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                   American Business Financial Services, Inc.

                            2001 STOCK INCENTIVE Plan

                           Restricted Stock Agreement
                           --------------------------

RS No. __

         An Award of Restricted Stock is hereby awarded on ___________, 2001
(the "Award Date") by American Business Financial Services, Inc. (the
"Corporation"), to ___________________ (the "Grantee"), in accordance with the
following terms and conditions, and the conditions contained in the American
Business Financial Services, Inc. 2001 Stock Incentive Plan (the "Plan"):

         1. Share Award. The Corporation hereby awards the Grantee ___________
shares (the "Shares") of Common Stock, par value $.001 per share ("Common
Stock"), of the Corporation pursuant to the Plan, as the same may from time to
time be amended, and upon the terms and conditions and subject to the
restrictions therein and hereinafter set forth. A copy of the Plan as currently
in effect is incorporated herein by reference and is attached hereto.

         2. Restrictions on Transfer and Restricted Period. During the period
(the "Restricted Period") commencing on the Award Date and terminating on
_________________, 200_, the Shares may not be sold, assigned, transferred,
pledged, or otherwise encumbered by the Grantee, except as hereinafter provided.

         Except as set forth below, the Shares will vest at a rate of ___% of
the initial award per year of Continuous Service (as defined in the Plan)
commencing on the Award Date pursuant to the following schedule:

                                                 Amount of
                                                Initial Award
                 Date of Vesting                   Vested
               --------------------            --------------
               _____________, 200_                   __%




         Subject to the restrictions set forth in the Plan, the Committee
referred to in Section 7 of the Plan or its successor (the "Committee") shall
have the authority, in its discretion, to accelerate the time at which any or
all of the restrictions shall lapse with respect to any Shares thereto, or to
remove any or all of such restriction, whenever the Committee may determine that
such action is appropriate by reason of changes in applicable tax or other laws,
or other changes in circumstances occurring after the commencement of the
Restricted Period.
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         Notwithstanding the foregoing, to the extent shareholder approval of
the Plan is not obtained, this Award shall be null and void. During the period
from the date of grant until the annual shareholders meeting, the Award shall be
held by the Corporation and no dividend or other distributions shall be paid to
the Grantee until shareholder approval is obtained or the Award is forfeited.

3. Termination of Service. Except as provided in Section 8 below, if the Grantee
ceases to maintain "Continuous Service" (as defined in the Plan) for any reason
other than death or disability, all shares which at the time of such termination
of Continuous Service are subject to the restrictions imposed by Section 2 above
shall upon such termination of Continuous Service be forfeited to the
Corporation. If the Grantee ceases to maintain "Continuous Service" (as defined
in the Plan) by reason of death or disability, the Shares then still subject to
restrictions imposed by Section 2 will be free of those restrictions and shall
not be forfeited.

4. Certificates for the Shares. The Corporation shall issue a certificate (or
certificates) in the name of the Grantee with respect to the Shares, and shall
hold such certificate (or certificates) on deposit for the account of the
Grantee until the expiration of the Restricted Period with respect to the Shares
represented thereby. Such certificate (or certificates) shall bear the following
restricted legend (the "Restricted Legend"):

                  The transferability of this certificate and the Shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) contained in the 2001 Stock
                  Incentive Plan of American Business Financial Services, Inc.
                  Copies of such Plan are on file in the office of the Secretary
                  of American Business Financial Services, Inc.

         The Grantee further agrees that simultaneously with the execution of
the Agreement, the Grantee shall execute _____ stock powers in favor of the
Corporation with respect to the Shares and that the Grantee shall promptly
deliver such stock powers to the Corporation

         The following two paragraphs shall be applicable if, on the Award Date,
the Common Stock subject to such Award has not been registered under the
Securities Act of 1933, as amended, and under applicable state securities laws,
and shall continue to be applicable for so long as such registration has not
occurred:

                  The Grantee hereby agrees, warrants and represents that
                  Grantee is acquiring the Common Stock to be issued pursuant to
                  this Agreement for Grantee's own account for investment
                  purposes only, and not with a view to, or in connection with,
                  any resale or other distribution of any of such shares, except
                  as hereafter permitted. The Grantee further agrees that
                  Grantee will not at any time make any offer, sale, transfer,
                  pledge or other disposition of such Common Stock to be issued
                  hereunder without an effective registration statement under
                  the Securities Act of 1933, as amended, and under any
                  applicable state securities laws or an opinion of counsel
                  acceptable to the Corporation to the effect that the proposed
                  transaction will be exempt from such registration. The Grantee
                  shall execute such instruments, representations,
                  acknowledgments and agreements as the Corporation may, in its
                  sole discretion, deem advisable to avoid any violation of
                  federal, state, local or securities exchange rule, regulation
                  or law.


                                       2
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         The certificates for Common Stock to be issued pursuant to this
Agreement shall bear the following securities legend (the "Securities Legend"):

                  The shares represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, or
                  under applicable state securities laws. The shares have been
                  acquired for investment and may not be offered, sold,
                  transferred, pledged or otherwise disposed of without an
                  effective registration statement under the Securities Act of
                  1933, as amended, and under any applicable state securities
                  laws or an opinion of counsel acceptable to the Corporation
                  that the proposed transaction will be exempt from such
                  registration.

The Securities Legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Corporation
that said registration is no longer required.

         The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.

         5. Grantee's Rights. Except as otherwise provided herein, the Grantee,
as owner of the Shares, shall have all rights of a stockholder. During any
Restricted Period, the Grantee shall be entitled to vote such Shares as to which
the Restricted Period has not yet lapsed or expired (the "Restricted Shares") in
Grantee's sole discretion, at any annual and special meetings of the
stockholders of the Corporation and at any continuations and adjournments of
such meetings, upon any matters coming before such meetings or adjournments.

         6. Cash Dividends. [Cash dividends, if any, paid on the Restricted
Shares shall be held by the Corporation for the account of the Grantee and paid
to the Grantee upon the expiration of the Restricted Period or upon the death or
disability of the Grantee. All such withheld dividends shall earn interest at an
annual rate determined by the Committee/Cash dividends shall be paid to the
Grantee during the Restricted Period].

         7. Expiration of Restricted Period. Upon the lapse or expiration of the
Restricted Period with respect to any portion of the Shares, the Corporation
shall deliver to the Grantee (or in the case of a deceased Grantee, to Grantee's
legal representative) the certificate in respect of such Shares and the related
stock power held by the Corporation pursuant to Section 4 above. The Shares as
to which the Restricted Period shall have lapsed or expired shall be free of the
restrictions referred to in Section 2 above and such certificate shall not bear
the Restricted Legend provided for in Section 4 above. Notwithstanding the
foregoing, the Securities Legend described in Section 4 shall continue to be
included on the certificates as long as registration has not occurred.

                                       3
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         8. Adjustments for Changes in Capitalization of the Corporation. In the
event of any change in the outstanding shares of Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, or any change in the corporate
structure of the Corporation or in the shares of Common Stock, the number and
class of Shares covered by this Agreement shall be appropriately adjusted by the
Committee in the same manner as other outstanding shares are adjusted. Any
shares of Common Stock or other securities received, as a result of the
foregoing, by the Grantee with respect to Shares subject to the restrictions
contained in Section 2 above also shall be subject to such restrictions and the
certificate or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Corporation in the manner
provided in Section 4 above.

         9. Change in Control. If the Continuous Service" (as defined in the
Plan) of the Grantee is involuntarily terminated for whatever reason, other than
for cause (as defined in the Plan), at any time within 18 months of a "change in
control" (as defined in the Plan), the Restricted Period with respect to all
Shares shall lapse upon such termination and all Shares shall become fully
vested in the Grantee.

         10. Delivery and Registration of Shares of Common Stock. The
Corporation's obligation to deliver Shares hereunder shall be conditioned upon
the receipt of a representation as to the investment intention of the Grantee or
any other person to whom such Shares are to be delivered, in such form as the
Committee shall determined to be necessary or advisable to comply with the
provisions of the Securities Act of 1933, as amended, or any other Federal,
state or local securities legislation or regulation. Any representation
regarding investment intent shall become inoperative upon the registration of
such shares or other action eliminating the necessity of such representation
under such Securities Act or other securities regulation.

                  The Corporation shall not be required to deliver any Shares
under the Plan prior to (i) the admission of such Shares to listing on the
Nasdaq Stock Market or any stock exchange on which the Shares of Common Stock
may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.

         11. Plan and Plan Interpretations as Controlling. The Shares hereby
awarded and the terms and conditions herein set forth are subject in all
respects to the terms and conditions of the Plan, which are controlling. All
determinations and interpretations of the Committee shall be binding and
conclusive upon the Grantee or Grantee's legal representatives with regard to
any question arising hereunder or under the Plan.

         12. Grantee Service. Nothing in this Agreement shall limit the right of
the Corporation or any of its Affiliates to terminate the Grantee's service as
an officer or employee, or otherwise impose upon the Corporation or any of its
Affiliates any obligation to employ or accept the services of the Grantee.

                                       4
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         13. Withholding and Social Security Taxes. Upon the termination of any
Restricted Period with respect to any Shares (or any such earlier time, if any,
that an election is made under Section 83(b) of the Code, or any successor
provision thereto, to include the value of such Shares in taxable income), the
Corporation shall have the right to withhold from the Grantee's compensation an
amount sufficient to fulfill its or its Affiliate's obligations for any
applicable withholding and employment taxes. Alternatively, the Corporation may
require the Grantee to pay the Corporation the amount of any taxes which the
Corporation is required to withhold with respect to the Shares, or, in lieu
thereof, to retain or sell without notice a sufficient number of Shares to cover
the amount required to be withheld. The Corporation shall withhold from any cash
dividends paid on the Restricted Stock an amount sufficient to cover taxes owed
as a result of the dividend payment. The Corporation's method of satisfying its
withholding obligations shall be solely in the discretion of the Corporation,
subject to applicable federal, state and local laws.

         14. Tax Consequences. Grantee has reviewed with Grantee's own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Grantee is
relying solely on such advisors and not on any statements or representations of
Corporation or any of its agents. Grantee understands that Grantee (and not
Corporation) shall be responsible for Grantee's own tax liability that may arise
as a result of this investment or the transactions contemplated by this
Agreement. Grantee understands that Section 83 of the Internal Revenue Code of
1986, as amended (the "Code"), taxes (as ordinary income) the fair market value
of the Shares as of the date the "restrictions" on the Shares lapse. To the
extent that a grant hereunder is not otherwise an exempt transaction for
purposes of Section 16(b) of the Securities and Exchange Act of 1934 (the "1934
Act"), with respect to officers, directors and 10% shareholders, a "restriction"
on the Shares includes for these purposes the period after the grant of the
Shares during which such officers, directors and 10% shareholders could be
subject to suit under Section 16(b) of the 1934 Act. Alternatively, Grantee
understands that Grantee may elect to be taxed at the time the Shares are
granted rather than when the restrictions on the Shares lapse, or the Section
16(b) period expires, by filing an election under Section 83(b) of the Code with
the I.R.S. within 30 days from the date of grant.

         GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE'S SOLE RESPONSIBILITY AND NOT
THE CORPORATION'S TO FILE TIMELY THE ELECTION AVAILABLE TO GRANTEE UNDER SECTION
83(B) OF THE CODE, EVEN IF GRANTEE REQUESTS THAT THE CORPORATION OR ITS
REPRESENTATIVES MAKE THIS FILING ON GRANTEE'S BEHALF.

         15. Grantee Acceptance. The Grantee shall signify Grantee's acceptance
of the terms and conditions of this Agreement by signing in the space provided
below and signing the attached stock powers and returning a signed copy of this
Agreement and the original attached stock powers to the Corporation. IF A FULLY
EXECUTED COPY HEREOF AND THE ATTACHED STOCK POWERS HAVE NOT BEEN RECEIVED BY THE
CORPORATION, THE CORPORATION HAS THE RIGHT TO REVOKE THIS AWARD, AND AVOID ALL
OBLIGATIONS UNDER THIS AGREEMENT.


                                       5
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         IN CONSIDERATION OF THE GRANT TO YOU OF THIS AWARD, YOU HEREBY AGREE TO
THE CONFIDENTIALITY AND NON-INTERFERENCE PROVISIONS SET FORTH IN ATTACHMENT A
HERETO.



                                       6
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         IN WITNESS WHEREOF, the parties hereto have caused this RESTRICTED
STOCK AGREEMENT to be executed as of the date first above written.

                                 AMERICAN BUSINESS FINANCIAL SERVICES, INC.


                                 By:
                                     -------------------------------------------
                                     Name:
                                     Title:



                                 ACCEPTED:

                                 -----------------------------------------------


                                 -----------------------------------------------
                                 (Street Address)


                                 -----------------------------------------------
                                 (City, State & Zip Code)

                                       7
<PAGE>




                                   STOCK POWER
                                   -----------

         For value received, I hereby sell, assign, and transfer to American
Business Financial Services, Inc. (the "Corporation") ____________ shares of the
common stock of the Corporation, standing in my name on the books and records of
the aforesaid Corporation, represented by Certificate No. _____ and do hereby
irrevocably constitute and appoint the Secretary of the Corporation attorney,
with full power of substitution, to transfer this stock on the books and records
of the aforesaid Corporation.




                                              ----------------------------------

Dated:
      ----------------------


In the presence of:


----------------------------------




<PAGE>



                   Attachment A to Restricted Stock Agreement
                   ------------------------------------------

                      Confidentiality and Non-Interference
                      ------------------------------------


         (a) You covenant and agree that, in consideration of the grant to you
of this Award, you will not, during your employment with the Corporation or at
any time thereafter, except with the express prior written consent of the
Corporation or pursuant to the lawful order of any judicial or administrative
agency of government, directly or indirectly, disclose, communicate or divulge
to any individual or entity, or use for the benefit of any individual or entity,
any knowledge or information with respect to the conduct or details of the
Corporation's business which you, acting reasonably, believe or should believe
to be of a confidential nature and the disclosure of which not to be in the
Corporation's interest.

         (b) You covenant and agree that, in consideration of the grant to you
of this Award, you will not, for a period of one year after your employment with
the Corporation ceases for any reason whatsoever (whether voluntary or not),
except with the express prior written consent of the Corporation, directly or
indirectly, whether as employee, owner, partner, consultant, agent, director,
officer, shareholder or in any other capacity, for your own account or for the
benefit of any individual or entity, (i) solicit any customer of the Corporation
for business which would result in such customer terminating their relationship
with the Corporation; or (ii) solicit or induce any (A) individual which is an
employee of the Corporation to leave the Corporation or (B) entity to otherwise
terminate their relationship with the Corporation.

         (c) The parties agree that any breach by you of any of the covenants or
agreements contained in this Attachment A will result in irreparable injury to
the Corporation for which money damages could not adequately compensate the
Corporation and therefore, in the event of any such breach, the Corporation
shall be entitled (in addition to any other rights and remedies which it may
have at law or in equity) to have an injunction issued by any competent court
enjoining and restraining you and/or any other individual or entity involved
therein from continuing such breach. The existence of any claim or cause of
action which you may have against the Corporation or any other individual or
entity shall not constitute a defense or bar to the enforcement of such
covenants. If the Corporation is obliged to resort to the courts for the
enforcement of any of the covenants or agreements contained in this Attachment
A, or if such covenants or agreements are otherwise the subject of litigation
between the parties, and the Corporation prevails in such enforcement or
litigation, then the term of such covenants and agreements shall be extended for
a period of time equal to the period of such breach, which extension shall
commence on the later of (a) the date on which the original (unextended) term of
such covenants and agreements is scheduled to terminate or (b) the date of the
final court order (without further right of appeal) enforcing such covenant or
agreement.
<PAGE>


         (d) If any portion of the covenants or agreements contained in this
Attachment A, or the application hereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or the
application thereof shall not be affected and shall be given full force and
effect without regard to the invalid or enforceable portions to the fullest
extent possible. If any covenant or agreement in this Attachment A is held
unenforceable because of the area covered, the duration thereof, or the scope
thereof, then the court making such determination shall have the power to reduce
the area and/or duration and/or limit the scope thereof, and the covenant or
agreement shall then be enforceable in its reduced form.

         (e) For purposes of this Attachment A, the term "the Corporation" shall
include the Corporation, any successor to the Corporation and all present and
future direct and indirect subsidiaries and affiliates of the Corporation.