<PAGE>

                              EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT ("Agreement"), is made as of this __ day of
December, 2003, by and between American Business Financial Services, Inc., a
Delaware corporation, with its corporate headquarters located at The Wanamaker
Building, 100 Penn Square East, Philadelphia, PA 19107 and its successors and
assigns (hereinafter collectively referred to as "ABFS"), and Barry Epstein
("Epstein").

     In consideration of the facts, mutual promises, and covenants contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:

     1. Employment. ABFS hereby employs Epstein and Epstein hereby accepts
employment with ABFS, for the period and upon the terms and conditions set forth
in this Agreement, subject to earlier termination pursuant to Section 6 below.


     2. Office and Duties.

          (a) During the Term or any Renewal Term, as defined herein, of this
Agreement, Epstein shall serve as Managing Director of the National Wholesale
Residential Mortgage Division (the "National Wholesale Division"), and shall
report directly to the Chief Executive Officer ("CEO") of ABFS and be subject to
his supervision, control and direction.

          (b) In his capacity as Managing Director of the National Wholesale
Division, Epstein shall serve as the chief operating officer of the National
Wholesale Division and shall have such authority, perform such duties, discharge
such responsibilities and render such services as are customary to, and
consistent with that position, including but not limited to its operations,
product development, pricing, entering into sales contracts and determining
commission structure for sales employees and agents with respect to mortgage and
home equity loans originated by the National Wholesale Division, subject to the
authority, direction and approval of the CEO of ABFS. Epstein shall also be a
member of the Credit Policy Committee. As such, Epstein shall make
recommendations to the Credit Policy Committee which will not unreasonably be
denied by said Committee. Epstein shall perform such additional duties and
responsibilities as may be assigned to him from time to time by the CEO of ABFS
or the Board of Directors of ABFS, provided that such additional duties are
consistent with the position as described and do not interfere with Epstein's
performing those duties or earning any of the compensation described below.

          (c) Epstein shall render his services diligently, faithfully and to
the best of his ability, and shall devote all of his working time, energy, skill
and best efforts to the performance of his duties hereunder, in a manner that
will further the business and interests of ABFS. During the Term or any Renewal
Term of this Agreement, as defined herein, Epstein shall not be engaged in any
business activity which, in the reasonable judgment of the CEO of ABFS or Board
of Directors of ABFS, conflicts with Epstein's duties hereunder, whether or not
such activity is pursued for pecuniary advantage. Notwithstanding the above,
Epstein may engage in personal investment activities during ABFS's regular
business hours and at other times, as long as those activities do not interfere
with the performance of Epstein's duties to ABFS.


<PAGE>

          (d) Epstein shall work out of ABFS's corporate headquarters office
located at the Wanamaker Building, 100 Penn Square East, Philadelphia,
Pennsylvania ("Corporate Headquarters").

          (e) During the first year of employment, Epstein will spend one week
per month working in California to assist in the development of the California
office, and any additional time during that first year, or any time after the
first year, as mutually agreed upon by Epstein and the CEO of ABFS or his
designee.

     3. Term.

          (a) This Agreement shall be effective on December 24, 2003,
("Effective Date"), and shall continue in effect through December 31, 2006
("Term").

          (b) If monthly production for Wholesale Originations, as defined
herein, reaches $100 million for any month during the Term, this Agreement shall
automatically continue in effect and be renewed for the period from January 1,
2006 through December 31, 2007. If monthly production for Wholesale Originations
reaches $200 million for any month during the Term or the Renewal Term expiring
December 31, 2007, this Agreement shall automatically continue in effect and be
renewed through December 31, 2008.

          (c) This Agreement shall automatically renew on a year to year basis
after the expiration of the Term (in the event a renewal pursuant to
subparagraph 3(b) does not occur) or any Renewal Term specified in subparagraph
3(b) unless either party provides written notice of non-renewal to the other
party sixty (60) days prior to the expiration of the Term or any Renewal Term.
(Any continuation of this Agreement as provided for in this Section 3 shall be
referred to herein as a "Renewal Term.")

          (d) Either party may terminate this Agreement during the Term or any
Renewal Term of this Agreement as provided for in Section 6.

          (e) Definition of Wholesale Originations. For purposes of this
Agreement:

               (i) "Wholesale Originations" means all residential mortgage loans
originated by the National Wholesale Division excluding existing originations
arising out of ABFS's Philadelphia Headquarters.

               (ii) "Existing originations arising out of ABFS's Philadelphia
Headquarters" means (A) retail mortgage origination business (excluding retail
mortgages arising out of the California office); (B) loans made by lenders that
are, as of the Effective Date, currently participating in the Bank Alliance
Program; and (C) business loans (including wholesale loans) originated by the
Business Loan division, formerly known as "American Business Credit, Inc."



                                       2
<PAGE>

     4. Compensation.

          (a) Base Salary. In consideration of the services rendered by Epstein
to ABFS during the Term or any Renewal Term hereof, Epstein shall receive a base
salary, payable monthly in accordance with ABFS's regular payroll practices in
effect from time to time ("Base Salary"). The Base Salary shall be $35,000.00
per month.

          (b) Cash Bonus Plan.

               (i) A cash bonus will be paid monthly once monthly production for
total Wholesale Originations reaches $200 million for any one calendar month
during the Term or any Renewal Term. The bonus shall be in an amount equal to
five (5) basis points multiplied by the amount of such Wholesale Originations
for such month that is greater than $200 million and less than or equal to $400
million, and will not exceed One Hundred Thousand Dollars ($100,000.00) in any
one month.

               (ii) In addition to any bonus provided for in subparagraph (i),
if monthly production for Wholesale Originations is $400 million or more for any
calendar month during the Term or any Renewal Term, Epstein shall receive
Fifteen Thousand Dollars ($15,000.00) as a bonus for that month.

          (c) Stock Grant. Epstein shall receive a grant of Two Hundred Thousand
(200,000) restricted shares of ABFS common stock, par value $.001 (the
"Restricted Shares"), on the Effective Date of this Agreement. ABFS represents
that ABFS only has one authorized class of common stock and that the common
stock is listed on the NASDAQ exchange.

               (i) The Restricted Shares shall become vested and no longer
subject to any restriction other than those imposed by Federal or State
securities laws, upon Epstein's achievement of the performance objectives set
forth below or as described in Section 7 of this Agreement:

                    a) One Hundred Thousand (100,000) Restricted Shares will
          become vested as of the earlier of the following:

                    (1) on the last day of the first calendar month during the
                    Term or any Renewal Term in which Wholesale Originations
                    reach $100 million; or

                    (2) on the first day of the month following any month in
                    2004 in which ABFS loses its warehouse lines or is unable or
                    fails to maintain warehouse lines in amounts sufficient to
                    achieve monthly Wholesale Originations of $100 million.

                    b) An additional One Hundred Thousand (100,000) Restricted
          Shares will become vested as of the last day of the first calendar
          month during the Term or any Renewal Term in which Wholesale
          Originations reach $200 million.



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<PAGE>

               (ii) In the event of a "Change in Control" as defined in this
subparagraph, any unvested Restricted Shares shall immediately become vested.
For these purposes, a "Change in Control" means (A) that Anthony J. Santilli,
Jr. ceases to be CEO of ABFS; or (B) there is a merger, consolidation or other
transaction involving ABFS in which ABFS is not the resulting or surviving
entity and the voting shareholders of the Corporation immediately prior to the
effectiveness of such transaction cease to control at least a majority of the
voting shares or interests of the resulting or surviving entity; or (C) the
effective date of any sale of substantially all of the assets of ABFS to any
entity other than an entity controlled by ABFS or an entity owned by
shareholders holding not less than a majority of the voting shares of ABFS
immediately prior to the effectiveness of such transaction.

               (iii) Any Restricted Shares that have not vested as of the date
of termination of employment will be forfeited and revert back to ABFS, except
as provided in Section 7 of this Agreement.

               (iv) ABFS and Epstein shall sign a separate Restricted Stock
Agreement simultaneously with the execution of this Agreement. The Restricted
Stock Agreement will govern the issuance and vesting of the Restricted Shares in
accordance with the provisions of this Agreement and will contain such other
provisions as are mutually acceptable to ABFS and Epstein. The Restricted Stock
Agreement shall be incorporated, in its entirety, into this Agreement. If there
are any conflicts between the two agreements, the provisions of this Agreement
shall be controlling.

          (d) Vacation and Benefits. During the Term and any Renewal Term of
this Agreement, Epstein shall be entitled to four (4) weeks of paid vacation,
with a right to take at least two (2) weeks consecutively, pursuant to company
policy, and to participate in all employee benefit plans and fringe benefit
programs, if any, as may be in effect from time to time and which are available
to ABFS senior executives (excluding the CEO), subject to the eligibility
requirements thereof (collectively, the "Benefits").

          (e) Business Expenses. During the Term and any Renewal Term, ABFS
shall advance to Epstein all airfare expenses and reimburse Epstein for all
other reasonable business expenses incurred or paid by Epstein in the
performance of Epstein's duties hereunder, including first class air travel to
California for trips required by ABFS, consistent with ABFS' policies for
payment and reimbursement of business expenses.

          (f) Relocation Expenses. ABFS agree to reimburse Epstein, in the
amount of $10,000, for relocation expenses incurred in moving from his current
home to a home within a reasonable commuting distance from ABFS' Corporate
Headquarters, including expenses incurred in furnishing or equipping his new
home, within ten (10) business days of Epstein's providing documentation of the
costs he has incurred.



                                       4
<PAGE>

          (g) Car Allowance. Epstein shall receive $650 per month for expenses
related to his car. Epstein will not be required to provide any documentation to
ABFS concerning the actual car-related expenses he has incurred.

          (h) Withholding. All payments made pursuant to this Agreement shall be
subject to such withholding taxes as may be required by any applicable law.

     5. Representations of Epstein. Epstein represents to ABFS that (a) there
are no restrictions, agreements or understandings whatsoever to which Epstein is
a party that would prevent, or render unlawful, his execution of this Agreement
and his employment hereunder; (b) his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which he is a party, or by which he is bound;
and (c) he is of full capacity, free and able to execute this Agreement and to
enter into this Agreement with ABFS.

     6. Termination. Epstein's employment may only be terminated prior to the
expiration of the Term or any Renewal Term as provided in this Section 6:

          (a) Resignation by Epstein for Good Reason. Epstein may resign for
Good Reason ("Resignation for Good Reason"), by providing written notice to ABFS
specifying both the contractual provision and the alleged acts or omissions by
ABFS on which he is relying in resigning for Good Reason. For purposes of this
Agreement, the term "Good Reason" shall mean the following:

               (i) changing Epstein's title or assigning Epstein a title
inconsistent with the specific provisions of this Agreement;

               (ii) changing, in any material manner, Epstein's responsibilities
and duties in violation of this Agreement;

               (iii) requiring Epstein to report to an executive other than
ABFS's CEO;

               (iv) except as provided by this Agreement, requiring Epstein to
report to a location that is more than 50 miles from ABFS's current corporate
headquarters;

               (v) failing to pay the Base Salary or Bonus owed to Epstein
pursuant to this Agreement, provided that a good faith dispute between the
parties as to the Bonus owed to Epstein will not constitute "Good Reason" for
Epstein's resignation;

               (vi) failing to pay or provide the Benefits, or to issue or vest
the Restricted Stock, as provided in this Agreement, provided that a good faith
dispute between the parties as to Benefits owed to Epstein or the vesting of
Restricted Stock pursuant to Subparagraph 4c(i)(b) will not constitute "Good
Reason" for Epstein's resignation;

               (vii) After receiving the written notice described above, ABFS
will have 30 days to cure the grounds for resignation for Good Reason. If ABFS
fails to cure such act(s) or omission(s) within the specified time period, the
Resignation for Good Reason shall be effective upon the expiration of such
specified period.



                                       5
<PAGE>

          (b) Termination by Epstein for Reasons Other Than Good Reason. Epstein
may resign at any time, for any reason other than for "Good Reason", by
providing ninety (90) days prior written notice to ABFS.

          (c) Termination by ABFS for Cause. ABFS shall have the right to
terminate Epstein's employment at any time for "Cause" by providing written
notice to Epstein specifying both the contractual provision and the alleged acts
or omissions by Epstein on which it is relying in terminating his employment.
For purposes of this Agreement, "Cause" shall mean the following:

               (i) Epstein commits fraud or theft against ABFS or any of its
subsidiaries, affiliates, joint ventures and related organizations, including
any not-for-profit affiliates or not-for-profit joint ventures (collectively
referred to as "Affiliates"), or is indicted, convicted of, or pleads guilty or
nolo contendere to, a felony, fraud or embezzlement;

               (ii) In carrying out his duties hereunder, Epstein engages in
conduct that constitutes gross neglect or willful misconduct;

               (iii) Epstein materially breaches any provision of this Agreement
(including but not limited to the restrictive covenants contained in Section 8
below);

               (iv) Epstein breaches any duty of loyalty owed to ABFS or its
Affiliates;

               (v) Epstein repeatedly refuses to perform his duties or
responsibilities as described in this Agreement, or refuses to obey lawful
directions by the CEO or the Board of Directors of ABFS which are consistent
with this Agreement;

               (vi) Epstein violates any lawful written policy that has been
established by ABFS or the Board of Directors of ABFS, that has been delivered
to him, that expressly calls for termination of employment, and that is not
inconsistent with this Agreement;

               (vii) Solely with regard to the grounds for Termination for Cause
described in Section 6(b) (ii), (iii), (v) or (vi), to the extent that Epstein's
acts or omissions are curable by him, Epstein's employment may only be
terminated for Cause after he is given the written notice described above and he
fails to cure the stated deficiencies within thirty (30) days after receiving
that notice.

          (d) Termination by ABFS for Insufficient Origination Volume. ABFS
shall have the right to terminate Epstein's employment in February 2005, in the
event monthly Wholesale Originations have not reached $100 million in at least
one calendar month during the period January 1, 2004 through January 31, 2005,
unless the failure to reach the above-stated benchmark is due to ABFS's
inability or failure to maintain warehouse lines in amounts sufficient to reach
that benchmark, by delivering written notice to Epstein at any time between
February 1, 2005 and February 25, 2005, specifying the effective date in
February of such termination.



                                       6
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          (e) Termination by ABFS upon Epstein's Death or Disability. Epstein's
employment shall terminate upon his Death. ABFS shall have the right to
terminate Epstein's employment at any time because of a Disability which has
prevented Epstein from performing the essential functions of his job hereunder
for a period of not less than one hundred fifty (150) consecutive days or for an
aggregate of one hundred eighty (180) days during any period of twelve (12)
consecutive months, subject to the reasonable accommodation provisions of
applicable statutes. The term, "Disability," as used herein, means any physical
or mental illness, disability or incapacity which has prevented him from
performing the essential functions of his job for more than thirty days. During
any period of Disability, Epstein agrees to submit to reasonable medical
examinations upon the reasonable request, and at the expense, of ABFS, subject
to applicable law.

          (f) Termination by ABFS Without Cause: ABFS may terminate Epstein's
employment at any time for any reason other than the reasons specified in
paragraphs 6(c), (d) and (e), which shall hereinafter be referred to as a
termination "Without Cause," by delivering written notice to Epstein specifying
the effective date of the termination Without Cause.

          (g) The provisions of Section 8, except to the extent limited by the
terms of Section 8(a) and 8(c), survive the termination of Epstein's employment
hereunder and shall remain in full force and effect thereafter.

     7. Payments Upon Termination.

          (a) Termination or Resignation for Any Reason. If Epstein resigns or
his employment is terminated for any reason, Epstein shall receive: (i) the
unpaid Base Salary, Bonus and Benefits described in Section 4 earned and accrued
through the date of his termination or resignation; (ii) the additional Benefits
to which he is entitled by law or pursuant to the terms of the employee benefit
plans in which he was a participant before the resignation or termination in
accordance with the provisions of those plans; and (iii) the additional amounts
and benefits, if any, described below.

          (b) Termination Upon Non-Renewal or for Cause. In the event that
Epstein's employment is terminated as a result of the non-renewal of this
Agreement in accordance with Section 3 herein or for Cause, Epstein will not be
entitled to receive any payments or benefits other than those described in
Paragraph 7(a).

          (c) Resignation for Any Reason Other Than for Good Reason. In the
event Epstein resigns for any reason other than Good Reason, Epstein will not be
entitled to receive any payments or benefits other than those described in
Paragraph 7(a).

          (d) Termination by ABFS for Insufficient Volume. If Epstein is
terminated in February 2005, because monthly Wholesale Originations did not
reach $100 million for at least one calendar month before February 1, 2005,
Epstein shall receive, in addition to the amounts described in Paragraph 7(a),
an amount equal to three (3) months Base Salary, and a portion of the Restricted
Shares shall become vested. The number of vested Restricted Shares shall be
calculated by multiplying 100,000 by the fraction in which the numerator is the
dollar amount of the highest Wholesale Originations achieved in any calendar
month prior to the date of termination and the denominator is $100,000,000. ABFS
shall make the payments described in this paragraph over a three (3) month
period in equal installments in accordance with ABFS's regular payroll practice
then in effect, but shall cease immediately if Epstein is in breach of this
Agreement, provided that Epstein executes, and does not revoke, a General
Release of all claims relating to his employment and termination from employment
in the form attached hereto and incorporated herein. Epstein understands that
should he fail or refuse to execute the attached General Release, or revoke such
General Release, he shall not be entitled to any severance payments under this
section. Payments under this subsection shall begin in the first full month
following the expiration of the revocation period described in the General
Release.



                                       7
<PAGE>

          (e) Termination Due to Death or Disability. In the event Epstein's
employment hereunder is terminated due to his death or Disability, in addition
to the amounts described in Paragraph 7(a), ABFS shall continue to pay the costs
of COBRA continuation coverage for medical insurance for a period of one year
from the date of termination, and, if none of the Restricted Shares have become
vested as of the termination of employment, a portion of the Restricted Shares
shall become vested. The number of vested Restricted Shares shall be calculated
by multiplying 100,000 by the fraction in which the numerator is the dollar
amount of the highest Wholesale Originations achieved in any calendar month
prior to the date of termination and the denominator is $100,000,000. In the
event that Epstein's employment is terminated because of his death, Epstein's
heirs, personal representative or estate shall be entitled to receive the
payments, benefits and Restricted Shares described herein. In the event of
termination because of Disability, ABFS shall also pay Epstein an amount equal
to six months' Base Salary in six equal monthly installments, in accordance with
ABFS's regular payroll practice then in effect, but shall cease immediately if
Epstein is in breach of this Agreement. Epstein shall only receive payments,
benefits and Restricted Shares provided for in this subsection if Epstein
executes, and does not revoke, a General Release of all claims relating to his
employment and termination from employment in the form attached hereto and
incorporated herein. Epstein understands that should he fail or refuse to
execute the attached General Release, or revoke such General Release, he shall
not be entitled to any severance payments under this section. Payments under
this subsection shall begin in the first full month following the expiration of
the revocation period described in the General Release.

          (f) Termination by ABFS Without Cause or Resignation for Good Reason,
before January 1, 2005. If ABFS terminates Epstein's employment Without Cause,
or Epstein resigns for Good Reason, before January 1, 2005, in addition to the
amounts described in Paragraph 7(a), ABFS shall pay Epstein an amount equal to
the balance of his Base Salary from the date of termination or resignation
through December 31, 2006 and shall vest 100,000 shares of any unvested
Restricted Shares, provided that Epstein executes, and does not revoke, a
General Release of all claims relating to his employment and termination from
employment in the form attached hereto and incorporated herein. Epstein
understands that should he fail or refuse to execute the attached General
Release, or revoke such General Release, he shall not be entitled to any
severance payments under this section. The stock shall vest, within ten (10)
business days after the expiration of the revocation period described in the
General Release. The total amount of the Base Salary described in this
subparagraph shall be payable in equal monthly installments through December
2006 beginning the first full month following the expiration of the revocation
period described in the General Release, pursuant to ABFS's regular payroll
practice then in effect, but shall cease immediately if Epstein is in breach of
this Agreement.



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          (g) Termination by ABFS Without Cause or Resignation for Good Reason,
on or after January 1, 2005. If ABFS terminates Epstein's employment Without
Cause, or Epstein resigns for Good Reason, on are after January 1, 2005, in
addition to the amounts described in Paragraph 7(a), ABFS shall pay Epstein an
amount equal to the sum of (i) two (2) years Base Salary, plus (ii) three times
the bonus, if any, Epstein earned in the last full month prior to his
termination, and shall vest all of Epstein's Restricted Shares that are unvested
at that time, provided that Epstein executes, and does not revoke, a General
Release of all claims relating to his employment and termination from employment
in the form attached hereto and incorporated herein. Epstein understands that
should he fail or refuse to execute the attached General Release, or revoke such
General Release, he shall not be entitled to any severance payments under this
section. The stock shall vest within ten (10) business days after the expiration
of the revocation period described in the General Release. The payments
described in this subsection shall be payable in twenty-four (24) equal monthly
installments beginning the first full month following the expiration of the
revocation period described in the General Release, pursuant to ABFS's regular
payroll practice then in effect, but shall cease immediately if Epstein is in
breach of this Agreement.

          (h) No amounts owed by ABFS pursuant to this Section 7 are subject to
mitigation or a duty to mitigate by Epstein.

          (i) The amounts described in this Section 7 are the only amounts that
ABFS is obligated to pay under this Agreement to Epstein in connection with the
termination of his employment or resignation for any reason whatsoever.

          (j) The form of General Release, attached hereto and incorporated
herein, may only be modified at the time of execution to the extent modification
is necessary to comply with any applicable law or regulation.

     8. Restrictive Covenants.

          (a) Non-Solicitation/Non-Piracy. While employed by ABFS, and for a
period of twelve (12) months thereafter, Epstein will not, directly or
indirectly, for his own account or for the benefit of any Person or entity:

               (i) solicit, service, contact, or aid in the solicitation or
servicing of any Person or entity which is or was a contractor, subcontractor,
broker, business partner, sales representative or supplier of ABFS or its
Affiliates within three (3) years prior to Epstein's termination ("Companies'
Customers/Clients"), for the purpose of (a) selling services or goods in
competition with the Business of Companies; (b) inducing Companies'
Customers/Clients to cancel, transfer or cease doing business in whole or in
part with ABFS or its Affiliates or (c) inducing Companies' Customers/Clients to
do business with any Person or business entity in competition with the Business
of Companies. Should ABFS terminate Epstein's employment without Cause or
Epstein resigns for Good Reason, then the restrictions contained in this
subparagraph 8(a)(i) shall not apply after the date of termination or
resignation.



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               (ii) solicit, aid in solicitation of, induce, contact for the
purpose of, encourage or in any way cause any employee of ABFS or its Affiliates
to leave the employ of ABFS or its Affiliates, or interfere with such employee's
relationship with ABFS or its Affiliates.

          (b) Non-Disclosure. Other than as required by law or in furtherance of
the Business of Companies, as defined herein, in the ordinary course in his
capacity as an employee hereunder, Epstein will not, at any time, except with
the express prior written consent of the CEO or Board of Directors of ABFS,
directly or indirectly, disclose, communicate or divulge to any Person or
entity, or use for the benefit of any Person or entity, any secret, confidential
or proprietary knowledge or information with respect to the conduct or details
of the Business of Companies including, but not limited to, customer and client
lists, customer and client accounts and information, prospective client,
customer, contractor and subcontractor lists and information, services,
techniques, methods of operation, pricing, costs, sales, sales strategies and
methods, marketing, marketing strategies and methods, products, product
development, research, know-how, policies, financial information, financial
condition, business strategies and plans and other information of ABFS or its
Affiliates which is not generally available to the public and which has been
developed or acquired by ABFS or its Affiliates with considerable effort and
expense. Upon the expiration or termination of Epstein's employment under this
Agreement, Epstein shall immediately deliver to ABFS all memoranda, books,
papers, letters, and other data (whether in written form or computer stored),
and all copies of same, which were made by Epstein or otherwise came into his
possession or under his control at any time between the Effective Date and the
expiration or termination of his employment under this Agreement, and which in
any way relate to the Business of Companies as conducted or as planned to be
conducted by ABFS or its Affiliates on the date of the expiration or
termination, except for documents relating to his compensation, stock or
Benefits.

          (c) Intellectual Property. Epstein will promptly communicate to ABFS,
in writing when requested, all software, designs, techniques, concepts, methods
and ideas, other technical information, marketing strategies and other ideas and
creations pertaining to the Business of Companies which are conceived or
developed by Epstein alone or with others, at any time (during or after business
hours) while Epstein is employed by ABFS or its Affiliates. Epstein acknowledges
that all of those ideas and creations are inventions and works for hire, and
will be the exclusive property of ABFS. Epstein will sign any documents which
ABFS deems necessary to confirm its ownership of those ideas and creations, and
Epstein will cooperate with ABFS in order to allow ABFS to take full advantage
of those ideas and creations.

          (d) Non-Disparagement. Epstein will not, at any time, publish or
communicate disparaging or derogatory statements or opinions about ABFS or its
Affiliates, including but not limited to, disparaging or derogatory statements
or opinions about ABFS's or its Affiliates' management, products or services, to
any third party. It shall not be a breach of this section for Epstein to testify
truthfully in any judicial or administrative proceeding or government
investigation or to make statements or allegations in legal filings that are
based on Epstein's reasonable belief and are not made in bad faith.



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          (e) Enforcement. Epstein acknowledges that the covenants and
agreements of this Section 8 ("Covenants") herein are of a special and unique
character, which give them peculiar value, the loss of which cannot be
reasonably or adequately compensated for in an action at law. Epstein further
acknowledges that any breach or threat of breach by him of any of the Covenants
will result in irreparable injury to ABFS for which money damages could not be
adequate to compensate ABFS. Therefore, in the event of any such breach or
threatened breach, ABFS shall be entitled, in addition to all other rights and
remedies which ABFS may have at law or in equity, to have an injunction issued
by any competent court enjoining and restraining Epstein and/or all other
Persons involved therein from committing a breach or continuing such breach. The
remedies granted to ABFS in this Agreement are cumulative and are in addition to
remedies otherwise available to ABFS at law or in equity. The existence of any
claim or cause of action which Epstein or any such other Person may have against
ABFS shall not constitute a defense or bar to the enforcement of any of the
Covenants contained in this Section 8. If ABFS is obliged to resort to
litigation to enforce any of the Covenants which has a fixed term, then such
term shall be extended for a period of time equal to the period during which a
material breach of such Covenant was occurring, beginning on the date of a final
court order (without further right of appeal) holding that such a material
breach occurred, or, if later, the last day of the original fixed term of such
Covenant.

          (f) Acknowledgements. Epstein expressly acknowledges that the
Covenants are a material part of the consideration bargained for by ABFS, and,
without the agreement of Epstein to be bound by the Covenants, ABFS would not
have agreed to enter into this Agreement. Epstein further acknowledges and
agrees that the Business of Companies and its services are highly competitive,
and that the Covenants contained in this Section 8 are reasonable and necessary
to protect the legitimate business interests of ABFS.

          (g) Scope. If any portion of any Covenant or its application is
construed to be invalid, illegal or unenforceable, then the remaining portions
and their application shall not be affected thereby, and shall be enforceable
without regard thereto. If any of the Covenants is determined to be
unenforceable because of its scope, duration, geographical area or similar
factor, then the court or other trier of fact making such determination shall
modify, reduce or limit such scope, duration, area or other factor, and enforce
such Covenant to the extent it believes is lawful and appropriate.

          (h) Business of Companies. The term "Business of Companies", as used
herein, shall mean the provision by ABFS or its Affiliates of originating,
selling, and servicing home equity loans and small business loans.

     9. Miscellaneous.

          (a) Indulgences, Etc. Neither the failure, nor any delay, on the part
of either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same, or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.



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<PAGE>

          (b) Controlling Law; Consent to Jurisdiction; Consent to Arbitration.

               (i) This Agreement and all matters arising out of or relating to
this Agreement, including all questions relating to its validity,
interpretation, performance, and enforcement (including, without limitation,
provisions concerning limitations of actions), shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
(notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary), and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.

               (ii) In the event there is any claim, dispute, or controversy
between ABFS and Epstein which cannot be brought to arbitration (as provided
below), each party agrees to the exercise of jurisdiction over it by a federal
or state court sitting in Philadelphia County, Pennsylvania. ABFS and Epstein
further agree that any action that may be brought in court shall be brought in
one of the courts specified in this subparagraph.

               (iii) Except to the extent provided for in Section 8 above
(relating to injunctive relief and other equitable remedies), ABFS and Epstein
agree that any claim, dispute or controversy arising under or in connection with
this Agreement, or otherwise in connection with Epstein's employment by ABFS or
termination of his employment (including, without limitation, any such claim,
dispute or controversy arising under any federal, state or local statute,
regulation or ordinance or any of ABFS's employee benefit plans, policies or
programs) shall be resolved solely and exclusively by binding, confidential
arbitration. The arbitration shall be held in Philadelphia, Pennsylvania (or at
such other location as shall be mutually agreed by the parties). The arbitration
shall be conducted in accordance with the National Rules for the Resolution of
Employment Disputes (the "Rules") of the American Arbitration Association ("the
AAA") in effect at the time of the arbitration, except that, if the AAA is
unable to designate an arbitrator from the initial list submitted to the
parties, then the arbitrator shall be selected from a second list of five
arbitrators supplied by the AAA, by alternatively striking from that list. All
fees and expenses of the arbitration, including a transcript if either requests,
shall be borne equally by the parties, however, all costs for the services of
the arbitrator shall be borne solely by ABFS. Each party is responsible for the
fees and expenses of its own attorneys, experts, witnesses, and preparation and
presentation of proofs and post-hearing briefs (unless the party prevails on a
claim for which attorney's fees are recoverable under law). In rendering a
decision on the merits, the arbitrator shall apply all legal principles and
standards that would govern if the dispute were being heard in court. This
includes the availability of all remedies that the parties could obtain in
court. In addition, all statutes of limitation and defenses that would be
applicable in court will apply to the arbitration proceeding. All procedural
decisions, including decisions regarding discovery requests, shall be governed
by AAA rules. The award of the arbitrator shall be set forth in writing, and be
binding and conclusive on all parties. Any action to enforce or vacate the
arbitrator's award shall be governed by the Federal Arbitration Act, if
applicable, and otherwise by applicable state law. If either ABFS or Epstein
improperly pursues any claim, dispute or controversy against the other in a
proceeding other than the arbitration provided for herein, the responding party
shall be entitled to dismissal or injunctive relief regarding such action and
recovery of all costs, losses and attorney's fees related to such action.



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<PAGE>

          (c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
(personally, by courier service such as Federal Express, or by other messenger)
or when deposited in the United States mails, registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth below:

               (i)  If to Epstein:

                    Barry Epstein
                    2122 Century Park Lane, # 416
                    Los Angeles, CA  90067

               (ii) If to ABFS:

                    American Business Financial Services, Inc.
                    The Wanamaker Building
                    100 Penn Square East
                    Philadelphia, PA 19107

                    Attention:  Board of Directors


                    With a copy to:

                    Lawrence F. Flick, II
                    Blank Rome LLP
                    One Logan Square
                    Philadelphia, PA 19103.

     In addition, notice by mail shall be by air mail if posted outside of the
continental United States.

     Any party may alter the addresses to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.

          (d) Assignment of Agreement. The rights and obligations of both
parties under this Agreement shall inure to the benefit of and shall be binding
upon their heirs, successors and assigns. ABFS may assign or otherwise transfer
its rights under this Agreement, including but not limited to all Covenants
contained in Section 8 above, to any successor or affiliated business or
corporation whether by sale of stock, merger, consolidation, sale of assets or
otherwise. This Agreement may not, however, be assigned by Epstein to a third
party, nor may Epstein delegate his duties under this Agreement.

          (e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, including by facsimile, each of which shall be deemed to
be an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.



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<PAGE>

          (f) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

          (g) Entire Agreement. This Agreement, including the Restricted Stock
Agreement and form of General Release incorporated into this Agreement, contains
the entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements and
understandings between the parties, inducements or conditions, express or
implied, oral or written, except as herein contained. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing signed by both Parties.

          (h) Section Headings. The Section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.

          (i) Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.

          (j) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday, Sunday or holiday on which ABFS is required or has elected to be
closed, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.

          (k) Costs, Expenses in the Event of Breach. In the event that either
party to this Agreement commences any proceeding or arbitration to enforce or
for breach of this Agreement, or any party asserts any counterclaim arising from
this Agreement in any such proceeding, the prevailing party shall be entitled to
reimbursement for all costs and expenses incurred, including but not limited to
reasonable legal fees and costs of litigation or arbitration (other than costs
for the services of the arbitrator, which are to be paid by ABFS pursuant to
subparagraph 9(b)(iii)). In determining whether a party is a prevailing party, a
court or arbitrator may take into account the legal standards that have been
developed in breach of contract actions (in which the contracts authorize an
award of attorneys fees) by Pennsylvania state courts or federal courts in the
Third Circuit Court of Appeals.

            [The remainder of this page is intentionally left blank]



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<PAGE>

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement,
intending to be legally bound hereby, as of the date first above written.



                                  AMERICAN BUSINESS FINANCIAL SERVICES, INC.


                                  By: ________________________________
                                  Name: Jeffrey M. Ruben
                                  Title:  Executive Vice-President





                                  ____________________________________
                                  BARRY EPSTEIN






















            [Signature Page to Employment Agreement of Barry Epstein]



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