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                  AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                    AMENDED AND RESTATED STOCK OPTION PLAN


     1. Purpose. The purpose of the American Business Financial Services, Inc.
Stock Option Plan (the "Plan") is to further the earnings of American Business
Financial Services, Inc. (the "Company"). The Plan provides for the award of
long-term incentives to those officers and other key employees who make
substantial contributions to the Company by their loyalty, industry, and
invention. The Company intends that the Plan will facilitate attracting,
retaining, and motivating management employees of high caliber and potential.

     2. Administration. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors of American Business Financial
Services, Inc. (the "Board"). The Committee shall consist of three (3) or more
persons selected by the Board of Directors, each of whom shall be (i) an
outside director as defined under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code") or any successor section; and (ii) a
"non-employee" director within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934, as amended, or any corresponding rule, except
that failure of the Committee for any reason to be composed solely of
non-employee directors for any reason shall not prevent any option from being
considered granted under this Plan. Without limiting the foregoing, the
Committee shall have full and final authority in its discretion to interpret
the provisions of the Plan and to decide all questions of fact arising in its
application; to determine the employees to whom awards shall be made under the
Plan; to determine the type of awards to be made and the amount, size and
terms of each such award; to determine the time when awards shall be granted;
and to make all other determinations necessary or advisable for the
administration of the Plan.

     3. Stock Subject to the Plan. The shares that may be issued under the
Plan shall not exceed in the aggregate more than 560,000 shares of common
stock, par value $.001 per share (the "Common Stock") of the Company. Such
shares may be authorized and unissued shares or treasury shares. Except as
otherwise provided herein, any shares subject to an outstanding option or
right which for any reason expires or is terminated unexercised as to such
shares shall again be available under the Plan.

     4. Eligibilily to Receive Awards. Persons eligible to receive awards
under the Plan shall be limited to those officers and other key employees of
the Company who are in positions in which their decisions, actions and counsel
will have a significant impact upon the profitability and success of the
Company. Directors of the Company who are not otherwise officers or employees
of the Company shall not be eligible to participate in the Plan.
Notwithstanding anything to this Plan to the contrary, no individual shall
receive option awards with respect to more than 75% of the shares reserved for
issuance under the Plan.

     5. Form of Awards. Awards may be made from time to time by the Committee
in the form of stock options to purchase shares of Common Stock. Stock options
may be options which are intended to qualify as incentive stock options within
the meaning of Section 422 of the Code, or any amendment or substitute thereto
("Incentive Stock Options") or options which are not intended

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to so qualify ("Non-Qualified Stock Options").

     6. Stock Options. Stock options for the purchase of Common Stock shall be
evidenced by written agreements in such form not inconsistent with the Plan as
the Committee shall approve from time to time, which shall contain, in
substance, the following terms and conditions:

         (a) Type of Option. Each option agreement shall identify the options
represented thereby as Incentive Stock Options or Non-Qualified Stock Options,
as the case may be.

         (b) Option Price. Subject to the restrictions set forth below
regarding Incentive Stock Options, the purchase price of stock subject to an
option shall be no less than the fair market value at the time of grant, as
determined by the Committee.

         (c) Exercise Term. Each option agreement shall state the period or
periods of time within which the option may be exercised, in whole or in part,
which shall be such period or periods of time as may be determined by the
Committee, provided that no option shall be exercisable after ten (10) years
from the date of grant thereof. The Committee may, in its discretion, provide
in the option agreement circumstances under which the option shall become
immediately exercisable, and may, notwithstanding the foregoing, accelerate
the exercisability of any option at any time.

         (d) Payment for Shares. The purchase price of the shares with respect
to which an option is exercised shall be payable in full at the time of
exercise in cash, Common Stock of the Company (valued at the fair market value
thereof), or a combination thereof, as the Committee may determine and subject
to such terms and conditions prescribed by the Committee for such purpose.

         (e) Rights Upon Termination of Employment. The award agreement shall
specify a Participant's rights upon termination of employment. In the case of
Incentive Stock Options, the restrictions set forth below must be followed.

         (f) Nontransferability. Each option agreement shall state that the
option is not transferable other than by will or the laws of descent and
distribution, and that during the lifetime of the optionee the option is
exercisable only by him.

         (g) Incentive Stock Options. In the case of an Incentive Stock
Option, each option agreement shall contain such other terms, conditions and
provisions as the Board determines necessary or desirable in order to qualify
such option as a tax favored option (within the meaning of Section 422 of the
Code, or any amendment or substitute thereto or regulation thereunder)
including without limitation, the following:

                  (i) The purchase price of stock subject to an Incentive
Stock Option shall not be less than 100% of the fair market value of such
stock on the date the option is granted, as determined by the Committee;


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                  (ii) The aggregate fair market value (determined as of the
time the option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by any employee during any calendar
year (under all plans of the Company) shall not exceed One Hundred Thousand 
($100,000) Dollars;

                  (iii) No Incentive Stock Option shall be granted to any
employee if at the time the option is granted the individual owns stock
possessing more than ten (10%) percent of the total combined voting power of
all classes of stock of the Company or subsidiary corporation unless at the
time such option is granted the option price is at least one hundred ten 
(110%) percent of the fair market value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five (5)
years from the date of grant; and

                  (iv) In the event that the recipient of an Incentive Stock
Option ceases to be an employee of the Company for any cause other than death
or disability, his Incentive Stock Options shall terminate ninety (90) days
following termination. In the event that such an optionee dies or becomes
disabled prior to the expiration of his Incentive Stock Options and without
having fully exercised such options, the optionee or his successor shall have
the right to exercise such options during its term but in no event later than
twelve (12) months after termination of death or termination due to
disability to the extent that such option was exercisable at the time of
termination, or within such other period, and subject to such terms and
conditions, as may be specified by the Committee.

     7. General Restrictions. Each award under the Plan shall be subject to
the requirement that if at any time the Committee shall determine the (i) the
listing, registration or qualification of the shares of Common Stock subject
or related thereto upon any securities exchange or under any state or federal
law, or (ii) the consent or approval of any government regulatory body, or
(iii) an agreement by the recipient of an award with respect to the
disposition of shares of Common Stock is necessary or desirable as a condition
of or in connection with the granting of such award or the issuance or
purchase of shares of Common Stock thereunder, such award shall not be
consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained, free of any conditions not acceptable to the Committee.

     8. Single or Multiple. Multiple forms of awards or combinations thereof
may be evidenced by a single agreement or multiple agreements, as determined
by the Committee.

     9. Rights of a Shareholder. The recipient of any award under the Plan,
unless otherwise provided by the Plan, shall have no rights as a shareholder
with respect thereto unless and until certificates for shares of Common Stock
are issued to him.

     10. Rights to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or affect any right
which the Company may have to terminate the employment of such participant.

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     11. Withholding. Wherever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy any federal, state or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.

     12. Non-Assignability. No award under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of descent
and distribution or by such other means as the Committee may approve in
writing. During the life of the recipient, such award shall be exercisable
only by such person or by such person's guardian or legal representative.

     13. Non-Uniform Determinations. The Committee's determination under the
Plan (including without limitation, determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions
of such awards and the agreements evidencing same, and the establishment of
values) need not be uniform and may be made selectively among persons who
receive, or are eligible to receive, awards under the Plan, whether or not
such persons are similarly situated.

     14. Adjustments.

         (a) In the event of any change in the outstanding stock of the
Company, by reason of a stock dividend or distribution, supplemental offering
of shares, recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like, the Committee may, in its discretion, adjust
the number of shares of Common Stock which may be issued under the Plan.

         (b) The number of shares of Common Shares purchasable upon the
exercise of the outstanding stock options ("Options") and the option price
shall be subject to adjustment from time to time as provided in this paragraph
14.

                  (i) If the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
number of shares of Common Stock purchasable upon exercise of an Option shall
be increased by multiplying such number of shares by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the day immediately preceding the date of such
distribution and the numerator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such increase to become effective inunediately after the opening of business
on the date following such distribution.

                  (ii) If the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the number of
shares of Common Stock purchasable upon exercise of an Option at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, if outstanding
shares of Common Stock shall each be combined into a smaller number of shares
of Common Stock, the number of shares of Common Stock purchasable upon
exercise of an Option at the

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opening of business on the day following the day upon which such combination
becomes effective shall be proportionately decreased, such increase or
decrease, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision
or combination becomes effective.

                  (iii) The reclassification of Common Stock into securities
(other than Common Stock) and/or cash and/or other consideration shall be
deemed to involve a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to such
reclassification into the number or amount of securities and/or cash and/or
other consideration outstanding immediately thereafter and the effective date
of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination becomes
effective, as the case may be, within the meaning of the clause (ii) above.

                  (iv) The Committee may in its discretion make such increases
in the number of shares of Common Stock purchasable upon exercise of an
Option, in addition to those required by this subparagraph (b), as shall be
determined by the Company's Board of Directors to be advisable in order to
achieve an equitable result or to avoid taxation so far as practicable of any
dividend of stock or stock rights or any event treated as such for federal
income tax purposes to the recipients.

         (c) Whenever the number of shares of Common Stock purchasable upon
exercise of an Option is adjusted as provided in this paragraph 14, the option
price shall be adjusted by a fraction in which the numerator is equal to the
number of shares of Common Stock purchasable prior to this adjustment and the
denominator is equal to the number of shares of Common Stock purchasable after
the adjustment.

         (d) For the purpose of this paragraph 14, the term "Common Stock"
shall include any shares of the Company of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of the Company and which is not subject to redemption by the Company.

     15. Amendment. The Committee may terminate or amend the Plan at any time,
except without shareholder approval, the Committee may not increase the
maximum number of shares which may be issued under the Plan (other than
increases pursuant to paragraph 14 hereof), extend the period during which any
award may be exercised, extend the term of the Plan or change the minimum
option price (other than pursuant to paragraph 14 hereof). The termination or
any modification or amendment of the Plan shall not, without the consent of a
participant, affect his rights under an award previously granted.

     16. Effect on Other Plans. Participation in this Plan shall not affect an
employee's eligibility to participate in any other benefit or incentive plan
of the Company. Any awards made pursuant to this Plan shall not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided.

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     17. Duration of the Plan. The Plan shall rernain in effect until all
awards under the Plan have been satisfied by the issuance of shares, but no
award shall be granted more than ten years after the earlier of the date the
Plan is adopted by the Company or is approved by the Company's shareholders.


Adopted February 9, 1993
by the Board of Directors of
American Business Financial Services, Inc.

Amended October 22, 1996
by the Board of Directors of
American Business Financial Services, Inc.

Amended and Restated December 10, 1996
by the Board of Directors of
American Business Financial Services, Inc.

Amended and Restated September 30, 1997
by the Board of Directors of
American Business Financial Services, Inc.



                                       /s/ Anthony J. Santilli, Jr.
                                           -------------------------------------
                                           Anthony J. Santilli, Jr., President








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