<PAGE>


                         AMERICAN BUSINESS CREDIT, INC.,
                           HOMEAMERICAN CREDIT, INC.
                             D/B/A UPLAND MORTGAGE,
                                       AND
                     NEW JERSEY MORTGAGE & INVESTMENT CORP.
                     --------------------------------------

                                   $5,000,000

                                 LOAN AGREEMENT

                          dated as of December 30, 1998
                     --------------------------------------

                          CHASE BANK OF TEXAS, NATIONAL
                               ASSOCIATION, LENDER

--------------------------------------------------------------------------------
                               [GRAPHIC OMITTED]
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<PAGE>
                             INDEX OF DEFINED TERMS


10/98 Credit Agreement.....................................................21
12/98 Security Agreement - Class R Certificate...........................1, 7
ABC.........................................................................1
Affiliate...................................................................1
Agreement...................................................................1
Annual Financial Statements ................................................1
Applicable LIBOR Margin ....................................................8
Bankruptcy Code ............................................................2
Borrowers...................................................................1
Borrowing Authorization ....................................................2
Business Day ...............................................................2
Ceiling Rate ...............................................................8
Chapter 1D..................................................................8
Claim......................................................................30
Class R Certificate ........................................................2
Class R Certificate's Value ................................................2
Code .......................................................................3
Collateral .................................................................3
Commitment .................................................................3
Compliance Certificate.....................................................17
Contribution Agreement......................................................3
Controlled Group ...........................................................3
Credit Papers ..............................................................3
Debt .......................................................................3
Default ....................................................................4
ERISA ......................................................................4
Facility Debt ..............................................................4
Financing Statements .......................................................4
GAAP .......................................................................4
Governmental Authority .....................................................4
Guarantor ..................................................................4
Guaranty ...................................................................4
HAC.........................................................................1
Hazardous Substance ........................................................5
Indemnified Parties........................................................27
Legal Requirement ..........................................................5
Lender......................................................................1
LIBOR ......................................................................8
Lien .......................................................................5
Loan Availability Period ...................................................5


                                       i
<PAGE>

Maturity Date ..............................................................5
Maximum Loan Available Amount ..............................................5
Net Working Capital ........................................................5
NJMI........................................................................1
Note .......................................................................5
Organizational Documents ...................................................5
Participant................................................................11
Parties ....................................................................5
Past Due Rate ...........................................................6, 9
PBGC .......................................................................6
Perfection Certificate .....................................................6
Person .....................................................................6
Plan .......................................................................6
Pledgor.....................................................................6
Pooling and Servicing Agreement ............................................6
Prime Rate .................................................................9
Proper Form ................................................................6
Property ...................................................................6
PUHC Act...................................................................15
Quarterly Financial Statements .............................................6
Request for Credit .........................................................7
Requirements of Environmental Law ..........................................7
Reuters Screen LIBO ........................................................9
Security Agreements ........................................................7
Security Documents .........................................................7
Specified Courts...........................................................29
Stated Rate ................................................................9
Subsidiary .................................................................7
Termination Date ...........................................................7
Texas Finance Code..........................................................8
Unfunded Liabilities .......................................................8
weekly ceiling..............................................................8
"Applicable LIBOR Margin"...................................................8
"Chapter 1D"................................................................8
"indicated rate ceiling"....................................................8
"LIBOR".....................................................................8
"Past Due Rate".............................................................9
"Prime Rate"................................................................9
"Reuters Screen LIBO Page"..................................................9
"Stated Rate"...............................................................9
"weekly ceiling"............................................................8


                                       ii
<PAGE>


                                TABLE OF CONTENTS


1.  Definitions..............................................................1
      1.1     General Definitions............................................1
      1.2     Definitions for Interest Calculations..........................8
      1.3     Other Definitional Provisions..................................9
2.  Loans...................................................................10
      2.1     Agreement to Lend.............................................10
      2.2     Mandatory Payment and Prepayments.............................10
      2.3     Interest......................................................11
      2.4     Rate of Return Maintenance Covenant...........................11
3.  Conditions Precedent....................................................12
      3.1     Conditions to Loans...........................................12
      3.2     Additional Conditions.........................................12
4.  Representations and Warranties..........................................13
      4.1     Duly Organized................................................13
      4.2     No Consents Required..........................................13
      4.3     No Conflicts or Violations....................................13
      4.4     Due Execution and Proper Form.................................13
      4.5     Information Correct; No Material Adverse Change...............13
      4.6     Tax Returns Filed and Taxes Paid..............................14
      4.7     No Condemnation or Suit.......................................14
      4.8     No Default....................................................14
      4.9     No Material Adverse Agreements. ..............................14
      4.10    Solvent, No Proceedings.......................................14
      4.11    No Untrue or Misleading Representations.......................14
      4.12    Not Purpose Credit............................................14
      4.13    Permits, Etc..................................................15
      4.14    Compliance with Legal Requirements and Good Practices.........15
      4.15    ERISA.........................................................15
      4.16    Investment Company Act of 1940................................15
      4.17    PUHC Act......................................................15
      4.18    Environmental Matters.........................................15
      4.19    Chief Executive Office........................................16
      4.20    Subsidiaries..................................................16
      4.21    Joint and Several Representations.............................16
      4.22    Year 2000.....................................................16


                                      iii
<PAGE>
5.  Affirmative Covenants.....................................................17
      5.1     Pay Taxes, Preserve Existence, Comply 
              with Legal Requirements, Pay Debts..............................17
      5.2     Furnish Financial Statements....................................17
      5.3     Inspections.....................................................18
      5.4     Further Assurances..............................................18
      5.5     GAAP Books......................................................18
      5.6     Insurance.......................................................18
      5.7     Notice of Suits, Etc............................................18
      5.8     PBGC Notices....................................................19
      5.9     Use of Loan Proceeds............................................19
6.  Negative Covenants........................................................20
      6.1     Merger, Consolidation, Etc......................................20
      6.2     Redemption and Dividends........................................20
      6.3     No Change in Business...........................................20
      6.4     Arm's-length Transactions.......................................20
      6.5     No New Subsidiaries.............................................20
7.  Default...................................................................21
      7.1     Events of Default...............................................21
      7.2     Remedies........................................................24
8.  Lender's Right to Cure....................................................24
9.  Miscellaneous.............................................................25
      9.1     Usury Not Intended; Savings Provisions..........................25
      9.2     Documentation Requirements......................................25
      9.3     Credit Papers Cumulative........................................26
      9.4     Satisfaction of Conditions......................................26
      9.5     Survival........................................................26
      9.6     Borrowers Agree to Pay or Reimburse Lender's Expenses...........26
      9.7     Amendments in Writing...........................................27
      9.8     Notices.........................................................28
      9.9     Lender's Offset Rights..........................................29
      9.10    Venue...........................................................29
      9.11    Rights Cumulative; Delay Not Waiver.............................30
      9.12    Severability....................................................30
      9.13    Release of Claims...............................................30
      9.14    Entire Agreement................................................31
      9.15    Counterparts....................................................31
      9.16    Sale and Assignment.............................................31
      9.17    NOTICE PURSUANT TO TEX. BUS. & COMM. CODEss.26.02...............31


                                       iv

<PAGE>

                                 LOAN AGREEMENT

         This Loan Agreement is made as of December 30, 1998 by and among
AMERICAN BUSINESS CREDIT, INC. ("ABC"), a Pennsylvania corporation, HOMEAMERICAN
CREDIT, INC. ("HAC"), a Pennsylvania corporation doing business as Upland
Mortgage, and NEW JERSEY MORTGAGE & INVESTMENT CORP., a New Jersey corporation
("NJMI" and collectively with ABC and HAC, the "Borrowers"), and CHASE BANK OF
TEXAS, NATIONAL ASSOCIATION ("Lender"), a national banking association.
Borrowers have requested that Lender make loans to Borrowers in the following
manner and subject to the following terms and conditions:

                                 1. Definitions.

         1.1 General Definitions. Unless a particular word or phrase is
otherwise defined or the context otherwise requires, capitalized words and
phrases used in this Agreement shall have the following meanings (all
definitions that are defined in this Agreement in the singular to have the same
meanings when used in the plural and vice versa):

         10/98 Credit Agreement is defined in Section 7.1(d).

         12/98 Security Agreement - Class R Certificate is defined in the
definition of "Security Agreements".

         Affiliate means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of any indicia of equity rights (whether issued and outstanding
capital stock, partnership interests or otherwise) or by any other means.

         Agreement means this Loan Agreement, as it may from time to time be
supplemented, amended or restated.



<PAGE>




                                                              

         Annual Financial Statements means the annual financial statements of a
Person, including all notes thereto, which statements shall include a balance
sheet as of the end of such fiscal year and an income statement, retained
earnings statement and statement of cash flows -- cash flow statements for the
Guarantor, Pledgor and the Borrowers on a consolidated basis -- for such fiscal
year, all setting forth in comparative form the corresponding figures from the
previous fiscal year, all prepared in conformity with GAAP, and without
expressing any doubt as to such Person's ability to continue as a going concern,
and accompanied by a report and opinion of independent certified public
accountants of recognized national standing satisfactory to Lender, which shall
state that such financial statements, in the opinion of such accountants,
present fairly, in all material respects, the financial position of such Person
as of the date thereof and the results of its operations for the period covered
thereby in conformity with GAAP. Such statements shall be accompanied by a
certificate of such accountants that in making the appropriate audit and/or
investigation in connection with such report and opinion, such accountants did
not become aware of any Default (as defined in this Agreement) or, if in the
opinion of such accountant any such Default exists, a description of the nature
and status thereof, certified as true and correct by an appropriate officer or
other responsible party acceptable to Lender on behalf of such Person. The
Annual Financial Statements for each Borrower and its Subsidiaries shall be
prepared on both a consolidated and a consolidating basis (the parties
recognizing that such consolidating statements will be prepared in accordance
with GAAP only to the extent normal and customary).

         Bankruptcy Code means the United States Bankruptcy Code, as amended,
and any successor statute.

         Borrowing Authorization means (i) with respect to a corporation, a
certificate, in Proper Form, of the Secretary or an Assistant Secretary of a
corporation as to the resolutions of the Board of Directors of such corporation
authorizing the execution, delivery and performance of the documents to be
executed by such corporation; the incumbency and signature of the officer of
such corporation executing such documents on behalf of such corporation, and the
Organizational Documents of such corporation and (ii) with respect to a
partnership, joint venture or other non-individual Person, such written
instruments as shall be required by Lender, each in Proper Form, authorizing the
execution, delivery and performance of the documents to be executed by such
Person; the incumbency and signature of the representative of such Person
executing such documents on behalf of such Person, and the Organizational
Documents of such Person.

         Business Day means any Monday, Tuesday, Wednesday, Thursday or Friday
when both (1) Lender's main branch in Houston, Texas is open for regular
commercial banking business and (2) federal funds wire transfers can be made.

         Class R Certificate means the Class R Certificate dated June 18, 1998,
Certificate No. R-1, issued by The Chase Manhattan Bank, Trustee of the ABFS
Mortgage Loan Trust 1998-2, Series 1998-2, to ABFS 1998-2, representing 100% of
the Class R percentage interest in certain first or second lien mortgage loans
serviced by ABC, a copy of which certificate is attached as Exhibit A.

         Class R Certificate's Value means the value as collateral of the Class
R Certificate as determined by Lender from time to time using usual and
customary market means, methods and sources for determining value of assets
fairly comparable to the Class R Certificate, based on an assumed ramping
twenty-four percent (24%) constant prepayment rate for home equity loans and
nine and one-half percent (9 1/2%) for business loans and an eleven percent
(11%) discount rate -- the Borrowers represent that their independent auditors
have applied similar parameters to the residual strips of Borrowers as of June
30, 1998 and have accepted the resulting valuation as reasonable -- and the
interest in mortgage loans which such certificate represents, including
consulting with nationally-recognized mortgage-backed securities broker-dealers
and nationally-recognized mortgage-backed securities appraisers or valuation
consultants, whether or not they are Affiliates of Lender.


                                       2
<PAGE>

         Code means the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

         Collateral means all the collateral described in and covered by the
Security Agreements.

         Commitment means the obligation, if any, of Lender to make Loans in an
aggregate principal amount at any one time outstanding up to (but not exceeding)
Five Million Dollars ($5,000,000).

         Compliance Certificate shall have the meaning given to it in Section
5.2.

         Contribution Agreement means a written agreement in Proper Form among
the Borrowers, the Pledgor and the Guarantor pursuant to which each signatory
agrees to be liable as among the other parties thereto only for its agreed
proportionate share of the indebtedness guaranteed or secured or otherwise
assumed pursuant to the applicable Credit Paper and to make such contribution(s)
to the other parties thereto as necessary to achieve that result.

         Controlled Group means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the applicable Person, are treated as a
single employer under Section 414 of the Code.

         Credit Papers means any and all papers now or hereafter governing,
evidencing, guaranteeing or securing or otherwise relating to all or any part of
the Facility Debt, including the Note, this Agreement, the Guaranty, Borrowing
Authorizations with respect to all such Persons as Lender may reasonably
require, the Security Documents, the Perfection Certificates, all instruments,
certificates and agreements now or hereafter executed or delivered to Lender
pursuant to any of the foregoing or in connection with the Loans or any
commitment regarding the Loans and all amendments, modifications, renewals,
extensions, increases and rearrangements of, and substitutions for, any of the
foregoing.

         Debt means and includes (a) all items which in accordance with GAAP are
to be included on the liability side of a balance sheet on the date as of which
Debt is to be determined (excluding capital stock, surplus, surplus reserves and
deferred credits); (b) all guaranties, letter of credit contingent reimbursement
obligations, endorsements and other contingent obligations in respect of, or any
obligations to purchase or otherwise acquire, Debt of others and (c) all Debt
secured by any Lien existing on any interest of the Person with respect to which
Debt is being determined in Property owned subject to such Lien whether or not
the Debt secured thereby shall have been assumed; provided, that such term shall
not mean or include any Debt in respect of which monies sufficient to pay and
discharge the same in full (either on the expressed date of maturity thereof or
on such earlier date as such Debt may be duly called for redemption and payment)
shall be deposited with a depository, agency or trustee acceptable to Lender in
trust for the payment thereof.



                                       3
<PAGE>

         Default means an event which with notice or lapse of time or both
would, unless cured or waived, become an Event of Default.

         ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the U.S. Department
of Labor thereunder.

         Event of Default shall have the meaning assigned to it in Section 7.1.

         Facility Debt means the Debt evidenced by the Note and other sums now
or hereafter payable to Lender under any of the Credit Papers.

         Financing Statements means all such Uniform Commercial Code financing
statements as Lender shall reasonably require, in Proper Form, duly executed by
Borrowers or others to give notice of and to perfect or continue perfection of
Lender's Liens in all Collateral.

         GAAP means, as to a particular Person, such accounting practice as, in
the opinion of the independent certified public accountants of recognized
national standing regularly retained by such Person and acceptable to Lender,
conforms at the time to generally accepted accounting principles, consistently
applied. GAAP means those principles and practices (a) which are recognized as
such by the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in which
such principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to Lender, and (c) which are
consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board in order for
such principle or practice to continue as a generally accepted accounting
principle or practice, all reports and financial statements required hereunder
may be prepared in accordance with such change and written notice of such change
shall be given to Lender when (or before) any report or financial statement
affected thereby is delivered to Lender.

         Governmental Authority means any governmental authority, the United
States of America, any State of the United States and any political subdivision
of any of the foregoing, and any central bank, agency, department, commission,
board, bureau, court or other tribunal having jurisdiction over Lender, any
Borrower or their respective Property.



                                       4
<PAGE>

         Guarantor means American Business Financial Services, Inc., a Delaware
corporation.

         Guaranty means Guarantor's written, absolute and irrevocable guaranty
to Lender of payment of the Loans, in form and substance satisfactory to
Guarantor and Lender, duly executed and delivered by Guarantor to Lender.

         Hazardous Substance shall mean petroleum products and any hazardous or
toxic waste or substance defined or regulated as a hazardous substance from time
to time by any law, rule, regulation or order described in the definition of
"Requirements of Environmental Law".

         Legal Requirement means any law, statute, ordinance, decree,
requirement, final order or judgment, rule, or regulation (or interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future. The
term "Legal Requirement" includes Requirements of Environmental Law.

         Lien means any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract, and
shall include reservations, exceptions, covenants, conditions and restrictions.

         Loan Availability Period means the period from and including the date
hereof to (but not including) the Termination Date.

         Loans means the loans described in and provided for by Section 2.

         Maturity Date means the maturity of the Note, December 30, 1999, as
such date may be accelerated pursuant to the provisions of any of the Credit
Papers.

         Maximum Loan Available Amount means, on any day, an amount equal to the
lesser of (i) the Commitment for that day or (ii) twenty-five percent (25%) of
the Class R Certificate's Value on that day.

         Net Working Capital means the amount by which Current Assets exceed
Current Liabilities.

         Note means the promissory note dated concurrently herewith, executed by
Borrowers, as co-makers, payable to the order of Lender, in the face principal
amount of Five Million Dollars ($5,000,000), and any and all renewals,
extensions, modifications, rearrangements and/or replacements thereof.

         Organizational Documents means, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Credit Paper referring to such
Organizational Document and any and all future modifications thereof.



                                       5
<PAGE>

         Participant is defined in Section 2.4.

         Parties means all Persons other than Lender executing any Credit Paper.

         Past Due Rate means, on any day, a rate per annum equal to the Ceiling
Rate for that day; or, only if applicable law imposes no maximum nonusurious
rate of interest for that day, then a rate per annum equal to the Stated Rate
plus four percent (4%) per annum.

         PBGC means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         Perfection Certificate means a certificate duly executed by an
authorized officer of each Borrower, appropriately completed and substantially
in the form of Exhibit C attached hereto.

         Person means any individual, corporation, partnership, joint venture,
joint stock association, business or other trust, unincorporated organization,
Governmental Authority or any other form of entity.

         Plan means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (a) maintained by a Borrower or any member of a Controlled
Group for employees of a Borrower or (b) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a Borrower or any member of a Controlled Group
for employees of a Borrower is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.

         Pledgor means ABFS 1998-2, a Delaware corporation and a Subsidiary of
the Guarantor.

         Pooling and Servicing Agreement means the Pooling and Servicing
Agreement dated as of June 1, 1998 among American Business Credit, Inc., as
servicer, Prudential Securities Secured Financing Corporation, as depositor, and
The Chase Manhattan Bank, as trustee, being the Pooling and Servicing Agreement
described and defined in the Class R Certificate reproduced as Exhibit A.

         Proper Form means in form and substance mutually satisfactory to Lender
and Borrowers.

         Property means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.



                                       6
<PAGE>

         Quarterly Financial Statements means the quarterly financial statements
of a Person, including all notes thereto, which statements shall include a
balance sheet as of the end of such calendar quarter and an income statement and
a statement of cash flows -- cash flow statements for the Guarantor, Pledgor and
the Borrowers on a consolidated basis -- for such calendar quarter, and for the
fiscal year to date, subject to normal year-end adjustments, all setting forth
in comparative form the corresponding figures for the corresponding calendar
quarter of the preceding year, prepared in accordance with GAAP and certified as
true and correct by an appropriate officer or other acceptable party acceptable
to Lender on behalf of such Person.

         Request for Credit means a request for credit duly executed by an
appropriate officer or other responsible party acceptable to Lender on behalf of
a Borrower, appropriately completed and substantially in the form of Exhibit B
attached hereto.

         Requirements of Environmental Law means all requirements imposed by any
law (including The Resource Conservation and Recovery Act and The Comprehensive
Environmental Response, Compensation, and Liability Act), rule, regulation or
order of any Governmental Authority in effect at the applicable time which
relate to (i) noise; (ii) pollution, protection or clean-up of the air, surface
water, ground water or land; (iii) solid, gaseous or liquid waste generation,
recycling, reclamation, treatment, storage, disposal or transportation; (iv)
exposure to Hazardous Substances; (v) the safety or health of employees or (vi)
regulation of the manufacture, processing, distribution in commerce, use,
discharge, release, threatened release, emission or storage of Hazardous
Substances.

         Security Agreements means, collectively, the security agreement dated
concurrently herewith, executed by the Pledgor and the Borrowers in favor of
Lender, covering the Class R Certificate and 100% of the Class R percentage
interest in certain first or second lien mortgage loans serviced by ABC therein
described and referred to (such security agreement being herein called the
"12/98 Security Agreement - Class R Certificate"), together with any and all
security agreements hereafter executed in favor of Lender in connection with, or
as security for the payment or performance of, any Credit Paper, as any of them
may from time to time be supplemented, amended or restated.

         Security Documents means, collectively, this Agreement, the Security
Agreements, the Financing Statements and all other agreements, chattel
mortgages, security agreements, pledges, guaranties, assignments of production
or proceeds of production, assignments of income, assignments of contract
rights, assignments of partnership interests, assignments of royalty interests,
assignments of performance, completion or surety bonds, standby agreements,
subordination agreements, undertakings and other instruments and Financing
Statements (if the Borrowers, the Pledgor, the Guarantor or any other Person
shall at any time provide any of the same in addition to this Agreement, the
12/98 Security Agreement - Class R Certificate, and the Financing Statements
related to the 12/98 Security Agreement - Class R Certificate), now or hereafter
executed and delivered in connection with, or as security for the payment or
performance of, any Credit Paper, as any of them may from time to time be
supplemented, amended or restated.



                                       7
<PAGE>

         Subsidiary means, as to a particular parent Person, any other Person of
which fifty percent (50%) or more of the indicia of equity rights (whether
outstanding capital stock, partnership interests or otherwise) is at the time
directly or indirectly owned or held by such parent Person, or by one or more of
its Affiliates. As of the date hereof, the Borrowers' only Subsidiaries are
listed on Schedule S.

         Termination Date means the earlier of (a) the Maturity Date or (b) the
date of termination of the Commitment pursuant to Section 7.2.

         Unfunded Liabilities means, with respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent actuarial valuation report for such
Plan, but only to the extent that such excess represents a potential liability
of any member of the applicable Controlled Group to the PBGC or a Plan under
Title IV of ERISA. With respect to multiemployer Plans, the term "Unfunded
Liabilities" shall also include contingent liability for withdrawal liability
under Section 4201 of ERISA to all multiemployer Plans to which a Borrower or
any member of a Controlled Group for employees of a Borrower contribute in the
event of complete withdrawal from such Plans.

         1.2 Definitions for Interest Calculations. For convenience of
reference, definitions used in provisions relating to calculation and payment of
interest are grouped together in this Section.

         Applicable LIBOR Margin means two percent (2%).

         Ceiling Rate means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas law
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that applicable Texas law establishes the Ceiling Rate, the Ceiling Rate
shall be the "weekly ceiling" (as defined in ss.303 of the Texas Finance Code --
the "Texas Finance Code" -- and Chapter 1D of Title 79, Texas Rev. Civ. Stats.
1925 -- "Chapter 1D", as amended, respectively) for that day. Lender may from
time to time, as to current and future balances, implement any other
non-usurious ceiling under the Texas Finance Code or Chapter 1D by notice to the
Borrowers if and to the extent permitted by the Texas Finance Code or Chapter
1D. Without prior notice to Borrowers or any other person or entity, the Ceiling
Rate shall automatically fluctuate upward and downward as and in the amount by
which such maximum nonusurious rate of interest permitted by applicable law
fluctuates.

         Chapter 1D is defined in the definition of "Ceiling Rate".



                                       8
<PAGE>

         LIBOR means, for any day, the rate of interest per annum which is equal
to the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of
1%) determined by The Chase Manhattan Bank (which is an Affiliate of Lender) to
be the average of the interest rates available to it in accordance with the
then-existing practices in the interbank market in London, England at
approximately 11:00 a.m. London time for that day for the offering to The Chase
Manhattan Bank by leading dealers in such interbank market for delivery on that
day of U. S. Dollar deposits of One Million Dollars ($1,000,000) each for a one
(1) month period. If for any reason Lender cannot determine that rate for any
day, then LIBOR for that day shall be the rate of interest per annum that is
equal to the arithmetic mean of the rates appearing on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on that date for the offering by such
institutions as are named therein to prime banks in the Eurodollar interbank
market in London, England, for delivery on that day of U.S. dollar deposits of
One Million Dollar ($1,000,000) each for a one (1) month period. Lender's
determination of LIBOR for each day shall be conclusive and binding, absent
manifest error. For purposes of this Agreement, the Note and all other Credit
Papers, LIBOR shall fluctuate upward and downward automatically and concurrently
with day-to-day changes in such arithmetic mean, and in the amount of the
change.

         Past Due Rate means, on any day, a rate per annum equal to the lesser
of (i) the Rate for that day plus four percent (4.0%) per annum or (ii) the
Ceiling Rate for that day.

         Prime Rate means, on any day, the prime rate for that day as announced
by Lender. The Prime Rate is a reference rate and does not necessarily represent
Lender's best or lowest rate or a favored rate, and Lender disclaims any
statement, representation or warranty to the contrary. Any rate of interest
based on the Prime Rate shall be adjusted as of the effective date of each
change in the Prime Rate. Should any issue ever arise in any forum or under any
circumstances as to the amount of the Prime Rate for any then-current or past
day, a certificate of Lender's or The Chase Manhattan Bank's chief credit
officer stating the Prime Rate for that day shall conclusively establish what
the Prime Rate was for that day, absent manifest error.

         Reuters Screen LIBO Page means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service or such other internationally recognized
service as the Lender shall select from time to time, or such other page, if
any, as shall replace the LIBO page on any such selected service for the purpose
of displaying London interbank offered rates of major banks.

         Stated Rate means, for each Loan on any day, LIBOR for that day plus
the Applicable LIBOR Margin for that day, computed in accordance with the
provisions of this Agreement; provided that if on any day the applicable rate
for any advance specified above in this definition (or in the next following
proviso) shall exceed the Ceiling Rate for that day, then the Stated Rate for
that advance shall be reset to equal the Ceiling Rate on that day and shall be
set to equal the Ceiling Rate for each day thereafter until the total amount of
interest accrued at the Stated Rate on the unpaid balance of that advance equals
the total amount of interest that would have accrued on it if there were no
Ceiling Rate. For the entire principal of the Loans outstanding on any day,
"Stated Rate" means the effective weighted average per annum rate of interest
applicable to the Loans for that day, as determined pursuant to the preceding
provisions of this definition.



                                       9
<PAGE>

         Texas Finance Code is defined in the definition of "Ceiling Rate".

         1.3      Other Definitional Provisions.

                  (a) Accounting terms not otherwise defined shall have the
meanings given them under GAAP.

                  (b) Defined terms may be used in the singular or the plural,
as the context requires.

                  (c) Except where otherwise specified, all times of day used in
the Credit Papers are local times in Houston, Texas.

                  (d) Wherever the word "including" or a similar word is used in
the Facilities Papers, it shall be read as if it were written, "including by way
of example but without in any way limiting the generality of the foregoing
concept or description".

                  (e) The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.

                  (f) The masculine and neuter genders used in this Agreement
each includes the masculine, feminine and neuter genders, and whenever the
singular number is used, the same shall include the plural where appropriate,
and vice versa.

                  (g) Except as otherwise specifically provided, references in
this Agreement to Section numbers, exhibits and schedules are references to
Section numbers, exhibits and schedules in and to this Agreement, and all such
exhibits and schedules are hereby incorporated into this Agreement at each place
where they are respectively referred to herein.

                  (h) The headings used is this Agreement are included for
reference only and shall not be considered in interpreting, applying or
enforcing this Agreement.

                                    2. Loans.

         2.1 Agreement to Lend. Lender agrees, subject to all of the terms and
conditions of this Agreement, to make Loans to Borrowers during the Loan
Availability Period in an outstanding aggregate principal amount at any one time
up to, but not exceeding, the Maximum Loan Available Amount. Subject to the
conditions of this Agreement, any such Loan repaid during the Loan Availability
Period may be reborrowed during the Loan Availability Period pursuant to the
terms of this Agreement. Borrowers and Lender agree that Chapter 346 of the
Texas Finance Code (which relates to open-end line of credit revolving loan
accounts) shall not apply to this Agreement, the Note or any Loan obligation and
that neither the Note nor any advance shall be governed by Chapter 346 or
subject to its provisions in any manner whatsoever. The Loans shall be evidenced
by the Note. Each Loan shall be in a principal amount equal to or greater than
$250,000 or the amount by which the Commitment exceeds the unpaid principal
balance of the Note, whichever is less. Loan proceeds shall be made available to
Borrowers by Lender's depositing them in an account designated by a Borrower and
maintained with Lender. Borrowers jointly and severally agree to pay to Lender a
Twenty-five Thousand Dollar ($25,000) facility fee for the period from the date
of this Agreement to and including the Termination Date, due and payable in
advance on the effective date of this Agreement.



                                       10
<PAGE>

         2.2 Mandatory Payment and Prepayments. Borrowers are jointly and
severally liable from time to time on demand by Lender to prepay the Loans in
such amounts as shall be necessary so that at all times the aggregate
outstanding amount of (x) the aggregate principal amount of all Loans
outstanding shall be less than or equal to (y) the Maximum Loan Available
Amount. On the Maturity Date, all advanced and unpaid principal of the Loans,
and all accrued and unpaid interest on the Loans, shall be finally due and
payable without notice or demand.

         2.3 Interest. Each Loan shall bear interest on its advanced and unpaid
principal balance at the Stated Rate from the date of the Loan until due or
repaid (whichever occurs first), and such interest shall be calculated through
the last day of each month and shall be due and payable monthly in arrears on
the later of (i) the fifteenth (15th) day of the next month (with the first
interest payment due January 15, 1999) or (ii) two (2) Business Days after
Borrower's receipt (or deemed receipt pursuant to the provisions of Section 9.8)
of Lender's bill for such accrued interest, and all accrued interest (as well as
all outstanding principal) then unpaid shall be fully, finally and absolutely
due and payable on the Maturity Date. All past due principal, interest, fees or
other sums shall bear interest at the Past Due Rate from their respective due
dates until paid, or at such lesser rate (if any) -- although not less than the
Stated Rate -- as Lender shall elect to be applicable for any one or more days
of such period. Without duplication, from the earlier of the Maturity Date or
the date of the occurrence (if any) of an Event of Default described in Section
7.1(e), 7.1(f), 7.1(o) or 7.1(p), all advanced and unpaid Loan principal shall
bear interest at the Past Due Rate, or at such lesser rate (if any) -- although
not less than the Stated Rate -- as Lender shall elect to be applicable for any
one or more days of such period. Except as otherwise specified in this Agreement
or any relevant Credit Papers, interest on any Loan is to be calculated on the
basis of the actual number of days elapsed on the basis of a year of 360 days
(i.e., on the 365/360 -- or 366/360 in a leap year -- day basis), unless that
would cause the Ceiling Rate for any day to be exceeded, in which event and to
the extent necessary to eliminate or minimize that result, interest shall be
calculated on the 365/365 -- or 366/366 in a leap year -- day basis. All
interest rate determinations and calculations by Lender, absent manifest error,
shall be conclusive.



                                       11
<PAGE>

         2.4 Rate of Return Maintenance Covenant. If, after the date of this
Agreement, Lender shall have determined that the adoption or effectiveness of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on Lender's capital
(or on the capital of any person or entity owning or holding a participation
interest in the Facility Debt (each a "Participant") as a consequence of its
obligations to Borrowers with respect to the Loans to a level below that which
could have been achieved but for such adoption, effectiveness, change or
compliance (taking into consideration Lender's policies (or the policies of any
applicable Participant) with respect to capital adequacy) by an amount deemed by
Lender to be material, then from time to time, Borrowers jointly and severally
agree to pay to Lender such additional amount or amounts as will compensate
Lender (and each applicable Participant) for such reduction. A certificate of
Lender setting forth such amount or amounts as shall be necessary to compensate
Lender (and each applicable Participant) as specified in this Section shall be
delivered as soon as practicable to Borrowers and shall be conclusive and
binding, absent manifest error. Borrowers shall pay Lender the amount shown as
due on any such certificate within fifteen (15) days after Lender delivers such
certificate. In preparing such certificate, Lender may employ such assumptions
and allocations of costs and expenses as it shall in good faith deem reasonable
and may use any reasonable averaging and attribution method.

                            3. Conditions Precedent.

         3.1 Conditions to Loans. The obligation of Lender to make any Loan is
subject to the accuracy of all representations and warranties of Borrowers and
Guarantor in this Agreement or any other Credit Paper on the date thereof, to
the performance by Borrowers and Guarantor of their respective obligations under
the Credit Papers and to the satisfaction of the following conditions: (i)
Lender shall have received, no later than 11:00 AM, Houston time on the Business
Day of the requested Loan telephonic notice of the amount and date and other
pertinent information relating to the requested Loan, such notice to be
confirmed in writing prior to the requested Loan by delivery to Lender of a duly
completed and executed Request for Credit; (ii) prior to the date thereof, there
shall not have occurred, in the sole opinion of Lender, any material adverse
change in the assets, liabilities, financial condition, business or affairs of
any Borrower or Guarantor; (iii) no Default or Event of Default shall have
occurred and be continuing or will occur as a result of, or exist for any reason
after, the requested Loan; (iv) the making of the Loan shall not be prohibited
by, or subject Lender to any penalty (however denominated) under, any applicable
Legal Requirement; (v) all of the Credit Papers have been executed and
delivered, and shall be valid, enforceable and in full force and effect; (vi)
all fees and expenses owed to Lender under any of the Credit Papers as of the
date thereof shall have been paid in full; (vii) Lender shall have received
evidence reasonably satisfactory to Lender as to the perfection and priority of
the Liens created by the Security Documents; and (viii) Lender shall have
received such other documents as it may reasonably require. Delivery of any
Request for Credit to Lender shall constitute a representation by Borrowers that
the representations and warranties made by Borrowers under this Agreement and
the other Credit Papers are true and correct as of the date of delivery of such
Request for Credit.



                                       12
<PAGE>

         3.2 Additional Conditions. In addition to the conditions described in
Section 3.1, the obligation of Lender to make the initial Loan is subject to the
receipt by Lender of each of the following, in Proper Form: (1) the Note, the
Guaranty, the Security Agreement - Class R Certificate and its related financing
statement and the other Credit Papers; (2) the original Class R Certificate, (3)
a duly executed bond power, completed in all respects except that the places for
the name of the attorney in fact appointed thereby and the name of the
transferee shall be left blank, sufficient for transferring ownership of the
Class R Certificate; (4) a duly executed and notarized Transfer Affidavit and
Agreement and Transfer Certificate (in the respective forms attached as an
exhibit to the Pooling and Servicing Agreement), completed in all respects
except that the places for the name of any attorney in fact appointed thereby to
transfer the Class R Certificate and the name of the transferee shall be left
blank; (5) a duly supplemented, amended or restated Borrowing Authorization; (6)
a current certificate from the Secretary of State or other appropriate official
of the state in which each Borrower is incorporated as to the continued
existence and good standing of such Borrower, (7) a fully executed counterpart
original of the Contribution Agreement and (8) a legal opinion from counsel for
Borrowers acceptable to Lender.

                            4.  Representations and Warranties.

         Each Borrower represents and warrants that:

         4.1 Duly Organized. (i) Such Borrower is duly organized, validly
existing and in good standing under the laws of the state of its organization
and has full legal right, power and authority to carry on its business as
presently conducted and to execute, deliver and perform its obligations under
the Credit Papers executed by it, (ii) such Borrower is duly qualified to do
business and in good standing in each jurisdiction in which the nature of the
business it conducts makes such qualification necessary or desirable and (iii)
such Borrower's execution, delivery and performance of the Credit Papers have
been duly authorized by all necessary action under Borrower's organizational
documents and otherwise.

         4.2 No Consents Required. Such Borrower's execution, delivery and
performance of the Credit Papers do not and will not require (i) any consent of
any other Person or (ii) any consent, license, permit, authorization or other
approval (including foreign exchange approvals) of any court, arbitrator,
administrative agency or other Governmental Authority, or any notice to,
exemption by, any registration, declaration or filing with or the taking of any
other action in respect of, any such court, arbitrator, administrative agency or
other Governmental Authority.



                                       13
<PAGE>

         4.3 No Conflicts or Violations. Neither execution or delivery of any
Credit Paper, nor the fulfillment of or compliance with its terms and provisions
will (i) violate any Legal Requirement or the Organizational Documents of such
Borrower or (ii) conflict with or result in a breach of the terms, conditions or
provisions of, or cause a default under, any agreement, instrument, franchise,
license or concession to which such Borrower is a party or bound.

         4.4 Due Execution and Proper Form. Each Credit Paper has been duly and
validly executed, issued and delivered by such Borrower. They are in proper
legal form for prompt enforcement and they are such Borrower's valid and legally
binding obligations, enforceable in accordance with their terms except as
limited by bankruptcy, insolvency, or other such laws in effect affecting the
enforcement of creditors' rights generally and by the application of equitable
principles. Such Borrower's obligations under them rank and will rank at least
equal in priority of payment with all of such Borrower's other Debt (except only
for Debt preferred by operation of law or Debt disclosed in writing to Lender
before execution and delivery of this Agreement).

         4.5 Information Correct; No Material Adverse Change. All information
supplied to Lender, and all statements made to Lender by or on behalf of such
Borrower by an authorized representative of such Borrower before, concurrently
with or after execution of this Agreement are and will be true, correct,
complete, valid and genuine in all material respects. Each of such Borrower's
financial statements furnished to Lender fairly present the financial condition
of Borrower as of its date and for the period then ended. No material adverse
change has occurred in the financial conditions reflected in any such statements
since their dates, and all assets listed on such statements are subject to such
Borrower's management, control and disposition.

         4.6 Tax Returns Filed and Taxes Paid. Such Borrower has filed all tax
returns required to be filed and paid all taxes shown thereon to be due,
including interest and penalties -- or will pay such taxes before they become
delinquent -- except for taxes which are being diligently contested in good
faith and for payment of which adequate reserves have been set aside.

         4.7 No Condemnation or Suit. There is no condemnation or other action,
suit or proceeding pending -- or, to the best of such Borrower's knowledge,
threatened -- against or affecting such Borrower or the Collateral, at law or in
equity, or before or by any Governmental Authority, which might result in any
material adverse change in such Borrower's business or financial condition or in
the Collateral or in other Property of such Borrower or any interest in it.

         4.8 No Default. Such Borrower is not in default with respect to any
order, writ, injunction, decree or demand of any court or other Governmental
Authority, in the payment of any Debt for borrowed money or under any agreement
or other papers evidencing or securing any such Debt.

         4.9 No Material Adverse Agreements. Such Borrower is not a party to any
contract or agreement which materially and adversely affects any of their
businesses, Properties or financial conditions.



                                       14
<PAGE>

         4.10 Solvent, No Proceedings. To such Borrower's knowledge, on the
effective date of this Agreement and on the date of each Borrowing, such
Borrower is solvent, and no bankruptcy or insolvency proceedings are pending or
contemplated by or against such Borrower. Such Borrower's liabilities and
obligations under the Credit Papers to which it is a party do not and will not
render such Borrower insolvent, cause such Borrower's liabilities to exceed such
Borrower's assets or leave such Borrower with too little capital to properly
conduct all of its business as now conducted or contemplated to be conducted.

         4.11 No Untrue or Misleading Representations. No representation or
warranty contained in any Credit Paper and no statement contained in any
certificate, schedule, list, financial statement or other papers furnished to
Lender by or on behalf of such Borrower by an authorized representative of such
Borrower contains -- or will contain -- any untrue statement of material fact,
or omits -- or will omit -- to state a material fact necessary to make the
statements contained therein not misleading.

         4.12 Not Purpose Credit. Except as disclosed to Lender in writing prior
to the date of this Agreement, none of the proceeds of the Note will be used for
the purpose of purchasing or carrying, directly or indirectly, any margin stock
or for any other purpose which would make such credit a "purpose credit" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System.

         4.13 Permits, Etc. Such Borrower possesses all permits, licenses,
patents, trademarks, tradenames and copyrights required to conduct its
businesses.

         4.14 Compliance with Legal Requirements and Good Practices. Such
Borrower and the Collateral are in compliance with all applicable Legal
Requirements and such Borrower manages and operates (and will continue to manage
and operate) its businesses in accordance with good industry practices.

         4.15 ERISA. With respect to each Plan, such Borrower and each member of
a Controlled Group for the employees of such Borrower have fulfilled their
obligations, including obligations under the minimum funding standards of ERISA
and the Code and are in compliance in all material respects with the provisions
of ERISA and the Code. No event has occurred which could result in a liability
of such Borrower or any member of a Controlled Group for the employees of such
Borrower to the PBGC or a Plan (other than to make contributions in the ordinary
course). Since the effective date of Title IV of ERISA, there have not been any
nor are there now existing any events or conditions that would cause the Lien
provided under Section 4068 of ERISA to attach to any Property of such Borrower
or any member of a Controlled Group for the employees of such Borrower. There
are no Unfunded Liabilities with respect to any Plan. No "prohibited
transaction" has occurred with respect to any Plan.



                                       15
<PAGE>

         4.16 Investment Company Act of 1940. Such Borrower is not an investment
company within the meaning of the Investment Company Act of 1940, as amended,
or, directly or indirectly, controlled by or acting on behalf of any Person
which is an investment company, within the meaning of said Act.

         4.17 PUHC Act. Such Borrower is not an "affiliate" or a "subsidiary
company" of a "public-utility company," or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended ("PUHC
Act"). Further, none of the transactions contemplated under this Agreement shall
cause or constitute a violation of any of the provisions, rules, regulations or
orders of or under the PUHC Act and the PUHC Act does not in any manner impair
the legality, validity or enforceability of the Note, the liabilities of such
Borrower under any of the Credit Papers or any Liens created under the Security
Documents.

         4.18 Environmental Matters. Except as disclosed in writing to Lender
before execution and delivery of this Agreement, (i) to the extent required by
applicable law and to the best of such Borrower's knowledge, such Borrower has
obtained and maintained in effect all Environmental Permits, (ii) to the best of
such Borrower's knowledge, such Borrower (and its Properties, business and
operations) has been and is in compliance with all applicable Requirements of
Environmental Law and Environmental Permits, (iii) such Borrower (or any of its
Properties, business and operations) is not subject to any (A) Environmental
Claims or (B) Environmental Liabilities, in either case direct or contingent,
and whether known or unknown, arising from or based upon any act, omission,
event, condition or circumstance occurring or existing on or prior to the date
hereof, and (iv) such Borrower has received no notice of any violation or
alleged violation of any Requirements of Environmental Law or Environmental
Permit or any Environmental Claim in connection with its Properties, business or
operations. The liability (including any Environmental Liability and any other
damage to persons or Property), if any, of such Borrower with respect to its
Properties, business and operations which is reasonably expected to arise in
connection with Requirements of Environmental Laws currently in effect and other
environmental matters presently known by such Borrower will not have a material
adverse effect on the business, condition (financial or otherwise), operations,
Properties or prospects of such Borrower or on the ability of such Borrower to
perform its material obligations under any Credit Paper relating to this
Agreement to which it is a party. Such Borrower knows of no event or condition
with respect to Environmental Matters with respect to any of its Properties
which could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, Properties or
prospects of Borrower or on the ability of such Borrower to perform its material
obligations under any Credit Paper relating to this Agreement. The provisions of
this Section are cumulative of the provisions relating to this subject matter in
the other Credit Papers.

         4.19 Chief Executive Office. Such Borrower's chief executive office is
at BalaPointe Office Centre, Suite 127, 111 Presidential Boulevard, Bala Cynwyd,
Pennsylvania 19004. Such Borrower's fiscal year is July 1 to June 30 of each
calendar year, and the Pledgor's fiscal year is the calendar year.



                                       16
<PAGE>

         4.20 Subsidiaries. Such Borrower has no Subsidiaries other than the
Subsidiaries listed on Schedule S.

         4.21 Joint and Several Representations. All statements made by or on
behalf of such Borrower in connection with this Agreement or any other Credit
Paper shall constitute the joint and several representations and warranties of
the Person making the statement and of such Borrower.

         4.22 Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) such Borrower's computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which such Borrower's systems interface)
and the testing of all such systems and equipment, as so reprogrammed, will be
completed by September 30, 1999. The cost to such Borrower of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to such
Borrower (including reprogramming errors and the failure of others' systems or
equipment) will not result in an Event of Default or have a material adverse
effect on the assets, liabilities, financial condition, business or affairs of
such Borrower. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, such Borrower's and its Subsidiaries' computer and
management information systems are -- and with ordinary course upgrading and
maintenance will continue for the term of this Agreement to be -- sufficient to
permit such Borrower to conduct its business without any material adverse effect
on the assets, liabilities, financial condition, business or affairs of such
Borrower.

                            5. Affirmative Covenants.

         Each Borrower covenants and agrees that prior to termination of this
Agreement:

         5.1 Pay Taxes, Preserve Existence, Comply with Legal Requirements, Pay
Debts. Such Borrower shall at all times (i) pay when due and before they become
delinquent all taxes and governmental charges of every kind upon it or against
its income, profits or Property, unless and only to the extent that the same
shall be contested diligently in good faith and reserves deemed adequate by
Lender have been established therefor; (ii) to the extent applicable, do all
things necessary to preserve its existence, qualifications, rights and
franchises in all states where such qualification is necessary or desirable;
(iii) comply with all applicable Legal Requirements (including Requirements of
Environmental Law) in respect of the conduct of its business and the ownership
of its Property; (iv) cause its Property to be protected, maintained and kept in
good repair and make all replacements and additions to its Property as may be
reasonably necessary to conduct its business properly and efficiently, and (v)
pay punctually and discharge when due, or renew or extend, any Debt incurred by
it and discharge, perform and observe the covenants, provisions and conditions
to be performed, discharged and observed on its part in connection therewith, or
in connection with any agreement or other instrument relating thereto or in
connection with any mortgage, pledge or lien existing at any time upon any of
its Property; provided, however, that nothing contained in this clause (v) shall
require payment, discharge, renewal or extension of any such Debt or discharge,
performance or observance of any such covenants, provisions and conditions so
long as any claims which may be asserted against such Borrower with respect to
any such Debt or any such covenants, provisions and conditions shall be
contested diligently and in good faith and reserves with respect thereto deemed
adequate by Lender shall be established.



                                       17
<PAGE>

         5.2 Furnish Financial Statements. Such Borrower shall furnish or cause
to be furnished to Lender three copies of each of the following: (1) as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of such Borrower that is not an individual, Annual Financial Statements of
such Borrower; (2) as soon as available and in any event within forty-five (45)
days after the end of each calendar quarter (except the last calendar quarter of
each fiscal year) Quarterly Financial Statements of such Borrower; (3)
concurrently with the financial statements provided for in clauses (1) and (2)
of this Section 5.2, such schedules, computations and other information, in
reasonable detail, as may be reasonably required by Lender to demonstrate
compliance with the covenants set forth herein or reflecting any non-compliance
therewith as of the applicable date, all certified and signed by an appropriate
officer or other responsible party acceptable to Lender on behalf of such
Borrower and a compliance certificate ("Compliance Certificate") in the form of
Exhibit D hereto, duly executed by such officer or other responsible party; and
(4) such other information relating to the financial condition, operations,
prospects or business of such Borrower as from time to time may be reasonably
requested by Lender. Each delivery of a financial statement pursuant to this
Section shall constitute a republication of the representations and warranties
contained in Section 4.

         5.3 Inspections. Such Borrower shall permit Lender to inspect its
Property, to examine its files, books and records and make and take away copies
thereof, and to discuss its affairs with its officers and accountants, subject
to representations and warranties as to maintaining confidences, all at such
times and intervals and to such extent as Lender may reasonably desire and
without materially disrupting such Borrower's day-to-day business operations.

         5.4 Further Assurances. Such Borrower shall promptly execute and
deliver (or cause to be executed and delivered), at such Borrower's expense, any
and all other and further instruments which may be reasonably requested by
Lender to cure any defect in the execution and delivery of any Credit Paper or
more fully to describe particular aspects of the agreements and undertakings set
forth in the Credit Papers and consistent with the terms of this Agreement.

         5.5 GAAP Books. Such Borrower shall maintain books and records in
accordance with GAAP.



                                       18
<PAGE>

         5.6 Insurance. Such Borrower shall (and shall cause each of its
Subsidiaries to) maintain insurance with such insurers, on such of its Property,
in such amounts and against such risks as is reasonably satisfactory to Lender,
and furnish Lender satisfactory evidence thereof promptly upon request. These
insurance provisions are cumulative of the insurance provisions of the Security
Documents. Lender shall be named as loss payee and a beneficiary of such
insurance and shall be provided with copies of the policies of insurance and a
certificate of the insurer that the insurance required by this Section may not
be canceled, reduced or affected in any manner without thirty (30) days' prior
written notice to Lender. Wherever applicable, such insurance shall name Lender
as loss payee.

         5.7 Notice of Suits, Etc. Such Borrower shall notify Lender immediately
upon acquiring knowledge of the occurrence of, or if such Borrower causes or
intends to cause, as the case may be: (1) the institution of any law suit or
administrative proceeding affecting such Borrower, the adverse determination
under which could have a material adverse effect on the business, condition
(financial or otherwise), operations, Property or prospects of such Borrower or
on its ability to perform its obligations under any Credit Paper; (2) any
material adverse change, either in any case or in the aggregate, in the assets,
liabilities, business, condition (financial or otherwise), operations, Property
or prospects of such Borrower; (3) any Event of Default or any Default, together
with a detailed statement by an appropriate officer or other responsible party
acceptable to Lender on behalf of such Borrower of the steps being taken to cure
the effect of such Event of Default or Default; (4) the receipt of any notice
from, or the taking of any other action by, the holder of any Debt of such
Borrower for an amount exceeding Five Hundred Thousand Dollars ($500,000) with
respect to a claimed default, together with a detailed statement by an
appropriate officer or other responsible party acceptable to Lender on behalf of
such Borrower specifying the notice given or other action taken by such holder
and the nature of the claimed default and what action such Borrower is taking or
proposed to take with respect thereto; (5) the occurrence of a default or event
of default by such Borrower under any agreement to which it is a party, which
default or event of default could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
Property or prospects of such Borrower; (6) any material adverse change in the
accuracy of the representations and warranties of such Borrower in this
Agreement or any other Credit Paper, and (7) any material adverse change in the
accuracy of the matters certified to in any Perfection Certificate. Such
Borrower will notify Lender in writing at least thirty (30) days prior to the
date that such Borrower changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its books and
records.

         5.8 PBGC Notices. Such Borrower shall promptly furnish to Lender (1)
immediately upon receipt, a copy of any notice of complete or partial withdrawal
liability under Title IV of ERISA and any notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan, (2)
if requested by Lender, promptly after the filing thereof with the United States
Secretary of Labor or the PBGC or the Internal Revenue Service, copies of each
annual and other report with respect to each Plan or any trust created
thereunder, (3) immediately upon becoming aware of the occurrence of any
"reportable event," as such term is defined in Section 4043 of ERISA, for which
the disclosure requirements of Regulation Section 2615.3 promulgated by the PBGC
have not been waived, or of any "prohibited transaction," as such term is
defined in Section 4975 of the Code, in connection with any Plan or any trust
created thereunder, a written notice signed by an appropriate officer or other
responsible party acceptable to Lender on behalf of such Borrower or the
applicable member of a Controlled Group for the employees of such Borrower
specifying the nature thereof, what action such Borrower or the applicable
member of such Controlled Group is taking or proposes to take with respect
thereto, and, when known, any action taken by the PBGC, the Internal Revenue


                                       19
<PAGE>

Service or the Department of Labor with respect thereto, (4) promptly after the
filing or receiving thereof by such Borrower or any member of a Controlled Group
for the employees of such Borrower of any notice of the institution of any
proceedings or other actions which may result in the termination of any Plan,
and (5) each request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section 412 of
the Code promptly after the request is submitted by such Borrower or any member
of a Controlled Group for the employees of such Borrower to the Secretary of the
Treasury, the Department of Labor or the Internal Revenue Service, as the case
may be. To the extent required under applicable statutory funding requirements,
such Borrower will fund all current service pension liabilities as they are
incurred under the provisions of all Plans from time to time in effect, and
comply with all applicable provisions of ERISA. Such Borrower covenants that it
shall and shall cause each other member of a Controlled Group for the employees
of such Borrower and such other member to (a) make contributions to each Plan in
a timely manner and in an amount sufficient to comply with the contribution
obligations under such Plan and the minimum funding standards requirements of
ERISA; (b) prepare and file in a timely manner all notices and reports required
under the terms of ERISA including annual reports; and (c) pay in a timely
manner all required PBGC premiums.

         5.9 Use of Loan Proceeds. The proceeds of the Loans will be used to
provide funds for general corporate purposes and working capital for such
Borrower.

                             6. Negative Covenants.

         Each Borrower further covenants and agrees that prior to termination of
this Agreement:

         6.1 Merger, Consolidation, Etc. Except as permitted by the provisions
of Section 8.5 of the 10/98 Credit Agreement, such Borrower will not, in any
single transaction or series of transactions, directly or indirectly: (1)
consolidate, terminate, liquidate or dissolve; (2) be a party to any
consolidation, termination, merger or consolidation; (3) modify or amend any of
its Organizational Documents so as to materially change the nature of its
business or affect its ability to keep, observe and perform any of its
obligations under this Agreement or the other Credit Papers; or (4) sell, convey
or lease all or any substantial part of its assets, except for sales in the
ordinary course of business. Such Borrower will not (and will not permit any of
its Subsidiaries to) (1) pledge, transfer or otherwise dispose of any of the
indicia of equity rights (whether issued and outstanding capital stock,
partnership interests or otherwise) of a Subsidiary or any Debt of a Subsidiary,
or permit any Subsidiary of any such Person to issue any additional indicia of
equity rights (whether issued and outstanding capital stock, partnership
interests or otherwise) other than to its parent or (2) acquire all or
substantially all of the assets of any Person, or any indicia of equity rights
(whether issued and outstanding capital stock, partnership interests or
otherwise) of any other Person.



                                       20
<PAGE>

         6.2 Redemption and Dividends. Such Borrower will not (and will not
permit any of its Subsidiaries to): (1) redeem, retire or otherwise acquire,
directly or indirectly, any shares of its capital stock; (2) pay any dividend
except (i) stock dividends or (ii) cash dividends after the payment of which no
Default or Event of Default will exist or (3) make any other distribution of any
Property or cash to stockholders as such.

         6.3 No Change in Business. Such Borrower will not (and will not permit
any of its Subsidiaries to) change the nature of its business or enter into any
business which is substantially different from the business in which it is
presently engaged or permit any material change in its management.

         6.4 Arm's-length Transactions. Such Borrower will not enter into any
transaction or agreement with any officer, director, partner, trustee or owner
or holder of any indicia of equity rights (whether issued and outstanding
capital stock, partnership interests or otherwise) of such Borrower (or any
Affiliate or Subsidiary) unless the same is upon terms substantially similar to
those obtainable from wholly unrelated sources.

         6.5 No New Subsidiaries. Such Borrower will not (and will not permit
any of its Subsidiaries to) form, create or acquire any Subsidiary except for
such Borrower's Subsidiaries specifically listed in the definition of
"Subsidiaries", new single purpose Subsidiaries formed for the sole purpose of
securitizing mortgage loans owned by such Borrower and any new subsidiary that
carries on the same business as Borrowers.

                                   7. Default.

         7.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default (herein so called) under this Agreement:

                  (a) any part of the Facility Debt is not paid when due,
whether by lapse of time or acceleration or otherwise.

                  (b) any Borrower fails to perform, observe or comply with --
or defaults under -- any of the terms, covenants, conditions or provisions of
any Credit Paper other than one described in a clause of this Section other than
this clause (b), and fails to cure such failure or default within five (5)
Business Days (in the case of a failure or default that is susceptible of being
cured by payment of a sum certain of money) or fifteen (15) Business Days (in
the case of any other failure or default) after its occurrence.



                                       21
<PAGE>

                  (c) any representation or warranty made in any Credit Paper or
in any other report or other paper now or hereafter provided to Lender pursuant
or incident to any Credit Paper or the Facility Debt proves to have been untrue
or misleading in any material respect as of the date made or deemed made.

                  (d) any default, potential default or event of default,
however denominated, occurs under any other loan agreement, credit agreement or
application and agreement for letter of credit between any Borrower and Lender
(whether or not there are any other parties thereto), including the Amended and
Restated Credit Agreement dated as of October 1, 1998 (as it may have been or
may be supplemented, amended, restated or replaced from time to time, the "10/98
Credit Agreement") by and among ABC, HAC and NJMI, as "Co-Borrowers", Guarantor
herein, as "Parent", Lender herein, as "Administrative Agent" and "Collateral
Agent", Chase Securities, Inc., as "Syndication Agent", and Lender herein and
certain other lenders, as "Lenders" therein; provided that if under such other
agreement, any grace period is applicable to any such default, potential default
or event of default, or if pursuant to such other agreement, Lender must give
notice and an opportunity to cure such default before Lender may exercise
remedies therefor, such grace period (if any) has expired or such notice and
opportunity to cure has been given and such default or event of default shall
not have been wholly cured or waived before the expiration of such grace period
or such notice-and-opportunity-to-cure period

                  (e) any Borrower, the Pledgor or the Guarantor (i) voluntarily
suspends transaction of business; (ii) becomes insolvent or unable to pay its
Debt as it matures; (iii) commences a voluntary case in bankruptcy or a
voluntary petition seeking reorganization or to effect a plan or other
arrangement with creditors; (iv) makes an assignment for the benefit of
creditors; (v) applies for or consents to the appointment of a receiver or
trustee for any such Person or for any substantial portion of its Property; or
(vi) makes an assignment to an agent authorized to liquidate any substantial
part of its assets.

                  (f) in respect of any Borrower, the Pledgor or the Guarantor,
(i) an involuntary case shall be commenced with any court or other authority
seeking liquidation, reorganization or a creditor's arrangement of any such
Person; (ii) an order of any court or other authority shall be entered
appointing any receiver or trustee for any such Person or for any substantial
portion of its Property; or (iii) a writ or warrant of attachment or any similar
process shall be issued by any court or other authority against any substantial
portion of the Property of any such Person and such petition seeking
liquidation, reorganization or a creditor's arrangement or such order appointing
a receiver or trustee is not vacated or stayed, or such writ, warrant of
attachment or similar process is not vacated, released or bonded off within
thirty (30) days after its entry or levy.

                  (g) except as permitted by the provisions of Section 8.5 of
the 10/98 Credit Agreement, a conveyance, transfer, assignment or pledge of a
controlling interest in any Borrower, the Pledgor or the Guarantor shall occur,
in a single transaction or a series of transactions, without Lender's prior
written consent.



                                       22
<PAGE>

                  (h) any action, suit or proceeding shall be commenced against
or affecting any Borrower, the Pledgor or the Guarantor or involving the
validity or enforceability of any Credit Paper, at law or in equity, or before
any Governmental Authority, which in Lender's judgment, impairs or would impair
Lender's ability to collect the Facility Debt when due or the enforceability of
any Credit Paper.

                  (i) any one or more final judgments for the payment of money
shall be rendered against any Borrower, the Pledgor or the Guarantor and remain
unstayed or undischarged for a period of sixty (60) days, or if even before such
sixty-day period has elapsed, execution thereof is levied on any of that
Person's property.

                  (j) any Borrower, the Pledgor or the Guarantor shall be
prevented or relieved by any Governmental Authority from performing or observing
any material term, covenant or condition of any Credit Paper.

                  (k) any material adverse change shall occur in the Property,
financial condition, business, operations, affairs or circumstances of any
Borrower, the Pledgor or the Guarantor.

                  (l) any Borrower, the Pledgor or the Guarantor shall fail to
pay when due any principal of or interest on any borrowed money obligation or
the holder of such other obligation declares -- or has the right to declare --
such obligation due before its stated maturity because of default.

                  (m) any Borrower, the Pledgor or the Guarantor shall be in
default under or in violation of any Legal Requirement of any Governmental
Authority having jurisdiction over any such Person or any such Person's
Property, which, if enforced, would have a material adverse effect on such
Person's business or financial condition or in the Collateral or in other
Property of such Person or any interest in it.

                  (n) any order, judgment or decree shall be entered against any
Borrower, the Pledgor or the Guarantor decreeing the dissolution or split up of
such Person and such order shall remain undischarged or unstayed for a period in
excess of thirty (30) days.

                  (o) any Borrower shall disavow its obligations under any of
the Credit Papers or shall contest their validity or enforceability.

                  (p) any Borrower shall claim-- or any court shall find or
rule-- that Lender does not have a valid Lien on any of the Collateral.



                                       23

<PAGE>

                  (q) the sale, encumbrance or abandonment (except as otherwise
expressly agreed to in writing by Lender) of any of the Collateral, the making
of any levy, seizure or attachment of or on any of the Collateral or the loss,
theft, substantial damage or destruction of any of the Collateral.

                  (r) any Borrower shall have concealed, removed, or permitted
to be concealed or removed, any part of its Property, with intent to hinder,
delay or defraud any of its creditors, or made or suffered a transfer of any of
its Property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law, or shall have made any transfer of its Property to or for the
benefit of a creditor at a time when other creditors similarly situated have not
been paid, or, while insolvent, shall have suffered or permitted any creditor to
obtain a lien upon any of its Property through legal proceedings or distraint
which is not vacated or its enforcement enjoined by a court of competent
jurisdiction within thirty (30) days from its date, or if any such injunction
shall subsequently be dissolved.

                  (s) any Borrower fails to pay when due any amount which it is
liable to pay to the PBGC or its successor or to a Plan, or notice of intent to
terminate any Plan is filed under ERISA, or PBGC commences proceedings under
ERISA to terminate any Plan or to cause a trustee to be appointed to administer
any Plan, or a proceeding is commenced by any fiduciary of any Plan to enforce
Section 515 or Section 4219(c)(5) of ERISA, or PBGC becomes entitled to obtain a
decree adjudicating that any Plan must be terminated.

                  (t) Anthony J. Santilli, Jr., shall cease to serve as
chairman, president and chief executive officer of Guarantor with substantially
the same responsibilities and duties as performed on the date hereof.

                  (u) Anthony J. Santilli, Jr. and his wife shall cease to own
at least twenty percent (20%) of the indicia of equity rights (whether issued
and outstanding capital stock, partnership interest or otherwise) of Guarantor.

                  (v) Lender shall reasonably and in good faith deem repayment
of the Facility Debt to be insecure after notice and demand for proof of ability
to pay and/or call for additional collateral and failure of the Borrowers to
provide the proof and/or additional collateral called for.

         7.2 Remedies. Upon the occurrence of any Default, the obligation of the
Lender to make Loans shall be suspended until such Default shall have been cured
or waived. Upon the occurrence of any Event of Default, or if Lender shall deem
payment of the Facility Debt to be insecure as provided in Section 7.1(v), and
at any time thereafter, the obligation, if any, to make Loans shall cease and
terminate, and Lender shall have the right, at its option, (1) to declare the
Commitment terminated (whereupon the Commitment shall be terminated effective on
the date of such declaration) and to declare (by declaration in writing to the
Borrowers) the unpaid balance of the Debt evidenced by the Note to be
immediately due and payable without further notice (including notice of intent
to accelerate and notice of acceleration), protest or demand or presentment for
payment, all of which are hereby expressly waived by each Borrower and (2) to
enforce or avail itself of any and all powers, rights and remedies available at
law or provided in this Agreement, the Note, the other Credit Papers or any
other document executed pursuant hereto or in connection herewith.
Notwithstanding any provision in this Section to the contrary, upon the
occurrence of any Event of Default, Lender shall have the right, immediately and


                                       24
<PAGE>

without notice, to take possession of and exercise possessory rights with regard
to any Collateral. All powers, rights and remedies of Lender set forth in this
Section shall be cumulative and not exclusive of any other power, right or
remedy available to Lender under the law or under this Agreement, the Note, the
other Credit Papers or any other document executed pursuant hereto or in
connection herewith to enforce the performance or observance of the covenants
and agreements contained in this Agreement, and no delay or omission of Lender
to exercise any power, right or remedy accruing to Lender shall impair any such
power, right or remedy, or shall be construed to be a waiver of the right to
exercise any such power, right or remedy. Every power, right or remedy of Lender
set forth in this Agreement, the Note, the other Credit Papers or any other
document executed pursuant hereto or in connection herewith, or afforded by law
may be exercised from time to time, and as often as may be deemed expedient by
Lender. In the event that any Borrower is the subject of any insolvency,
bankruptcy, receivership, dissolution, reorganization or similar proceeding,
federal or state, voluntary or involuntary, under any present or future law or
act, to the greatest extent permitted by applicable law, Lender is entitled to
the automatic and absolute lifting of any automatic stay as to the enforcement
of its remedies under the Credit Papers against the security for the Debt
evidenced by the Note and other sums due and payable to Lender under any of the
Credit Papers, including specifically the stay imposed by Section 362 of the
Bankruptcy Code. To the greatest extent permitted by applicable law, each
Borrower hereby consents to the immediate lifting of any such automatic stay,
and will not contest any motion by Lender to lift such stay.

                           8. Lender's Right to Cure.

         If any Borrower should fail to comply with any of its agreements,
covenants or obligations under any Credit Paper, then Lender (in such Borrower's
name or in Lender's own name) may perform them or cause them to be performed for
such Borrower's account and at such Borrower's expense, but shall have no
obligation to perform any of them or cause them to be performed. Any and all
expenses thus incurred or paid by Lender shall be Borrowers' joint and several
obligations to Lender due and payable on demand, or if no demand is sooner made,
then they shall be due and payable on, or at Borrowers' election anytime before,
four (4) years after the respective dates on which they were incurred, and each
shall bear interest from the date Lender pays it until five (5) Business Days
after Lender bills Borrower therefor at the Stated Rate and from five (5)
Business Days after Lender bills Borrower therefor until the date Borrowers
repay it to Lender at the Past Due Rate. Upon making any such payment or
incurring any such expense, Lender shall be fully and automatically subrogated
to all of the rights of the person, corporation or body politic receiving such
payment. Any amounts owing by Borrowers, or any of them, to Lender pursuant to
this or any other provision of this Agreement shall be secured by all
instruments securing the Note. The amount and nature of any such expense and the
time when it was paid shall be fully established by the affidavit of Lender or
any of Lender's officers or agents. The exercise of the privileges granted to
Lender in this Section shall in no event be considered or constitute a cure of
the default or a waiver of Lender's right at any time after an Event of Default
to declare the Note to be at once due and payable, but is cumulative of such
right and of all other rights given by this Agreement, the Note and the Credit
Papers and of all rights given Lender by law.



                                       25
<PAGE>

                                9. Miscellaneous

         9.1 Usury Not Intended; Savings Provisions. Notwithstanding any
provision to the contrary contained in any Credit Paper, it is expressly
provided that in no case or event shall the aggregate of any amounts accrued or
paid pursuant to this Agreement which under applicable laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious interest rate
permitted by applicable Texas or federal laws, whichever permit the higher rate.
In this connection, Borrowers and Lender stipulate and agree that it is their
common and overriding intent to contract in strict compliance with applicable
usury laws. In furtherance thereof, none of the terms of this Agreement shall
ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the maximum
rate permitted by applicable laws. Borrowers shall never be liable for interest
in excess of the maximum rate permitted by applicable laws. If, for any reason
whatever, such interest paid or received during the full term of the applicable
Debt produces a rate which exceeds the maximum rate permitted by applicable
laws, Lender shall credit against the principal of such Debt (or, if such Debt
shall have been paid in full, shall refund to the payor of such interest) such
portion of said interest as shall be necessary to cause the interest paid to
produce a rate equal to the lesser of the maximum rate permitted by applicable
laws or the amount of interest accrued in accordance with the provisions of the
Credit Papers read without regard to the provisions of this Section. All sums
paid or agreed to be paid to Lender for the use, forbearance or detention of
money shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the applicable
Debt, so that the interest rate is uniform throughout the full term of such
Debt. The provisions of this Section shall control all agreements, whether now
or hereafter existing and whether written or oral, between Borrowers, or any of
them, and Lender.

         9.2 Documentation Requirements. Each written instrument required by
this Agreement, the Note or the other Credit Papers to be furnished to Lender
shall be duly executed by the person or persons specified (or where no
particular person is specified, by such person as Lender shall reasonably
require), duly acknowledged where reasonably required by Lender and, in the case
of affidavits and similar sworn instruments, duly sworn to and subscribed before
a notary public duly authorized to act by governmental authority; shall be
furnished to Lender in one or more copies as required by Lender; and shall in
all respects be in form and substance satisfactory to Lender and to its legal
counsel.



                                       26
<PAGE>

         9.3 Credit Papers Cumulative. The benefits, rights and remedies of
Lender and the security contained herein or provided for in the Note, the other
Credit Papers or any other document executed pursuant hereto or in connection
herewith are cumulative; provided, however, that to the extent of any conflict
between any provision of this Agreement and any provision contained in the Note,
the other Credit Papers or any other document executed pursuant hereto or in
connection herewith, the provisions of this Agreement shall control.

         9.4 Satisfaction of Conditions. Where evidence of the existence or
nonexistence of any circumstance or condition is required by this Agreement, the
Note, the other Credit Papers or any other document executed pursuant hereto or
in connection herewith to be furnished to Lender, such evidence shall in all
respects be in form and substance satisfactory to Lender in the reasonable
exercise of its discretion, and the duty to furnish such evidence shall not be
considered satisfied until Lender shall have acknowledged that it is satisfied
therewith.

         9.5 Survival. All covenants, agreements, representations and warranties
made by any Borrower in this Agreement, the Note, the other Credit Papers and
any other document executed pursuant hereto or in connection herewith, and in
any certificates or other documents or instruments delivered pursuant to this
Agreement, the Note, the other Credit Papers or any other document executed
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement, the Note, the other Credit Papers and the other
documents executed pursuant hereto or in connection herewith, and shall continue
in full force and effect until full payment of the Debt evidenced by the Note
and/or secured by the Credit Papers, complete performance of all of the
obligations of Borrowers under the Credit Papers and final termination of
Lender's obligations -- if any -- to make any further advances under the Note or
to provide any other financial accommodation to Borrowers (provided, that all
reimbursement obligations, indemnification and hold harmless obligations and
other similar obligations of Borrowers under any of the Credit Papers shall
survive such payment, performance and termination for a period of two (2) years
after the termination of this Agreement with respect to all such obligations
other than those arising out of the provisions of Section 4.18, the time of
survival of which is not hereby limited). All such covenants, agreements,
representations and warranties shall be binding upon any successors and assigns
of Borrowers, but any attempted assignment of any rights of any Borrower
hereunder without the prior written consent of Lender shall be null and void. No
Person other than Borrowers shall have any right or action hereon or any rights
to Loans at any time, the Loans shall not constitute a trust fund for the
benefit of any third parties and no third party shall under any circumstances
have or be entitled to any Lien or any trust impressed on any undisbursed Loans.

         9.6 Borrowers Agree to Pay or Reimburse Lender's Expenses. To the
extent not prohibited by applicable law, Borrowers hereby jointly and severally
agree to pay all costs and expenses and reimburse Lender for any and all
expenditures of every character actually and reasonably incurred or expended
from time to time, regardless of whether an Event of Default shall have
occurred, in connection with:



                                       27
<PAGE>

                  (a) the preparation, negotiation, documentation, closing,
renewal, revision, modification, increase, review or restructuring of any loan
or credit facility secured by the Credit Papers, including legal, accounting and
auditing services and disbursements, or in connection with collecting or
attempting to enforce or collect any Credit Paper.

                  (b) Lender's evaluating and protecting the Collateral.

                  (c) Lender's creating, perfecting and realizing upon Lender's
security interest in and liens on the Collateral, and all costs and expenses
relating to Lender's exercising any of its rights and remedies under any Credit
Paper or at law, including all appraisal fees, consulting fees, filing fees,
taxes, brokerage fees and commissions, litigation report fees, UCC search fees,
reports and security interests, escrow fees, attorneys' fees, legal expenses,
court costs, other fees and expenses incurred in connection with any complete or
partial liquidation of the Collateral, and all fees and expenses for any
professional services actually and reasonably incurred relating to the
Collateral or any operations conducted in connection therewith. Provided, that
no right or option granted by any Borrower to Lender or otherwise arising
pursuant to any provision of any Credit Paper shall be deemed to impose or admit
a duty on Lender to supervise, monitor or control any aspect of the character or
condition of the Collateral or any operations conducted in connection therewith
for the benefit of any Borrower or any person or entity other than Lender.
Borrowers agree jointly and severally to indemnify, defend and hold Lender, its
shareholders, directors, officers, agents, attorneys, advisors and employees
(collectively "Indemnified Parties") harmless from and against any and all
Environmental Liabilities and any and all other loss, liability, obligation,
damage, penalty, judgment, claim, deficiency, expense, action, suit, cost and
disbursement of any kind or nature whatsoever (including interest, penalties,
attorneys' fees and amounts paid in settlement), REGARDLESS OF WHETHER CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed
on, incurred by or asserted against the Indemnified Parties growing out of or
resulting from any Credit Paper or any transaction or event contemplated therein
(except that such indemnity shall not be paid to any Indemnified Party to the
extent that such loss, etc. results from the gross negligence or willful
misconduct of that Indemnified Party). If any person or entity (including any
Borrower or any of its affiliates) ever alleges gross negligence or willful
misconduct by an Indemnified Party, the full amount of indemnification provided
for in this Section shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement at such time -- if any -- as a court of competent
jurisdiction enters a final judgment as to the indemnification liability. Any
amount to be paid under this Section by any Borrower to Lender shall be a demand
obligation owing by Borrower to Lender and shall bear interest from the date of
expenditure until paid at the Past Due Rate.

         9.7 Amendments in Writing. This Agreement shall not be changed orally
but shall be changed only by agreement in writing signed by Borrowers and
Lender. Any waiver or consent with respect to this Agreement shall be effective
only in the specific instance and for the specific purpose for which given. No
course of dealing between the parties, no usage of trade and no parol or
extrinsic evidence of any nature shall be used to supplement or modify any of
the terms or provisions of this Agreement.



                                       28
<PAGE>

         9.8 Notices. Any notice, request or other communication required,
desired or permitted to be given hereunder shall be given in writing by
delivering it against receipt for it, by depositing it with an overnight
delivery service, by depositing it in a receptacle maintained by the United
States Postal Service, postage prepaid, registered or certified mail, return
receipt requested, or by delivering the same with delivery charges prepaid to a
reputable overnight courier service (such as Fed Ex, Airborne, Purolator or DHL)
addressed to the respective parties at the addresses below (and if so given,
shall be deemed given on the next Business Day after having been so mailed or
delivered to such courier service):

If to Lender:

Chase Bank of Texas, National Association
712 Main Street, 6th Floor
Houston, Texas 77002
Attention:  Michael W. Nicholson
Phone:  (713) 216-5335
Fax:  (713) 216-1567

If to Borrowers:

c/o American Business Financial Services, Inc.
BalaPointe Office Centre
111 Presidential Boulevard, Suite 102
Bala Cynwyd, Pennsylvania 19004
Attention:  Amedeo G. Piccioni, Treasurer
Phone: (610) 617-4942
Fax: (610) 668-1132

with a copy to:

American Business Financial Services, Inc.
BalaPointe Office Centre
111 Presidential Boulevard, Suite 127
Bala Cynwyd, Pennsylvania 19004
Attention:  Jeffrey M. Rubin, Esq.
Executive Vice President and General Counsel
Phone: (610) 668-2440
Fax: (610) 668-4164



                                       29
<PAGE>

Borrowers' address for notice may be changed at any time and from time to time,
but only after thirty (30) days' advance written notice to Lender and shall be
the most recent such address furnished in writing by Borrowers to Lender.
Lender's address for notice may be changed at any time and from time to time,
but only after thirty (30) days' advance written notice to Borrower and shall be
the most recent such address furnished in writing by Lender to Borrowers.
Notices may also be transmitted by telecopier provided that each such telecopy
transmission is promptly confirmed by the receiver upon the request of the
sender and the original notice, duly executed, is promptly deposited in the
United States mail to be delivered to the addressee of such notice. Actual
notice, however and from whomever given or received, shall always be effective
when received unless such written notice otherwise provides. Whenever notice by
fax by Borrowers is permitted hereunder, it is intended for the convenience of
Borrowers, and Lender may rely on, and shall not be liable for acting (or
refraining from acting) upon, any notice, instruction or request purporting to
have been signed or presented by the proper party unless such action (or refrain
from action) constitutes gross negligence or willful misconduct.

         9.9 Lender's Offset Rights. Lender is hereby authorized at any time and
from time to time after the occurrence of an Event of Default, without notice to
any person or entity (and each Borrower hereby WAIVES any such notice) to the
fullest extent permitted by law (including state and federal bankruptcy and
insolvency laws), to set-off and apply any and all monies, securities and other
Properties of any or all Borrowers now or in the future in the possession,
custody or control of Lender, or on deposit with or otherwise owed to any
Borrower by Lender -- including all such monies, securities and other Properties
held in general, special, time, demand, provisional or final accounts or for
safekeeping or as collateral or otherwise (but excluding those accounts clearly
designated as escrow or trust accounts held by any Borrower for others
unaffiliated with such Borrower, and also excluding any account against which
the Lender has setoff rights under the 10/98 Credit Agreement unless such setoff
rights have been waived or extinguished by payment in full of the Debt under the
10/98 Credit Agreement or by any other means) -- against any and all of
Borrowers' obligations to Lender now or hereafter existing under this Agreement,
irrespective of whether Lender shall have made any demand under this Agreement.
Lender agrees to use reasonable efforts to promptly notify any Borrower after
any such set-off and application, provided that failure to give -- or delay in
giving -- any such notice shall not affect the validity of such set-off and
application or impose any liability on Lender. Lender's rights under this
Section are in addition to other rights and remedies (including other rights of
set-off) which Lender may have.

         9.10 Venue. This Agreement is performable in Harris County, Texas,
which shall be a proper place of venue for suit on or in respect of this
Agreement. Each Borrower irrevocably hereby agrees that any legal proceeding in
respect of this Agreement shall be brought in the district courts of Harris
County, Texas or the United States District Court for the Southern District of
Texas, Houston Division (collectively, the "Specified Courts"). Each Borrower
irrevocably hereby submits to the nonexclusive jurisdiction of the state and
federal courts of the State of Texas. Each Borrower hereby irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to any Credit Paper brought in any Specified Court, and
hereby further irrevocably waives any claims that any such suit, action or


                                       30
<PAGE>

proceeding brought in any such court has been brought in an inconvenient forum.
Each Borrower further irrevocably hereby consents to the service of process out
of any of the Specified Courts in any such suit, action or proceeding by the
mailing of copies thereof by certified mail, return receipt requested, postage
prepaid, to such Borrower at its address as provided in this Agreement. Nothing
herein shall affect the right of Lender to commence legal proceedings or
otherwise proceed against Borrowers, or any of them, in any jurisdiction or to
serve process in any manner permitted by applicable law. Each Borrower hereby
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.

         9.11 Rights Cumulative; Delay Not Waiver. Lender's exercise of any
right, benefit or privilege under any of the Credit Papers or any other papers
or at law or in equity shall not preclude the concurrent or subsequent exercise
of Lender's other present or future rights, benefits or privileges. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law, the Credit Papers or any other papers. No failure by Lender to
exercise, and no delay in exercising, any right under any Credit Paper or any
other papers shall operate as a waiver thereof.

         9.12 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this Agreement shall
not be affected thereby, and this Agreement shall be liberally construed so as
to carry out the intent of the parties to it. Each waiver in this Agreement is
subject to the overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable law and (b)
applicable law neither provides for nor allows any material sanctions to be
imposed against Lender for having bargained for and obtained it.

         9.13 Release of Claims. To the maximum extent permitted by applicable
law, each Borrower hereby releases, discharges and acquits forever Lender and
its officers, directors, trustees, agents, employees and counsel (in each case,
past, present or future) from any and all Claims existing as of the date hereof
(or the date of actual execution hereof by such Borrower, if later). As used
herein, the term "Claim" shall mean any and all liabilities, claims, defenses,
demands, actions, causes of action, judgments, deficiencies, interest, liens,
costs or expenses (including court costs, penalties, attorneys' fees and
disbursements, and amounts paid in settlement) of any kind and character
whatsoever, including claims for usury, breach of contract, breach of
commitment, negligent misrepresentation or failure to act in good faith (but not
for Lender's gross negligence or willful misconduct), in each case whether now
known or unknown, suspected or unsuspected, asserted or unasserted or primary or
contingent, and whether arising out of written documents, unwritten
undertakings, course of conduct, tort, violations of laws or regulations or
otherwise.



                                       31
<PAGE>

         9.14 Entire Agreement. This Agreement, the Note and the other Credit
Papers together embody the entire agreement and understanding between Borrowers
and Lender with respect to the subject matter hereof and supersede all prior
conflicting or inconsistent agreements, consents and understandings relating to
such subject matter. Each Borrower acknowledges and agrees that there is no oral
agreement between such Borrower and Lender which has not been incorporated in
this Agreement, the Note and the other Credit Papers.

         9.15 Counterparts. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

         9.16 Sale and Assignment. Lender reserves the right, in its sole
discretion, without notice to any Borrower or any other Person, to sell
participations to the Lender's Affiliates, and with notice to the Borrowers to
sell participations or assign its interest, or both, in all or any part of this
Agreement, the Note, any of the other Credit Papers or any Loan; provided that
the Lender agrees to neither sell participations or assign any such interest to
any Person whom the Lender knows is antagonistic towards the Borrowers. Without
limiting the foregoing, and notwithstanding anything contained in any Credit
Paper to the contrary, Lender may at any time assign all or any portion of its
rights under this Agreement, the Note and the other Credit Papers as collateral
to a Federal Reserve Bank.

         9.17 NOTICE PURSUANT TO TEX. BUS. & COMM. CODE ss.26.02. THIS
AGREEMENT, THE NOTE AND THE OTHER CREDIT PAPERS AND ALL OTHER LOAN DOCUMENTS
EXECUTED BY ANY OF THE PARTIES SUBSTANTIALLY CONCURRENTLY HEREWITH CONSTITUTE A
WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

[The rest of this page is intentionally blank; unnumbered counterpart signature
page follows.]




                                       32
<PAGE>


EXECUTED effective as of the date first above written.

                                       CHASE BANK OF TEXAS,
                                        NATIONAL ASSOCIATION


                                       By:______________________________
                                       Name:____________________________
                                       Title:___________________________

                                       AMERICAN BUSINESS CREDIT, INC.


                                       By:______________________________
                                                Albert Mandia, Executive
                                                Vice President and Chief
                                                Financial Officer

                                       HOMEAMERICAN CREDIT, INC.
                                       d/b/a UPLAND MORTGAGE

                                       By:______________________________ 
                                                Albert Mandia, Executive
                                                Vice President and Chief
                                                Financial Officer

                                        NEW JERSEY MORTGAGE &
                                          INVESTMENT CORP.


                                       By:______________________________ 
                                                Albert Mandia, Executive
                                                Vice President and Chief
                                                Financial Officer



        Unnumbered counterpart signature page for Loan Agreement between
         American Business Credit, Inc., et al, and Chase Bank of Texas,
            National Association, $5 million revolving line of credit


<PAGE>





EXHIBITS:

A - Copy of the Class R Certificate 
B - Request for Credit 
C - Perfection Certificate 
D - Compliance Certificate

SCHEDULES

S - List of the Borrowers' Subsidiaries



<PAGE>





                           EXHIBIT A TO LOAN AGREEMENT



             (A copy of the Class R Certificate follows this page.)


<PAGE>





                           EXHIBIT B TO LOAN AGREEMENT

                               REQUEST FOR CREDIT





Chase Bank of Texas, National Association
712 Main Street, 6th Floor
Houston, Texas 77002

Attention:  Mr. Michael W. Nicholson

Ladies and Gentlemen:

         The undersigned hereby certifies that he is the Executive Vice
President and Chief Financial Officer of American Business Credit, Inc.,
HomeAmerican Credit, Inc. and New Jersey Mortgage & Investment Corp.
("Borrower"), and that as such is authorized to execute this Request for Credit
(the "Request") on behalf of such Borrower pursuant to the Loan Agreement (as it
may have been or may be supplemented, amended or restated from time to time, the
"Loan Agreement") dated as of December 30, 1998, by and among American Business
Credit, Inc, HomeAmerican Credit, Inc. d/b/a Upland Mortgage, and New Jersey
Mortgage & Investment Corp., as borrowers, and Chase Bank of Texas, National
Association ("Lender"). The Loan requested hereby is to be in the amount set
forth in (b) below and is requested to be made on December 31, 1998, which is a
Business Day. On behalf of such Borrower, the undersigned further certifies,
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Loan Agreement unless otherwise specified
herein):

         a.       As of the date hereof:

<TABLE>
<S>                                                                                                   <C> 
                  (1)      The aggregate outstanding amount
                           of Loans is:                                                               $___0_______

                  (2)      The available Commitment -- the amount by which the
                           lesser of (i) the Commitment or (ii) 25% of the Class
                           R Certificate's Value exceeds
                           the amount in (a)(1) above, if positive-- is:                              $5,000,000.00
                                                                                                      -------------
</TABLE>

         b.       If and only if the available Commitment is positive, such
                  Borrower hereby requests under this Request a Loan in the
                  amount of $5,000,000.00 (which is no more than the available
                  Commitment).

                                    EXHIBIT B


<PAGE>

         c.       The representations and warranties made in each Credit Paper
                  are true and correct in all respects on and as of the time of
                  delivery hereof, with the same force and effect as if made on
                  and as of the time of delivery hereof.

         a.       No Default has occurred and is continuing or will occur as a
                  result of the requested Loan.

         Thank you for your attention to this matter.


                                                   Very truly yours,

                                                   ____________________________
                                                        Borrower's name


                                                   By:__________________________
                                                   Name:________________________
                                                   Title:_______________________


<PAGE>





                           EXHIBIT C TO LOAN AGREEMENT

                             PERFECTION CERTIFICATE



         The undersigned, the Executive Vice President of each of the Borrowers
(as defined in the Loan Agreement, collectively, the "Borrower"), hereby
certifies to Chase Bank of Texas, National Association ("Lender"), a national
banking association, as follows:

         1. Names. (a) The exact corporate name of Borrower as it appears in its
organizational documents is as follows:

                  American Business Credit, Inc.
                  Home American Credit, Inc. d/b/a Upland Mortgage
                  New Jersey Mortgage and Investment Corp.
                  ABFS 1998-2, Inc.

                  (b) The following is a list of all other names (including
trade names or similar appellations) used by Borrower or any of its divisions or
other business units at any time during the past five years:

                  Home American Credit, Inc. d/b/a Upland Mortgage

                  (c) The following is a list of all federal tax identification
numbers used at any time during the past five years by any entity described in
(a) or (b) of this Section:

                  ABC, Inc.                                   23-2493400
                  HAC, Inc. d/b/a Upland Mortgage             23-2646780
                  ABFS 1998-2, Inc.                           51-0381734
                  NJMIC                                       22-1153363

                  (d) Borrower shall not, and shall not permit any of its
divisions or other business units to, use any names (including trade names or
similar appellations) other than those described in (a) or (b) of this Section
and other than the following:

           [to be determined and provided to Lender before actual use]

                  (e) The following is a description of each change by Borrower
of its identity or corporate structure in any way within the past five (5)
years:

              HAC, Inc. became HAC, Inc. d/b/a Upland Mortgage  February 1, 1996
              ABC, Inc. acquired NJMIC                          October 27, 1997


                                    EXHIBIT C

<PAGE>
         2. Locations. The chief executive office of Borrower is located at the
following address:

                  111 Presidential Blvd., Suite 127
                  Bala Cynwyd, PA  19004

        3.        Prior Locations.

                  (a) During the past five (5) years, Borrower has not
maintained any chief executive office other than the chief executive office
described in Section 2 above, except for executive offices maintained by:

                  ABC at: 301 City Line Avenue
                                   Bala Cynwyd, PA  19004
                  HAC at: 301 City Line Avenue
                                   Bala Cynwyd, PA  19004
                  NJMIC at:        5 Becker Farm Road
                                   Roseland, NJ  07068

        EXECUTED _____________.


By:                                        
        Jeffrey M. Ruben, Executive
          Vice President of Borrower

                                    EXHIBIT C

<PAGE>





                           EXHIBIT D TO LOAN AGREEMENT

                             COMPLIANCE CERTIFICATE

        The undersigned hereby certifies that he is the Executive Vice President
and Chief Financial Officer of American Business Credit, Inc., HomeAmerican
Credit, Inc. and New Jersey Mortgage & Investment Corp., and that as such is
authorized to execute this certificate on behalf of all of the Borrowers
pursuant to -- and as that term is defined in -- the Loan Agreement (the "Loan
Agreement") dated as of December 30, 1998 by and among American Business Credit,
Inc., HomeAmerican Credit, Inc., and New Jersey Mortgage and Investment Corp.
(the "Borrowers") and Chase Bank of Texas, National Association (the "Lender");
and that a review of Borrowers and their Subsidiaries has been made under [his]
[her] supervision with a view to determining whether Borrowers have fulfilled
all of their obligations under the Loan Agreement and the other Credit Papers;
and on behalf of Borrowers further certifies, represents and warrants as follows
(each capitalized term used herein having the same meaning given to it in the
Loan Agreement unless otherwise specified):

                  (a) Borrowers have fulfilled their obligations under the
         Credit Papers.

                  (b) The representations and warranties made in each Credit
         Paper are true and correct in all respects on and as of the time of
         delivery hereof, with the same force and effect as if made on and as of
         the time of delivery hereof.

                  (c) The financial statements delivered to Lender concurrently
         with this Compliance Certificate have been prepared in accordance with
         GAAP consistently followed throughout the period indicated and fairly
         present the financial condition and results of operations of the
         applicable Persons as at the end of, and for, the period indicated.

                  (d) No Default has occurred and is continuing.

                  (e) No Event of Default has occurred and is continuing.

                  (f) No material adverse change has occurred in the assets,
         liabilities, financial condition, business or affairs of any Borrower
         since the date of the Loan Agreement.

         DATED as of ______________________.


Name:_________________________
Title:___________________________                     


                                    EXHIBIT D

<PAGE>


                          SCHEDULE S TO LOAN AGREEMENT

                             Borrowers' Subsidiaries

The Borrowers' Subsidiaries as of the effective date of the Loan Agreement are
as follows:

<TABLE>
<CAPTION>
--------------------- ------------------------- ---------------------- ---------------------- ----------------------

      Borrower            Subsidiary Name             State of              Subsidiary           If not directly
                                                    Subsidiary's        Organizational Type      owned, name of
                                                    Organization        (e.g., corporation)       Subsidiary's
                                                                                                immediate parent
--------------------- ------------------------- ---------------------- ---------------------- ----------------------
<S>                   <C>                       <C>                    <C>                    <C>

ABC                   PSC                       PA                     corporation
--------------------- ------------------------- ---------------------- ---------------------- ----------------------

ABC                   HAC d/b/a Upland          PA                     corporation
--------------------- ------------------------- ---------------------- ---------------------- ----------------------

ABC                   ABL                       PA                     corporation
--------------------- ------------------------- ---------------------- ---------------------- ----------------------

ABC                   ABC Holdings              PA                     corporation
--------------------- ------------------------- ---------------------- ---------------------- ----------------------

NJMIC                 FLC                       NJ                     corporation
--------------------- ------------------------- ---------------------- ---------------------- ----------------------
</TABLE>


                                    EXHIBIT D