial Agreement and the Secured
         Note have been duly authorized, executed and delivered by such Borrower
         all requisite corporate action having been taken, and each is valid,
         binding and enforceable against such Borrower in accordance with its
         terms except as such enforcement may be affected by bankruptcy, by
         other insolvency laws, or by general principles of equity.



                                       9
<PAGE>

                  10. There are no Liens on any Servicing Agreement or on any
         computer hardware or software relating to the servicing of the Pledged
         Contracts.

                  B. With respect to every Contract delivered to the Custodian,
the related Borrower represents and warrants to the Lender that:

                  1. Such Contract and all accompanying documents are complete
         and authentic and all signatures thereon are genuine;

                  2. Such Contract arose from a bona fide lease, complying with
         all applicable State and Federal laws and regulations, to persons
         having the legal capacity to contract;

                  3. All amounts represented to be payable on such Contract are,
         in fact, payable in accordance with the provisions of such Contract;

                  4. Such Contract is secured by a piece of Equipment;

                  5. The Equipment subject to any security interest given in
         connection with such Contract is not subject to any encumbrance, except
         for liens released simultaneously with the grant of a security interest
         in favor of the Lender hereunder in such Contract and Equipment;

                  6. Such Contract has been fully paid for by the related
         Borrower;

                  7. Immediately prior to its pledge hereunder, with respect to
         each item of Collateral, the related Borrower held good and
         indefeasible title to, and was the sole owner of, such Collateral, and
         such Collateral is not subject to any liens, charges, mortgages,
         participations, encumbrances or rights of others, except for liens
         released simultaneously with the Borrowers' pledge of such Collateral
         made herein;

                  8. Each Contract conforms to the description thereof as set
         forth on the related Contract Schedule;

                  9. No Contract has been rejected for financing by any of the
         Borrowers' other financing sources for warehouse financing, or was
         removed from any other of the Borrowers' warehouse lines for breaching
         any requirement for financing thereunder unless such Contract has been
         approved by the Lender in writing;

                  10. The information in respect of the Contract set forth in
         the related Contract Schedule is true and correct;

                  11. (A) The Contract contains provisions requiring the user to
         assume all risk of loss or malfunction of the related Equipment and to
         maintain appropriate liability insurance with respect thereto, and


                                       10
<PAGE>

         making the user absolutely and unconditionally liable for all payments
         required to be made thereunder, without any right of set-off for any
         reason whatsoever, subject only to the user's right of quiet enjoyment,
         (B) the Contract may not be terminated or prepaid without the consent
         of the Lender, (C) the Contract does not provide for the substitution,
         exchange or addition of any other items of Equipment pursuant to such
         Contract which would result in any reduction or extension of payments
         due under the Contract and (D) the rights with respect to such Contract
         are assignable by the Borrowers without the consent of any person other
         than, with respect to certain Contracts, the consent to assignment of
         the underlying user which the Borrowers have received prior to the
         pledge to the Lender hereunder;

                  12. All requirements of applicable federal, state and local
         laws, and regulations thereunder, including, without limitation, usury
         laws, if any, in respect of the origination and servicing of the
         Contract have been complied with in all material respects;

                  13. The Contract represents the legal, valid and binding
         payment obligation of the user, enforceable in accordance with its
         terms, subject to bankruptcy, insolvency and other laws (including, but
         not limited to, principles of equity) affecting the rights of
         creditors;

                  14. No instrument of release or waiver has been executed in
         connection with the Contract, and no lessee/borrower in respect of such
         Contract has been released from its obligations thereunder, in whole or
         in part;

                  15. Except as otherwise reflected in the Contract Schedule,
         the Contract has not been amended after the date on which such Contract
         is listed on the Contract Schedule and pledged to the Lender hereunder
         in any material respect or such that the amount of any monthly payment
         or the total number of the monthly payments is increased or decreased;

                  16. The Contract is not subject to any right of rescission,
         set-off, counterclaim or defense, including the defense of usury, and
         no such right of rescission, set-off, counterclaim or defense has been
         asserted with respect thereto;

                  17. There are no proceedings or investigations pending, or, to
         the best of each of the Borrower's knowledge after due inquiry,
         threatened, before any court, administrative agency, or other tribunal
         or governmental instrumentality (A) asserting the invalidity of the
         Contract or the lien, if any, on the related Equipment, (B) asserting
         the bankruptcy or insolvency of a user, (C) seeking to prevent payment
         and performance of the Contract, or (D) seeking any determination or
         ruling that might materially and adversely affect the validity or
         enforceability of the Contract or the lien, if any, on the related
         Equipment;

                  18. The Borrowers have duly fulfilled all obligations on their
         respective parts, required by the Agreement, to be fulfilled under or


                                       11
<PAGE>

         in connection with the Contract and have done nothing to impair the
         rights of the Lender in the Contract or payments with respect thereto,
         or in the related Equipment;

                  19. There is no default, breach, violation or event of
         acceleration existing under the Contract, and no event has occurred
         which, with the passage of time or with notice, would constitute a
         default, breach, violation or event of acceleration; and none of the
         Borrowers have waived any monetary or non-monetary default, breach,
         violation or event of acceleration in respect of the Contract;

                  20. All parties to each Contract had legal capacity to execute
         such Contract and each such Contract has been duly and properly
         executed by such parties;

                  21. The Contract was not selected by the Borrowers on any
         basis intended to adversely affect the value of the Lender's security
         interest therein;

                  22. The Contract was not originated in, nor is it subject to
         the laws of, any jurisdiction the laws of which would make unlawful the
         pledge, transfer or assignment of such document or the related
         Equipment under this Agreement, including any sale in accordance with
         this Agreement;

                  23. Immediately after the pledge, assignment and transfer to
         the Lender as herein contemplated, all necessary action will have been
         taken to grant (a) a valid and enforceable first priority perfected
         security interest in such Contract (including the filing or amendment
         of UCC statements in all applicable jurisdictions) and all payments to
         become due thereunder and all rights of the Borrowers in the Perfected
         Equipment and (b) a valid and enforceable first priority security
         interest in all rights of the Borrowers in the Equipment other than the
         Perfected Equipment, in each case free and clear of all liens and
         encumbrances, except for the interests of users pursuant to the
         Contract, and for those subsequent liens which, by operation of law,
         take priority over a previously perfected security interest;

                  24. (A) The Contract has not been sold, transferred, assigned
         or pledged by the Borrowers to any person other than the Lender, except
         for liens released simultaneously with the grant of a security interest
         in favor of the Lender hereunder and (B) immediately prior to the
         pledge and conveyance of the Contract pursuant to Section 3 hereof, the
         related Borrower was the sole owner of the Contract and had good and
         marketable title thereto, free and clear of all liens and encumbrances;

                  25. There is only one original executed counterpart of the
         Contract that constitutes "chattel paper" or an "instrument" for
         purposes of Sections 9-105(1)(b) and 9-105(1)(i), respectively, and
         9-308 of the UCC;

                                       12
<PAGE>

                  26. The Borrowers' computer records shall have been marked to
         indicate that such Contract has been pledged, assigned and transferred
         to the Lender pursuant to this Agreement;

                  27. In the event that all insurance policies required to be
         maintained by the Contract are not in full force and effect, each of
         the Borrowers will indemnify the Lender for any losses, liabilities and
         expenses that result from the fact that such policies are not in full
         force and effect;

                  28. Each individual Contract was originated or purchased by
         one of the Borrowers using its underwriting guidelines previously
         approved by PSI. The user is not insolvent or in bankruptcy and the
         Borrowers have no knowledge of any circumstances or conditions with
         respect to the Contract, the Equipment or the user's credit standing
         that could reasonably be expected to cause the Lender to regard the
         Contract as an unacceptable security, cause the Contract to become
         delinquent or adversely affect the value or marketability of the
         Contract;

                  29. The Equipment was properly delivered to the user in good
         repair, without defects and in satisfactory order and, to the best of
         each of the Borrowers' knowledge, is in proper working order as of the
         date on which such Contract was pledged to the Lender and listed on the
         Contract Schedule;

                  30. The Contract does not have characteristics which are
         materially worse than those of other Contracts financed by the
         Borrowers during the twelve-month period preceding the initial Funding
         Date;

                  31. On the date of the Advance relating to such Contract, it
         is not more than 20 days delinquent, and, on any date of determination,
         no more than 1.0% of the pool of Pledged Contracts are more than 30
         days delinquent, and no Pledged Contract is more than 45 days
         delinquent;

                  32. For each piece of Equipment subject to a Contract which is
         a "finance" lease, (a) with an Original Equipment Cost greater than
         $10,000, there has previously been filed a UCC-1 Financing Statement
         naming the related User, as debtor and the related Borrower as secured
         party, (or, to the extent such Contract was originated by a third-party
         originator, naming such originator as secured party) or (b) with an
         Original Equipment Cost greater than $25,000, to the extent such
         Contract was originated by a third-party originator, a UCC-3 assignment
         of a previously filed financing statement (in each case naming the user
         as "debtor" and the originator of such Contract as "Secured Party")
         naming the related Borrower as assignee or secured party;

                  33. For each piece of Equipment subject to a Contract which is
         a "true" or "operating" lease, a UCC-1 Financing Statement naming the
         related Borrower, as debtor, and the Custodian, as secured party;



                                       13
<PAGE>

                  34. Such Contract has an original principal balance of less
         than $500,000; provided, that the aggregate original principal balance
         of each Contract relating to a single user is less than $1,000,000;
         provided, further, that the average original principal balance of all
         Pledged Contracts is less than $50,000;

                  35. Each piece of Equipment (a) with an Original Equipment
         Cost greater than $100,000, is covered by an Insurance Policy or
         Insurance Certificate, as the case may be, or (b) with an Original
         Equipment Cost less than $100,000, is covered by a blanket Insurance
         Policy or Insurance Certificate, as the case may be, in each case,
         naming the related Borrower as the loss payee; and

                  36. The Borrowers have reviewed each Contract for conformity
         with the representations and warranties listed in this Section 4(B),
         and found such Contract to conform with such representations and
         warranties, before requesting the Lender to make an Advance against
         such Contract.



                                       14
<PAGE>

                  C. Each of the Borrowers covenants with the Lender that,
                  during the term of this facility:

                  1. Such Borrower and any of its Affiliates shall not create or
         suffer to exist any Lien, other than Permitted Liens, on any of such
         Borrower's or any of its Affiliate's assets, including, without
         limitation, any Servicing Agreement and any computer hardware and
         software relating to such Borrowers' servicing of the Pledged Assets.

                  2. Such Borrower shall not pledge, assign or grant to any
         other party any security interest in any Pledged Contract or the
         related Equipment.

                  3. Such Borrower's Tangible Net Worth shall not be less than
         $100,000.

                  For purposes of this Agreement:

                  Lien means, with respect to any asset of a Borrower or any of
         its Affiliates, any mortgage, lien, pledge, charge, security interest
         or other similar encumbrance of any kind in respect of such asset,
         whether or not filed, recorded or otherwise perfected under applicable
         law (including, without limitation, any conditional sale or other title
         retention agreement, and any financing lease in the nature thereof, any
         agreement to sell, and any filing of, or agreement to give, any
         financing statement (other than notice filings not perfecting a
         security interest) under the Uniform Commercial Code (or equivalent
         statutes) of any jurisdiction).

                  Permitted Lien means (i) Liens for taxes, assessments or
         governmental charges or claims that either (a) are not yet delinquent
         or (b) are being contested in good faith by appropriate proceedings and
         as to which appropriate reserves or other provisions have been made in
         accordance with GAAP; (ii) statutory Liens of landlords and carriers',
         warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
         other like Liens arising in the ordinary course of business and with
         respect to amounts that either (a) are not yet delinquent or (b) are
         being contested in good faith by appropriate proceedings and as to
         which appropriate reserves or other provisions have been made in
         accordance with GAAP; (iii) Liens (other than any Lien imposed by the
         Employee Retirement Income Security Act of 1974, as amended) incurred
         or deposits due in the ordinary course of business in connection with
         workers' compensation, unemployment insurance and other types of social
         security; (iv) Liens incurred or deposits made to secure the
         performance of tenders, bids, leases, statutory obligations, surety and
         appeal bonds, progress payments, government contracts and other
         obligations of like nature (exclusive of obligations for the payment of
         borrowed money), in each case incurred in the ordinary course of
         business; (v) attachment or judgment Liens not giving rise to an Event
         of Default; (vi) easements, rights-of-way, restrictions and other
         similar charges or encumbrances not interfering with the ordinary
         conduct of the business of a Borrower or any of its Affiliates; (vii)
         leases or subleases granted to others not interfering with the ordinary

                                       15
<PAGE>

         conduct of the business of a Borrower or any of its Affiliates; (viii)
         the Lien granted to the Lender pursuant hereto; (ix) secured borrowing
         facilities or other Liens which are secured by assets of a Borrower or
         any of its Affiliates other than the Contracts; provided, that no such
         secured borrowing facility or other Lien may be secured by a blanket
         lien on the assets of a Borrower or any of its Affiliates, including,
         without limitation, any Servicing Agreement and any computer hardware
         and software relating to such Borrowers' servicing of the Pledged
         Assets; and (x) any other Lien to which the Lender has given its prior
         written consent.

                  Tangible Net Worth means the related Borrower's stated net
         worth minus intangible assets and the amount of any receivable from any
         of its Affiliates.

                  Section 5. Mandatory Prepayment of Loan.

                  A. Upon discovery by either Borrower or the Lender of any
breach of any of the representations and warranties listed in Section 4(B)
preceding, the party discovering such breach shall promptly give notice of such
discovery to the others.

                  The Lender has the right to require, in its unreviewable
discretion, the related Borrower to repay the Loan in part in an amount equal to
the amount of the Advance relating to such Contract with respect to any Contract
which breaches one or more of the representations and warranties listed in
Section 4(B) preceding or which is determined by the Lender to be unacceptable
for inclusion in such Securitization; provided, however, that upon the Lender's
written consent, then in lieu of any prepayment required by this Section 5(A),
such Borrower may pledge additional Contracts complying with the terms of this
Agreement such that the aggregate principal amount of the Loan does not exceed
the Maximum Loan Amount.

                  B. If (x) more than 1,0% of the Pledged Contracts, as
indicated on any Supplemental Contract Schedule delivered pursuant to Section
9(A) hereof, become 31 or more days delinquent, or (y) any of the Pledged
Contract become 45 or more days delinquent, the Lender may require the related
Borrower to prepay the Loan in part in an amount equal to the amount of the
Advance relating to such Contracts, or, with the Lender's consent, deliver
qualifying substitute contracts in their place.

                  C. If the Borrowers award a Securitization or any whole-loan
trade involving any Pledged Contracts to an investment banking house, agent or
underwriter other than PSI, or to a group of managers for which PSI is not the
lead manager, then (x) the Lender may demand that the Borrowers prepay any
portion of the Loan evidenced hereby relating to the dollar amount of the
Contracts to be included in such Securitization or whole loan trade, in which
PSI has not been selected for participation, for payment within five business
days of the demand for prepayment, (y) the Lender may refuse to make further
Advances hereunder if such Advances would relate to Contracts to be included in
such Securitization or whole-loan trade in which PSI has not been selected for
participation and (z) the interest rate on the Loan shall increase as set forth


                                       16
<PAGE>

in Section 1(E)(2) hereof. The Borrowers shall give immediate notice, by
facsimile transmission, to the attention of Murray Weiss at the Lender and to
the attention of Len Blum at PSI (fax 212-778-7401) of any decision to award the
lead manager role or to name any group of managers for any Securitization or
whole-loan trade involving any Pledged Contracts.

                  D. If at any time the outstanding principal amount of the Loan
exceeds the Maximum Loan Amount, the Borrowers shall, no later than one business
day after receipt of notice of such excess, either prepay the Loan (together
with interest thereon) in part or in whole, or pledge additional Collateral to
the Lender, or both, such that, after giving effect to such prepayment or
pledge, or both, the aggregate outstanding principal amount of the Loan does not
exceed the Maximum Loan Amount.

                  Section 6. Release of Contract Files following Payment of
Loan.

                  The Lender agrees to cause to be released from the lien hereof
the documents described in Section 2 of the Custodial Agreement at the request
of the Borrowers upon payment in full of the Loan, or, if a partial payment of
the Loan occurs, the documents relating to a pro rata portion of the Pledged
Contracts.

                  Section 7. Servicing.

                  Each Borrower shall service the related Contracts with the
degree of skill and care consistent with that which such Borrower customarily
exercises with respect to similar contracts owned, managed, or serviced by it
and all applicable industry standards. Each Borrower (i) shall not knowingly
fail to comply with all applicable Federal and State laws and regulations, (ii)
shall maintain all State and Federal licenses and franchises necessary for it to
perform its servicing responsibilities hereunder, (iii) shall not impair the
rights of the Lender in any Contracts or for payment thereunder and (iv) shall
not violate any laws which affect its ability to service the related Contracts.

                  Section 8. No Oral Modifications; Successors and Assigns;
Assignment of Collateral.

                  No provisions of this Agreement shall be waived or modified
except by a writing duly signed by the authorized agents of the Lender and each
of the Borrowers. This Agreement shall be binding upon the successors and
assigns of the parties hereto. The Borrowers acknowledge and agree that the
Lender may re-pledge, enter into repurchase transactions, and otherwise
re-hypothecate (including the granting of participation interests therein) the
Collateral for the Loan; provided, that no such act shall in any way affect the
Borrowers' rights to the Collateral.

                  Section 9. Reports.

                  A. The related Borrower shall provide the Lender with an
electronic disk or tape (each, a "Supplemental Contract Schedule") (i) on the
date any additional Contracts are delivered pursuant to Section 5(D), (ii) at
the earliest of (A) two business days before each Funding Date or (B) two weeks


                                       17
<PAGE>

following the date that the last such schedule was provided and (iii) within two
business days following any request by the Lender or any affiliate thereof for
such a schedule. Such Supplemental Contract Schedule will contain the
information set forth in Section 2(A) hereof concerning (x) the Contracts then
held in the warehouse facility and (y) any Contracts proposed to be delivered to
the warehouse facility on the next Funding Date or in connection with Collateral
maintenance pursuant to Section 5(D) hereof, and shall be in the format as may
be agreed upon by the Borrowers and the Lender from time to time and contain the
information set forth in Section 2(A) hereof.

                  B. Each Borrower shall furnish to the Lender (x) promptly,
copies of any material and adverse notices (including, without limitation,
notices of defaults, breaches, potential defaults or potential breaches) given
to or received from its other lenders, (y) immediately, notice of the occurrence
of any "Event of Default" hereunder or of any situation which such Borrower,
with the passage of time, reasonably expects to develop into an "Event of
Default" hereunder and (z) the following:

                            (i) unaudited consolidating financial statements of
         such Borrower and its Affiliates (setting forth such Borrower's balance
         sheet and income statement), within 105 days of such Borrower's fiscal
         year end;

                            (ii) unaudited consolidating financial statements of
         such Borrower and its Affiliates (setting forth such Borrower's balance
         sheet and income statement) for each of such Borrower's first three
         quarters of each fiscal year, within 50 days after quarter end; and

                            (iii) copies of all SEC filings by such Borrower and
         its Affiliates, within five business days of their filing with the SEC.

                  All required financial statements, information and reports
shall be prepared in accordance with U.S. GAAP, or, if applicable to SEC
filings, SEC accounting regulations.

                  C. On the fifth business day of each calendar month, the
Borrowers shall provide the Lender with a report both in hardcopy and on a
computer diskette or via electronic transmission, which report shall contain
information concerning the portfolio performance data with respect to the
Pledged Contracts, including, without limitation, information regarding any
outstanding delinquencies, prepayments in whole or in part and any repurchases
by the Borrowers, in a format as may be agreed upon by the Borrowers and the
Lender from time to time.

                  D. In conjunction with the delivery of each of the financial
statements to be delivered by the Borrowers pursuant to Section 9(B), each
Borrower shall deliver to the Lender an officer's certificate of such Borrower
certifying that, as of the date of delivery of such financial statements, such
Borrower is in compliance with all the terms of this Agreement, including,


                                       18
<PAGE>

without limitation, each of the representations and warranties set forth in
Section 4(B) and the covenants set forth in Section 4(C). Such certificate
shall, as appropriate, set forth any calculations necessary to determine such
compliance, including, without limitation, a calculation showing compliance with
the representations set forth in Section 4(B)(34).

                  Section 10. Events of Default.

                  Each of the following shall constitute an "Event of Default"
hereunder:

                  A. Failure of either Borrower to make any payment of interest
or principal or any other sum which has become due, whether by acceleration or
otherwise, under the terms of the Secured Note, this Agreement, any warehouse
and security agreement or any other document evidencing or securing indebtedness
of either Borrower to the Lender or to any affiliate of the Lender; provided,
however, that, with respect to payments of interest hereunder, the Borrowers
shall have one (1) Business Day to cure such deficiency.

                  B. Any "event of default" or any occurrence which with the
passage of time would become an "event of default" by either Borrower, the
Guarantor or any of their Affiliates under any agreement relating to any
indebtedness of either Borrower, the Guarantor or any of their Affiliates to any
other lender.

                  C. Any default of any term, condition or agreement or any
breach of any representation or warranty of the Guarantor under the Guaranty or
any other guaranty executed by the Guarantor in favor of the Lender or its
affiliates.

                  D. Assignment or attempted assignment by the Borrowers of this
Agreement or any rights hereunder, without first obtaining the specific written
consent of the Lender, or the granting by the Borrowers of any security
interest, lien or other encumbrance on any Collateral to other than the Lender.

                  E. The filing by either Borrower or the Guarantor of a
petition for liquidation, reorganization, arrangement or adjudication as a
bankrupt or similar relief under the bankruptcy, insolvency or similar laws of
the United States or any state or territory thereof or of any foreign
jurisdiction; the failure of either Borrower or the Guarantor to secure
dismissal of any such petition filed against it within ninety (90) days of such
filing; the making of any general assignment by either Borrower or the Guarantor
for the benefit of creditors; the appointment of a receiver or trustee for
either Borrower or the Guarantor, or for any part of either Borrower's or the
Guarantor's assets; the institution by either Borrower or the Guarantor of any
other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or
of any formal or informal proceeding, for the dissolution or liquidation of,
settlement of claims against, or winding up of the affairs of, either Borrower
or the Guarantor; the institution of any such proceeding against either Borrower
or the Guarantor if such party shall fail to secure dismissal thereof within
ninety (90) days thereafter; the consent by either Borrower or the Guarantor to
any type of insolvency proceeding against either Borrower or the Guarantor


                                       19
<PAGE>

(under the Bankruptcy Code or otherwise); the occurrence of any event or
existence of any condition which could be the ground, basis or cause for any
proceeding or petition described in this Section 10.

                  F. Any materially adverse change in the financial condition of
either Borrower or any of its Affiliates or the existence of any other condition
which, in the Lender's sole, reasonable determination, constitutes an impairment
of either Borrower's ability to perform its obligations under this Agreement or
the Secured Note.

                  G. Failure by either Borrower to service the Contracts in
substantial compliance with the servicing requirements set forth in Section 7
hereof.

                  H. A breach by either Borrower of any representation, warranty
or covenant set forth in Section 4(A), 4(C) or Section 9 hereof or a use by
either Borrower of the proceeds of the Loan for a purpose other than as set
forth in Section 1(A) hereof.

                  I. Any "event of default" under any agreement between either
Borrower or any of their Affiliates and the Lender or any of its affiliates.

                  Section 11. Remedies Upon Default.

                  A. Upon the occurrence of one or more Events of Default and
notice thereof to the Borrowers, the Lender may (x) refuse to make further
Advances hereunder and (y) immediately declare the principal of the Secured Note
then outstanding to be immediately due and payable, together with all interest
thereon and fees and expenses accruing under this Agreement; provided, that,
upon the occurrence of the Event of Default referred to in Section 10(D), such
amounts shall immediately and automatically become due and payable without any
further action by any person or entity. Upon such declaration or such automatic
acceleration, the balance then outstanding on the Secured Note shall become
immediately due and payable without presentation, demand or further notice of
any kind to the Borrowers.

                  B. Upon the occurrence of one or more Events of Default, the
Lender shall have the right to obtain physical possession, and to commence an
action to obtain physical possession, of all files of the Borrowers relating to
the Collateral and all documents and information relating to the Collateral
which are then or may thereafter come in to the possession of the Borrowers or
any third party acting for the Borrowers, including, without limitation, all
computer data relating to the Collateral and the servicing of the Collateral.
The Lender shall be entitled to specific performance of all agreements of the
Borrowers contained in this Agreement. The Borrowers and the Lender hereby
acknowledge that the Lender's right to obtain physical possession of the
Collateral is deemed for all purposes to be equivalent to the rights of "seizure
of property or maintenance or continuation of perfection of an interest in
property" as specified under Bankruptcy Code Sections 362(b) and 546(b)(2).



                                       20
<PAGE>

                  C. Upon the occurrence of one or more Events of Default, the
Lender shall have the right to direct all servicers then servicing any Pledged
Contracts to remit all collections on the Pledged Contracts to the Lender, and
if any such payments are received by either Borrower, such Borrower shall not
commingle the amounts received with other funds of such Borrower and shall
promptly pay them over to the Lender. In addition, the Lender shall have the
right to dispose of the Collateral as provided herein, or as provided in the
other documents executed in connection herewith, or in any commercially
reasonable manner, or as provided by law. Such disposition may be on either a
servicing-released or a servicing-retained basis. The Lender shall be entitled
to place the Contracts which it recovers after any default in a pool for
issuance of equipment lease-backed securities at the then-prevailing price for
such securities and to sell such securities for such prevailing price in the
open market as a commercially reasonable disposition of Collateral, subject to
the applicable requirements of the New York UCC. The Lender shall also be
entitled to sell any or all of such Contracts individually for the prevailing
price as a commercially reasonable disposition of Collateral subject to the
applicable requirements of the New York UCC. The specification in this Section
11 of manners of disposition of collateral as being commercially reasonable
shall not preclude the use of other commercially reasonable methods (as
contemplated by the New York UCC) at the option of the Lender.

                  D. Following the occurrence and during the continuance of an
Event of Default, interest shall accrue on the Loan at a default interest rate
of LIBOR plus 5.00%.

                  Section 12. Indemnification.

                  Each of the Borrowers agrees to hold the Lender harmless from
and indemnifies the Lender against all liabilities, losses, damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by, or asserted
against the Lender relating to or arising out of this Agreement, the Custodial
Agreement, the Secured Note, the Guaranty or any transaction contemplated hereby
or thereby resulting from anything other than the Lender's gross negligence or
willful misconduct. Each of the Borrowers also agrees to reimburse the Lender
for all reasonable expenses in connection with the enforcement of this
Agreement, the Custodial Agreement, the Secured Note and the Guaranty,
including, without limitation, the reasonable fees and disbursements of counsel.
Each of the Borrowers' agreements in this Section shall survive the payment in
full of the Secured Note and the expiration or termination of this Agreement.
Each of the Borrowers hereby acknowledges that, notwithstanding the fact that
the Secured Note is secured by the Collateral, the obligations of such Borrower
under the Secured Note are recourse obligations of such Borrower.

                  Section 13. Power of Attorney.

                  The related Borrower hereby authorizes the Lender, at such
Borrower's expense, to file such financing statement or statements relating to
the Collateral without such Borrower's signature thereon as the Lender at its


                                       21
<PAGE>

reasonable option may deem appropriate and necessary, and appoints the Lender as
such Borrower's attorney-in-fact to execute any such financing statement or
statements in such Borrower's name and to perform all other acts which the
Lender deems appropriate to perfect and continue the security interest granted
hereby and to protect, preserve and realize upon the Collateral, including, but
not limited to, the right to endorse notes, complete blanks in documents,
transfer servicing, and sign assignments on behalf of such Borrower as its
attorney-in-fact. This Power of Attorney is coupled with an interest and is
irrevocable without the Lender's consent. Notwithstanding the foregoing, the
power of attorney hereby granted may be exercised only during the occurrence and
continuance of any Event of Default hereunder.

                  Section 14. Agreement Constitutes Security Agreement.

                  This Agreement is intended by the parties hereto to be
governed by New York Law, and to constitute a security agreement within the
meaning of the New York UCC.

                  Section 15. Lender May Act Through Affiliates.

                  The Lender may, from time to time, designate one or more
affiliates for the purpose of performing any action hereunder.

                  Section 16. Notices.

                  All demands, notices, reports and communications relating to
this Agreement shall be in writing and shall be deemed to have been duly given
if mailed, by registered or certified mail, return receipt requested, or by
overnight courier, or, if by other means, when received by the other party or
parties at the address shown below, or such other address as may hereafter be
furnished to the other party or parties by like notice. Any such demand, notice,
report or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee (as evidenced, in
the case of registered or certified mail, by the date noted on the return
receipt).

                  If to ABL:

                           Anthony J. Santilli
                           Chairman
                           American Business Leasing, Inc.
                           111 Presidential Blvd.
                           Bala Cynwyd, PA  19004
                           Phone Number:  610-668-2440
                           Fax Number:  610-668-1468



                                       22
<PAGE>

                  with a copy to:

                           Lawrence F. Flick, II, Esq.
                           Blank Rome Comisky & McCauley
                           Four Penn Center Plaza
                           Philadelphia, Pennsylvania  19103-2599
                           Phone Number:  215-569-5500
                           Fax Number:    215-569-5555

                  If to Federal Leasing:

                           Anthony J. Santilli
                           Chairman
                           Federal Leasing Corp.
                           111 Presidential Blvd.
                           Bala Cynwyd, PA  19004
                           Phone Number:  610-668-2440
                           Fax Number:  610-668-1468

                  with a copy to:

                           Lawrence F. Flick, II, Esq.
                           Blank Rome Comisky & McCauley
                           Four Penn Center Plaza
                           Philadelphia, Pennsylvania  19103-2599
                           Phone Number:  215-569-5500
                           Fax Number:    215-569-5555

                  If to the Lender:

                           Prudential Securities Credit Corporation
                           One Seaport Plaza, 27th Floor
                           Treasury Department
                           New York, New York  10292
                           Attention:  Elizabeth Castagna
                           Phone Number: 212-214-7772
                           Fax Number:  212-214-7572

                  with copies to:

                           Prudential Securities Credit Corporation
                           One Seaport Plaza
                           New York, New York  10292
                           Attention:  Jeffrey French
                           Phone Number: 212-214-7558
                           Fax Number:  212-214-7678



                                       23
<PAGE>

                           Prudential Securities Credit Corporation
                           One Seaport Plaza
                           New York, New York  10292
                           Attention:  Jim Maitland
                           Phone Number: 212-214-7231
                           Fax Number:  212-214-7678

                           Prudential Securities Incorporated
                           One New York Plaza
                           New York, New York  10292
                           Attention: Mr. Len Blum
                           Phone Number:  212-778-1397
                           Fax Number:  212-778-7401

                  Section 17. Severability.

                  Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization, without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.

                  Section 18. Counterparts.

                  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.

                  Section 19. Certain Definitions.

                  The following capitalized terms are defined in the
corresponding sections specified below:

                  "Advance" - Section 1(A)(1).

                  "Affiliate" - Section 4(A)(5).

                  "Agreement" - Introductory Clause.

                  "Borrowers" - Introductory Clause.

                  "Collateral" - Section 3.

                  "Collateral Value" - Section 1(B)(1).

                  "Contract" - Recitals.



                                       24
<PAGE>

                  "Contract Schedule" - Section 2(A).

                  "Contract Schedule Cut-Off Date" - Section 2(A).

                  "Contract Value" - Section 2(A).

                  "Custodian" - Section 3.

                  "Custodial Agreement" - Section 3.

                  "Custodian's Certification" - Section 1(A)(2)(iii).

                  "Discount Rate" - Section 2(A).

                  "Equipment" - Recitals.

                  "Event of Default" - Section 9.

                  "Funding Date" - Section 1(A)(2).

                  "Guarantor" - Section 1(A)(2)(vii).

                  "Guaranty" - Section 1(A)(2)(vii)

                  "Lien" - Section 4.

                  "Lender" - Introductory Clause.

                  "Leverage Ratio" - Section 4.

                  "LIBOR" - Section 1(A)(3).

                  "Loan" - Section 1(A)(1).

                  "Maturity Date" - Section 1(B)(2).

                  "Maximum Loan Amount" - Section 1(B)(1).

                  "NY UCC" - Section 1(E)(1).

                  "Original Equipment Cost" - Section 2(A).

                  "Perfected Equipment" - Section 1(A)(2)(vi).

                  "Permitted Lien" - Section 4.

                  "Pledged Contracts" - Section 1(B)(2).

                  "Pre-Funding Account" - Section 1(A)(2).



                                       25
<PAGE>

                  "PSI" - Recitals.

                  "Secured Note" - Section 1(F).

                  "Secured Obligations" - Section 3.

                  "Securitization" - Recitals.

                  "Servicing Agreement" - Section 2(B)(9).

                  "Supplemental Contract Schedule" - Section 9(A).

                  "Tangible Net Worth" - Section 4.



                                       26
<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.

                                    FEDERAL LEASING CORP.


                                    By:  /s/ David M. Levin                     
                                        --------------------------------------- 
                                         Name:  David M. Levin
                                         Title: Chief Financial Officer


                                    AMERICAN BUSINESS LEASING, INC.


                                    By:  /s/ David M. Levin                     
                                        --------------------------------------- 
                                         Name:  David M. Levin
                                         Title: Chief Financial Officer


                                    PRUDENTIAL SECURITIES CREDIT CORPORATION


                                    By: /s/ Jeffrey French                      
                                        --------------------------------------- 
                                         Name:  Jeffrey French
                                         Title: Vice President


<PAGE>
                                                                       Exhibit A





                                  SECURED NOTE


                            Dated as of April 3, 1998

                  FOR VALUE RECEIVED, the undersigned, FEDERAL LEASING CORP., a
corporation organized under the laws of the State of New Jersey, whose address
is 111 Presidential Boulevard, Bala Cynwyd, Pennsylvania 19004 ("Federal
Leasing") and AMERICAN BUSINESS LEASING, INC., a corporation organized under the
laws of the State of Pennsylvania, whose address is 111 Presidential Boulevard,
Bala Cynwyd, Pennsylvania 19004 ("ABL", and together with Federal Leasing, the
"Borrowers"), jointly and severally promise to pay to the order of PRUDENTIAL
SECURITIES CREDIT CORPORATION, a Delaware corporation, whose address is One
Seaport Plaza, New York, New York 10292 (the "Lender") on or before the Maturity
Date the amount then outstanding (including accrued interest) under that certain
Interim Warehouse and Security Agreement for Contracts dated as of April 3, 1998
(the "Agreement"). Initially, the maximum principal amount which may be
outstanding is $50,000,000 (as such amount may be amended from time to time by a
Credit Increase Confirmation and Note Amendment). Capitalized terms used herein
and not defined herein shall have their respective meanings as set forth in the
Agreement.

                  The holder of this Note is authorized to record the date and
amount of each Advance and the date and amount of each repayment of principal
thereof on the schedule to be maintained by the Lender (which schedule may be
obtained upon the Borrowers' request), and any such recordation shall constitute
prima facie evidence of the accuracy of the amount so recorded; provided, that
the failure of the holder hereof to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrowers hereunder or
under the Agreement.

                  MAXIMUM RATE OF INTEREST: It is intended that the rate of
interest herein shall never exceed the maximum rate, if any, which may be
legally charged on the Loan evidenced by this Note ("Maximum Rate"), and if the
provisions for interest contained in this Note would result in a rate higher
than the Maximum Rate, interest shall nevertheless be limited to the Maximum
Rate and any amounts which may be paid toward interest in excess of the Maximum
Rate shall be applied to the reduction of principal, or, at the option of the
Lender, returned to the Borrowers.

                  DUE DATE: The Loan evidenced hereby not paid before the
Maturity Date shall be due and payable on the Maturity Date.



                                      A-1
<PAGE>

                  PLACE OF PAYMENT: All payments hereon shall be made, and all
notices to the Lender required or authorized hereby shall be given, at the
office of the Lender at the address designated in the heading of this Note, or
to such other place as the Lender may from time to time direct by written notice
to the Borrowers.

                  PAYMENT AND EXPENSES OF COLLECTION: All amounts payable
hereunder are payable by wire transfer in immediately available funds to the
account number specified by the Lender, in lawful money of the United States.
Payments remitted by the Borrowers via wire transfer initiated after 1:00 p.m.
New York City time shall be deemed to be received on the next business day. The
Borrowers agree to pay all costs of collection when incurred, including, without
limiting the generality of the foregoing, reasonable attorneys' fees through
appellate proceedings, and to perform and comply with each of the covenants,
conditions, provisions and agreements contained in every instrument now
evidencing or securing said indebtedness.

                  SECURITY: This Note is issued pursuant to the Agreement and is
secured by a pledge of the collateral described therein. Notwithstanding the
pledge of the collateral, each of the Borrowers hereby acknowledges, admits and
agrees that the Borrower's obligations under this Note are recourse obligations
of such Borrower to which such Borrower pledges its full faith and credit.

                  DEFAULTS: Upon the occurrence of an Event of Default (as
defined in the Agreement), the Lender shall have all rights and remedies set
forth in the Agreement.

                  The failure to exercise any of the rights and remedies set
forth in the Agreement shall not constitute a waiver of the right to exercise
the same or any other option at any subsequent time in respect of the same event
or any other event. The acceptance by the Lender of any payment hereunder which
is less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
foregoing rights and remedies at that time or at any subsequent time or nullify
any prior exercise of any such rights and remedies without the express consent
of the Lender, except as and to the extent otherwise provided by law.

                  WAIVERS: Each of the Borrowers waives diligence, presentment,
protest and demand and also notice of protest, demand, dishonor and nonpayments
of this Note, and expressly agrees that this Note, or any payment hereunder, may
be extended from time to time, and consents to the acceptance of further
collateral, the release of any collateral for this Note, the release of any
party primarily or secondarily liable hereon, and that it will not be necessary
for the Lender, in order to enforce payment of this Note, to first institute or
exhaust the Lender's remedies against such Borrower or any other party liable
hereon or against any collateral for this Note. None of the foregoing shall
affect the liability of such Borrower. No extension of time for the payment of
this Note, or an installment hereof, made by agreement by the Lender with any
person now or hereafter liable for the payment of this Note, shall affect the
liability under this Note of the Borrowers, even if the Borrowers are not a


                                      A-2
<PAGE>

party to such agreement; provided, however, that the Lender and the Borrowers,
by written agreement between them, may affect the liability of the Borrowers.

                  TERMINOLOGY: If more than one party joins in the execution of
this Note, the covenants and agreements herein contained shall be the joint and
several obligation of each and all of them and of their respective heirs,
executors, administrators, successors and assigns, and relative words herein
shall be read as if written in the plural when appropriate. Any reference herein
to the Lender shall be deemed to include and apply to every subsequent holder of
this Note. Words of masculine or neuter import shall be read as if written in
the neuter or masculine or feminine when appropriate.

                  AGREEMENT: Reference is made to the Agreement for provisions
as to Advances, rates of interest, mandatory principal repayments, collateral
and acceleration. If there is any conflict between the terms of this Note and
the terms of the Agreement, the terms of the Agreement shall control.

                  APPLICABLE LAW: This Note shall be governed by and construed
under the laws of the State of New York, the laws of which the Borrowers hereby
expressly elect to apply to this Note. The Borrowers agree that any action or
proceeding brought to enforce or arising out of this Note may be commenced in
the Supreme Court of the State of New York, or in the District Court of the
United States for the Southern District of New York.

                             FEDERAL LEASING CORP.


                             By: _________________________________________ 
                                 Name:
                                 Title:


                             AMERICAN BUSINESS LEASING, INC.


                             By: _________________________________________ 
                                 Name:
                                 Title:




                                      A-3
<PAGE>

                                                                       Exhibit D





                                FORM OF GUARANTY


                  THIS GUARANTY is given as of the 3rd day of April, 1998 by
AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Guarantor"), a corporation
organized and existing under the laws of the State of Pennsylvania and having
its principal office at 111 Presidential Boulevard, Bala Cynwyd, Pennsylvania
19004.

                  WHEREAS, Prudential Securities Credit Corporation (the
"Lender") has entered into an Interim Warehouse and Security Agreement for
Contracts dated as of April 3, 1998 (the "Warehouse Agreement") with Federal
Leasing Corp. ("Federal Leasing") and American Business Leasing, Inc. ("ABL",
and together with Federal Leasing, the "Borrowers") (capitalized terms not
defined herein shall have the meanings set forth in the Warehouse Agreement,
unless otherwise noted) providing for a loan by the Lender to the Borrowers
secured by certain Contracts and the related Equipment; and

                  WHEREAS, the Lender and the Borrowers have entered into a
Custodial Agreement for Contracts with Chase Bank of Texas, N.A. (the
"Custodian") dated as of April 3, 1998 (the "Custodial Agreement") whereby the
Custodian agrees to act as Custodian on behalf of the Borrowers with respect to
the Contracts; and

                  WHEREAS, the Guarantor represents that it directly or
indirectly owns all of the stock of the Borrowers and is financially interested
in its affairs and expects to derive advantage from the transactions
contemplated by each of the Warehouse Agreement and the Custodial Agreement;

                  NOW, THEREFORE, to induce the Lender to enter into the
transactions with the Borrowers contemplated by the Warehouse Agreement and the
Custodial Agreement and for other good and valuable consideration receipt of
which is hereby acknowledged, the Guarantor hereby agrees as follows:

                  1. The Guarantor hereby unconditionally and irrevocably
guarantees to the Lender the full and complete payment when due and performance
of each of the Borrowers' obligations under the Warehouse Agreement, every
Advance evidenced by the Secured Note issued pursuant to the Warehouse
Agreement, and the Custodial Agreement. In addition, the Guarantor agrees that
in the event that either of the Borrowers defaults in the performance of or
payment when due of any or all obligations or sums hereby guaranteed, the
Guarantor shall forthwith pay such sums or perform such obligations. All amounts
payable by the Guarantor to the Lender hereunder shall be paid in immediately
available funds in U.S. Dollars and at the place and otherwise in the manner and



                                      D-1
<PAGE>

on the terms required by the Warehouse Agreement or, if so specified and
applicable, the Custodial Agreement. This is a Guaranty of payment and not of
collection. This Guaranty shall be a continuing Guaranty and shall remain in
full force and effect until all the obligations of the Borrowers hereby
guarantied are paid or performed in full. The Guarantor's obligations under this
Guaranty shall be reinstated and be continued in full force and effect if at any
time any payment received by the Lender under the Warehouse Agreement or the
Custodial Agreement is invalidated, declared to be fraudulent or preferentially
set aside and/or required to be repaid by the Lender.

                  2. The Guarantor hereby expressly waives all setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty, notices of sale, surrender or other handling or
disposition of assets subject to the Warehouse Agreement or the Custodial
Agreement, any requirement that the Lender exhaust any right, power or remedy or
take any action against the Borrowers or against any assets subject to the
Warehouse Agreement or the Custodial Agreement, and other formalities of any
kind. The obligation of the Guarantor hereunder is absolute and unconditional
irrespective of the genuineness, legality, validity, regularity or
enforceability of the Warehouse Agreement, the Custodial Agreement, or any other
agreement, instrument or document contemplated therein or thereby and
irrespective of the obligation of any other party or person, and shall not in
any manner be affected by reason of any action taken or not taken by the Lender,
which action or inaction is herein consented and agreed to, or of any lack of
prior enforcement or retention of any rights against the Borrowers, the
Guarantor or any other person or property. The Guarantor hereby waives, to the
fullest extent permitted by applicable law, all defenses of a surety to which it
may be entitled by statute or otherwise. The Lender may neglect or forbear to
enforce payment or performance hereunder, under the Warehouse Agreement, the
Custodial Agreement, or under any other agreement, instrument or document
contemplated therein or thereby, or waive, amend or otherwise alter the terms of
the Warehouse Agreement or the Custodial Agreement in any manner, or release or
cause the release of any assets subject to the Warehouse Agreement, in each case
without in any way affecting or impairing the liability of the Guarantor
hereunder.

                  3. The Guarantor hereby waives all rights of subrogation,
exoneration, reimbursement or contribution, whether arising by contract or
operation of law (including, without limitation, any such right arising under
the Federal Bankruptcy Code) or otherwise by reason of any payment by it
hereunder and further agrees with the Borrowers for the benefit of its creditors
that any such payment by it shall constitute a contribution of capital by the
Guarantor to the related Borrower.

                  4. Any indebtedness of the Borrowers now or hereafter held by
the Guarantor is hereby subordinated to any obligations of the Borrowers to the
Lender under the Warehouse Agreement and the Custodial Agreement.



                                      D-2
<PAGE>

                  5. If an Event of Termination under the Warehouse Agreement or
an Event of Default under the Custodial Agreement shall have occurred and be
continuing, the Guarantor agrees that, as between the Guarantor and the Lender,
the obligations of the Borrowers guaranteed hereunder may be declared to be due
for purposes of this Guaranty notwithstanding any stay, injunction or other
prohibition which may prevent, delay or vitiate any such declaration as against
the Borrowers and that, in the event of any such declaration (or attempted
declaration), such obligations shall forthwith become due by the Guarantor for
purposes of this Guaranty.

                  6. All of the Lender's rights and remedies shall be cumulative
and any failure of the Lender to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right any
time and from time to time thereafter.

                  7. All notices, demands and other communications hereunder
shall be given in writing and delivered or telefaxed (i) to the Guarantor, at
American Business Financial Services, Inc., 111 Presidential Boulevard, Bala
Cynwyd, Pennsylvania 19004, Attention: Anthony J. Santilli, Facsimile: (610)
668-1468, (ii) to the Lender at (a) Prudential Securities Credit Corporation,
One Seaport Plaza, 27th Floor, Treasury Department, New York, New York 10292,
Attention: Elizabeth Castagna, Facsimile: (212) 214-7572, (b) Prudential
Securities Credit Corporation, One Seaport Plaza, New York, New York 10292,
Attention: Jeffrey French, Facsimile (212) 214-7678, and (c) Prudential
Securities Credit Corporation, One Seaport Plaza, New York, New York 10292,
Attention: Jim Maitland, Facsimile (212) 214-7678, and shall be effective upon
actual receipt and (iii) to PSI at Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292, Attention: Len Blum, Facsimile (212)
778-7401.

                  8. This Guaranty shall inure to the benefit of the Lender, its
successors, assigns and any person to whom the Lender may grant any interest in
any of the Secured Note or the Contracts, and shall be binding upon the
Guarantor, its successors, heirs, executors, administrators, legal
representatives and assigns.

                  9. The Guarantor covenants with the Lender that, during the
term of this Guaranty: (i) the Guarantor's Tangible Net Worth ("Tangible Net
Worth" being Net Worth less intangible assets, less receivables from Affiliates,
and "Net Worth" being the sum of (a) the book value of the common stock, plus
(b) paid in capital, plus (c) retained earnings, plus (d) the book value of any
preferred stock not payable within five years) at all times shall not be less
than the sum of (A) $15,000,000, plus (B) 75% of the positive earnings of the
Guarantor subsequent to December 31, 1997, plus (C) the net proceeds to the
Guarantor from the issuance of any common stock or preferred stock subsequent to
December 31, 1997; (ii) the Guarantor shall maintain a minimum of $25,000,000 of
outstanding subordinated debentures maturing in more than one year; (iii) the
Guarantor's leverage ratio shall not exceed 4.00:1, such ratio being the ratio
of (x) the excess of (A) the Guarantor's total liabilities over (B) outstanding


                                      D-3
<PAGE>

subordinated debentures maturing in more than one year, to (y) the sum of (A)
the Guarantor's Tangible Net Worth and (B) outstanding subordinated debentures
maturing in more than one year; (iv) the subordinated debentures shall be
subordinate to the Guarantor's obligations hereunder, including, any unsecured
obligations to the Lender, and (v) the Guarantor shall at no time have
guarantees outstanding in respect of obligations in excess of $200,000,000. All
calculations made pursuant to this Section 9 shall be made in accordance with
generally accepted accounting principles.

                  10. As long as this Guaranty is in effect, the Guarantor shall
(i) promptly upon preparation, but in no event later than 50 days following the
end of its first three fiscal quarters, deliver to the Lender its unaudited
company-prepared financial statements as of the end of such fiscal quarter,
prepared in accordance with GAAP, and (ii) promptly upon preparation, but in no
event later than 105 days following the end of its fourth fiscal quarter,
deliver to the Lender its audited and certified financial statements, prepared
in accordance with GAAP, as of the end of and for the most recently ended fiscal
year, which audits and certification shall be prepared by a nationally
recognized independent accounting firm or by a regionally recognized independent
accounting firm with the prior written consent of the Lender, which consent
shall not be unreasonably withheld. In all cases, financial statements shall
include, without limitation, a balance sheet, a profit and loss statement and a
statement of cash flows. In conjunction with the delivery of each of the
financial statements to be delivered by the Guarantor pursuant to this Paragraph
10, the Guarantor shall deliver to the Lender (a) an officer's certificate of
the Guarantor certifying that, as of the date of delivery of such financial
statements, the Guarantor is in compliance with all the terms of this Guaranty,
including, without limitation, each of the covenants set forth in Paragraph 9,
(b) a schedule setting forth by month of maturity all outstanding subordinated
debentures of the Guarantor, and (c) a schedule of other receivables and other
assets of the Guarantor. Such compliance certificate shall, as appropriate, set
forth any calculations necessary to determine such compliance.

                  11. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS RULES THEREOF. This Guaranty may not be modified, altered or
amended except by a writing signed by both the Guarantor and the Lender.

                  12. THE GUARANTOR IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED
IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT AGAINST IT WHICH IS RELATED TO ANY MATTER CONTAINED IN THIS GUARANTY,
AND THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION,
DEFENSE OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT PROVIDED THAT SERVICE


                                      D-4
<PAGE>

OF PROCESS IS MADE BY ANY LAWFUL MEANS, THAT ANY SUCH COURT IS AN INCONVENIENT
FORUM OR THAT VENUE IN ANY SUCH COURT IS IMPROPER. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY MATTER ARISING HEREUNDER.



                                      D-5
<PAGE>

                  IN WITNESS WHEREOF, the Guarantor has executed this Guaranty
as of the day and year first above written.

                               AMERICAN BUSINESS FINANCIAL
                                SERVICES, INC.


                               By: ___________________________________ 
                                   Name:
                                   Title:


                                      D-6
<PAGE>

                          CREDIT INCREASE CONFIRMATION
                            AND NOTE AMENDMENT NO. 1
                                     TO THE
                    INTERIM WAREHOUSE AND SECURITY AGREEMENT
                    FOR CONTRACTS, SECURED NOTE AND GUARANTY

                            Dated as of May 29, 1998

                  Reference is made to (x) the Interim Warehouse and Security
Agreement for Contracts, dated as of April 3, 1998 (the "Interim Warehouse
Agreement") among Prudential Securities Credit Corporation (the "Lender") and
Federal Leasing Corp. ("Federal Leasing") and American Business Leasing, Inc.
("ABL", and together with Federal Leasing, the "Borrowers"), (y) the Secured
Note, dated as of April 3, 1998 (the "Note"), from the Borrowers to the Lender,
and (z) the Guaranty, dated as of April 3, 1998 (the "Guaranty"), from the
Borrowers' parent, American Business Financial Services, Inc. ("ABFS" or the
"Guarantor"), to the Lender.

                  WHEREAS, the Lender and the Borrowers desire to amend the
Interim Warehouse Agreement; and

                  WHEREAS, the Lender and the Guarantor desire to amend the
financial covenants contained in the Guaranty;

                  NOW THEREFORE, the Lender, the Borrowers and the Guarantor
hereby amend the Interim Warehouse Agreement, the Secured Note and the Guaranty
as follows:

Section 1. Amendment of the Interim Warehouse Agreement.

                  Section 1(A)(1) of the Interim Warehouse Agreement is hereby
deleted in its entirety and replaced with the following:

                  The Lender agrees to lend to the Borrowers up to $50,000,000
                  (such borrowing, the "Loan") to be made in one or more
                  advances (each, an "Advance"); provided, however, that, in no
                  event shall the outstanding debt owed to the Lender by the
                  Borrowers or any of their Affiliates (including, without
                  limitation, American Business Credit, Inc., HomeAmerican
                  Credit, Inc. d/b/a Upland Mortgage and New Jersey Mortgage and
                  Investments Corp.) under any loan agreement (including,
                  without limitation, this Agreement) exceed $100,000,000;
                  provided, further, that, at any time when funds are on deposit
                  in a Pre-Funding Account (as defined herein), the amount of


<PAGE>

                  the Loan shall not exceed the amount on deposit in such
                  Pre-Funding Account. The Borrower agrees that the Loan shall
                  be used to warehouse Contracts that are to be included in a
                  Securitization, as such Contracts are identified to the Lender
                  in writing and in electronic form from time to time. Such
                  Contracts may be (a) included at the time of closing of the
                  Securitization or (b) purchased by the Securitization trust
                  subsequent to closing with funds on deposit in an account (a
                  "Pre-Funding Account") relating to the Securitization and
                  designated for such purpose. The Lender may refuse to lend
                  against any Contract(s) which the Lender reasonably believes
                  will not be eligible for inclusion in a securitized pool
                  either (x) due to the characteristics of such Contract or (y)
                  due to the expected aggregate characteristics of the
                  Contracts.

Section 2. Amendment of the Guaranty.

                  Section 9 of the Guaranty is hereby deleted in its entirety
and replaced with the following:

                  9. The Guarantor covenants with the Lender that, during the
                  term of this Guaranty: (i) the Guarantor's Tangible Net Worth
                  ("Tangible Net Worth" being Net Worth less intangible assets,
                  less receivables from Affiliates, and "Net Worth" being the
                  sum of (a) the book value of the common stock, plus (b) paid
                  in capital, plus (c) retained earnings, plus (d) the book
                  value of any preferred stock not payable within five years) at
                  all times shall not be less than the sum of (A) $15,000,000,
                  (B) 75% of the positive earnings of the Guarantor subsequent
                  to December 31, 1997, plus (C) the net proceeds to the
                  Guarantor from the issuance of any common stock or preferred
                  stock subsequent to December 31, 1997; (ii) the Guarantor
                  shall maintain a minimum of $43,000,000 of outstanding
                  subordinated debentures maturing in more than one year; (iii)
                  the Guarantor's leverage ratio shall not exceed 3.75:1, such
                  ratio being the ratio of (x) the excess of (A) the Guarantor's
                  total liabilities over (B) outstanding subordinated debentures
                  maturing in more than one year, to (y) the sum of (A) the
                  Guarantor's Tangible Net Worth and (B) outstanding
                  subordinated debentures maturing in more than one year; (iv)
                  the subordinated debentures shall be subordinate to the
                  Guarantor's obligations hereunder, including, any unsecured
                  obligations to the Lender; and (v) the Guarantor shall at no
                  time have guarantees outstanding in respect of obligations in
                  excess of $250,000,000. All calculations made pursuant to this
                  Section 9 shall be made in accordance with generally accepted
                  accounting principles.



                                       2
<PAGE>

Section 3. Confirmation of the Interim Warehouse Agreement, the Note and the
           Guaranty.

                  As amended by Section 1 and Section 2 hereof, all provisions
of the Interim Warehouse Agreement, the Note and the Guaranty, are reconfirmed
as of the date hereof. Each of the Borrowers and the Guarantor, in addition,
hereby reconfirms and remakes as of the date hereof each and every one of its
representations, warranties and covenants as set forth in the Interim Warehouse
Agreement, the Note or the Guaranty, as applicable.

                  [Remainder of Page Intentionally Left Blank]


<PAGE>




                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.


                                 AMERICAN BUSINESS LEASING, INC.,
                                  as Borrower



                                 By: /s/ Beverly Santilli
                                     ------------------------------------ 
                                 Name: Beverly Santilli
                                 Title: President


                                 FEDERAL LEASING CORP., as Borrower



                                 By: /s/ Jeffery M. Ruben
                                     ------------------------------------ 
                                 Name: Jeffrey M. Ruben
                                 Title: Senior Vice President


                                 AMERICAN BUSINESS FINANCIAL SERVICES, INC.,
                                  as Guarantor



                                 By: /s/ Anthony J. Santilli, Jr. 
                                     ------------------------------------ 
                                 Name: Anthony J. Santilli, Jr.
                                 Title: President


                                 PRUDENTIAL SECURITIES CREDIT CORPORATION,
                                  as Lender



                                  By: /s/ Elisabeth W. Castagna
                                     ------------------------------------ 
                                  Name: Elisabeth W. Castagna
                                  Title: Treasurer




<PAGE>


                          CREDIT INCREASE CONFIRMATION
                            AND NOTE AMENDMENT NO. 2
                                     TO THE
                    INTERIM WAREHOUSE AND SECURITY AGREEMENT
                    FOR CONTRACTS, SECURED NOTE AND GUARANTY

                           Dated as of August 27, 1998

                  Reference is made to (x) the Interim Warehouse and Security
Agreement for Contracts, dated as of April 3, 1998 (the "Interim Warehouse
Agreement") among Prudential Securities Credit Corporation (the "Lender") and
Federal Leasing Corp. ("Federal Leasing") and American Business Leasing, Inc.
("ABL", and together with Federal Leasing, the "Borrowers"), as amended by
Credit Increase Confirmation and Note Amendment No.1, dated May 29, 1998, (y)
the Secured Note, dated as of April 3, 1998 (the "Note"), from the Borrowers to
the Lender, and (z) the Guaranty, dated as of April 3, 1998 (the "Guaranty"),
from the Borrowers' parent, American Business Financial Services, Inc. ("ABFS"
or the "Guarantor"), to the Lender.

                  WHEREAS,  the  Lender  and the  Borrowers  desire to amend the
Interim Warehouse Agreement;

                  NOW THEREFORE, the Lender, the Borrowers and the Guarantor
hereby amend the Interim Warehouse Agreement, the Secured Note and the Guaranty
as follows:

Section 1.        Amendment of the Interim Warehouse Agreement and Note.

                  The definition of "Maturity Date" in Section 1(B) is hereby
deleted in its entirety and replaced with the following:

                  Maturity Date means, (i) the earlier of (a) December 31, 1998
                  and (b) the next Securitization if no Pre-Funding Account is
                  utilized in the Securitization or (ii) if a Pre-Funding
                  Account is utilized in the next Securitization, the earlier of
                  (a) March 31, 1999 and (b) the date on which the funds in the
                  Pre-Funding Account are reduced to zero. The Maturity Date may
                  be extended by the Lender, in the Lender's sole and
                  unreviewable discretion, on any date by the execution and
                  delivery of a Credit Increase Confirmation and Note Amendment
                  in the form of Exhibit C hereto.


<PAGE>

Section 2.        Confirmation of the Interim Warehouse Agreement, the Note and
                  the Guaranty.

                  As amended by Section 1 hereof, all provisions of the Interim
Warehouse Agreement, the Note and the Guaranty, are reconfirmed as of the date
hereof. Each of the Borrowers and the Guarantor, in addition, hereby reconfirms
and remakes as of the date hereof each and every one of its representations,
warranties and covenants as set forth in the Interim Warehouse Agreement, the
Note or the Guaranty, as applicable.

                  [Remainder of Page Intentionally Left Blank]



                                      -2-


<PAGE>





                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.


                                        AMERICAN BUSINESS LEASING, INC.,
                                          as Borrower



                                        By: /s/ Jeffrey M. Ruben
                                            --------------------
                                            Jeffrey M. Ruben
                                            Senior Vice President


                                        FEDERAL LEASING CORP., as Borrower



                                        By: /s/ Jeffrey M. Ruben
                                            --------------------
                                            Jeffrey M. Ruben
                                            Senior Vice President


                                        AMERICAN BUSINESS FINANCIAL
                                          SERVICES, INC., as Guarantor



                                        By: /s/ Jeffrey M. Ruben
                                            --------------------
                                            Jeffrey M. Ruben
                                            Senior Vice President


                                        PRUDENTIAL SECURITIES CREDIT
                                          CORPORATION, as Lender



                                        By: /s/ Jeffrey French
                                            --------------------
                                            Jeffrey French
                                            Vice President