Document:

<PAGE>
                                    INDENTURE

             AMERICAN BUSINESS FINANCIAL SERVICES, INC., as obligor

               Unsecured, Subordinated Investment Debt Securities

                                       and

         Unsecured, Adjustable Rate Subordinated Money Market Securities

                                 $350,000,000.00

      U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association
                                   as trustee

                           Dated as of _________, 2000

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                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>         <C>                   <C>                                                                            <C>

ARTICLE I.  DEFINITIONS AND INCORPORATION BY REFERENCE............................................................1
         Section 1.1       Definitions............................................................................1
         Section 1.2       Other Definitions......................................................................5
         Section 1.3       Incorporation by Reference of Trust Indenture Act......................................5
         Section 1.4       Rules of Construction..................................................................6

ARTICLE II.  THE SECURITIES.......................................................................................6
         Section 2.1       Unlimited Amount; Accounts; Interest; Maturity.........................................6
         Section 2.2       Transaction Statement..................................................................8
         Section 2.3       Registrar and Paying Agent.............................................................9
         Section 2.4       Paying Agent to Hold Money in Trust....................................................9
         Section 2.5       Securityholder Lists..................................................................10
         Section 2.6       Transfer and Exchange.................................................................10
         Section 2.7       Payment of Principal and Interest; Principal and
                           Interest Rights Preserved.............................................................11
         Section 2.8       Reserved..............................................................................12
         Section 2.9       Outstanding Securities................................................................12
         Section 2.10      Treasury Securities...................................................................13
         Section 2.11      Reserved..............................................................................13
         Section 2.12      Reserved..............................................................................13
         Section 2.13      Defaulted Interest....................................................................13
         Section 2.14      Book Entry Registration...............................................................13
         Section 2.15      Initial and Periodic Statements.......................................................14

ARTICLE III.  REDEMPTION.........................................................................................15
         Section 3.1       Redemption of Investment Debt Securities..............................................15
         Section 3.2       Redemption of Money Market Securities.................................................15

ARTICLE IV.  COVENANTS...........................................................................................16
         Section 4.1       Payment of Securities.................................................................16
         Section 4.2       Maintenance of Office or Agency.......................................................17
         Section 4.3       SEC Reports and Other Reports.........................................................17
         Section 4.4       Compliance Certificate................................................................18
         Section 4.5       Stay, Extension and Usury Laws........................................................19
         Section 4.6       Liquidation...........................................................................19

ARTICLE V.  SUCCESSORS...........................................................................................19
         Section 5.1       When the Company May Merge, etc.......................................................19
         Section 5.2       Successor Corporation Substituted.....................................................20

</TABLE>

                                       ii
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<S>         <C>                   <C>                                                                            <C>
ARTICLE VI.  DEFAULTS AND REMEDIES...............................................................................20
         Section 6.1       Events of Default.....................................................................20
         Section 6.2       Acceleration..........................................................................21
         Section 6.3       Other Remedies........................................................................22
         Section 6.4       Waiver of Past Defaults...............................................................22
         Section 6.5       Control by Majority...................................................................22
         Section 6.6       Limitation on Suits...................................................................22
         Section 6.7       Rights of Holders to Receive Payment..................................................23
         Section 6.8       Collection Suit by Trustee............................................................23
         Section 6.9       Trustee May File Proofs of Claim......................................................23
         Section 6.10      Priorities............................................................................24
         Section 6.11      Undertaking for Costs.................................................................24

ARTICLE VII.  TRUSTEE............................................................................................25
         Section 7.1       Duties of Trustee.....................................................................25
         Section 7.2       Rights of Trustee.....................................................................26
         Section 7.3       Individual Rights of Trustee..........................................................27
         Section 7.4       Trustee's Disclaimer..................................................................27
         Section 7.5       Notice of Defaults....................................................................27
         Section 7.6       Reports by Trustee to Holders.........................................................27
         Section 7.7       Compensation and Indemnity............................................................28
         Section 7.8       Replacement of Trustee................................................................28
         Section 7.9       Successor Trustee by Merger, etc......................................................30
         Section 7.10      Eligibility; Disqualification.........................................................30
         Section 7.11      Preferential Collection of Claims Against Company.....................................30

ARTICLE VIII.  DISCHARGE OF INDENTURE............................................................................30
         Section 8.1       Termination of Company's Obligations..................................................30
         Section 8.2       Application of Trust Money............................................................31
         Section 8.3       Repayment to Company..................................................................31
         Section 8.4       Reinstatement.........................................................................32

ARTICLE IX.  AMENDMENTS..........................................................................................32
         Section 9.1       Without Consent of Holders............................................................32
         Section 9.2       With Consent of Holders...............................................................33
         Section 9.3       Compliance with Trust Indenture Act...................................................35
         Section 9.4       Revocation and Effect of Consents.....................................................35
         Section 9.5       Notation on or Exchange of Investment Debt Securities.................................35
         Section 9.6       Trustee to Sign Amendments, etc.......................................................36

ARTICLE X.  SUBORDINATION........................................................................................36
         Section 10.1      Agreement to Subordinate..............................................................36
         Section 10.2      Liquidation; Dissolution; Bankruptcy..................................................36
         Section 10.3      Default of Senior Debt................................................................37
         Section 10.4      When Distribution Must Be Paid Over...................................................38
         Section 10.5      Notice by Company.....................................................................39
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                                      iii
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<S>         <C>                   <C>                                                                            <C>

         Section 10.6      Subrogation...........................................................................39
         Section 10.7      Relative Rights.......................................................................39
         Section 10.8      Subordination May Not Be Impaired by the Company
                           or Holders of Senior Debt.............................................................40
         Section 10.9      Distribution or Notice to Representative..............................................41
         Section 10.10     Rights of Trustee and Paying Agent....................................................41
         Section 10.11     Authorization to Effect Subordination.................................................41
         Section 10.12     Article Applicable to Paying Agent....................................................42
         Section 10.13     Miscellaneous.........................................................................42

ARTICLE XI.  MISCELLANEOUS.......................................................................................42
         Section 11.1      Trust Indenture Act Controls..........................................................42
         Section 11.2      Notices...............................................................................42
         Section 11.3      Communication by Holders with Other Holders...........................................44
         Section 11.4      Certificate and Opinion as to Conditions Precedent....................................44
         Section 11.5      Statements Required in Certificate or Opinion.........................................44
         Section 11.6      Rules by Trustee and Agents...........................................................45
         Section 11.7      Legal Holidays........................................................................45
         Section 11.8      No Recourse Against Others............................................................45
         Section 11.9      Duplicate Originals...................................................................45
         Section 11.10     Governing Law.........................................................................45
         Section 11.11     No Adverse Interpretation of Other Agreements.........................................46
         Section 11.12     Successors............................................................................46
         Section 11.13     Severability..........................................................................46
         Section 11.14     Counterpart Originals.................................................................46
         Section 11.15     Table of Contents, Headings, etc......................................................46
</TABLE>

                                       iv
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                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Trust Indenture
   Act Section                                                                                    Indenture Section
   -----------                                                                                    -----------------
<S>                                                                                                           <C>
350(a)(1)......................................................................................................7.10
   (a)(2)......................................................................................................7.10
   (a)(3)......................................................................................................N.A.
   (a)(4)......................................................................................................N.A.
   (a)(5)......................................................................................................N.A.
   (b)....................................................................................................7.8; 7.10
   (c).........................................................................................................N.A.
311(a).........................................................................................................7.11
   (b).........................................................................................................7.11
   (c).........................................................................................................N.A.
312(a)..........................................................................................................2.5
   (b).........................................................................................................11.3
   (c).........................................................................................................11.3
313(a)..........................................................................................................7.6
   (b)(1)......................................................................................................N.A.
   (b)(2).......................................................................................................7.6
   (c)....................................................................................................7.6; 11.2
   (d)..........................................................................................................7.6
314(a)...............................................................................................4.3; 4.4; 11.2
   (b).........................................................................................................N.A.
   (c)(1)......................................................................................................11.4
   (c)(2)......................................................................................................11.4
   (c)(3)......................................................................................................N.A.
   (d).........................................................................................................N.A.
   (e).........................................................................................................11.5
   (f).........................................................................................................N.A.
315(a).......................................................................................................7.1(b)
   (b)....................................................................................................7.5; 11.2
   (c).......................................................................................................7.1(a)
   (d).......................................................................................................7.1(c)
   (e).........................................................................................................6.11
316(a)(last sentence)..........................................................................................2.10
   (a)(1)(A)....................................................................................................6.5
   (a)(1)(B)....................................................................................................6.4
   (a)(2)......................................................................................................N.A.
   (b)..........................................................................................................6.7
   (c).........................................................................................................N.A.
317(a)(1).......................................................................................................6.8
   (a)(2).......................................................................................................6.9
   (b)..........................................................................................................2.4
318(a).........................................................................................................11.1
</TABLE>

N.A. means not applicable
* This Cross Reference Table is not part of the Indenture

                                       v
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         INDENTURE dated as of _________, 2000, by American Business Financial
Services, Inc., a Delaware corporation (the "Company"), and U.S. Bank Trust
National Association, a national banking association, as trustee (the
"Trustee").

         The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the unsecured,
subordinated Investment Debt Securities and the unsecured adjustable rate
subordinated Money Market Securities of the Company issued pursuant to the
Company's registration statement on Form S-2 declared effective by the
Securities and Exchange Commission on or about _________, 2000 (collectively,
the "securities"):

                                   ARTICLE I.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section   1.1 Definitions.

         "Account" means the record of beneficial ownership of a Money Market
Debt Security or Investment Debt Security maintained by the Company.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.

         "Agent" means any Registrar, Paying Agent or co-registrar of the
Securities.

         "Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.

         "Business Day" means any day other than a Legal Holiday.

         "Company" means American Business Financial Services, Inc., unless and
until replaced by a successor in accordance with Article V hereof and thereafter
means such successor.

         "Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is originally dated, located at 180 East 5th Street, Saint Paul,
Minnesota 55101, Attention: Mr. Richard Prokosch, Corporate Finance.

                                       1
<PAGE>

         "Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fiscal Year" means initially a June 30 year end.

         "GAAP" means, as of any date, generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.

         "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

         "Holder" or "Securityholder" means a Person in whose name a Security is
registered.

         "Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
capital Lease obligations) or representing any hedging obligations, except any
such balance that constitutes an accrued expense or a trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
hedging obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and also includes, to the extent not
otherwise included, (a) the Guarantee of items that would be included within
this definition, and (b) liability for items that would arise by operation of a
Person's status as a general partner of a partnership.

         "Indenture" means, this Indenture as amended or supplemented from time
to time.

         "Interest Accrual Date" means with respect to any Security, the date
the Company accepts funds for the purchase of the Security if such funds are
received by 3:00 p.m. (EDT) on a Business Day, or if such funds are not so
received, on the next Business Day.

         "Interest Accrual Period" means, as to each Security, the period from
the later of the Interest Accrual Date of such Security or the day after the
last Payment Date upon which an interest payment was made until the following
Payment Date during which interest accrues on each Security with respect to any
Payment Date.

                                       2
<PAGE>

         "Investment Debt Securities" or "Investment Debt Security" means the
Company's Unsecured Subordinated Investment Debt Security(s) issued under this
Indenture.

         "Issue Date" means, with respect to any Security, the date on which
such Money Market Security is initially registered on the books and records of
the Registrar.

         "Legal Holiday" means a legal holiday in the State of Delaware.

         "Maturity Date" means, with respect to any Security, the date on which
the principal of such Security becomes due and payable as therein provided.

         "Maturity Record Date" means, with respect to any Security, as of 11:59
p.m. of the date fifteen days prior to the Maturity Date or Redemption Date
applicable to such Security.

         "Money Market Security" means the Company's unsecured adjustable rate,
subordinated money market securities issued pursuant to this Indenture.

         "Obligations" means any principal, interest (including Post-Petition
Interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

         "Officer" means the Chairman of the Board or principal executive
officer of the Company, the President or operating officer of the Company, the
Chief Financial Officer or principal financial officer of the Company, the
Treasurer, any Assistant Treasurer, Controller or principal officer of the
Company, Secretary or any Vice-President of the Company.

         "Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the principal executive officer, principal operating officer,
principal financial officer or principal accounting officer of the Company.

         "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

         "Payment Date" means the last day of each calendar month or such other
date as determined by the Holder and the Company or if such day is not a
Business Day, the Business Day immediately following such day and, with respect
to a specific Security, the Maturity Date or Redemption Date of such Security.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

                                       3
<PAGE>

         "Post-Petition Interest" means interest accruing after the commencement
of any bankruptcy or insolvency case or proceeding with respect to the Company
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, at the rate applicable to such Indebtedness,
whether or not such interest is an allowable claim in any such proceeding.

         "Redemption Date" has the meaning given in Article III hereof.

         "Redemption Price" means, with respect to any Security to be redeemed,
the principal amount of such Security plus the interest accrued but unpaid
during the Interest Accrual Period up to the Redemption Date for such security.

         "Regular Record Date" means, with respect to each Payment Date, as of
11:59 p.m. of the date fifteen days prior to such Payment Date.

         "Responsible Officer" when used with respect to the Trustee, means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.

         "SEC" means the U.S. Securities and Exchange Commission.

         "Security" or "Securities" means, the Company's unsecured, subordinated
Investment Debt Securities and the unsecured, adjustable rate, subordinated
Money Market Securities issued under this Indenture.

         "Senior Debt" means any Indebtedness (whether outstanding on the date
hereof or thereafter created) incurred by the Company in connection with
borrowings by the Company (including its subsidiaries) from a bank, trust
company, insurance company, any other institutional lender or other entity which
lends funds in connection with its primary business activities whether such
Indebtedness is or is not specifically designated by the Company as being
"Senior Debt" in its defining instruments.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.

         "Total Permanent Disability" means a determination by a physician
chosen by the Company that the Holder of a Security, who was gainfully employed
on a full time basis at the Issue Date of such security is unable to work on a
full time basis during the succeeding twenty-four months. For purposes of this
definition, "working on a full time basis" shall mean working at least forty
hours per week.

                                       4
<PAGE>
         "Trustee" means U.S. Bank Trust National Association, a national
banking association, until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means the successor
serving hereunder.

         "U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.

Section 1.2   Other Definitions.

                           Term                             Defined in Section
                           ----                           --------------------

                       "Bankruptcy Law"............................6.1
                       "Custodian".................................6.1
                       "Event of Default"..........................6.1
                       "Legal Holiday"............................11.7
                       "Paying Agent"..............................2.3
                       "Payment Blockage Period"..................10.3
                       "Payment Notice"...........................10.3
                       "Registrar".................................2.3

Section 1.3   Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:

                  "indenture securities" means the Securities;

                  "indenture security holder" means a Securityholder;

                  "indenture to be qualified" means this Indenture;

                  "indenture trustee" or "institutional trustee" means the
Trustee;

                  "obligor" on the Securities means the Company or any successor
obligor upon the Securities.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

                                       5
<PAGE>

Section 1.4   Rules of Construction.

                  Unless the context otherwise requires:

                  1. a term has the meaning assigned to it;

                  2. an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  3. references to GAAP, as of any date, shall mean GAAP in
         effect in the United States as of such date;

                  4. "or" is not exclusive,

                  5. words in the singular include the plural, and in the plural
         include the singular; and

                  6. provisions apply to successive events and transactions.

                                   ARTICLE II.
                                 THE SECURITIES

Section 2.1   Unlimited Amount; Accounts; Interest; Maturity.

         The outstanding aggregate principal amount of Securities outstanding at
any time is limited to $350 million, provided, however, that the Company and the
Trustee may, without the consent of any Holder, increase such aggregate
principal amount of Securities which may be outstanding at any time. The
Securities may be subject to notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Company is subject or usage.

         Except as provided in Section 2.14 hereof, each Security shall not be
evidenced by a promissory note. The record of beneficial ownership of the
Securities shall be maintained and updated by the Company through the
establishment and maintenance of Accounts. Each Security shall be in such
denominations as may be designated from time to time by the Company but in no
event in an original denomination less than $1,000. Separate purchases may not
be cumulated to satisfy the minimum denomination requirements. Each Investment
Debt Security shall have a term of not less than three months and not greater
than 120 months as shall be designated by the Company from time to time. Each
Money Market Security shall have no stated term to maturity and shall be
redeemable in increments of $500 (except in the case of the redemption of the
entire account) at the option of the Holder upon written notice to the Company
as provided in Article III of this Indenture. The payment due upon redemption
shall be made within 10 Business Days of the Company's receipt of such notice
from the Holder. The Money Market Security shall be redeemable by the Company
upon 30 days written notice to the Holder thereof. The Investment Debt Security
shall be redeemable by the Company upon 90 days written notice to the Holder
thereof. Such redemption notice shall state the date of the redemption.

                                       6
<PAGE>

         Each Security shall bear interest from and commencing on its Interest
Accrual Date at such rate of interest as the Company shall determine from time
to time; provided, however, that the interest rate will be fixed for the term of
the Investment Debt Securities upon issuance, subject to change upon extension
and the interest rate on the Money Market Securities shall be adjusted by the
Company from time to time in its sole discretion provided that such rate shall
not be less than 4.0% per year. The Company shall provide written notice to all
Holders of the Money Market Securities at least 14 days prior to any decrease in
the interest rate to be paid thereon, which notice shall set forth the new
interest rate to be paid and the effective date of such change. The Company
shall have the right to increase the interest rate paid on the Money Market
Securities at any time without prior notice to the Holders of the Money Market
Securities.

         Interest on an Investment Debt Security with a term of twelve (12)
months or less will compound daily and be payable at maturity. Interest on an
Investment Debt Security of duration longer than twelve (12) months will
compound daily and the Holder thereof may elect to have interest paid monthly,
on the fifteenth day of each calendar month, quarterly, on January 15, April 15,
July 15 and October 15, semi-annually, on January 15 and July 15, annually, on
January 15, or upon maturity. A Holder may change this election once during the
term of the Investment Debt Security. To the extent any applicable interest
payment date is not a Business Day, then interest shall be paid instead on the
next succeeding Business Day. All interest payments on the Investment Debt
Securities shall be approved prior to payment by the Company's Treasurer.

         Interest on a Money Market Security shall compound daily and will be
payable in the form of additional notes. Interest shall be payable on a monthly
basis at the end of each calendar month on any Account with a balance of $1,000
or more. No interest will be paid on any Account for any day during which the
principal balance of such account is less than $1,000. All interest payments on
the Money Market Securities shall be approved prior to payment by the Company's
Treasurer.

         The Company will give each Holder of an Investment Debt Security
(existing as of the applicable Maturity Record Date) a written notice at least
seven days prior to the Maturity Date of the Investment Debt Security held by
such Holder reminding such Holder of the pending maturity of the Investment Debt
Security and noticing the Holder of the Company's intention to repay, or if the
Company does not intend to repay the Investment Debt Security, reminding the
Holder that the automatic extension provision described in the next paragraph
will take effect unless the Holder requests payment. Such notice shall also
state that payment of principal of an Investment Debt Security be made upon
presentation and surrender of such Investment Debt Security and shall specify
the place where such Investment Debt Security may be presented and surrendered
for the making of such payment. If the Company gives notice to a Holder of the
Company's intention to repay an Investment Debt Security at maturity, no
interest will accrue after the Maturity Date for such Investment Debt Security.
Otherwise, if a Holder requests repayment within seven days after the Maturity
Date, the Company will pay interest on the Investment Debt Security during the
period after the Investment Debt Security's Maturity Date and prior to
redemption at the lower of (i) the lowest interest rate then being paid on
Investment Debt Securities being offered by the Company to the general public or
(ii) the rate being paid on such Investment Debt Security immediately prior to
its maturity.

                                       7
<PAGE>

         If, within seven days after the Maturity Date of an Investment Debt
Security, a Holder of such Investment Debt Security has not demanded repayment
of the Investment Debt Security, and the Company has not noticed its intention
to repay such Security at least seven days prior to maturity, such Investment
Debt Security shall be extended automatically for the same term, and shall be
deemed to have been renewed by the Holder thereof as of the Maturity Date. An
Investment Debt Security will continue to renew as described herein absent some
permitted action be either the Holder or the Company. Interest shall continue to
accrue from the first day of such renewed term. Such Investment Debt Security,
as renewed, will continue in all its provisions, including provisions relating
to payment, except that the interest rate payable during any renewed term shall
be the interest rate which is being offered by the Company on similar Investment
Debt Securities as of the renewal date. If similar Investment Debt Securities
are not then being issued, the interest rate upon renewal will be the rate
specified by the Company on or before the Maturity Date of such Investment Debt
Security, or the Investment Debt Security's current rate if no such rate is
specified.

         Investment Debt Securities with a remaining duration of one (1) year or
greater are subject to early repayment at the election (a) of the Holder, who is
a natural person, only upon the occurrence of a Total Permanent Disability of
such Holder (or if such Investment Debt Security is held jointly by a husband
and wife, upon the Total Permanent Disability of one of such spouses), or (b) if
such Investment Debt Security is held jointly by a husband and wife, of a Holder
upon the death of such Holder's spouse. This redemption provision does not apply
to a Holder who is not a natural person such as a trust, partnership or
corporation.

         The Company may modify its policy on redemptions after death or Total
Permanent Disability provided that any change in such policy shall not effect
any outstanding security.

         The terms and provisions contained in the Investment Debt Securities
shall constitute, and are hereby expressly made, a part of this Indenture and to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, and the Holders by accepting the Investment Debt
Securities, expressly agree to such terms and provisions and to be bound
thereby. In case of a conflict, the provisions of this Indenture shall control.

Section 2.2   Transaction Statement.

         A Security shall not be validly issued until a transaction statement
executed by a duly authorized officer of the Company is sent to the purchaser or
transferee thereof and an Account is established by the Company in the name of
such purchaser or transferee.

                                       8
<PAGE>

Section 2.3   Registrar and Paying Agent.

         The Company shall maintain (i) an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Securities may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any
co-registrar, and the term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent or Registrar without prior notice to any
Securityholder; provided that the Company shall promptly notify the
Securityholders of the name and address of any Agent not a party to this
Indenture. The Company may act as Paying Agent and/or Registrar. In the event
the Company uses any Agent other than the Company or the Trustee, the Company
shall enter into an appropriate agency agreement with such Agent, which
agreement shall incorporate the provisions of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.7 hereof.

         The Company shall be the initial Registrar and Paying Agent. The
Company initially appoints Trustee as agent for service of notices and demands
in connection with the Securities. The Company shall act as Registrar and Paying
Agent until such time as the Company gives the Trustee written notice to the
contrary.

Section 2.4   Paying Agent to Hold Money in Trust.

         Prior to each due date of the principal or interest on any Security,
the Company shall deposit with the Paying Agent sufficient funds to pay
principal, premium, if any, and interest then so becoming due and payable in
cash. The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Securities, and will notify the Trustee
promptly in writing of any default by the Company in making any such payment.
While any such default continues, the Trustee shall require a Paying Agent (if
other than the Company) to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Securityholders all money held by it as Paying
Agent. The Company shall notify the Trustee in writing at least 5 days before
the Payment Date of the name and address of the Paying Agent if a person other
than the Company is named Paying Agent at any time or from time to time.

                                       9
<PAGE>

Section 2.5   Securityholder Lists.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders and shall otherwise comply with TIA ss.312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee each quarter during
the term of this Indenture and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders, and the aggregate
principal amount outstanding and the Company shall otherwise comply with TIA
ss.312(a).

Section 2.6   Transfer and Exchange.

         (a) The Securities are not negotiable instruments and cannot be
transferred without the prior written consent of the Company (which consent
shall not be unreasonably withheld). Requests to Registrar for the transfer of
the Accounts maintained for the benefit of the Holders of the Securities shall
be:

                  (i)      made to the Registrar in writing on a form supplied
                           by the Company;

                  (ii)     duly executed by the current holder of the Account,
                           as reflected on the Company's records as of the date
                           of receipt of such transfer request, or his attorney
                           duly authorized in writing;

                  (iii)    accompanied by the written consent of the Company to
                           the transfer; and

                  (iv)     if requested by the Company, an opinion of Holder's
                           counsel (which counsel shall be reasonably acceptable
                           to the Company) that the transfer does not violate
                           any applicable securities laws and/or a signature
                           guarantee.

Upon transfer of a Security, the Company will provide the new registered owner
of the Security with an initial transaction statement which will evidence the
transfer of the account on the Company's records.

         (b) Obligations with respect to Transfers and Exchanges of Securities.

                  (i)      The Company may assess service charges to a Holder
                           for any registration or transfer or exchange, and the
                           Company may require payment of a sum sufficient to
                           cover any transfer tax or similar governmental charge
                           payable in connection therewith (other than any such
                           transfer taxes or similar governmental charge payable
                           upon exchange pursuant to Section 9.5 hereof).

                                       10
<PAGE>

                  (ii)     The Company shall treat the individual or entity
                           listed on each Account maintained by the Company as
                           the absolute owner of the Security represented
                           thereby for purposes of receiving payments thereon
                           and for all other purposes whatsoever.

Section 2.7   Payment of Principal and Interest; Principal and Interest
              Rights Preserved.

         (a) Each Security shall accrue interest at the rate specified for such
Security and such interest shall be payable on each Payment Date following the
Issue Date for such Security, until the principal thereof becomes due and
payable. Any installment of interest payable on a Security that is caused to be
punctually paid or duly provided for by the Company on the applicable Payment
Date shall be paid to the Holder in whose name such Security is registered in
the Security Register on the applicable Regular Record Date: (i) with respect to
the Investment Debt Securities outstanding, by check mailed to such Holder's
address as it appears in the Security Register on such Regular Record Date, and
(ii) with respect to the Money Market Securities outstanding, by crediting the
Account of each Holder of a Money Market Security as of the last day of each
calendar date month following the Issue Date with additional Money Market
Securities in an amount equal to the interest due on the balance maintained in
the Account during the preceding calendar month provided that no interest shall
accrue for any day in which the balance in an Account is less than $1,000. The
payment of any interest payable in connection with the payment of any principal
payable with respect to such Security on a Maturity Date or Redemption Date
shall be payable as provided below. Any funds with respect to which such checks
were issued which remain uncollected shall be held in accordance with Section
8.3 hereof. Any installment of interest not punctually paid or duly provided for
shall be payable in the manner and to the Holders specified in Section 2.13
hereof.

         (b) Each of the Investment Debt Securities shall have stated maturities
of principal as shall be indicated in each such Security. The principal of each
Investment Debt Security shall be paid in full no later than the Maturity Date
thereof unless the term of such Security is extended pursuant to Section 2.1
hereof or such Investment Debt Security becomes due and payable at an earlier
date by acceleration, redemption or otherwise. The interest rate paid on the
Money Market Securities shall be adjusted by the Company from time to time in
its sole discretion provided that such rate shall not be less than 4.0% per
year. The Company shall provide written notice to all Holders of the Money
Market Securities at least 14 days prior to any decrease in the interest rate to
be paid thereon, which notice shall set forth the new interest rate to be paid
and the effective date of such change. The Company shall have the right to
increase the interest rate paid on the Money Market Securities at any time
without prior notice to the Holders of the Money Market Securities.

         Interest on each Security shall be due and payable on each Payment Date
at the interest rate applicable to such Security for the Interest Accrual Period
related to such Security and such Payment Date.

         Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Securities, if the Securities have
become or been declared due and payable following an Event of Default, then
payments of principal of and interest on the Securities shall be made in
accordance with Article 6 hereof.

                                       11
<PAGE>

         The principal payment made on any Investment Debt Security on any
Maturity Date (or the Redemption Price of any Security required to be redeemed),
and any accrued interest thereon, shall be payable on or after the Maturity Date
or Redemption Date therefor at the office or agency of the Company maintained by
it for such purpose pursuant to Section 2.3 hereof or at the office of any
Paying Agent for such Investment Debt Security.

         The principal payment made on any Money Market Security on any
Redemption Date and any accrued interest thereon, shall be payable within 10
Business Days of the Company's receipt of written notice executed by the Holder
or his duly authorized representative on a form acceptable to the Company at the
office or agency of the Company maintained by it for such purpose pursuant to
Section 2.3 hereof or at the office of any Paying Agent for such Money Market
Securities. All such payments made upon redemption of the Money Market
Securities shall be made in U.S. dollars.

         (c) All computations of interest due with respect to any Security shall
be made, unless otherwise specified in the Security, based upon the actual
number of days (e.g., 365 or 366) in the applicable year.

Section 2.8   Right of Set-Off In Certain Circumstances.

         Subject to the conditions of applicable law, if the holder of a
Security is a borrower or guarantor on a loan, lease or other obligation owned
by one of the Company's affiliates or subsidiaries, including, but not limited
to American Business Credit, New Jersey Mortgage and Investment Corp. and Upland
Mortgage, and that obligation becomes delinquent or otherwise in default, the
Company reserves the right to set-off principal and interest payments due on the
Securities against all sums due by the holder of the affiliate or subsidiary
pursuant to the set-off terms contained in the loan, lease, other indebtedness
or the guarantee. If the Company elects to exercise its right of set-off, the
Security shall automatically be deemed redeemed as of the date of set-off
without regard to any notice period otherwise applicable to redemption by the
Company.

Section 2.9   Outstanding Securities.

         The Securities outstanding at any time are (i) the outstanding balances
of all Accounts representing the Investment Debt Securities maintained by the
Company or such other entity as the Company designated as Registrar, and (ii)
the outstanding balances of all of the Accounts representing the Money Market
Securities maintained by the Company or such other entity as the Company
designates as Registrar.

         If the principal amount of any Security is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.

                                       12
<PAGE>

         Subject to Section 2.10 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.

Section 2.10   Treasury Securities.

         In determining whether the holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded.

Section 2.11   Reserved.

Section 2.12   Reserved.

Section 2.13   Defaulted Interest.

         If the Company defaults in a payment of interest on any Security, it
shall pay the defaulted interest plus, to the extent lawful, any interest
payable on the defaulted interest, to the Holder of such Security on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least 5 Business Days prior to the payment date, in
each case at the rate provided in the Security. The Company shall, with written
notification to the Trustee, fix or cause to be fixed each such special record
date and payment date. At least 15 days before any such special record date, the
Company (or the Trustee, in the name of and at the expense of the Company) shall
mail to Securityholder(s) a notice that states the special record date, the
related payment date and the amount of such interest to be paid.

Section 2.14   Book Entry Registration.

         The Registrar shall maintain a book entry registration and transfer
system through the establishment of Accounts for the benefit of Holders of
Securities as the sole method of recording the ownership and transfer of
ownership interests in such Securities. The registered owners of the Accounts
established by the Company in connection with the purchase or transfer of the
Securities shall be deemed to be the Holders of the Securities outstanding for
all purposes under this Indenture. The Company shall promptly notify the
Registrar of the acceptance of a subscriber's order to purchase a Security and
the Registrar shall credit its book-entry registration and transfer system to

                                       13

<PAGE>

the Account of each Security purchaser, the principal amount of such Security
owned of record by the purchaser. The total amount of any principal and/or
interest (which shall be paid in the form of additional notes) due and payable
to book entry owners of the Accounts maintained by the Company as provided in
this Indenture shall be credited to such Accounts by the Company within the time
frames provided in this Indenture. The Trustee shall review the book entry
registration and transfer system as it deems necessary to ensure the Company's
compliance with the terms of the Indenture.

         Book-entry accounts representing interests in the Securities shall not
be exchangeable for Securities in denominations of $1,000 and any amount in
excess thereof and fully registered in the names as the Company directs unless
(a) the Company at its option advises the Trustee in writing of its election to
terminate the book-entry system, or (b) after the occurrence of any Event of
Default, Holders of a majority of the Money Market Securities or Investment Debt
Securities then outstanding (as determined based upon the latest quarterly
statement provided to the Trustee pursuant to Section 4.3(d) hereof) advise the
Trustee in writing that the continuation of the book-entry system is no longer
in the best interests of such Holders and the Trustee notifies all Holders of
the Money Market Securities or Investment Debt Securities, as the case may be,
of such event and the availability of definitive notes to the Holders of Money
Market Securities or Investment Debt Securities, as the case may be, requesting
such notes in definitive form.

Section 2.15   Initial and Periodic Statements.

         (1) The Company shall provide initial transaction statements to initial
purchasers, registered owners, registered pledgees, former registered owners and
former pledgees, within two business days of the purchase, transfer or pledge of
a Security.

         (2) The Company shall send each Holder of a Security (and each
registered pledgee) via U.S. mail not later than ten business days after each
month end in the case of money market securities and after each quarter end in
the case of Investment Debt Securities in which such Holder had an outstanding
balance in such holder's Account, a statement which indicates as of the calendar
month end preceding the mailing: (a) the balance of such Account; (b) interest
credited; (c) withdrawals made, if any; and (d) the interest rate paid on such
Account during the preceding calendar month. The Company shall provide
additional statements as the holders or registered pledgees of the Securities
may reasonably request from time to time. The Company may charge such holders or
pledgees requesting such statements a fee to cover the charges incurred by the
Company in providing such additional statements.

                                       14
<PAGE>
                                  ARTICLE III.
                                   REDEMPTION

Section 3.1   Redemption of Investment Debt Securities.

         The Company may not redeem, in whole or in part, any Investment Debt
Security prior to the scheduled Maturity Date of the Security except upon 90
days written notice to the Holder thereof listed on the records maintained by
the Company. In addition, except as provided in this Article III, the Company
shall have no mandatory redemption or sinking fund obligations with respect to
any of the Investment Debt Securities.

         Upon the death or Total Permanent Disability of a Holder of an
Investment Debt Security, who is a natural person, the estate of such Holder (in
the event of death) or such Holder (in the event of Total Permanent Disability)
may require the Company to redeem, in whole and not in part, the Investment Debt
Security held by such Holder, who is a natural person, provided that such
Investment Debt Security has a remaining maturity of one (1) year or greater at
the time of such death or disability by delivering to the Company an irrevocable
election (a "Redemption Election") requiring the Company to make such
redemption. In the event an Investment Debt Security is held jointly by two or
more natural Persons (including without limitation joint owners that are not
legally married), the Company shall not be required to redeem such Investment
Debt Security if either joint holder of such Investment Debt Security has either
died or suffered a Total Permanent Disability. Notwithstanding the foregoing
sentence, if an Investment Debt Security is held jointly by a husband and wife,
such Investment Debt Security shall be subject to the elective redemption
provisions of this Article III upon the death or Total Permanent Disability of
either spouse. If the Investment Debt Security is held by a Holder who is not a
natural person such as a trust, partnership, corporation or other similar
entity, the redemption upon death or disability does not apply. Upon receipt of
a Redemption Election, the Company shall designate the Redemption Date for such
Investment Debt Security, which Redemption Date shall be no more than fifteen
days after the Company's receipt of the Redemption Election, and shall pay the
Redemption Price to the estate of the Holder or the Holder, as the case may be,
in accordance with the provisions set forth in Section 2.7 hereof. No interest
shall accrue on an Investment Debt Security to be redeemed under this Article
III for any period of time after the Redemption Date for such Investment Debt
Security and after the Company has tendered the Redemption Price to the Estate
of the Holder or to the Holder, as the case may be.

         The Company, may offer, in its sole discretion, certain Holders of
Investment Notes, the ability to extend the maturity of an existing Investment
Note through the redemption of the current note and the issuance of a new note.
This redemption option shall not be subject to the 90 day notice of redemption
described in this section.

Section 3.2   Redemption of Money Market Securities.

         The Company may not redeem, in whole or in part, any Money Market
Security except upon 30 days prior written notice to the Holder thereof listed
on the records maintained by the Company. In addition, except as provided in
this Article III, the Company shall have no mandatory redemption or sinking fund
obligations with respect to any of the Money Market Securities.

                                       15
<PAGE>

         Any Holder of a Money Market Security may require the Company to
redeem, in whole and or in part, in increments of $500 (except in the case of
redemption of an entire account), the Money Market Security held by such Holder
by delivering to the Company an irrevocable election (a "Redemption Election")
requiring the Company to make such redemption or by executing a draft in a form
provided by or approved by the Company. Upon receipt of a Redemption Election,
the Company shall designate the Redemption Date for such Money Market Security,
which Redemption Date shall be within ten (10) Business Days after the Company's
receipt of the Redemption Election, and shall pay the Redemption Price to (i)
the Holder or his duly authorized attorney in fact, as the case may be, in
accordance with the provisions set forth in Section 2.7 hereof, or (ii) in the
case of a draft, to the intermediary which presented the draft to the Company's
designated bank for collection on behalf of a payee. No interest shall accrue on
a Money Market Security to be redeemed under this Section 3.2 of Article III for
any period of time after the Redemption Date for such Money Market Security and
after the Company has tendered the Redemption Price to the Holder of the Money
Market Security or his duly authorized attorney in fact.

                                   ARTICLE IV.
                                    COVENANTS

Section 4.1   Payment of Securities.

         The Company shall duly pay the principal of and interest on each
Security on the dates and in the manner provided in the Prospectus related to
such Securities. Principal and interest (to the extent such interest is paid in
cash) shall be considered paid on the date due if the Paying Agent, if other
than the Company, holds at least one Business Day before that date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal and interest then due; provided, however, that
principal and interest shall not be considered paid within the meaning of this
Section 4.1 if money is held by the Paying Agent for the benefit of holders of
Senior Debt pursuant to the provisions of Article 10 hereof. The payment of
interest on the Money Market Securities shall be paid in the form of additional
notes as provided for in Section 2.1 hereof. Such Paying Agent shall return to
the Company, no later than 5 days following the date of payment, any money
(including accrued interest) that exceeds such amount of principal and interest
paid on the Securities in accordance with this Section 4. 1.

         To the extent lawful, the Company shall pay interest (including
Post-Petition Interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate borne by the Securities, compounded semi-annually; it
shall pay interest (including Post-Petition Interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate, compounded semi-annually.

                                       16
<PAGE>

Section 4.2   Maintenance of Office or Agency.

         The Company will maintain an office or agency (which may be an office
of the Trustee, Registrar or coregistrar) where Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

         The Company hereby designates its office at Balapointe Office Centre,
111 Presidential Boulevard, Bala Cynwyd, Pennsylvania as one such office or
agency of the Company in accordance with Section 2.3.

Section 4.3   SEC Reports and Other Reports.

         (a) The Company shall file with the Trustee, within 15 days after
filing with the SEC, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) that the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the
Company is not subject to the requirements of such Section 13 or 15(d) of the
Exchange Act, the Company shall continue to file with the SEC and the Trustee on
the same timely basis such reports, information and other documents as it would
file if it were subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the provisions of TIA
ss.314(a). Notwithstanding anything contrary herein the Trustee shall have no
duty to review such documents for purposes of determining compliance with any
provisions of the Indenture.

         (b) So long as any of the Securities remain outstanding, the Company
shall cause an annual report to stockholders and each quarterly or other
financial report furnished by it generally to stockholders to be filed with the
Trustee at the time of such mailing or furnishing to stockholders. If the
Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements, including any notes thereto (and, with respect to annual reports, an
auditors' report by the Company's certified independent accountants) and a
"Management's Discussion and Analysis of Financial Condition or Plan of
Operations," comparable to that which would have been required to appear in
annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act
to be so filed with the Trustee within 120 days after the end of each of the
Company's fiscal years and within 60 days after the end of each of the first
three quarters of each such fiscal year.

                                       17

<PAGE>
         (c) Whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information with the SEC for public
availability and make such information available to investors who request it in
writing.

         (d) The Company, or such other entity as the Company shall designate as
Registrar for the Money Market Securities as provided in Section 7.3 hereof,
shall provide the Trustee with quarterly management reports which provide the
Trustee with such information regarding the Accounts maintained by the Company
for the benefit of the Holders of the Money Market Securities as the Trustee may
reasonably request which information shall include at least the following: (1)
the outstanding balance of each Account; (2) interest credited or withdrawals
made for the period; (3) the amount of interest paid in the form of additional
notes at each month end and (3) the interest rate paid on each Account
maintained by the Company during the preceding quarterly period.

Section 4.4   Compliance Certificate.

         (a) The Company shall deliver to the Trustee, within 120 days after the
end of each Fiscal Year, an Officers' Certificate stating that a review of the
activities of the Company during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to determining whether each
has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge each has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he may
have knowledge and what action each is taking or proposes to take with respect
thereto) and that to the best of his knowledge no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest, if any, on the Securities are prohibited or if such event has
occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.

         (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.3 above shall be accompanied by a
written statement of the Company's independent public accountants that in making
the examination necessary for certification of such financial statements nothing
has come to their attention which would lead them to believe that the Company
has violated the provisions of Section 4. 1 of this Indenture or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.

         (c) The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

                                       18
<PAGE>

Section 4.5   Stay, Extension and Usury Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all beneficial advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.

Section 4.6   Liquidation.

         The Board of Directors or the stockholders of the Company may not adopt
a plan of liquidation that provides for, contemplates or the effectuation of
which is preceded by (a) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company otherwise than substantially
as an entirety (Section 5.1 of this Indenture being the Section hereof which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety) and (b) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of capital stock of the Company,
unless the Company, prior to making any liquidating distribution pursuant to
such plan, makes provision for the satisfaction of the Company's Obligations
hereunder and under the Securities as to the payment of principal and interest.

                                   ARTICLE V.
                                   SUCCESSORS

Section 5.1   When the Company May Merge, etc.

         The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless (a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made assumes all the obligations of the Company pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Securities
and this Indenture; and (c) immediately after such transaction no Default or
Event of Default exists.

                                       19
<PAGE>

         The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture. The Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and Opinion of Counsel.

Section 5.2   Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor corporation formed by such
consolidation or into or with which the Company, is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; provided, however, that the Company shall not be released
or discharged from the obligation to pay the principal of or interest on the
Securities.

                                   ARTICLE VI.
                              DEFAULTS AND REMEDIES

Section 6.1   Events of Default.

                  An "Event of Default" occurs if:

                           (1) the Company defaults in the payment of interest
                  on a Security when the same becomes due and payable and the
                  Default continues for a period of 30 days, whether or not such
                  payment is prohibited by the provisions of Article 10 hereof;

                           (2) the Company defaults in the payment of the
                  principal of any Security when the same becomes due and
                  payable at maturity, upon a required redemption or otherwise,
                  and the Default continues for a period of 30 days, whether or
                  not prohibited by the provisions of Article 10 hereof;

                           (3) the Company fails to observe or perform any
                  covenant, condition or agreement on the part of the Company to
                  be observed or performed pursuant to Section 4.6 or 5.1
                  hereof;

                           (4) the Company fails to comply with any of its other
                  agreements or covenants in, or provisions of, the Securities
                  or this Indenture and the Default continues for the period and
                  after the notice specified below;

                                       20
<PAGE>

                           (5) the Company pursuant to or within the meaning of
                  any Bankruptcy Law (a) commences a voluntary case; (b)
                  consents to the entry of an order for relief against it in an
                  involuntary case; (c) consents to the appointment of a
                  Custodian of it or for all or substantially all of its
                  property; (d) makes a general assignment for the benefit of
                  its creditors; or (e) admits in writing its inability to pay
                  debts as the same become due; or

                           (6) a court of competent jurisdiction enters an order
                  or decree under any Bankruptcy Law that (a) is for relief
                  against the Company in an involuntary case; (b) appoints a
                  Custodian of the Company or for all or substantially all of
                  its property; (c) orders the liquidation of the Company, and
                  the order or decree remains unstayed and in effect for 120
                  consecutive days; and

         The term "Bankruptcy Law" means title II, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

         A Default under clause (3) or (4) of Section 6.1 is not an Event of
Default until the Trustee or the Holders of at least a majority in principal
amount of the then outstanding Securities notify the Company of the Default and
the Company does not cure the Default or such Default is not waived within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."

Section 6.2   Acceleration.

         If an Event of Default (other than an Event of Default specified in
clauses (5) or (6) of Section 6.1) occurs and is continuing, the Trustee by
notice to the Company or the Holders of at least a majority in principal amount
of the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately; provided, however, that if any
Indebtedness or Obligation is outstanding pursuant to the Senior Debt, upon a
declaration of acceleration by the Holders, all principal and interest under
this Indenture shall be due and payable upon the earlier of (x) the day which is
5 Business Days after the receipt by each of the Company and the holders of
Senior Debt of such written notice of acceleration or (y) the date of
acceleration of any Indebtedness under any Senior Debt. If an Event of Default
specified in clause (5) or (6) of Section 6.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the then outstanding Securities by written notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.

                                       21
<PAGE>

Section 6.3   Other Remedies.

          If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Securities or to enforce the performance of any provision of the Securities
or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.4   Waiver of Past Defaults.

         Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of the principal of or interest on any Security held by a
non-consenting Holder. Upon actual receipt of any such notice of waiver by a
Responsible Officer of the Trustee, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

Section 6.5   Control by Majority.

         The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it, provided, that indemnification for the Trustee's fees and
expenses, in a form reasonably satisfactory to the Trustee, shall have been
provided. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders, or that may involve the
Trustee in personal liability.

Section 6.6   Limitation on Suits.

         A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:

                  (1) the Holder gives to the Trustee written notice of a
         continuing Event of Default;

                  (2) the Holders of at least a majority in principal amount of
         the then outstanding Securities make a written request to the Trustee
         to pursue the remedy;

                                       22
<PAGE>

                  (3) such Holder or Holders offer and, if requested, provide to
         the Trustee indemnity satisfactory to the Trustee against any loss,
         liability or expense;

                  (4) the Trustee does not comply with the request within 60
         days after receipt of the request and the offer and, if requested, the
         provision of indemnity; and

                  (5) during such 60 day period the Holders of a majority in
         principal amount of the then outstanding Securities do not give the
         Trustee a direction inconsistent with the request.

A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.

Section 6.7   Rights of Holders to Receive Payment.

         Notwithstanding any other provision of this Indenture, but subject to
Article 10 hereof, the right of any Holder of a Security to receive payment of
principal and interest on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.

Section 6.8   Collection Suit by Trustee.

         If an Event of Default specified in Section 6.1 (1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

Section 6.9   Trustee May File Proofs of Claim.

         The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,

                                       23
<PAGE>

expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders of the
Securities may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

         If the Trustee does not file a proper claim or proof of debt in the
form required in any such proceeding prior to 30 days before the expiration of
the time to file such claims or proofs, then any holder of Senior Debt shall
have the right to demand, sue for, collect and receive the payments and
distributions in respect of the Securities which are required to be paid or
delivered to the holders of Senior Debt as provided in Article 10 hereof and to
file and prove all claims therefor and to take all such other action in the name
of the Holders or otherwise, as such holder of Senior Debt may determine to be
necessary or appropriate for the enforcement of the provisions of Article 10.

Section 6.10   Priorities.

         If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Article 10 hereof, pay out the money in the
following order:

         First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7, including payment of all compensation, expenses and liabilities
incurred, and all advances made, if any, by the Trustee and the costs and
expenses of collection;

         Second: to Holders of Senior Debt to the extent required by Article 10
hereof;

         Third: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and

         Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.

         The Trustee may fix a record date and payment date for any payment to
Holders.

Section 6.11   Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the

                                       24

<PAGE>

court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.

                                  ARTICLE VII.
                                     TRUSTEE

Section 7.1   Duties of Trustee.

         (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

         (b)      Except during the continuance of an Event of Default:

                  (1) The duties of the Trustee shall be determined solely by
         the express provisions of this Indenture and the Trustee need perform
         only those duties that are specifically set forth in this Indenture and
         no others, and no implied covenants or obligations shall be read into
         this Indenture against the Trustee.

                  (2) In the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon resolutions,
         statements, reports, documents, orders, certificates, opinions or other
         instruments furnished to the Trustee and conforming to the requirements
         of this Indenture. However, in the case of any of the above that are
         specifically required to be furnished to the Trustee pursuant to this
         Indenture, the Trustee shall examine them to determine whether they
         substantially conform to the requirements of this Indenture.

         (c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                  (1) This paragraph does not limit the effect of paragraph (2)
         of this Section.

                  (2) The Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer, unless it is proved that
         the Trustee was negligent in ascertaining the pertinent facts.

                  (3) The Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance with a direction
         received by it pursuant to Section 6.5.

                                       25
<PAGE>

         (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section.

         (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.

         (f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.2   Rights of Trustee.

         (a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented to it by the proper Person.
The Trustee need not investigate any fact or matter stated in the document. The
Trustee shall have no duty to inquire as to the performance of the Issuers'
covenants in Article 4. In addition, the Trustee shall not be deemed to have
knowledge of any Default or any Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.

         (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

         (c) The Trustee may act through agents, attorneys, custodians or
nominees and shall not be responsible for the misconduct or negligence or the
supervision of any agents, attorneys, custodians or nominees appointed by it
with due care.

         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

         (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

         (f) The Trustee shall not be deemed to have notice of an Event of
Default for any purpose under this Indenture unless notified of such Event of
Default by the Company, the Paying Agent (if other than the Company) or a Holder
of the Securities.

                                       26
<PAGE>

Section 7.3   Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.

Section 7.4   Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.

Section 7.5   Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
a notice of the Default or Event of Default within 90 days after it occurs. At
least 5 Business Days prior to the mailing of any notice to Holders under this
Section 7.5, the Company shall provide the Company with notice of its intent to
mail such notice. Except in the case of a Default or Event of Default in payment
on any Security, the Trustee may withhold the notice if and so long as the
Responsible Officers of the Trustee in good faith determines that withholding
the notice would have no material adverse effect on the Holders.

Section 7.6   Reports by Trustee to Holders.

         Within 60 days after May 15th of each fiscal year, commencing May 15,
2001, the Trustee shall mail to Holders a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the 12 months preceding the reporting date,
no report need be prepared or transmitted). The Trustee also shall comply with
TIA ss. 313(b). The Trustee shall also transmit by mail all reports as required
by TIA ss. 313(c).

         Commencing at the time this Indenture is qualified under the TIA, a
copy of each report mailed to Holders under this Section 7.6 (at the time of its
mailing to Holders) shall be filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Company shall promptly notify the
Trustee when the Securities are listed on any stock exchange.

                                       27
<PAGE>

Section 7.7   Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and its performance of the
duties and services required hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.

         The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except as set
forth in the second next paragraph. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder, except to the extent the Company is prejudiced thereby. The Company
shall defend the claim and the Trustee shall reasonably cooperate in such
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such one counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.

         The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.

         The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.

         To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on the Securities. Such lien shall survive the satisfaction and
discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

Section 7.8   Replacement of Trustee.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.

         The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if.

                                       28
<PAGE>
                  (1) the Trustee fails to comply with Section 7.10;

                  (2) the Trustee is adjudged a bankrupt or an insolvent or an
         order for relief is entered with respect to the Trustee under any
         Bankruptcy Law;

                  (3) a Custodian or public officer takes charge of the Trustee
         or its property;

                  (4) the Trustee becomes incapable of acting as Trustee under
         this Indenture, or

                  (5) the Company so elects, provided such replacement Trustee
         is qualified and reasonably acceptable.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a different successor Trustee to replace the successor Trustee appointed by the
Company.

         If a successor Trustee does not take office within 30 days after notice
that the Trustee has resigned or has been removed, the Company or the Trustee or
the Holders of at least a majority in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

         If the Trustee after written request by any Holder who has been a
Holder for at least 6 months fails to comply with Section 7.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to all Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the lien provided for in
Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.

                                       29
<PAGE>

Section 7.9   Successor Trustee by Merger, etc.

         If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

Section 7.10   Eligibility; Disqualification.

         There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state or territory thereof or of the District of Columbia
authorized under such laws to exercise corporate trustee power, shall be subject
to supervision or examination by Federal, state, territorial or District of
Columbia authority and shall have a combined capital and surplus of at least
$500,000 as set forth in its most recent published annual report of condition.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 350(a)(1). The Trustee is subject to TIA ss. 350(b).

Section 7.11   Preferential Collection of Claims Against Company.

         The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.

                                  ARTICLE VIII.
                             DISCHARGE OF INDENTURE

Section 8.1   Termination of Company's Obligations.

         This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.7 and 8.4, and the Company's, Trustee's
and Paying Agent's obligations under Section 8.3 shall survive) when all
outstanding Investment Debt Securities have been paid in full and all
outstanding Money Market Securities redeemed and the Company has paid all sums
payable by the Company hereunder. In addition, the Company may terminate all of
its obligations under this Indenture if:

                  (1) the Company irrevocably deposits in trust with the Trustee
         or at the option of the Trustee, with a trustee reasonably satisfactory
         to the Trustee and the Company under the terms of an irrevocable trust
         agreement in form and substance satisfactory to the Trustee, money or
         U.S. Government Obligations sufficient (as certified by an independent
         public accountant designated by the Company) to pay principal and
         interest on the Securities to maturity or redemption, as the case may
         be, and to pay all other sums payable by it hereunder, provided that
         (i) the trustee of the irrevocable trust shall have been irrevocably

                                       30
<PAGE>

         instructed to pay such money or the proceeds of such U.S. Government
         Obligations to the Trustee and (ii) the Trustee shall have been
         irrevocably instructed to apply such money or the proceeds of such U.S.
         Government Obligations to the payment of said principal and interest
         with respect to the Securities;

                  (2) the Company delivers to the Trustee an Officers'
         Certificate stating that all conditions precedent to satisfaction and
         discharge of this Indenture have been complied with; and

                  (3) no Event of Default or event (including such deposit)
         which, with notice or lapse of time, or both, would become an Event of
         Default with respect to the Securities shall have occurred and be
         continuing on the date of such deposit.

Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
The Company may make the deposit only if Article X hereof does not prohibit such
payment. However, the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.8, 4.1, 4.2, 4.3, 7.7, 7.8, 8.3 and 8.4 and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Securities are no longer
outstanding. Thereafter, only the Company's obligations in Section 7.7 and 8.4
and the Company's, Trustee's and Paying Agent's obligations in Section 8.3 shall
survive.

         After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon written
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.

         In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest at least one Business Day before such payment date in
such amounts as will provide the necessary money. U.S. Government Obligations
shall not be callable at the issuer's option.

Section 8.2   Application of Trust Money.

         The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 8. 1. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.

Section 8.3   Repayment to Company.

         The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.

                                       31
<PAGE>
         The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have either caused
notice of such payment to be mailed to each Holder entitled thereto no less than
30 days prior to such repayment or within such period shall have published such
notice in a newspaper of widespread circulation published in the City of
Philadelphia. After payment to the Company, Holders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.

Section 8.4   Reinstatement.

         If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2; provided, however,
that if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment, as long as no money is owed to the Trustee by the Company, from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.

                                   ARTICLE IX.
                                   AMENDMENTS

Section 9.1   Without Consent of Holders.

         The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Holder:

                  (1) to cure any ambiguity, defect or inconsistency;

                  (2) to comply with Section 5.1;

                  (3) to provide for additional uncertificated Securities or
         certificated Securities;

                  (4) to make any change that does not adversely affect the
         legal rights hereunder of any Holder, including but not limited to an
         increase in the aggregate dollar amount of Securities which may be
         outstanding under this Indenture;

                                       32
<PAGE>
                  (5) make any change in the second paragraph of Article 3;
         provided, however, that no such change shall adversely affect the
         rights of any outstanding Security; or

                  (6) to comply with any requirements of the SEC in connection
         with the qualification of this Indenture under the TIA.

Section 9.2   With Consent of Holders.

         The Company and the Trustee may amend this Indenture or the Securities
with the written consent of the Holders of at least a majority in principal
amount of the then outstanding Securities. The Holders of a majority in
principal of the then outstanding Securities may also waive any existing default
or compliance with any provision of this Indenture or the Securities. However,
without the consent of the Holder of each Investment Debt Security affected, an
amendment or waiver under this Section may not (with respect to any Investment
Debt Security held by a nonconsenting Holder):

                  (1) reduce the principal amount of Investment Debt Securities
         whose Holders must consent to an amendment, supplement or waiver;

                  (2) reduce the rate of or change the time for payment of
         interest, including default interest, on any Investment Debt Security;

                  (3) reduce the principal of or change the fixed maturity of
         any Investment Debt Security or alter the redemption provisions or the
         price at which the Company shall offer to purchase such Investment Debt
         Security pursuant to Section 3.1 of Article III hereof;

                  (4) make any Investment Debt Security payable in money other
         than that stated in the Prospectus (or related supplement) with respect
         to such Investment Debt Security;

                  (5) Modify or eliminate the right of the estate of a Holder or
         a Holder to cause the Company to redeem an Investment Debt Security
         upon the death or Total Permanent Disability of a Holder pursuant to
         Article III; provided, however, that the Company may not modify or
         eliminate such right, as it may be in effect on the Issue Date, of any
         Investment Debt Security which was issued with such right. After an
         amendment under this subsection 9.1(5) becomes effective, the Company
         shall mail to the Holders of each Investment Debt Security then
         outstanding a notice briefly describing the amendment.

                  (6) make any change in Section 6.4 or 6.7 hereof or in this
         sentence of this Section 9.2;

                  (7) make any change in Article X that adversely affects the
         rights of any Holders; or

                                       33
<PAGE>

                  (8) waive a Default or Event of Default in the payment of
         principal of, or premium, if any, or interest on, or redemption payment
         with respect to, any Security (except a rescission of acceleration of
         the Investment Debt Securities by the Holders of at least a majority in
         aggregate principal amount of the Investment Debt Securities and a
         waiver of the payment default that resulted from such acceleration).

Without the consent of each Holder of Money Market Securities affected, an
amendment or waiver under this Section may not (with respect to any Money Market
Security held by a nonconsenting Holder):

                  (1) reduce the principal amount (other than as a result of
         withdrawals made by the Holder) of a Money Market Security whose Holder
         must consent to an amendment, supplement or waiver;

                  (2) reduce the rate of interest paid on the Money Market
         Securities, other than interest rate adjustments as provided for in
         Article II hereof, or change the time for payment of interest,
         including default interest, on any Security;

                  (3) reduce the principal of (other than as a result of
         withdrawals made by the Holder) or alter the redemption provisions or
         the price at which the Company shall offer to purchase such Money
         Market Security pursuant to Section 3.2 of Article III hereof;

                  (4) make any Money Market Security payable in money other than
         that stated in this Indenture;

                  (5) make any change in Section 6.4 or 6.7 hereof or in this
         sentence of this Section 9.2;

                  (6) make any change in Article 10 that adversely affects the
         rights of any Holders; or

                  (7) waive a Default or Event of Default in the payment of
         principal of, or premium, if any, or interest on, or redemption payment
         with respect to, any Money Market Security (except a rescission of
         acceleration of the Money Market Securities by the Holders of at least
         a majority in aggregate principal amount of the Money Market Securities
         and a waiver of the payment default that resulted from such
         acceleration).

         It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.

                                       34
<PAGE>

         After an amendment or waiver under this Section becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver. Subject to
Sections 6.4 and 6.7 hereof, the Holders of a majority in principal amount of
the Securities then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities.

Section 9.3   Compliance with Trust Indenture Act.

         If at the time this Indenture shall be qualified under the TIA, every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.

Section 9.4   Revocation and Effect of Consents.

         Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. An amendment or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.

         The Company may fix a record date for determining which Holders must
consent to such amendment or waivers. If the Company fixes a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or
(iii) such other date as the Company shall designate.

Section 9.5   Notation on or Exchange of Investment Debt Securities.

         The Trustee may place an appropriate notation about an amendment or
waiver on any Security, if certificated, or any Account statement.

         Failure to make the any notation or issue a new note shall not affect
the validity and effect of such amendment or waiver.

                                       35
<PAGE>

Section 9.6   Trustee to Sign Amendments, etc.

         The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if, in the Trustee's reasonable
discretion, the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive, if requested, an indemnity
reasonably satisfactory to it and to receive and, subject to Section 7.1, shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel (or written advice of counsel) as conclusive evidence that such
amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until its Board of Directors approves it.

                                   ARTICLE X.
                                  SUBORDINATION

Section 10.1   Agreement to Subordinate.

         The Company agrees, and each Holder by accepting a Security consents
and agrees, that the Indebtedness evidenced by the Securities and the payment of
the principal of and interest on the Securities is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the prior
payment in full, in cash, cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, of all Obligations due in respect of Senior Debt
of the Company whether outstanding on the date hereof or hereafter incurred, and
that the subordination is for the benefit of the holders of Senior Debt.

         For purposes of the Article 10, a payment or distribution on account of
the Securities may consist of cash, property or securities, by set-off or
otherwise, and a payment or distribution on account of any of the Securities
shall include, without limitation, any redemption, purchase or other acquisition
of the Securities.

Section 10.2   Liquidation; Dissolution; Bankruptcy.

         (a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
(i) any dissolution or winding-up or total or partial liquidation or
reorganization of the Company whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (ii) any bankruptcy or insolvency case
or proceeding or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
assets, (iii) any assignment for the benefit of creditors or any other
marshaling of assets of the Company, all obligations due, or to become due, in
respect of Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) shall first
interfeasibly be paid in full, or provision shall have been made for such
payment, in cash, cash equivalents or otherwise in a manner satisfactory to the

                                       36
<PAGE>

holders of Senior Debt, before any payment is made on account of the principal
of, premium, if any, or interest on the Securities, except that Holders may
receive securities that are subordinated to at least the same extent as the
Securities are to (x) Senior Debt and (y) any securities issued in exchange for
Senior Debt. Upon any such dissolution winding-up, liquidation or
reorganization, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders of
the Securities or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee under this
Indenture if received by them, directly to the holders of Senior Debt (pro rata
to such holders on the basis of the amounts of Senior Debt held by such holders)
or their Representative or Representatives, or to the trustee or trustees under
any indenture pursuant to which any of such Senior Debt may have been issued, as
their interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been indefeasibly paid in full,
or provisions shall have been made for such payment, in cash, cash equivalents
or otherwise in a manner satisfactory to the holders of Senior Debt, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of Senior Debt.

         (b) For purposes of this Article X, the words "cash, property or
securities" shall not be deemed to include securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment which
are subordinated, to at least the same extent as the Securities, to the payment
of all Senior Debt then outstanding or to the payment of all securities issued
in exchange therefor to the holders of Senior Debt at the time outstanding. The
consolidation of the Company with, or the merger of the Company with or into,
another corporation or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article 5 shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article V.

Section 10.3   Default of Senior Debt.

         (a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior Debt, or
any amount owing from time to time under or in respect of Senior Debt or in the
event that any nonpayment event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, or (b) in the event that any other
nonpayment event of default with respect to any Senior Debt shall have occurred
and be continuing permitting the holders of such Senior Debt (or a trustee on
behalf of the holders thereof) to declare such Senior Debt due and payable prior
to the date on which it would otherwise have become due and payable, then the
Company shall make no payment, direct or indirect (including any payment which
may be payable by reason of the payment of any other Indebtedness of the Company

                                       37
<PAGE>

being subordinated to the payment of the Securities) (other than securities that
are subordinated to at least the same extent as the Securities are to (x) Senior
Debt and (y) any securities issued in exchange for Senior Debt) unless and until
(i) such event of default shall have been cured or waived or shall have ceased
to exist or such acceleration shall have been rescinded or annulled, or (ii) in
case of any nonpayment event of default specified in (b), during the period (a
"Payment Blockage Period") commencing on the date the Company and the Trustee
receive written notice (a "Payment Notice") of such event of default (which
notice shall be binding on the Trustee and the Holders as to the occurrence of
such an event of default) from a holder of the Senior Debt to which such default
relates and ending on the earliest of (A) 179 days after such date, (B) the
date, if any, on which such Senior Debt to which such default relates is
discharged or such default is waived by the holders of such Senior Debt or
otherwise cured and (C) the date on which the Trustee receives written notice
from the holder of such Senior Debt to which such default relates terminating
the Payment Blockage Period. No new Payment Blockage Period may be commenced
within 360 days after the receipt by the Trustee of any prior Payment Blockage
Notice. For all purposes of this Section 10.3, no Event of Default which existed
or was commencing with respect to the Senior Debt to which a Payment Blockage
Period relates on the date such Payment Blockage Period commenced shall be or be
made the basis for the commencement or any subsequent Payment Blockage Period
unless such event of default is cured or waived for a period of not less than
180 consecutive days.

Section 10.4   When Distribution Must Be Paid Over.

         If the Trustee or any Holder receives any payment with respect to the
Securities, whether in cash property or securities (other than securities that
are subordinated to at least the same extent of the Securities are to (x) Senior
Debt and (y) any securities issued in exchange for Senior Debt at a time when
such payment is prohibited by Article X hereof), such payment shall be held by
the Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the amount of Senior Debt held by such holders) for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full, in
cash, cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.

         With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article X, except if such payment is made as a result
of the willful misconduct or gross negligence of the Trustee.

                                       38
<PAGE>

Section 10.5   Notice by Company.

         The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Company to violate this Article, but failure to
give such notice shall not affect the subordination of the Securities to the
Senior Debt provided in this Article.

Section 10.6   Subrogation.

         After all Senior Debt is paid in full, in cash, cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior Debt, and until
the Securities are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Securities) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Holders have been
applied to the payment of Senior Debt. A distribution made under this Article to
holders of Senior Debt which otherwise would have been made to Holders is not,
as between the Company and Holders, a payment by the Company on the Senior Debt.

Section 10.7   Relative Rights.

         This Article defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Indenture shall:

                  (1) impair, as between the Company and Holders, the
         obligations of the Company, which are absolute and unconditional, to
         pay principal of and interest on the Securities in accordance with
         their terms;

                  (2) affect the relative rights of Holders and creditors of the
         Company other than their rights in relation to holders of Senior Debt;
         or

                  (3) prevent the Trustee or any Holder from exercising its
         available remedies upon a Default or Event of Default, subject to the
         rights of holders and owners of Senior Debt to receive distributions
         and payments otherwise payable to Holders.

         If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.

                                       39
<PAGE>
Section 10.8   Subordination May Not Be Impaired by the Company or
               Holders of Senior Debt.

         No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Securities and the
Obligations related thereto shall be prejudiced or impaired by any act or
failure to act by any such holder or by the Company, the Trustee or any Agent or
by the failure of the Company to comply with this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.

         Without limiting the effect of the preceding paragraph, any holder of
Senior Debt may at any time and from time to time without the consent of or
notice to any other holder or to the Trustee, without impairing or releasing any
of the rights of any holder of Senior Debt under this Indenture, upon or without
any terms or conditions and in whole or in part:

         (a) change the manner, place or term of payment, or change or extend
the time of payment of, renew or alter any Senior Debt or any other liability of
the Company to such holder, any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the provisions of this Article X
shall apply to the Securities as so changed, extended, renewed or altered;

         (b) notwithstanding the provisions of Section 5.1 hereof, sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
and in any order any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, any Senior Debt or any other liability of the
Company to such holder or any other liabilities incurred directly or indirectly
in respect thereof or hereof or any offset thereagainst;

         (c) exercise or refrain from exercising any rights or remedies against
the Company or others or otherwise act or refrain from acting or, for any
reason, fail to file, record or otherwise perfect any security interest in or
lien on any property of the Company or any other Person; and

         (d) settle or compromise any Senior Debt or any other liability of the
Company to such holder, or any security therefor, or any liability incurred
directly or indirectly in respect thereof.

         All rights and interests under this Indenture of any holder of Senior
Debt and all agreements and obligations of the Trustee, the Holders, and the
Company under Article 6 and under this Article 10 shall remain in full force and
effect irrespective of (i) any lack of validity or enforceability of any
agreement or instrument relating to any Senior Debt or (ii) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Trustee, any Holder, or the Company.

         Any holder of Senior Debt hereby authorized to demand specific
performance of the provisions of this Article 10, whether or not the Company
shall have complied with any of the provisions of this Article 10 applicable to
it, at any time when the Trustee or any Holder shall have failed to comply with
any of these provisions. The Trustee and the Holders irrevocably waive any
defense based on the adequacy of a remedy at law that might be asserted as a bar
to such remedy of specific performance.

                                       40
<PAGE>

Section 10.9   Distribution or Notice to Representative.

         Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
representative.

         Upon any payment or distribution of assets of the Company referred to
in this Article X, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending or upon any certificate of any representative of any holder of
Senior Debt or of the liquidating trustee or agent or other Person making any
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.

Section 10.10   Rights of Trustee and Paying Agent.

         Notwithstanding the provisions of this Article X or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution by the Trustee, or the taking of any action by the Trustee, and the
Trustee or Paying Agent may continue to make payments on the Securities unless
it shall have received at its Corporate Trust Division at least 5 Business Days
prior to the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Securities to violate this
Article, which notice, unless specified by a holder of Senior Debt as such,
shall not be deemed to be a Payment Notice. The Trustee may conclusively rely on
such notice. Only the Company or a holder of Senior Debt may give the notice.
Nothing in this Article X shall apply to amounts due to, or impair the claims
of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.

         The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

Section 10.11   Authorization to Effect Subordination.

         Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt and the
Holders, the subordination as provided in this Article X, and appoints the
Trustee his attorney-in-fact for any and all such purposes.

                                       41

<PAGE>

Section 10.12     Article Applicable to Paying Agent.

         In case at any time any Paying Agent (other than the Trustee or the
Company) shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article X shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article X in addition to or in place of the
Trustee.

Section 10.13   Miscellaneous.

         (a) The agreements contained in this Article 10 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Debt is rescinded or must otherwise be returned by any holder
of Senior Debt upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.

         (b) The Trustee shall notify all holders of Senior Debt (of whose
identity the Trustee has received reasonable advance written notice) of the
existence of any Default or Event of Default under Section 6.1 promptly after a
Responsible Officer of the Trustee actually becomes aware thereof; provided,
however, that at least 5 Business Days prior to the notification of any holder
of Senior Debt under this Section 7.5, the Company shall provide the Company
with notice of its intent to provide such notification.

                                   ARTICLE XI.
                                  MISCELLANEOUS

Section 11.1   Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.

Section 11.2   Notices.

         Any notice, instruction, direction, request or other communication by
the Company, the Trustee or any other holder of Senior Debt to the others is
duly given if in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:

                                       42
<PAGE>

         If to the Company:

                  AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                  Balapointe Office Centre
                  111 Presidential Boulevard
                  Bala Cynwyd, PA  19004
                  Attention:   Anthony J. Santilli
                               Chairman, President and Chief Executive Officer
                  Telecopier: (215) 668-1468

         With a copy to:

                  BLANK ROME COMISKY & McCAULEY LLP
                  One Logan Square
                  Philadelphia, Pennsylvania  19103-2599
                  Attention:   Jane K. Storero, Esquire
                  Telecopier:  (215) 569-5399

         If to the Trustee:

                  U.S. BANK TRUST NATIONAL ASSOCIATION,
                     a national banking association
                  180 East 5th Street
                  Saint Paul, Minnesota  55101
                  Attention:   Mr. Richard Prokosch, Corporate Finance
                  Telecopier: (612) 244-0711

         If to a holder of Senior Debt, such address as such holder of Senior
Debt shall have provided in writing to the Company and the Trustee.

         The Company, the Trustee or a holder of Senior Debt by notice to the
Company and the Trustee may designate additional or different addresses for
subsequent notices or communications.

         All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; 5 Business Days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.

         Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, to his address shown on
the register kept by the Registrar. Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.

                                       43
<PAGE>
         If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

         If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

Section 11.3   Communication by Holders with Other Holders.

         Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The Trustee
is subject to ss. 312(b). The Company, the Trustee, the Registrar and anyone
else shall have the protection of TIA ss. 312(c).

Section 11.4   Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                  (1) an Officers' Certificate in form and substance reasonably
         satisfactory to the Trustee (which shall include the statements set
         forth in Section 11.5) stating that, in the opinion of the signers, all
         conditions precedent and covenants, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                  (2) an Opinion of Counsel in form and substance reasonably
         satisfactory to the Trustee (which shall include the statements set
         forth in Section 11.5) stating that, in the opinion of such counsel,
         all such conditions precedent and covenants have been complied with.

Section 11.5   Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:

                  (1) a statement that the Person making such certificate or
         opinion has read such covenant or condition;

                  (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (3) a statement that, in the opinion of such Person, he has
         made such examination or investigation as is necessary to enable him to
         express an informed opinion whether such covenant or condition has been
         complied with; and

                                       44
<PAGE>

                  (4) a statement whether, in the opinion of such Person, such
         condition or covenant has been complied with.

Section 11.6   Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 11.7   Legal Holidays.

         A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the Commonwealth of Pennsylvania or the City of Wilmington or at
a place of payment are authorized or obligated by law, regulation or executive
order to remain closed. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.

Section 11.8   No Recourse Against Others.

         No director, officer, employee, agent, manager or stockholder of the
Company as such, shall have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.

Section 11.9   Duplicate Originals.

         The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.

Section 11.10   Governing Law.

         THE INTERNAL LAW OF THE STATE OF DELAWARE SHALL GOVERN THIS INDENTURE
AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

                                       45
<PAGE>

Section 11.11   No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.

Section 11.12   Successors.

         All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successor.

Section 11.13   Severability.

         In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

Section 11.14   Counterpart Originals.

         The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

Section 11.15   Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions thereof.

                                       46
<PAGE>

                                   SIGNATURES

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, as of the day and year first written above.

                                              AMERICAN BUSINESS FINANCIAL
                                              SERVICES, INC.

                  (SEAL)                      By:
                                                 -----------------------------

                                                 Name:
                                                      ------------------------

                                                 Title:

Attest:

                                               U.S. BANK TRUST NATIONAL
                                               ASSOCIATION, as Trustee

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

                          {SIGNATURE PAGE TO INDENTURE}

                                       47<PAGE>
                    WAREHOUSING CREDIT AND SECURITY AGREEMENT
                         (SINGLE FAMILY MORTGAGE LOANS)

                                     BETWEEN

                    NEW JERSEY MORTGAGE AND INVESTMENT CORP.,
                            a New Jersey corporation

                                       AND

                         AMERICAN BUSINESS CREDIT, INC.,
                           a Pennsylvania corporation

                                       AND

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

                                       AND

                        RESIDENTIAL FUNDING CORPORATION,
                             a Delaware corporation

                             Dated as of May 5, 2000

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>  <C>                                                                                                         <C>
1.   DEFINITIONS..................................................................................................1
   1.1    Defined Terms...........................................................................................1
   1.2    Other Definitional Provisions..........................................................................11

2.   THE CREDIT..................................................................................................11
   2.1    The Commitment.........................................................................................11
   2.2    Procedures for Obtaining Advances......................................................................12
   2.3    Note...................................................................................................13
   2.4    Interest...............................................................................................13
   2.5    Principal Payments.....................................................................................15
   2.6    Expiration of Commitment...............................................................................17
   2.7    Method of Making Payments..............................................................................17
   2.8    Commitment Fees and Non-Usage Fees.....................................................................17
   2.9    Warehousing Fees.......................................................................................18
   2.10   Miscellaneous Charges..................................................................................18
   2.11   Interest Limitation....................................................................................19
   2.12   Increased Costs; Capital Requirements..................................................................19

3.   COLLATERAL..................................................................................................20
   3.1    Grant of Security Interest.............................................................................20
   3.2    Release of Security Interest in Collateral.............................................................21
   3.4    Release of Collateral..................................................................................23
   3.5    Collection and Servicing Rights........................................................................23
   3.6    Return of Collateral at End of Commitment..............................................................23

4.   CONDITIONS PRECEDENT........................................................................................24
   4.1    Initial Advance........................................................................................24
   4.2    Each Advance...........................................................................................27

5.   REPRESENTATIONS AND WARRANTIES..............................................................................28
   5.1    Organization; Good Standing; Subsidiaries..............................................................28
   5.2    Authorization and Enforceability.......................................................................28
   5.3    Approvals..............................................................................................29
   5.4    Financial Condition....................................................................................29
   5.5    Litigation.............................................................................................29
   5.6    Compliance with Laws...................................................................................29
   5.7    Regulation U...........................................................................................29
   5.8    Investment Company Act.................................................................................30
   5.9    Payment of Taxes.......................................................................................30
   5.10   Agreements.............................................................................................30
   5.11   Title to Properties....................................................................................30
   5.12   ERISA..................................................................................................31
   5.13   Eligibility............................................................................................31
   5.14   Place of Business......................................................................................31
   5.15   Special Representations Concerning Collateral..........................................................31
   5.16   Servicing..............................................................................................33
   5.17   No Adverse Selection...................................................................................33
   5.18   Year 2000 Compliance...................................................................................33
   5.19   Assumed Names..........................................................................................33

</TABLE>

                                       i

<PAGE>
<TABLE>
<CAPTION>
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<S>  <C>                                                                                                         <C>
6.   AFFIRMATIVE COVENANTS.......................................................................................34
   6.1    Payment of Note........................................................................................34
   6.2    Financial Statements and Other Reports.................................................................34
   6.3    Maintenance of Existence; Conduct of Business..........................................................36
   6.4    Compliance with Applicable Laws........................................................................36
   6.5    Inspection of Properties and Books.....................................................................36
   6.6    Notice.................................................................................................37
   6.7    Payment of Debt, Taxes, etc............................................................................37
   6.8    Insurance..............................................................................................37
   6.9    Closing Instructions...................................................................................38
   6.10   Subordination of Certain Indebtedness..................................................................38
   6.11   Other Loan Obligations.................................................................................38
   6.12   Use of Proceeds of Advances............................................................................38
   6.13   Special Affirmative Covenants Concerning Collateral....................................................38

7.   NEGATIVE COVENANTS..........................................................................................39
   7.1    Contingent Liabilities.................................................................................40
   7.2    Sale or Pledge of Servicing Contracts..................................................................40
   7.3    Merger; Sale of Assets; Acquisitions...................................................................40
   7.4    Deferral of Subordinated Debt..........................................................................40
   7.5    Loss of Eligibility....................................................................................40
   7.6    Debt to Tangible Net Worth Ratio.......................................................................40
   7.7    Minimum Tangible Net Worth.............................................................................40
   7.8    Net Income.............................................................................................40
   7.9    Transactions with Affiliates...........................................................................41
   7.10   Acquisition of Recourse Servicing Contracts............................................................41
   7.11   Gestation Facilities...................................................................................41
   7.12   Special Negative Covenants Concerning Collateral.......................................................41

8.   DEFAULTS; REMEDIES..........................................................................................41
   8.1    Events of Default......................................................................................41
   8.2    Remedies...............................................................................................44
   8.3    Application of Proceeds................................................................................47
   8.4    Lender Appointed Attorney-in-Fact......................................................................47
   8.5    Right of Set-Off.......................................................................................48

9.   NOTICES.....................................................................................................48

10.     REIMBURSEMENT OF EXPENSES; INDEMNITY.....................................................................49

11.     FINANCIAL INFORMATION....................................................................................50

12.     MISCELLANEOUS............................................................................................50
   12.1   Terms Binding Upon Successors; Survival of Representations.............................................50
   12.2   Assignment.............................................................................................50
   12.3   Amendments.............................................................................................50
   12.4   Governing Law..........................................................................................50
   12.5   Participations.........................................................................................50
   12.6   Relationship of the Parties............................................................................51
   12.7   Severability...........................................................................................51
   12.8   Operational Reviews....................................................................................51
   12.9   Consent to Credit References...........................................................................52
   12.10  Consent to Jurisdiction................................................................................52
   12.11  Counterparts...........................................................................................52
   12.12  Entire Agreement.......................................................................................52
   12.13     WAIVER OF JURY TRIAL................................................................................52
</TABLE>

                                       ii

<PAGE>

                                    EXHIBITS

Exhibit A         Promissory Note
Exhibit B         Guaranty
Exhibit C-SF      Request for Advance Against Single Family Mortgage Loans
Exhibit D-SF      Procedures and Documentation for Warehousing Single Family
                    Mortgage Loans
Exhibit E         Schedule of Servicing Contracts
Exhibit F         Subordination of Debt Agreement
Exhibit G         Subsidiaries
Exhibit H         Legal Opinion
Exhibit I-SF      Officer's Certificate
Exhibit J         Schedule of Existing Warehouse Lines
Exhibit K         Funding Bank Agreement (Wire)
Exhibit L         Commitment Summary Report
Exhibit M         Terms Applicable to Advances Against Eligible Loans
Exhibit N         RFConnects Pledge Agreement
Exhibit O         Assumed Names
Exhibit P         Terms of Guaranteed Obligations

                                      iii
<PAGE>

         THIS WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of May 5,
2000, between NEW JERSEY MORTGAGE AND INVESTMENT CORP., a New Jersey corporation
("New Jersey Mortgage"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation ("American Business Credit"), and HOMEAMERICAN CREDIT, INC. d/b/a
UPLAND MORTGAGE, a Pennsylvania corporation ("Upland") (New Jersey Mortgage,
American Business Credit and Upland are hereinafter collectively referred to as
the "Borrowers"), having their principal office at 111 Presidential Boulevard,
Suite 125, Bala Cynwyd, PA 19004 and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation (the "Lender"), having its principal office at 8400 Normandale Lake
Blvd., Suite 600, Minneapolis, Minnesota 55437.

         WHEREAS, the Borrowers and the Lender desire to set forth herein the
terms and conditions upon which the Lender shall provide warehouse financing to
the Borrowers;

         NOW, THEREFORE, the parties hereto hereby agree as follows:

1.       DEFINITIONS.

         1.1      Defined Terms.  Capitalized terms defined below or elsewhere
in this Agreement (including the Exhibits hereto) shall have the following
meanings:

                  "Advance" means a disbursement by the Lender under the
Commitment pursuant to Section 2.1 of this Agreement.

                  "Advance Request" has the meaning set forth in Section 2.2(a)
hereof.

                  "Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.

                  "Agency Security" means a Mortgage-backed Security issued or
guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

                  "Agreement" means this Warehousing Credit and Security
Agreement (Single Family Mortgage Loans), either as originally executed or as it
may from time to time be supplemented, modified or amended.

                  "Approved Custodian" means a pool custodian or other Person
which is deemed acceptable to the Lender from time to time in its sole
discretion to hold a Mortgage Loan for inclusion in a Mortgage Pool or to hold a
Mortgage Loan as agent for an Investor who has issued a Purchase Commitment for
such Mortgage Loan.

                  "Borrowers" has the meaning set forth in the first paragraph
of this Agreement.

                  "Business Day" means any day excluding Saturday or Sunday and
excluding any day on which national banking associations in the United States
are closed for business.

<PAGE>

                  "Calendar Quarter" means the 3 month period beginning on any
January 1, April 1, July 1 or October 1.

                  "Cash Collateral Account" means a demand deposit account
maintained at the Funding Bank in the name of the Lender and designated for
receipt of the proceeds of the sale or other disposition of the Collateral.

                  "Change of Control" means the occurrence, after the Closing
Date, of any of the following circumstances: (a) the Guarantor not owning,
directly or indirectly, all of the issued and outstanding capital stock of each
of the Borrowers; or (b) any Person, or two or more Persons acting in concert,
other than Anthony J. Santilli and his wife, or their respective estates or
heirs, acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Guarantor (or other
securities convertible into such securities) representing 15% or more of the
combined voting power of all securities of the Guarantor entitled to vote in the
election of directors; or (c) any Person, or two or more Persons acting in
concert, other than Anthony J. Santilli and his wife, or their respective
estates or heirs, acquiring by contract or otherwise, or entering into a
contract or arrangement which upon consummation will result in its or their
acquisition of, control over securities of the Guarantor (or other securities
convertible into such securities) representing 15% or more of the combined
voting power of all securities of NCFC entitled to vote in the election of the
directors.

                  "Check Disbursement Account" means a demand deposit account
maintained by the Funding Bank in the name of the Lender for the benefit of the
Borrowers for the clearing of checks written by the Borrowers to fund the
closing of Pledged Mortgages.

                  "Closing Date" means May 5, 2000.

                  "Collateral" has the meaning set forth in Section hereof.

                  "Collateral Documents" means, with respect to each Mortgage
Loan: (a) the Mortgage Note, the Mortgage, and all other documents executed in
connection with or otherwise relating to the Mortgage Loan, (b) as applicable,
the original lender's ALTA Policy of Title Insurance or its equivalent,
documents evidencing the FHA commitment to insure or the VA guaranty, the
appraisal, Private Mortgage Insurance, the Regulation Z Statement, certificates
of casualty or hazard insurance, credit information on the maker(s) of the
Mortgage Note, the HUD-1 or corresponding purchase advice, and (c) any other
documents that are customarily desired for inspection or transfer incidental to
the purchase of any Mortgage Note by an Investor or which are customarily
executed by the seller of a Mortgage Note to an Investor.

                  "Collateral Value" means (a) with respect to any Eligible Loan
as of the date of determination, the lesser of (i) the amount of any Advance
made against such Eligible Loan under Section hereof or (ii) the Fair Market
Value of such Eligible Loan; (b) in the event Pledged Mortgages have been
exchanged for Agency Securities, the lesser of (A) the amount of any Advances
outstanding against the Eligible Loans backing such Agency Securities or (B) the
Fair Market Value of such Agency Securities; and (c) with respect to cash, the
amount of such cash.

                                       2
<PAGE>
                  "Commitment" has the meaning set forth in Section hereof.

                  "Commitment Amount" means $25,000,000.

                  "Commitment Fee" means a fee payable by the Borrowers in
consideration of the Lender's issuance of the Commitment. The amount of the
Commitment Fee, if any, is set forth in Section _____ hereof.

                  "Committed Purchase Price" means for an Eligible Loan the
product of the Mortgage Note Amount multiplied by (a) the price (expressed as a
percentage) as set forth in a Purchase Commitment for the Eligible Loan or (b)
in the event the Eligible Loan is to be used to back an Agency Security, the
price (expressed as a percentage) as set forth in a Purchase Commitment for the
Agency Security.

                  "Credit Score" means a mortgagor's overall consumer credit
rating, represented by a single numeric credit score calculated using the Fair,
Isaac consumer credit scoring system, provided by a credit repository acceptable
to the Lender and the Investor that issued the Purchase Commitment covering the
related Mortgage Loan.

                  "Debt" means, with respect to any Person at any date, (a) all
indebtedness or other obligations of such Person which, in accordance with GAAP,
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet of such Person at such date, and (b) all indebtedness or
other obligations of such Person for borrowed money or for the deferred purchase
price of property or services; provided that for purposes of this Agreement,
there shall be excluded from Debt at any date deferred taxes arising from
capitalized excess servicing fees and capitalized servicing rights.

                  "Default" means the occurrence of any event or existence of
any condition described in Section 8.1 which, but for the giving of Notice, the
lapse of time, or both, would constitute an Event of Default.

                  "Depository Benefit" shall mean the compensation received by
the Lender, directly or indirectly, as a result of the Borrowers' maintenance of
Eligible Balances with a Designated Bank.

                  "Designated Bank" means any bank(s) designated from time to
time by the Lender as a Designated Bank, but only for as long as the Lender has
an agreement under which the Lender can receive a Depository Benefit.

                                       3
<PAGE>

                  "Designated Bank Charges" means any fees, interest or other
charges that would otherwise be payable to a Designated Bank in connection with
Eligible Balances maintained at a Designated Bank, including Federal Deposit
Insurance Corporation insurance premiums, service charges and such other charges
as may be imposed by governmental authorities from time to time.

                  "Electronic Advance Request" means an electronic transmission
through RFConnects Delivery containing the same information as Exhibit C-SF to
this Agreement, together with the RFConnects Pledge Agreement, duly executed by
the Borrowers, and a list of the Mortgage Loans (including mortgagor's name,
loan number and loan amount) to be funded with the Advance sent to the Lender by
facsimile.

                  "Eligible Balances" means all funds of or maintained by the
Borrowers and their Subsidiaries in accounts at a Designated Bank, less balances
to support float, reserve requirements, and such other reductions as may be
imposed by governmental authorities from time to time.

                  "Eligible Loan" means a Single Family Mortgage Loan secured by
a Mortgage on real property located in one of the states of the United States or
the District of Columbia that is designated as such on Exhibit M attached hereto
and made a part hereof.

                  "Eligible Mortgage Pool" means a Mortgage Pool for which (a)
an Approved Custodian has issued its initial certification (on the basis of
which an Agency Security is to be issued), (b) there exists a Purchase
Commitment covering such Agency Security, and (c) such Agency Security will be
delivered to the Lender.

                  "ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated thereunder, as amended from time
to time and any successor statute.

                  "Event of Default" means any of the conditions or events set
forth in Section hereof.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.

                  "Fair Market Value" means at any time for an Eligible Loan or
the related Agency Security (if the Eligible Loan is to be used to back an
Agency Security), (a) if the Eligible Loan is covered by a Purchase Commitment
from Fannie Mae or Freddie Mac, or the Eligible Loan is to be exchanged for an
Agency Security and such Agency Security is covered by a Purchase Commitment,
the Committed Purchase Price, or (b) otherwise, the market price for such
Eligible Loan or Agency Security, determined by the Lender based on market data
for similar Mortgage Loans or Agency Securities and such other criteria as the
Lender deems appropriate.

                                       4
<PAGE>

                  "Fannie Mae" means Fannie Mae, a corporation created under the
laws of the United States, and any successor thereto.

                  "FHA" means the Federal Housing Administration and any
successor thereto.

                  "FICA" means the Federal Insurance Contributions Act.

                  "FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.

                  "First Mortgage" means a Mortgage which constitutes a first
Lien on the property covered thereby.

                  "First Mortgage Loan" means a Mortgage Loan secured by a First
Mortgage.

                  "Freddie Mac" means Freddie Mac, a corporation created under
the laws of the United States, and any successor thereto.

                  "Funding Bank" means Bank One, NA or any other bank designated
from time to time by the Lender.

                  "Funding Bank Agreement" means the letter agreement
substantially in the form of Exhibit K hereto.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances of the
Borrowers as of the date of determination.

                  "Gestation Agreement" means an agreement under which the
Borrowers agree to sell or finance (a) a Pledged Mortgage prior to the date of
purchase by an Investor, or (b) a Mortgage Pool prior to the date an Agency
Security backed by such Mortgage Pool is issued.

                  "Ginnie Mae" means the Government National Mortgage
Association, an agency of the United States government, and any successor
thereto.

                  "Guarantor" means AMERICAN BUSINESS FINANCIAL SERVICES, INC.,
a Delaware corporation, and any other Person that hereafter guarantees all or
any portion of the Borrowers' Obligations. If more than one Person is named as
Guarantor, the term "Guarantor" shall mean each of such Persons and all of them.

                                       5
<PAGE>
                  "Guaranty" means a guaranty of all or any portion of the
Borrowers' Obligations. If more than one Guaranty is executed and delivered to
the Lender, the term "Guaranty" shall mean each of such Guaranties and all of
them.

                  "Hedging Arrangements" means, with respect to any Person, any
agreements or other arrangement (including, without limitation, interest rate
swap agreements, interest rate cap agreements and forward sale agreements)
entered into by such Person to protect itself against changes in interest rates
or the market value of assets.

                  "HUD" means the Department of Housing and Urban Development
and any successor thereto.

                  "HUD 203(K) Mortgage Loan" means an FHA insured closed-end
First Mortgage Loan, of which a portion will be used for the purpose of
rehabilitating and/or repairing the related single family property, and which
satisfies the definition of "rehabilitation loan" under 24 C.F.R. Section
203.50(a).

                  "Indemnified Liabilities" has the meaning set forth in Article
10 hereof.

                  "Internal Revenue Code" means the Internal Revenue Code of
1986, Title 26 of the United States Code, the regulations, rulings and
interpretations issued thereunder, and any subsequent federal income tax law or
laws, as any of the foregoing have been or may from time to time be amended.

                  "Investor" means Fannie Mae, Freddie Mac or a financially
responsible private institution which is deemed acceptable by the Lender from
time to time in its sole discretion with respect to a particular category of
Pledged Mortgages.

                  "Lender" has the meaning set forth in the first paragraph of
this Agreement.

                  "LIBOR" means, for each calendar week, the rate of interest
per annum which is equal to the arithmetic mean of the U.S. Dollar London
Interbank Offered Rates for 1 month periods of certain U.S. banks as of 11:00
a.m. London time on the first Business Day of each week on which the London
Interbank market is open, as published by Bloomberg L.P. If such U.S. dollar
LIBOR rates are not so offered or published for any period, then during such
period LIBOR shall mean the London Interbank Offered Rate for 1 month periods
published on the first Business Day of each week on which the London Interbank
market is open, in the Wall Street Journal in its regular column entitled "Money
Rates."

                  "Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest).

                                       6
<PAGE>
                  "Loan Documents" means this Agreement, the Note, the Guaranty,
any agreement of the Borrowers relating to Subordinated Debt, and each other
document, instrument or agreement executed by the Borrowers in connection
herewith or therewith, as any of the same may be amended, restated, renewed or
replaced from time to time.

                  "Manufactured Home" means a structure that is built on a
permanent chassis (steel frame) with the wheel assembly necessary for
transportation in one or more sections to a permanent site or semi-permanent
site and which has been built in compliance with the National Manufactured
Housing Construction and Safety Standards established by HUD.

                  "Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.

                  "Maturity Date" shall mean the earlier of: (a) the close of
business on December 31, 2000, as such date may be extended from time to time in
writing by the Lender, in its sole discretion, on which date the Commitment
shall expire of its own term and without the necessity of action by the Lender,
and (b) the date the Advances become due and payable pursuant to Section 8.2
below.

                  "Miscellaneous Charges" has the meaning set forth in Section
hereof.

                  "Mortgage" means a mortgage or deed of trust on improved and
substantially completed real property (including, without limitation, real
property to which a Manufactured Home has been affixed in a manner such that the
Lien of a mortgage or deed of trust would attach to such Manufactured Home under
applicable real property law).

                  "Mortgage-backed Securities" means securities that are secured
or otherwise backed by Mortgage Loans.

                  "Mortgage Loan" means any loan evidenced by a Mortgage Note
and secured by a Mortgage.

                  "Mortgage Note" means a promissory note secured by a Mortgage.

                  "Mortgage Note Amount" means, as of the date of determination,
the then outstanding unpaid principal amount of a Mortgage Note (whether or not
an additional amount is available to be drawn thereunder).

                  "Mortgage Pool" means a pool of one or more Pledged Mortgages
on the basis of which there is to be issued a Mortgage-backed Security.

                  "Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is maintained for employees of the
Borrowers or any Subsidiary of the Borrowers.

                                       7
<PAGE>
                  "Non-Usage Fee" has the meaning set forth in Section hereof.

                  "Note" has the meaning set forth in Section hereof.

                  "Notices" has the meaning set forth in Article 9 hereof.

                  "Obligations" means any and all indebtedness, obligations and
liabilities of the Borrowers to the Lender (whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred), whether arising out of or related to the Loan Documents or
other contractual relationships between any Borrower and the Lender.

                  "Officer's Certificate" means a certificate executed on behalf
of the Borrowers by the chief financial officer or the treasurer of American
Business Financial Services, Inc. or by such other officer as may be designated
herein and substantially in the form of Exhibit I-SF attached hereto.

                  "Operating Account" means a demand deposit account maintained
at the Funding Bank in the name of the Borrowers and designated for funding that
portion of each Eligible Loan not funded by an Advance made against such
Eligible Loan and for returning any excess payment from an Investor for a
Pledged Mortgage or Pledged Security.

                  "Participant" has the meaning set forth in Section hereof.

                  "Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.

                  "Plans" has the meaning set forth in Section hereof.

                  "Pledged Mortgages" has the meaning set forth in Section
hereof.

                  "Pledged Securities" has the meaning set forth in Section
hereof.

                  "Purchase Commitment" means a written commitment, in form and
substance satisfactory to the Lender, issued in favor of the Borrowers by an
Investor pursuant to which that Investor commits to purchase Mortgage Loans or
Mortgage-backed Securities.

                  "Release Amount" has the meaning set forth in Section hereof.

                                       8

<PAGE>
                  "RFConnects Delivery" means the Lender's proprietary service
to support the electronic exchange of information between the Lender and the
Borrowers, including, but not limited to, Advance Requests, shipping requests,
payoff requests, activity reports and exception reports.

                  "RFConnects Pledge Agreement means a pledge agreement in the
form of Exhibit N to the Agreement.

                  "Second Mortgage" means a Mortgage which constitutes a second
Lien on the property covered thereby.

                  "Second Mortgage Loan" means a Mortgage Loan secured by a
Second Mortgage.

                  "Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person has the
right to service Mortgage Loans.

                  "Servicing Portfolio" means, as to any Person, the unpaid
principal balance of Mortgage Loans serviced by such Person under Servicing
Contracts.

                  "Single Family Mortgage Loan" means a Mortgage Loan secured by
a Mortgage covering improved real property containing one to four family
residences.

                  "Statement Date" means the date of the most recent financial
statements of American Business Financial Services, Inc. and its Subsidiaries
delivered to the Lender under the terms of this Agreement.

                  "Sublimit" means the aggregate amount of Advances (expressed
as a dollar amount or as a percentage of the Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of Eligible
Loan.

                  "Subordinated Debt" means (a) all indebtedness of the
Borrowers for borrowed money which is effectively subordinated in right of
payment to all other present and future Obligations either (i) pursuant to a
Subordination of Debt Agreement in the form of Exhibit F hereto or (ii)
otherwise on terms acceptable to the Lender, and (b) solely for purposes of
Section hereof, all indebtedness of the Borrowers which is required to be
subordinated by Section 4.1(b) or Section hereof.

                  "Subsidiary" means any corporation, association or other
business entity in which more than 50% of the total voting power or shares of
stock entitled to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.

                                       9
<PAGE>

                  "Tangible Net Worth" means with respect to any Person at any
date, the excess of the total assets of such Person over total liabilities of
such Person on such date, each to be determined in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section hereof, provided that, for purposes of calculating
Tangible Net Worth, there shall be excluded from total assets advances or loans
to shareholders, officers, employees or Affiliates, investments in Affiliates,
assets pledged to secure any liabilities not included in the Debt of such
Person, intangible assets, those other assets which would be deemed by HUD to be
non-acceptable in calculating adjusted net worth in accordance with its
requirements in effect as of such date, as such requirements appear in the
"Audit Guide for Audit of Approved Non-Supervised Mortgagees," and other assets
deemed unacceptable by the Lender in its sole discretion.

                  "Title I Mortgage Loan" means an FHA co-insured closed-end
First Mortgage Loan or Second Mortgage Loan which is underwritten in accordance
with HUD underwriting standards for the Title I Property Improvement Program as
set forth in and which is reported for insurance under the Mortgage Insurance
Program authorized and administered under Title I of the National Housing Act of
1934, as amended and the regulations promulgated thereunder.

                  "Trust Receipt" means a trust receipt in a form approved by
and pursuant to which the Lender may deliver any document relating to the
Collateral to the Borrowers for correction or completion.

                  "Unused Portion" has the meaning set forth in Section hereof.

                  "Used Portion" has the meaning set forth in Section hereof.

                  "VA" means the U.S. Department of Veterans Affairs and any
successor thereto.

                  "Warehousing Fee" has the meaning set forth in Section hereof.

                  "Warehouse Period" means, for any Eligible Loan, the maximum
number of days an Advance against that type of Eligible Loan is permitted to
remain outstanding as set forth on Exhibit M attached to this Agreement.

                  "Wet Settlement Advance" means with respect to any Advance,
the time from the date the Advance is made until the date of the Lender's
receipt of the Collateral Documents as provided in Section 2.2(b) and the
Exhibit referenced therein.

                  "Wire Disbursement Account" means a demand deposit account
maintained at the Funding Bank in the name of the Lender for the benefit of the
Borrowers for the clearing of wire transfers requested by the Borrowers to fund
Advances.

                  "Year 2000 Problem" means the risk that computer applications
may not be able to properly perform date-sensitive functions after December 31,
1999.

                                       10
<PAGE>

         1.2      Other Definitional Provisions.

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

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

                  1.2(c) All references to time of day shall mean the then
applicable time in Chicago, Illinois, unless expressly provided to the contrary.

2.       THE CREDIT.

         2.1      The Commitment.

                  2.1(a) Subject to the terms and conditions of this Agreement
and provided no Default or Event of Default has occurred and is continuing, the
Lender agrees from time to time during the period from the Closing Date to, but
not including, the Maturity Date, to make Advances to the Borrowers, provided
the total aggregate principal amount outstanding at any one time of all such
Advances shall not exceed the Commitment Amount. The obligation of the Lender to
make Advances hereunder up to the Commitment Amount is hereinafter referred to
as the "Commitment." Within the Commitment, the Borrowers may borrow, repay and
reborrow. All Advances under this Agreement shall constitute a single
indebtedness, and all of the Collateral shall be security for the Note and for
the performance of all the Obligations. Advances shall be made to New Jersey
Mortgage, American Business Credit or Upland, as shall be requested by New
Jersey Mortgage, American Business Credit or Upland, but each Advance, whether
made to New Jersey Mortgage, American Business Credit or Upland shall be deemed
made to or for the benefit of New Jersey Mortgage, American Business Credit and
Upland, jointly and severally, and each Borrower shall be obligated to repay any
Advances made to New Jersey Mortgage, American Business Credit or Upland under
this Agreement. With respect to its obligation to repay Advances made to the
other Borrowers, each Borrower agrees to the terms set forth in Exhibit P
attached hereto and made a part hereof.

                  2.1(b) Advances shall be used by the Borrowers solely for
the purpose of funding the acquisition or origination of Eligible Loans and
shall be made at the request of the Borrowers, in the manner hereinafter
provided in Section hereof, against the pledge of such Eligible Loans as
Collateral therefor. The limitations on the use of Advances set forth on Exhibit
M attached hereto and made a part hereof shall be applicable. In addition, the
following limitations on the use of Advances shall be applicable:

                           (1) No Advance shall be made against a Mortgage Loan
other than a Mortgage Loan secured by a Mortgage on real property located in one
of the states of the United States or the District of Columbia.

                                       11
<PAGE>

                  2.1(c) No Advance shall exceed the following amount
applicable to the type of Eligible Loan at the time it is pledged to secure an
Advance hereunder:

                           (1) For an Eligible Loan pledged hereunder, the
amount set forth on Exhibit M attached hereto and made a part hereof.

         2.2      Procedures for Obtaining Advances.

                  2.2(a) To obtain an Advance, the Borrowers must comply with
the conditions set forth in Sections 4.1 and 4.3 of this Agreement, the
procedures set forth in this Section 2.2(a), and the procedures and
documentation required under the Exhibit D for the type of Mortgage Loan against
which the Borrowers are requesting the Advance. The Borrowers will request an
Advance either by delivering to Lender a completed and signed advance request in
the applicable form of Exhibit C or by sending to Lender an Electronic Advance
Request, together with a list of Mortgage Loans for which the request is being
made and a completed and signed RFConnects Pledge Agreement sent by facsimile
(each an "Advance Request"), each no later than 1 Business Day prior to the
Business Day the requested Advance is to be made. The current forms of the
Exhibit C and Exhibit D referred to above are attached to this Agreement. The
Lender is entitled, upon not less than 5 Business Days' prior Notice to the
Borrowers, to modify any of those Exhibits or the form of Electronic Advance
Request to conform to current legal requirements or Lender's reasonable lending
practices. Exhibits and Electronic Advance Requests so modified automatically
become a part of this Agreement.

                  2.2(b) In the case of a Wet Settlement Advance, the
Borrowers shall follow the procedures and, at or prior to the Lender's making of
such Wet Settlement Advance, shall deliver to the Lender the documents set forth
in Exhibit D-SF hereto. In the case of a Mortgage Loan financed through a Wet
Settlement Advance, the Borrowers shall cause all Collateral Documents required
to be delivered to the Lender pursuant to Exhibit D-SF within 7 Business Days
after the date of the Wet Settlement Advance relating thereto.

                  2.2(c) Before funding, the Lender shall have a reasonable
time (1 Business Day under ordinary circumstances) to examine such Advance
Request and the Collateral Documents to be delivered prior to such requested
Advance, as set forth in the applicable Exhibit hereto, and may reject such of
them as do not meet the requirements of this Agreement or of the related
Purchase Commitment. If the Lender determines not to make an Advance against any
Mortgage Loan with respect to which the Borrowers have submitted Collateral
Documents to the Lender for such purpose, the Lender shall promptly return the
original Mortgage Note, the original assignment of the Mortgage and any other
original documentation related to such Mortgage Loan to the Borrowers.

                  2.2(d) The Borrowers shall hold in trust for the Lender, and
the Borrowers shall deliver to the Lender promptly upon request, or if the
recorded Collateral Documents have not yet been returned from the recording
office, immediately upon receipt by the Borrowers of such recorded Collateral

                                       12
<PAGE>

Documents, unless the Pledged Mortgage is being held by an Investor for purchase
or has been redeemed from pledge, the following: (1) the originals of the
Collateral Documents for which copies are required to be delivered to the Lender
pursuant to Exhibit D-SF, (2) the original lender's ALTA Policy of Title
Insurance or an equivalent thereto, and (3) any other documents relating to a
Pledged Mortgage which the Lender may request, including, without limitation,
documentation evidencing the FHA Commitment to Insure or the VA Guaranty of any
Pledged Mortgage which is either FHA insured or VA guaranteed, the appraisal,
Private Mortgage Insurance Certificate, if applicable, the Regulation Z
Statement, certificates of casualty or hazard insurance, credit information on
the maker of each such Mortgage Note, a copy of a HUD-1 or corresponding
purchase advice and other documents of all kinds which are customarily desired
for inspection or transfer incidental to the purchase of any Mortgage Note by an
Investor and any additional documents which are customarily executed by the
seller of a Mortgage Note to an Investor.

                  2.2(e) To make an Advance, the Lender shall cause the
Funding Bank to credit the Wire Disbursement Account upon compliance by the
Borrowers with the terms of the Loan Documents. The Lender shall cause Advances
and other amounts on deposit in the Wire Disbursement Account to be disbursed by
the Funding Bank to fund the related Mortgage Loans as specified in the related
Advance Request (subject to all of the terms and conditions of this Agreement
and the Exhibits hereto).

                  2.2(f) If, pursuant to the authorization given by the
Borrowers in the Funding Bank Agreement, for the purpose of funding a Mortgage
Loan against which the Lender has made an Advance in accordance with a Request
for Advance, (i) the Lender debits the Borrowers' Operating Account at the
Funding Bank to the extent necessary to cover a wire to be initiated by the
Lender, or (ii) the Lender directs the Funding Bank to honor a check drawn by
the Borrowers on its Check Disbursement Account at the Funding Bank, and such
debit or direction results in an overdraft, the Lender may make an additional
Advance to fund such overdraft.

         2.3 Note. The Borrowers' Obligations shall be evidenced by the
promissory note (the "Note") dated as of the date hereof substantially in the
form of Exhibit A attached hereto. The term "Note" shall include all extensions,
renewals and modifications of the Note and all substitutions therefor. All terms
and provisions of the Note are hereby incorporated herein.

         2.4 Interest.

                  2.4(a) Except as otherwise provided in Section hereof, the
unpaid amount of each Advance against an Eligible Loan shall bear interest, from
the date of the Advance until paid in full, at the rate(s) per annum set forth
on Exhibit M attached hereto and made a part hereof.

                                       13
<PAGE>
                  2.4(b) Provided no Default or Event of Default exists, the
Borrowers is entitled to receive a benefit in the form of an "Earnings Credit"
on the portion of the Eligible Balances maintained in time deposit accounts with
a Designated Bank, and the Borrowers are entitled to receive a benefit in the
form of an "Earnings Allowance" on the portion of the Eligible Balances
maintained in demand deposit accounts with a Designated Bank. Any Earnings
Allowance shall be used first and any Earnings Credit shall be used second as a
credit against accrued Designated Bank Charges, any other Miscellaneous Charges
and fees, including, but not limited to Commitment Fees, Non-Usage Fees and
Warehousing Fees, and may be used, at the Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the month in which the benefit
was received shall be accumulated for use and must be used within 6 months of
the month in which the benefit was received. Provided no Default or Event of
Default exists, any Earnings Credit not used during the month in which the
benefit was received shall be used to provide a cash benefit to the Borrowers.
Any Earnings Credit retained by the Lender as a result of a Default or Event of
Default will be applied to the payment of the Borrowers' Obligations in such
order as the Lender will determine in its sole discretion. The Lender's
determination of the Earnings Credit and the Earnings Allowance for any month
shall be determined by the Lender in its sole discretion and shall be conclusive
and binding absent manifest error. In no event shall the benefit received by the
Borrowers exceed the Depository Benefit.

                  Either party hereto may terminate the benefits provided for in
this Section effective immediately upon Notice to the other party, if the
terminating party shall have determined (which determination shall be conclusive
and binding absent manifest error) at any time that any applicable law, rule,
regulation, order or decree or any interpretation or administration thereof by
any governmental authority charged with the interpretation or administration
thereof, or compliance by such party with any request or directive (whether or
not having the force of law) of any such authority, shall make it unlawful or
impossible for such party to continue to offer or receive the benefits provided
for in this Section. No Notice is required for a termination of benefits as a
result of a Default or Event of Default.

                  2.4(c) Interest shall be computed on the basis of a 360-day
year and applied to the actual number of days elapsed in each interest
calculation period and shall be payable monthly in arrears, on the first day of
each month, commencing with the first month following the Closing Date and on
the Maturity Date.

                  2.4(d) If, for any reason, no interest is due on an Advance,
the Borrowers agree to pay to the Lender an administrative fee equal to one day
of interest on such Advance at the rate of interest applicable to such Advance,
as in effect on the date of such Advance. Administrative and other fees shall be
due and payable in the same manner as interest is due and payable hereunder.

                  2.4(e) Upon Notice to the Borrowers, after the occurrence
and during the continuation of an Event of Default, the unpaid amount of each
Advance shall bear interest until paid in full at a per annum rate of interest
(the "Default Rate") equal to 4% in excess of the rate of interest otherwise
applicable to the Advance or, if no rate is applicable, the highest rate then
applicable to any outstanding Advances.

                                       14
<PAGE>
                  2.4(f) The floating rates of interest provided for in this
Agreement will be adjusted as of the effective date of each change in the
applicable index. The Lender's determination of such rates as of any date of
determination shall be conclusive and binding, absent manifest error.

         2.5      Principal Payments.
                  ------------------

                  2.5(a) The outstanding principal amount of all Advances
shall be payable in full on the Maturity Date.

                  2.5(b) The Borrowers shall have the right to prepay the
outstanding Advances in whole or in part, from time to time, without premium or
penalty.

                  2.5(c) The Borrowers shall pay the Lender, without the
necessity of prior demand or notice from the Lender, and the Borrowers authorize
the Lender to cause the Funding Bank to charge the Borrowers' Operating Account
for, the amount of any outstanding Advance against a specific Pledged Mortgage,
upon the earliest occurrence of any of the following events:

                           (1) 1 Business Day elapses from the date an Advance
was made against an Eligible Loan that was not closed and funded.

                           (2) 10 Business Days elapse from the date a
Collateral Document was delivered to the Borrowers for correction or completion
under a Trust Receipt, if such Collateral Document has not been returned to the
Lender.

                           (3) On the date on which a Pledged Mortgage is
determined to have been originated based on untrue, incomplete or inaccurate
information, whether or not the Borrowers have knowledge of such
misrepresentation or incorrect information or on the date on which the Borrowers
know, or have reason to know, or receives notice from the Lender, that one or
more of the representations and warranties set forth in Section were inaccurate
or incomplete in any material respect on any date when made or deemed made.

                           (4) On the date the Pledged Mortgage has been in
default for a period of 60 days or more.

                           (5) 3 Business Days after the mandatory delivery date
of the related Purchase Commitment and the specific Pledged Mortgage or the
Pledged Security backed thereby was not delivered under the Purchase Commitment
prior to such mandatory delivery date, or the Purchase Commitment is terminated;
unless in each case, such Pledged Mortgage or Pledged Security is eligible for
delivery to an Investor under a comparable Purchase Commitment acceptable to the
Lender.

                                       15
<PAGE>

                           (6) Upon sale or other disposition of the Pledged
Mortgage or, if a Pledged Mortgage is included in an Eligible Mortgage Pool,
upon sale or other disposition of the related Agency Security.

                  2.5(d) Upon Notice to the Borrowers by the Lender, the
Borrowers shall pay to the Lender, and the Borrowers authorize the Lender to
cause the Funding Bank to charge the Borrowers' Operating Account for, the
amount of any outstanding Advance against a specific Pledged Mortgage upon the
earliest occurrence of any of the following events:

                           (1) For any Pledged Mortgage, the Warehouse Period
elapses.

                           (2) On the date the payment of a Lien prior to a
Pledged Mortgage is delinquent for a period of 60 days.

                           (3) 45 days elapse from the date the Pledged Mortgage
was delivered to an Investor or an Approved Custodian for examination and
purchase or inclusion in a Mortgage Pool, without the purchase being made or an
Eligible Mortgage Pool being initially certified, or upon rejection of the
Pledged Mortgage as unsatisfactory by an Investor or an Approved Custodian.

                           (4) 7 Business Days elapse from the date a Wet
Settlement Advance was made without receipt by the Lender of all Collateral
Documents relating to such Pledged Mortgage, or such Collateral Documents, upon
examination by the Lender, are found not to be in compliance with the
requirements of this Agreement or the related Purchase Commitment.

                           (5) With respect to any Pledged Mortgage, any of the
items described in Section 2.2(d), upon examination by the Lender, are found not
to be in compliance with the requirements of this Agreement or the related
Purchase Commitment, unless such non-compliance is correctible and the Lender
delivers such item(s) to the Borrowers for correction or completion under a
Trust Receipt.

                  2.5(e) The outstanding amount of any Advance made pursuant
to Section shall be payable in full within 1 Business Day after the date of such
Advance.

                  2.5(f) In addition to the payments required pursuant to
Sections 2.5(d) and 2.5(e), if the principal amount of any Pledged Mortgage is
prepaid in whole or in part while an Advance is outstanding against such Pledged
Mortgage, the Borrowers shall be obligated to pay to the Lender, without the
necessity of prior demand or notice from the Lender, and the Borrowers authorize
the Lender to cause the Funding Bank to charge the Borrowers' Operating Account
for the amount of such prepayment, to be applied to such Advance.

                  2.5(g) The proceeds of the sale or other disposition of
Pledged Mortgages and Pledged Securities shall be paid directly by the Investor
to the Cash Collateral Account. The Borrowers shall give Notice to the Lender
(telephonically, to be followed by written notice) of the Pledged Mortgages or

                                       16
<PAGE>

Pledged Securities for which proceeds have been received. Upon receipt of such
Notice the Advances against such Pledged Mortgages or Pledged Securities shall
be repaid from such proceeds and such Pledged Mortgages or Pledged Securities
shall be considered to have been redeemed from pledge. The Lender is entitled to
rely upon the Borrowers' affirmation that deposits in the Cash Collateral
Account represent payment from Investors for the purchase of Pledged Mortgages
or Pledged Securities as specified by the Borrowers. In the event that the
payment from an Investor for the purchase of Pledged Mortgages or Pledged
Securities is less than the outstanding Advances against such Pledged Mortgages
or the Mortgage Loans backing Pledged Securities, the Lender is authorized to
cause the Funding Bank to charge the Operating Account for an amount equal to
such deficiency. Provided no Default or Event of Default exists, the Lender
shall return any excess payment from an Investor for Pledged Mortgages or
Pledged Securities to the Borrowers.

         2.6   Expiration of Commitment. The Commitment shall expire on the
               Maturity Date.

         2.7   Method of Making Payments.

                  2.7(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Lender not later than the close of
business on the date when due unless such date is a non-Business Day, in which
case, such payment shall be due on the first Business Day thereafter, and shall
be made in lawful money of the United States of America in immediately available
funds transferred via wire to accounts designated by the Lender in writing from
time to time.

                  2.7(b) After the occurrence and during the continuance of an
Event of Default, and without the necessity of prior demand or notice from the
Lender, the Borrowers authorize the Lender to cause the Funding Bank to charge
the Borrowers' Operating Account for any Obligations due and owing the Lender.

         2.8   Commitment Fees and Non-Usage Fees.

                  2.8(a) The Borrowers agree to pay to the Lender a Commitment
Fee in the amount of 1/8% per annum of the Commitment Amount which Commitment
Fee shall be paid quarterly in advance and shall be computed on the basis of a
365-day year and applied to the actual number of days elapsed in such Calendar
Quarter. On the Closing Date, the Borrowers shall pay the prorated portion of
the quarterly Commitment Fee due from the Closing Date to the last day of the
current Calendar Quarter. Thereafter, the Borrowers shall make quarterly
payments of the Commitment Fee on the first day of each Calendar Quarter. If the
Maturity Date is other than the last day of a Calendar Quarter, the Borrowers
shall pay the prorated portion of the quarterly Commitment Fee due from the
beginning of the then current Calendar Quarter to and including the Maturity
Date. The Borrowers shall not be entitled to a reduction in the amount of the
Commitment Fee, in the event the Commitment Amount is reduced or in the event
that the Commitment is terminated at the request of the Borrowers or as a result
of an Event of Default. If the Commitment terminates at the request of the
Borrowers or as a result of an Event of Default, the unpaid balance of the
Commitment Fee shall be due and payable in full on the date of such termination.

                                       17
<PAGE>

                  2.8(b) At the end of each Calendar Quarter, during the term
hereof commencing with the Calendar Quarter beginning on April 1, 2000, the
Lender shall determine the average usage of the Commitment by calculating the
arithmetic daily average of the Advances outstanding during such Calendar
Quarter. The Lender shall then subtract such quarterly average usage (the "Used
Portion") from the arithmetic daily average of the Commitment Amount (and the
result thereof shall be known as the "Unused Portion"), and the Borrowers shall
pay in arrears, within 30 days after the end of each Calendar Quarter, a
Non-Usage Fee (the "Non-Usage Fee") equal to 1/16% per annum on the total amount
of the Unused Portion of the Commitment during such Calendar Quarter; provided
that no Non-Usage Fee shall be payable with respect to any Calendar Quarter for
which the Used Portion is equal to or greater than 50% of the Commitment Amount.
If the Maturity Date of the Commitment is other than the last day of a Calendar
Quarter, the Borrowers shall pay the prorated portion of the quarterly Non-Usage
Fee due from the beginning of the then current Calendar Quarter to and including
the Maturity Date. In the absence of manifest error, the calculation by the
Lender of the amount of any Non-Usage Fee shall be conclusive. If the Commitment
terminates at the request of the Borrowers or as a result of an Event of
Default, the Non-Usage Fee shall be due and owing through the last day of the
current Calendar Quarter.

         2.9 Warehousing Fees. The Borrowers agree, at the time of each Advance,
to pay to the Lender a Warehousing Fee in the amount of $15.00 for each Mortgage
Loan pledged as Collateral for such Advance; provided, however, if the Borrowers
are not delivering all Advance Requests as Electronic Advance Requests via
RFConnects Delivery within ninety (90) days after the Closing Date, the
Warehousing Fee for each Mortgage Loan pledged as Collateral for an Advance
thereafter shall be $20.00. Warehousing Fees are due when incurred, but shall
not be delinquent if paid within fifteen (15) days after receipt of an invoice
or an account analysis statement from the Lender.

         2.10 Miscellaneous Charges. The Borrowers agree to reimburse the Lender
for miscellaneous charges and expenses (collectively, "Miscellaneous Charges")
incurred by or on behalf of the Lender in connection with the handling and
administration of Advances, and to reimburse the Lender for Miscellaneous
Charges incurred by or on behalf of the Lender in connection with the handling
and administration of the Collateral, except to the extent explicitly addressed
elsewhere in this Agreement. For the purposes hereof, Miscellaneous Charges
shall include, but not be limited to, costs for UCC, tax lien and judgment
searches conducted by the Lender, filing fees, charges for wire transfers, check
processing charges, charges for security delivery fees, charges for overnight
delivery of Collateral to Investors, the Funding Bank's service fees and
overdraft charges and Designated Bank Charges. Miscellaneous Charges are due
when incurred, but shall not be delinquent if paid within 15 days after receipt
of an invoice or an account analysis statement from the Lender.

                                       18
<PAGE>

         2.11 Interest Limitation. All agreements between the Borrowers and the
Lender are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of this Agreement or
the Note or otherwise, shall the amount paid or agreed to be paid to the Lender
for the use, forbearance, loaning or retention of the Advances secured by this
Agreement exceed the maximum permissible under applicable law. If from any
circumstances whatsoever, fulfillment of any provisions hereof or of the Note,
or any other document securing this Agreement at any time given shall involve
transcending the limit of validity prescribed by law, then, the obligation to be
fulfilled shall automatically be reduced to the limit of such validity, and if
from any circumstances the Lender should ever receive as interest an amount
which would exceed the highest lawful rate of interest, such amount which would
be in excess of interest shall be applied to the reduction of the principal
balance secured by the Note and not to the payment of interest thereunder. This
provision shall control every other provision of all agreements between the
Borrowers and Lender and shall also be binding upon and available to any
subsequent holder of the Note.

         2.12 Increased Costs; Capital Requirements. In the event any applicable
law, order, regulation or directive issued by any governmental or monetary
authority, or any change therein or in the governmental or judicial
interpretation or application thereof, or compliance by the Lender with any
request or directive (whether or not having the force of law) by any
governmental or monetary authority:

                  2.12(a) Does or shall subject the Lender to any tax of any
kind whatsoever with respect to this Agreement or any Advances made hereunder,
or change the basis of taxation on payments to the Lender of principal, fees,
interest or any other amount payable hereunder (except for change in the rate of
tax on the overall gross or net income of the Lender by the jurisdiction in
which the Lender's principal office is located);

                  2.12(b) Does or shall impose, modify or hold applicable any
reserve, capital requirement, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of the Lender which are not otherwise
included in the determination of the interest rate as calculated hereunder;

and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining any Advance or to reduce any amount receivable
in respect thereof or to reduce the rate of return on the capital of the Lender
or any Person controlling the Lender as it relates to credit facilities in the
nature of that evidenced by this Agreement, then, in any such case, the
Borrowers shall promptly pay any additional amounts necessary to compensate the
Lender for such additional cost or reduced amounts receivable or reduced rate of
return as determined by the Lender with respect to this Agreement or Advances
made hereunder. If the Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall notify the Borrowers of the event by reason
of which it has become so entitled and the Borrowers shall pay such amount
within 15 days thereafter. A certificate as to any additional amount payable
pursuant to the foregoing sentence containing the calculation thereof in

                                       19
<PAGE>
reasonable detail submitted by the Lender to the Borrowers shall be conclusive
in the absence of manifest error. The obligations of the Borrowers under this
Section shall survive the payment of all other Obligations and the termination
of this Agreement. In the event the Lender notifies the Company of any payment
due under this Section 2.12, the Borrowers may, within 30 days after its receipt
of such notice pay all of the outstanding Obligations and terminate the
Commitment, without paying any additional Commitment Fee or any Non-Usage Fee
for the period after the effective date of such termination, provided, that the
Borrowers shall not be entitled to any refund of any Commitment Fees previously
paid, and shall remain liable for all Obligations (including, without
limitation, any payment due under this Section 2.12) accrued through the
effective date of such payment and termination.

3.       COLLATERAL.

         3.1 Grant of Security Interest. As security for the payment of the Note
and for the performance of all of the Borrowers' Obligations, the Borrowers
hereby assign and transfers to the Lender all right, title and interest in and
to and grants a security interest to the Lender in the following described
property (the "Collateral"):

                  3.1(a) All Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing or securing such Mortgage Loans, which from time to time
are delivered or caused to be delivered to the Lender (including delivery to a
third party on behalf of the Lender), come into the possession, custody or
control of the Lender for the purpose of assignment or pledge or in respect of
which an Advance has been made by the Lender hereunder, including without
limitation all Mortgage Loans in respect of which Wet Settlement Advances have
been made by the Lender (the "Pledged Mortgages").

                  3.1(b) All Mortgage-backed Securities which are from time to
time created in whole or in part on the basis of the Pledged Mortgages or are
delivered or caused to be delivered to, or are otherwise in the possession of
the Lender or its agent, bailee or custodian as assignee, or pledged to the
Lender, or for such purpose are registered by book-entry in the name of the
Lender (including delivery to or registration in the name of a third party on
behalf of the Lender) hereunder or in respect of which from time to time an
Advance has been made by the Lender hereunder (the "Pledged Securities").

                  3.1(c) All private mortgage insurance and all commitments
issued by the FHA or VA to insure or guarantee any Mortgage Loans included in
the Pledged Mortgages; all Purchase Commitments held by the Borrowers covering
the Pledged Mortgages or the Pledged Securities and all proceeds resulting from
the sale thereof to Investors pursuant thereto; and all personal property,
contract rights, servicing and servicing fees and income or other proceeds,
amounts and payments payable to the Borrowers as compensation or reimbursement,
accounts, payments, intangibles and other general intangibles of whatsoever kind
relating to the Pledged Mortgages, the Pledged Securities, said FHA commitments
or VA commitments and the Purchase Commitments, and all other documents or
instruments relating to the Pledged Mortgages and the Pledged Securities,
including, without limitation, any interest of the Borrowers in any fire,

                                       20
<PAGE>

casualty or hazard insurance policies and any awards made by any public body or
decreed by any court of competent jurisdiction for a taking or for degradation
of value in any eminent domain proceeding as the same relate to the Pledged
Mortgages.

                  3.1(d) All right, title and interest of the Borrowers in and
to all escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records (including all information, records, tapes, data, programs, discs and
cards necessary or helpful in the administration or servicing of the Collateral)
and other information and data of the Borrowers relating to the Collateral.

                  3.1(e) All now existing or hereafter acquired cash delivered
to or otherwise in the possession of the Lender, the Funding Bank, or the
Lender's agent, bailee or custodian or designated on the books and records of
the Borrowers as assigned and pledged to the Lender.

                  3.1(f) All cash and non-cash proceeds of the Collateral,
including all dividends, distributions and other rights in connection with, and
all additions to, modifications of and replacements for, the Collateral, and all
products and proceeds of the Collateral, together with whatever is receivable or
received when the Collateral or proceeds thereof are sold, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or involuntary,
including, without limitation, all rights to payment with respect to any cause
of action affecting or relating to the Collateral or proceeds thereof.

         3.2      Release of Security Interest in Collateral.

                  3.2(a) Pledged Mortgages shall be released from the Lender's
security interest only against payment to the Lender of the Release Amount in
connection with such Pledged Mortgages.

                  3.2(b) If Pledged Mortgages are to be transferred to a pool
custodian or to Freddie Mac or Fannie Mae for inclusion in a Mortgage Pool, the
Lender's security interest in such Pledged Mortgages shall be released only
against payment to the Lender of the Release Amount in connection with such
Pledged Mortgages. If the Lender's security interest in the Pledged Mortgages
comprising the Mortgage Pool is not released prior to the issuance of the
Mortgage-backed Security, then the Mortgage-backed Security, when issued, shall
be a Pledged Security. The Lender's security interest shall continue in such
Pledged Mortgages and the Pledged Security. The Lender shall be entitled to
possession of such Pledged Security in the manner provided below.

                  3.2(c) If Pledged Mortgages are transferred to an Approved
Custodian and included in an Eligible Mortgage Pool, the Lender's security
interest in the Pledged Mortgages comprising the Eligible Mortgage Pool shall be
released upon the issuance of the Agency Security, which shall be a Pledged
Security. The Lender's security interest in such Pledged Security shall be
released only against payment to the Lender of the Release Amount in connection
with the Pledged Mortgages backing such Pledged Security. The Lender shall be
entitled to possession of such Pledged Security in the manner provided below.

                                       21
<PAGE>

                  3.2(d) The Lender shall have the exclusive right to the
possession of the Pledged Securities or, if the Pledged Securities are issued in
book-entry form or issued in certificated form and delivered to a clearing
corporation (as such term is defined in the Uniform Commercial Code of
Minnesota) or its nominee, the Lender shall have the right to have the Pledged
Securities registered in the name of a securities intermediary (as such term is
defined in the Uniform Commercial Code of Minnesota) in an account containing
only customer securities and credited to an account of the Lender. The Lender
shall have the right to cause delivery of the Pledged Securities to be made to
the Investor or the Pledged Securities credited to the account of the Investor
or the Investor's designee only against payment therefor. The Borrowers
acknowledge that the Lender may enter into one or more standing arrangements
with other financial institutions with respect to Pledged Securities issued in
book entry form or issued in certificated form and delivered to a clearing
corporation, pursuant to which such Pledged Securities are registered in the
name of such financial institution, as agent or securities intermediary for the
Lender, and the Borrowers agree upon request of the Lender to execute and
deliver to such other financial institutions the Borrowers' written concurrence
in any such standing arrangements.

                  3.2(e) Prior to the occurrence of an Event of Default, the
Borrowers may redeem a Pledged Mortgage or Pledged Security from the Lender's
security interest by notifying the Lender of its intention to redeem such
Pledged Mortgage or Pledged Security from pledge and either (a) paying, or
causing an Investor to pay, to the Lender, for application to prepayment of the
principal balance of the Note, the Release Amount in connection with such
Pledged Mortgage or Pledged Security, or (b) delivering substitute Collateral
which, in addition to being acceptable to the Lender in its sole discretion
will, when included with the Collateral, result in a Collateral Value of all
Collateral held by the Lender which is at least equal to the aggregate
outstanding Advances.

                  3.2(f) Following the occurrence of a Default or Event of
Default, the Lender may, with no liability to the Borrowers or any Person,
continue to release its security interest in any Pledged Mortgage or Pledged
Security against payment of the Release Amount in connection with such Pledged
Mortgage or Pledged Security.

                  3.2(g) The amount (the "Release Amount") to be paid by the
Borrowers to obtain the release of the Lender's security interest in a Pledged
Mortgage shall be (i) prior to the occurrence of an Event of Default, the
principal amount of the Advances outstanding against such Pledged Mortgage, and
(ii) from and after the occurrence and during the continuance of an Event of
Default, the Committed Purchase Price of such Pledged Mortgage or, if there is
no Purchase Commitment therefor, the amount paid to the Lender in a commercially
reasonable disposition thereof.

                                       22
<PAGE>
         3.3 Delivery of Additional Collateral or Mandatory Prepayment. At any
time that the aggregate Collateral Value of the Collateral then pledged
hereunder is less than the aggregate amount of the Advances then outstanding
hereunder, the Lender may request, and the Borrowers shall within 2 Business
Days after Notice by the Lender (a) deliver to the Lender for pledge hereunder
additional Collateral, with a Collateral Value sufficient to cover the
difference between the Collateral Value of the Collateral pledged and the
aggregate amount of Advances outstanding hereunder, and/or (b) repay the
Advances in an amount sufficient to reduce the aggregate balance thereof
outstanding to or below the Collateral Value of the Collateral pledged
hereunder.

         3.4      Release of Collateral.

                  3.4(a) The Lender may deliver documents relating to the
Collateral to the Borrowers for correction or completion pursuant to a Trust
Receipt.

                  3.4(b) Prior to the occurrence of a Default or Event of
Default, upon delivery by the Borrowers to the Lender of shipping instructions
pursuant to Exhibit D-SF, the Lender will transmit Pledged Mortgages or Pledged
Securities and all related loan documents or pool documents to the applicable
Investor, Approved Custodian or other party.

                  3.4(c) Upon receipt of Notice from the Borrowers under
Section hereof, and repayment of the Release Amount with respect to a Pledged
Mortgage identified by the Borrowers, any Collateral Documents relating to the
redeemed Pledged Mortgage or Mortgage Loan backing a Pledged Security which have
not been delivered to an Investor or Approved Custodian shall be released by the
Lender to the Borrowers.

         3.5 Collection and Servicing Rights. So long as no Event of Default
shall have occurred and be continuing, the Borrowers shall be entitled to
service and receive and collect directly all sums payable to the Borrowers in
respect of the Collateral other than proceeds of any Purchase Commitment or
proceeds of the sale of any Collateral. Following the occurrence of any Event of
Default and Notice thereof from the Lender to the Borrowers, the Lender or its
designee shall thereafter be entitled to service and receive and collect all
sums payable to the Borrowers in respect of the Collateral, and in such case (a)
the Lender or its designee in its discretion may, in its own name, in the name
of the Borrowers or otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so, (b) the Borrowers
shall, if the Lender so requests, hold in trust for the benefit of the Lender
and forthwith pay to the Lender at its office designated by Notice hereunder,
all amounts thereafter received by the Borrowers upon or in respect of any of
the Collateral, advising the Lender as to the source of such funds, and (c) all
amounts so received and collected by the Lender shall be held by it as part of
the Collateral.

         3.6 Return of Collateral at End of Commitment. If (a) the Commitment
shall have expired or been terminated, and (b) no Advances, interest or other
Obligations shall be outstanding and unpaid, the Lender shall deliver or release
its security interest and shall deliver all Collateral in its possession to the
Borrowers at the Borrowers' expense. The receipt of the Borrowers for any

                                       23
<PAGE>

Collateral released or delivered to the Borrowers pursuant to any provision of
this Agreement shall be a complete and full acquittance for the Collateral so
returned, and, as long as all Collateral Documents are returned to the Borrowers
without modification or amendment other than as provided for hereunder, the
Lender shall thereafter be discharged from any liability or responsibility
therefor.

4.       CONDITIONS PRECEDENT.

         4.1 Initial Advance. The obligation of the Lender to make the initial
Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, on or before the date thereof of the following
conditions precedent:

                  4.1(a)The Lender shall have received the following, all of
which must be satisfactory in form and content to the Lender, in its sole
discretion:

                           (1) The Note and this Agreement duly executed by the
Borrowers.

                           (2) New Jersey Mortgage's articles of incorporation
as certified by the Secretary of State of New Jersey, bylaws certified by the
corporate secretary of New Jersey Mortgage, and certificates of good standing
dated no less recently than 90 days prior to the date of this Agreement.

                           (3) A resolution of the board of directors of New
Jersey Mortgage, certified as of the date of this Agreement by its corporate
secretary, authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents, and all other instruments or documents to be
delivered by New Jersey Mortgage pursuant to this Agreement.

                           (4) A certificate of New Jersey Mortgage's corporate
secretary as to the incumbency and authenticity of the signatures of the
officers of New Jersey Mortgage executing this Agreement and the other Loan
Documents and each Advance Request and all other instruments or documents to be
delivered pursuant hereto (the Lender being entitled to rely thereon until a new
such certificate has been furnished to the Lender).

                           (5) American Business Credit's articles of
incorporation as certified by the Secretary of State of the Commonwealth of
Pennsylvania, bylaws certified by the corporate secretary of American Business
Credit, and certificates of good standing dated no less recently than 90 days
prior to the date of this Agreement.

                           (6) A resolution of the board of directors of
American Business Credit, certified as of the date of this Agreement by its
corporate secretary, authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents, and all other instruments or documents
to be delivered by American Business Credit pursuant to this Agreement.

                                       24
<PAGE>
                           (7) A certificate of American Business Credit's
corporate secretary as to the incumbency and authenticity of the signatures of
the officers of American Business Credit executing this Agreement and the other
Loan Documents and each Advance Request and all other instruments or documents
to be delivered pursuant hereto (the Lender being entitled to rely thereon until
a new such certificate has been furnished to the Lender).

                           (8) Upland's articles or certificate of incorporation
as certified by the Secretary of State of the Commonwealth of Pennsylvania,
bylaws certified by the corporate secretary of Upland, and certificates of good
standing dated no less recently than 90 days prior to the date of this
Agreement.

                           (9) A resolution of the board of directors of Upland,
certified as of the date of this Agreement by its corporate secretary,
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, and all other instruments or documents to be delivered by
Upland pursuant to this Agreement.

                           (10) A certificate of Upland's corporate secretary as
to the incumbency and authenticity of the signatures of the officers of Upland
executing this Agreement and the other Loan Documents and each Advance Request
and all other instruments or documents to be delivered pursuant hereto (the
Lender being entitled to rely thereon until a new such certificate has been
furnished to the Lender).

                           (11) Financial statements of the Guarantor and its
Subsidiaries, on a consolidated and consolidating, basis containing a balance
sheet as of June 30, 1999, and related statements of income, changes in
stockholders' equity and cash flows for the fiscal year ended on such date, all
prepared in accordance with GAAP applied on a basis consistent with prior
periods and audited by independent certified public accountants of recognized
standing acceptable to the Lender, together with an unqualified auditor's
opinion regarding the financial statements.

                           (12) Financial statements of the Guarantor and its
Subsidiaries, on a consolidated basis, containing a balance sheet as of December
31, 1999, related statements of income and changes in stockholders' equity for
the period ended on such date prepared in accordance with GAAP applied on a
basis consistent with the Guarantor's most recent audited financial statements.

                           (13) The Guaranty, in the form attached hereto as
Exhibit B, duly executed by the Guarantor.

                           (14) Copies of the Guarantor's articles or
certificate of incorporation as certified by the Secretary of State of Delaware,
bylaws certified by the corporate secretary of the Guarantor, and certificates
of good standing issued by the Secretary of State dated no less recently than 90
days prior to the date of this Agreement.

                                       25
<PAGE>

                           (15) A resolution of the board of directors of the
Guarantor, certified as of the date of the Agreement by its corporate secretary,
authorizing the execution, delivery and performance of the Guaranty and all
other instruments or documents to be delivered by the Guarantor pursuant to this
Agreement.

                           (16) A certificate of the Guarantor's corporate
secretary as to the incumbency and authenticity of the signatures of the
officers of the Guarantor executing the Guaranty and all other instruments or
documents to be delivered pursuant hereto (the Lender being entitled to rely
thereon until a new such certificate has been furnished to the Lender).

                           (17) A favorable written opinion of counsel to the
Borrowers and the Guarantor (or of separate counsel at the option of the
Borrowers and the Guarantor), dated as of the date of this Agreement
substantially in the form of Exhibit H attached hereto, addressed to the Lender.

                           (18) Uniform Commercial Code, tax lien and judgment
searches of the appropriate public records for the Borrowers and the Guarantor,
which searches shall not have disclosed the existence of any prior Lien on the
Collateral other than in favor of the Lender or as permitted hereunder.

                           (19) Copies of the certificates, documents or other
written instruments which evidence the Borrowers' eligibility described in
Section hereof, all in form and substance satisfactory to the Lender.

                           (20) Copies of each of the Borrowers' errors and
omissions insurance policies or mortgage impairment insurance policies and
blanket bond coverage policies, or certificates in lieu of policies, all in form
and content satisfactory to the Lender, showing compliance by the Borrowers as
of the date of this Agreement with the related provisions of Section _________
hereof.

                           (21) Executed financing statements in recordable form
covering the Collateral and ready for filing in all jurisdictions required by
the Lender.

                           (22) Receipt by the Lender of any fees due on the
date hereof, including, but not limited to, Commitment Fees and document
production fees.

                           (23) Evidence that all accounts necessary into which
Advances will be funded have been established at the Funding Bank and receipt of
a fully executed Funding Bank Agreement.

                           (24) Assumed Name Certificate dated no less recently
than 90 days prior to the date of this Agreement for any assumed name used by
the Borrowers in the conduct of its business.

                                       26
<PAGE>

                  4.1(b) All directors, officers and shareholders of the
Borrowers and the Guarantor, all Affiliates of the Borrowers or the Guarantor,
and of any Subsidiary of the Borrowers, or the Guarantor, to which any of the
Borrowers shall be indebted as of the date of this Agreement, which indebtedness
has a term of more than 1 year or is in excess of $25,000, shall have
subordinated such indebtedness to the Obligations (unless such indebtedness is
already subordinated to the Lender's satisfaction), by executing a Subordination
of Debt Agreement, in the form of Exhibit F hereto; and the Lender shall have
received an executed copy of any such Subordination of Debt Agreement, certified
by the corporate secretary of the Borrowers to be true and complete and in full
force and effect as of the date of the Advance.

         4.2 Each Advance. The obligation of the Lender to make the initial and
each subsequent Advance under this Agreement is subject to the satisfaction, in
the sole discretion of the Lender, as of the date of each such Advance, of the
following additional conditions precedent:

                  4.2(a) The Borrowers shall have delivered to the Lender the
Advance Request, Collateral Documents, and documents relating to Wet Settlement
Advances, called for under, and shall have satisfied the procedures set forth
in, Section hereof and the applicable Exhibits hereto described in that Section,
according to the type of the requested Advance. All items delivered to the
Lender shall be satisfactory to the Lender in form and content, and the Lender
may reject such of them as do not meet the requirements of this Agreement or of
the related Purchase Commitment.

                  4.2(b) The Lender shall have received evidence satisfactory
to it as to the making and/or continuation of any book entry or the due filing
and recording in all appropriate offices of all financing statements and other
instruments as may be necessary to perfect the security interest of the Lender
in the Collateral under the Uniform Commercial Code or other applicable law.

                  4.2(c) The representations and warranties of the Borrowers
contained in Article 5 hereof shall be accurate and complete in all material
respects as if made on and as of the date of each Advance.

                  4.2(d) The Borrowers shall have performed all agreements to
be performed by it hereunder, and after giving effect to the requested Advance,
there shall exist no Default or Event of Default hereunder.

                  4.2(e) The Guarantor shall have performed all agreements to
be performed by the Guarantor under the Guaranty.

                  4.2(f) The Lender shall have received from counsel for the
Borrowers or for the Guarantor or both, if requested by the Lender in its sole
discretion, an updated opinion, in form and substance satisfactory to the
Lender, addressed to the Lender and dated as of the date of such Advance,
covering such of the matters as the Lender may reasonably request.

                                       27
<PAGE>
                  Delivery of an Advance Request by the Borrowers shall be
deemed a representation by the Borrowers that all conditions set forth in this
Section shall have been satisfied as of the date of such Advance.

5.       REPRESENTATIONS AND WARRANTIES.

         The Borrowers hereby represent and warrant to the Lender, as of the
date of this Agreement and as of the date of each Advance Request and the making
of each Advance, that:

         5.1 Organization; Good Standing; Subsidiaries. Each Borrower and each
Subsidiary of the Borrowers is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the full legal power and authority to own its property and to carry on its
business as currently conducted and is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no material
adverse effect on the business, operations, assets or financial condition of the
Borrowers or any such Subsidiary. For the purposes hereof, good standing shall
include qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which the Borrowers transact business. Neither the Guarantor nor the Borrowers
have any Subsidiaries except as set forth on Exhibit G hereto. Exhibit G sets
forth with respect to each such Subsidiary, its name, address, place of
incorporation, each state in which it is qualified as a foreign corporation, and
the percentage ownership of its capital stock by the Guarantor or the Borrowers.

         5.2 Authorization and Enforceability. The Borrowers have the power and
authority to execute, deliver and perform this Agreement, the Note and all other
Loan Documents to which the Borrowers are party and to make the borrowings
hereunder. The Guarantor has the power and legal capacity to execute, deliver
and perform the Guaranty. The execution, delivery and performance by the
Borrowers of this Agreement, the Note and all other Loan Documents to which the
Borrowers are party and the making of the borrowings hereunder and thereunder
have been duly and validly authorized by all necessary corporate action on the
part of the Borrowers (none of which actions has been modified or rescinded, and
all of which actions are in full force and effect) and do not and will not
conflict with or violate any provision of law, of any judgments binding upon the
Borrowers, or of the articles of incorporation or by-laws of the Borrowers,
conflict with or result in a breach of or constitute a default or require any
consent under, or result in the creation of any Lien upon any property or assets
of the Borrowers other than the Lien on the Collateral granted hereunder, or
result in or require the acceleration of any indebtedness of the Borrowers
pursuant to any agreement, instrument or indenture to which the Borrowers are
party or by which the Borrowers or their property may be bound or affected. This
Agreement, the Note and all other Loan Documents contemplated hereby or thereby
constitute legal, valid, and binding obligations of the Borrowers or of the
Guarantor, as applicable, enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency or other such laws affecting the
enforcement of creditors' rights and by general principles of equity.

                                       28
<PAGE>
         5.3 Approvals. The execution and delivery of this Agreement, the Note
and all other Loan Documents and the performance of the Borrowers' obligations
hereunder and thereunder and the validity and enforceability hereof and thereof
do not require any license, consent, approval or other action of any state or
federal agency or governmental or regulatory authority other than those which
have been obtained and remain in full force and effect.

         5.4 Financial Condition. The balance sheet of the Guarantor and its
Subsidiaries, on a consolidated and consolidating basis, as of the Statement
Date, and the related statements of income and changes in stockholders' equity
for the fiscal period ended on the Statement Date, heretofore furnished to the
Lender, fairly present the financial condition of the Guarantor and its
Subsidiaries as of the Statement Date and the results of its operations for the
fiscal period ended on the Statement Date. The Borrowers had, on the Statement
Date, no known material liabilities, direct or indirect, fixed or contingent,
matured or unmatured, or liabilities for taxes, long-term leases or unusual
forward or long-term commitments not disclosed by, or reserved against in, said
balance sheet and related statements, and at the present time there are no
material unrealized or anticipated losses from any loans, advances or other
commitments of the Borrowers except as heretofore disclosed to the Lender in
writing. Said financial statements were prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved. Since the Statement Date,
there has been no material adverse change in the business, operations, assets or
financial condition of the Guarantor and its Subsidiaries, nor is the Guarantor
aware of any state of facts which (with or without notice or lapse of time or
both) would or could result in any such material adverse change.

         5.5 Litigation. There are no actions, claims, suits or proceedings
pending or, to the knowledge of the Borrowers, threatened or reasonably
anticipated against or affecting the Borrowers or any Subsidiary of the
Borrowers in any court or before any arbitrator or before any government
commission, board, bureau or other administrative agency which, if adversely
determined, may reasonably be expected to result in any material and adverse
change in the business, operations, assets or financial condition of the
Borrowers as a whole, or which would affect the validity or enforceability of
this Agreement, the Note or any other Loan Document.

         5.6 Compliance with Laws. None of the Borrowers or any Subsidiary of
the Borrowers are in violation of any provision of any law, or of any judgment,
award, rule, regulation, order, decree, writ or injunction of any court or
public regulatory body or authority which might have a material adverse effect
on the business, operations, assets or financial condition of the Borrowers as a
whole or which would affect the validity or enforceability of this Agreement,
the Note or any other Loan Document.

         5.7 Regulation U. The Borrowers are not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock, and no part of the proceeds of any
Advances made hereunder will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.

                                       29
<PAGE>
         5.8 Investment Company Act. The Borrowers are not an "investment
company" or controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

         5.9 Payment of Taxes. The Borrowers and each of their Subsidiaries has
filed or caused to be filed all federal, state and, to the best of the
Borrowers' knowledge, local income, excise, property and other tax returns with
respect to the operations of the Borrowers and their Subsidiaries which are
required to be filed, all such returns are true and correct, and the Borrowers
and each of their Subsidiaries has paid or caused to be paid all taxes as shown
on such returns or on any assessment, to the extent that such taxes have become
due, including, but not limited to, all FICA payments and withholding taxes, if
appropriate. The amounts reserved, as a liability for income and other taxes
payable, in the financial statements described in Section hereof are sufficient
for payment of all unpaid federal, state and, to the best of the Borrowers'
knowledge, local income, excise, property and other taxes, whether or not
disputed, of the Borrowers and their Subsidiaries accrued for or applicable to
the period and on the dates of such financial statements and all years and
periods prior thereto and for which the Borrowers and their Subsidiaries may be
liable in its own right or as transferee of the assets of, or as successor to,
any other Person. No tax Liens have been filed and no material claims are being
asserted with respect to any such taxes, fees or charges.

         5.10 Agreements. None of the Borrowers or any Subsidiary of the
Borrowers are a party to any agreement, instrument or indenture or subject to
any restriction materially and adversely affecting its business, operations,
assets or financial condition, except as disclosed in the financial statements
described in Section hereof. Neither the Borrowers or any Subsidiary of the
Borrowers are in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement, instrument,
or indenture which default could have a material adverse effect on the business,
operations, properties or financial condition of the Borrowers as a whole. No
holder of any indebtedness of the Borrowers or of any of their Subsidiaries has
given notice of any asserted default thereunder, and no liquidation or
dissolution of the Borrowers or of any of their Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Borrowers or of any of its Subsidiaries or any of
its properties is pending, or to the knowledge of the Borrowers, threatened.

         5.11 Title to Properties. The Borrowers and each Subsidiary of the
Borrowers have good, valid, insurable (in the case of real property) and
marketable title to all of their properties and assets (whether real or
personal, tangible or intangible) reflected on the financial statements
described in Section hereof, except for such properties and assets as have been
disposed of since the date of such financial statements as no longer used or
useful in the conduct of its business or as have been disposed of in the
ordinary course of business, and all such properties and assets are free and
clear of all Liens except as disclosed in such financial statements and the lien
search reports described in Section 4.1(a)(18).

                                       30
<PAGE>

         5.12 ERISA. All plans ("Plans") of a type described in Section 3(3) of
ERISA in respect of which the Borrowers or any Subsidiary of the Borrowers is an
"Employer," as defined in Section 3(5) of ERISA, are in substantial compliance
with ERISA, and none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Internal Revenue Code, and none of the Borrowers or any Subsidiary of the
Borrowers have incurred any material liability (including any material
contingent liability) to or on account of any such Plan pursuant to Sections
4062, 4063, 4064, 4201 or 4204 of ERISA; and no proceedings have been instituted
to terminate any such Plan, and no condition exists which presents a material
risk to the Borrowers or a Subsidiary of the Borrowers of incurring a liability
to or on account of any such Plan pursuant to any of the foregoing Sections of
ERISA. No Plan or trust forming a part thereof has been terminated since
September 1, 1974.

         5.13 Eligibility. The Borrowers are approved and qualified and in good
standing as a lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as such:

                  5.13(a) New Jersey is a Fannie Mae approved seller/servicer
of Mortgage Loans, eligible to originate, purchase, hold, sell, and service
Mortgage Loans to be sold to Fannie Mae.

                  5.13(b) New Jersey is a HUD approved mortgagee, eligible to
originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

         5.14 Place of Business. The principal place of business of the
Borrowers is 111 Presidential Boulevard, Suite 125, Bala Cynwyd, PA 19004.

         5.15 Special Representations Concerning Collateral. The Borrowers
hereby represent and warrant to the Lender, as of the date of this Agreement and
as of the date of each Advance Request and the making of each Advance, that:

                  5.15(a) The Borrowers are the legal and equitable owners and
holders, free and clear of all Liens (other than Liens granted hereunder), of
the Pledged Mortgages and the Pledged Securities. All Pledged Mortgages, Pledged
Securities and Purchase Commitments have been duly authorized and validly issued
to the Borrowers, and all of the foregoing items of Collateral comply with all
of the requirements of this Agreement, and have been and will continue to be
validly pledged or assigned to the Lender, subject to no other Liens.

                  5.15(b) The Borrowers have, and will continue to have, the
full right, power and authority to pledge the Collateral pledged and to be
pledged by it hereunder.

                  5.15(c) Any Mortgage Loan and any related document included
in the Pledged Mortgages (1) has been duly executed and delivered by the parties
thereto at a closing held not more than 90 days prior to the date of the Advance
Request for such Mortgage Loan, (2) has been made in compliance with all
requirements of the Real Estate Settlement Procedures Act, Equal Credit

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<PAGE>

Opportunity Act, the federal Truth-In-Lending Act and all other applicable laws
and regulations, (3) is and will continue to be valid and enforceable in
accordance with its terms, without defense or offset, (4) has not been modified
or amended except in writing, which writing is part of the Collateral Documents,
nor any requirements thereof waived, (5) has been evaluated or appraised in
accordance with Title XI of FIRREA, and (6) complies and will continue to comply
with the terms of this Agreement and, if applicable, with the related Purchase
Commitment held by the Borrowers. Each Mortgage Loan, other than an open-ended
Pledged Loan, has been fully advanced in the face amount thereof. Each First
Mortgage is a first Lien on the premises described therein and each Second
Mortgage is secured by a second Lien on the premises described therein, and has
or will have a title insurance policy, in American Land Title Association form
or equivalent thereof, from a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the usual requirements of
Investors purchasing such Mortgage Loans.

                  5.15(d) No default has occurred and is continuing for more
than 60 days under any Mortgage Loan included in the Pledged Mortgages without
the Advance against such Pledged Mortgage having been repaid in accordance with
Section 2.5(c)(4) hereof, provided, however, that with respect to Pledged
Mortgages which have already been pledged as Collateral hereunder, if any
default has occurred, the Borrowers will promptly notify the Lender.

                  5.15(e) The Borrowers have complied and will continue to
comply with all laws, rules and regulations in respect of the FHA insurance or
VA guaranty of each Mortgage Loan included in the Pledged Mortgages designated
by the Borrowers as an FHA insured or VA guaranteed Mortgage Loan, and such
insurance or guarantee is and will continue to be in full force and effect.

                  5.15(f) All fire and casualty policies covering the premises
encumbered by each Mortgage included in the Pledged Mortgages (1) name and will
continue to name the Borrowers and their successors and assigns as the insured
under a standard mortgagee clause, (2) are and will continue to be in full force
and effect, and (3) afford and will continue to afford insurance against fire
and such other risks as are usually insured against in the broad form of
extended coverage insurance from time to time available.

                  5.15(g) Pledged Mortgages secured by premises located in a
special flood hazard area designated as such by the Director of the Federal
Emergency Management Agency are and shall continue to be covered by special
flood insurance under the National Flood Insurance Program.

                  5.15(h) Each Pledged Mortgage, against which an Advance is
made on the basis of a Purchase Commitment, meets all requirements of such
Purchase Commitment. The Borrowers shall assure that Pledged Mortgages which are
intended to be used in the formation of Mortgage-backed Securities shall comply
or, prior to the formation of any such Mortgage-backed Security, shall comply
with the requirements of the governmental instrumentality, department, agency or
other Person issuing or guaranteeing such Mortgage-backed Security. The
Borrowers shall assure that Mortgage Loans pledged hereunder that are not
covered by a Purchase Commitment meet all requirements of one or more Investors
with which the Borrowers have agreements or other arrangements to sell similar
Mortgage Loans.

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<PAGE>
                  5.15(i) For Pledged Mortgages which will be used to back
Ginnie Mae Mortgage-backed Securities, the Borrowers have received from Ginnie
Mae a confirmation notice or confirmation notices for Request Additional
Commitment Authority and for Request Pool Numbers, and there remains available
thereunder a commitment on the part of Ginnie Mae sufficient to permit the
issuance of Ginnie Mae Mortgage-backed Securities in an amount at least equal to
the amount of such Pledged Mortgages designated by the Borrowers as the Mortgage
Loans to be used to back such Ginnie Mae Mortgage-backed Securities; each such
Confirmation Notice is in full force and effect; each of such Pledged Mortgages
has been assigned by the Borrowers to one of such Pool Numbers and a portion of
the available Ginnie Mae Commitment has been allocated thereto by the Borrowers,
in an amount at least equal to such Pledged Mortgages; and each such assignment
and allocation has been reflected in the books and records of the Borrowers.

                  5.15(j) Each Pledged Mortgage secured by real property to
which a Manufactured Home is affixed will create a valid Lien on such
Manufactured Home that will have priority over any other Lien on such
Manufactured Home, whether or not arising under applicable real property law.

         5.16 Servicing. Attached hereto as Exhibit E is a true and complete
list of the Borrowers' Servicing Portfolio. All of the Borrowers' Servicing
Contracts are in full force and effect and, except as otherwise indicated, are
unencumbered by Liens. No default or event which, with notice or lapse of time
or both, would become a default, exists under any such Servicing Contract.

         5.17 No Adverse Selection. The Borrowers have not selected the
Collateral in a manner so as to affect adversely the Lender's interests.

         5.18 Year 2000 Compliance. The Borrowers have conducted a comprehensive
review and assessment of the Borrowers' computer applications and made inquiry
of the Borrowers' key suppliers, vendors, customers, and Investors with respect
to the "Year 2000 Problem" and, based on that review and inquiry and the passage
of time during the year 2000, the Borrowers do not believe the Year 2000 Problem
will result in a material adverse change in the Borrowers' business condition
(financial or otherwise), operations, properties or prospects, or ability to
repay the credit.

         5.19 Assumed Names. The Borrowers do not originate Mortgage Loans or
otherwise conduct business under any names other than its legal name and the
assumed name(s) set forth on Exhibit O attached hereto and made a part hereof.
The Borrowers have made all filings and taken all other action as may be
required under the laws of any jurisdiction in which it originates Mortgage
Loans or otherwise conducts business under any assumed name. The Borrowers' use
of assumed name(s) set forth herein does not conflict with any other Person's
legal rights to any such name(s), nor otherwise give rise to any liability by
the Borrowers to any other Person.

                                       33
<PAGE>

6.       AFFIRMATIVE COVENANTS.

         The Borrowers hereby covenant and agree that, so long as the Commitment
is outstanding or there remain any Obligations to be paid or performed under
this Agreement or under any other Loan Document, the Borrowers shall:

         6.1 Payment of Note. Punctually pay or cause to be paid all Obligations
payable hereunder and under the Note in accordance with the terms hereof and
thereof.

         6.2 Financial Statements and Other Reports. Deliver to the Lender:

                  6.2(a) As soon as available and in any event within 45 days
after the end of each fiscal quarter of the Guarantor each fiscal year,
statements of income and changes in stockholders' equity of the Guarantor and
its Subsidiaries, on a consolidated basis, for the period from the beginning of
such fiscal year to the end of such fiscal quarter, and the related balance
sheet as of the end of such fiscal quarter, all in reasonable detail and
certified as to the fairness of presentation by the chief financial officer of
the Guarantor, subject, however, to year-end audit adjustments.

                  6.2(b) As soon as available and in any event within 90 days
after the end of each fiscal year of the Guarantor, statements of income,
changes in stockholders' equity and cash flow of the Guarantor and its
Subsidiaries, on a consolidated and consolidating basis for such year, and the
related balance sheet as of the end of such year (setting forth in comparative
form the corresponding figures for the preceding fiscal year), all in reasonable
detail and accompanied by an opinion (which opinion shall not be qualified due
to possible failure to take all appropriate steps to successfully address Year
2000 Problem) in form and substance satisfactory to the Lender and prepared by
an accounting firm reasonably satisfactory to the Lender, or other independent
certified public accountants of recognized standing selected by the Guarantor
and acceptable to the Lender, as to said financial statements and a certificate
signed by the chief financial officer of the Guarantor stating that said
financial statements fairly present the financial condition and results of
operations of the Guarantor and its Subsidiaries as of the end of, and for, such
year.

                  6.2(c) Together with each delivery of financial statements
required in this Section , an Officer's Certificate substantially in the form of
Exhibit I-SF hereto: (1) setting forth in reasonable detail all calculations
necessary to show that the Guarantor and its Subsidiaries are in compliance with
the requirements of Sections , , and hereof as of the end of such quarter or
year (or, if the Borrowers are not in compliance, showing the extent of
non-compliance and specifying the period of non-compliance and what actions the
Borrowers have taken, are taking or propose to take with respect thereto); (2)
certifying that the Borrowers were, as of the end of the period, in compliance
and in good standing with applicable HUD, Ginnie Mae, or Investor net worth

                                       34
<PAGE>

requirements; (3) certifying that the representation set forth in Section hereof
is true and correct as of the date of such certificate or, if such
representation is not true and correct as of such date, specifying the nature of
the problem and what action the Borrowers have taken, are taking and propose to
take with request thereto, and (4) stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and conditions of
the Guarantor and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not have
knowledge of the existence as of the date of the Officer's Certificate, of any
Default or Event of Default, or if any Default or Event of Default existed or
exists, specifying the nature and period of the existence thereof and what
action the Borrowers have taken, are taking and propose to take with respect
thereto.

                  6.2(d) As soon as available and in any event within 30 days
after the end of each calendar month, a consolidated report, substantially in
the form of Exhibit L (the "Commitment Summary Report"), setting forth for each
forward commitment entered into by the Borrowers and the Lender, the following
information: size of the forward commitment, amount available, amount used and
such additional information as the Lender may from time to time request.

                  6.2(e) As soon as available and in any event within 45 days
after the end of each Calendar Quarter, a consolidated report (the "Servicing
Portfolio Report") as of the end of the Calendar Quarter detailing, as to all
Mortgage Loans the servicing rights to which are owned by the Borrowers
(specified by investor type, recourse and non-recourse) regardless of whether
such Mortgage Loans are Pledged Mortgages and which report shall indicate
Mortgage Loans which (A) are current and in good standing, (B) are more than 30,
60 or 90 days past due, respectively, (C) are, for Mortgage Loans serviced with
recourse, more than 360 days past due, (D) are the subject of pending bankruptcy
or foreclosure proceedings, or (E) have been converted (through foreclosure or
other proceedings in lieu thereof) by the Borrowers into real estate owned by
the Borrowers.

                  6.2(f) As soon as available and in any event within 30
Business Days after the end of each calendar month, a report detailing any and
all repurchase requests and the status thereof and any and all indemnification
agreements entered into by the Borrowers with respect to such repurchase
requests no later than the last day of the month immediately following each
calendar month end.

                  6.2(g) As soon as available and in any event within 30 days
after the end of each Calendar Quarter, a consolidated report (the "Loan
Production Report") as of the end of such fiscal quarter, presenting the total
dollar volume and the number of Mortgage Loans originated or purchased during
such fiscal quarter and the fiscal year to date, specified by property type and
loan type.

                                       35

<PAGE>
                  6.2(h) As soon as available and in any event within 30 days
after the end of each calendar month, one or more reports (collectively, the
"Status Report") as of the end of the calendar month, setting forth for each
Mortgage Loan held by the Borrowers for sale, the following information: loan
type, delinquency status, Credit Score (to the extent available),
bankruptcy/foreclosure status, unpaid principal balance, and such additional
information as the Lender may from time to time request (to the extent
available).

                  6.2(i) Reports in respect of the Pledged Mortgages and
Pledged Securities, in such detail and at such times as the Lender in its
discretion may reasonably request at any time or from time to time.

                  6.2(j) Copies of all regular or periodic financial and other
reports, if any, which the Borrowers shall file with the Securities and Exchange
Commission or any governmental agency successor thereto, copies of any audits
completed by Ginnie Mae, Fannie Mae or Freddie Mac and copies of the Mortgage
Bankers' Financial Reporting Forms (Freddie Mac Form 1055/Fannie Mae Form 1002)
which the Borrowers are required to have filed, as the Lender may reasonably
request.

                  6.2(k) From time to time, with reasonable promptness, such
further information regarding the business, operations, properties or financial
condition of the Borrowers as the Lender may reasonably request.

         6.3 Maintenance of Existence; Conduct of Business. Preserve and
maintain its corporate existence in good standing and all of its rights,
privileges, licenses and franchises necessary or desirable in the normal conduct
of its business, including, without limitation, its eligibility as lender,
seller/servicer and issuer described under Section hereof; conduct its business
in an orderly and efficient manner; maintain a net worth of acceptable assets as
required for maintaining the Borrowers' eligibility as lender, seller/servicer
and issuer described under Section 5.13 hereof; not change the nature or
character of its business; not engage in any business other than the mortgage
banking business; and not change its name, state of incorporation or principal
place of business.

         6.4 Compliance with Applicable Laws. Comply with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, a breach of which could materially adversely affect its business,
operations, assets, or financial condition, except where contested in good faith
and by appropriate proceedings.

         6.5 Inspection of Properties and Books. Permit authorized
representatives of the Lender or any Participant to discuss the business,
operations, assets and financial condition of the Guarantor and its Subsidiaries
with their officers and employees and to examine their books of account and make
copies or extracts thereof, all at such reasonable times as the Lender or any
Participant may request; provided, that unless a Default or Event of Default has
occurred and is continuing, the Lender shall not conduct more than 2 such
inspections in any calendar year. The Borrowers will provide their accountants
with a copy of this Agreement promptly after the execution hereof and will
instruct its accountants to answer candidly any and all questions that the
officers of the Lender or any Participant or any authorized representatives of

                                       36
<PAGE>

the Lender or any Participant may address to them in reference to the financial
condition or affairs of the Borrowers and their Subsidiaries. The Borrowers may
have their representatives in attendance at any meetings between the officers or
other representatives of the Lender or any Participant and the Borrowers'
accountants held in accordance with this authorization. As long as no Default or
Event of Default exists, such discussions, examinations, copies and meetings
shall be at the expense of the Lender, but any such discussions, examinations,
copies and meetings that occur while any Default or Event of Default is
continuing shall be at the expense of the Borrowers.

         6.6 Notice. Give prompt Notice to the Lender of (a) any action, suit or
proceeding instituted by or against the Borrowers or any of their Subsidiaries
in any federal or state court or before any commission or other regulatory body
(federal, state or local, domestic or foreign) which action, suit or proceeding
has at issue in excess of $250,000, or any such proceedings threatened against
the Borrowers or any of their Subsidiaries in a writing containing the details
thereof, (b) the filing, recording or assessment of any federal, state or local
tax Lien against the Borrowers, or any of its assets or any of its Subsidiaries,
(c) the occurrence of any Event of Default hereunder or the occurrence of any
Default and continuation thereof for 5 days, (d) the suspension, revocation or
termination of the Borrowers' eligibility, in any respect, as approved lender,
seller/servicer or issuer as described under Section hereof, (e) the involuntary
transfer, loss or termination of any Servicing Contract to which the Borrowers
are a party, or which is held for the benefit of the Borrowers, and the reason
for such transfer, loss or termination, if known to the Borrowers, and (f) any
other action, event or condition of any nature which may lead to or result in a
material adverse effect upon the business, operations, assets, or financial
condition of the Borrowers and their Subsidiaries or which, with or without
notice or lapse of time or both, would constitute a default under any other
agreement, instrument or indenture to which the Borrowers or any of their
Subsidiaries is a party or to which the Borrowers or any of their Subsidiaries,
their properties, or assets may be subject.

         6.7 Payment of Debt, Taxes, etc. Pay and perform all obligations and
indebtedness of the Borrowers, and cause to be paid and performed all
obligations and indebtedness of its Subsidiaries, promptly and in accordance
with the terms thereof and pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and governmental charges or levies imposed upon
the Borrowers or their Subsidiaries or upon their respective income, receipts or
properties before the same shall become past due, as well as all lawful claims
for labor, materials and supplies or otherwise which, if unpaid, might become a
Lien or charge upon such properties or any part thereof; provided, however, that
the Borrowers and their Subsidiaries shall not be required to pay taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies prior to their due date or for which the Borrowers or their
Subsidiaries shall have obtained an adequate bond or adequate insurance or which
are being contested in good faith and by proper proceedings which are being
reasonably and diligently pursued and for which proper reserves have been
created.

         6.8 Insurance. Maintain (a) errors and omissions insurance or mortgage
impairment insurance and blanket bond coverage, with such companies and in such
amounts as satisfy prevailing requirements applicable to a lender,
seller/servicer and issuer described under Section 5.13 hereof, and (b)

                                       37
<PAGE>

liability insurance and fire and other hazard insurance on its properties, with
responsible insurance companies approved by the Lender, in such amounts and
against such risks as is customarily carried by similar businesses operating in
the same vicinity. Copies of such policies shall be furnished to the Lender
without charge upon request of the Lender.

         6.9 Closing Instructions. Indemnify and hold the Lender harmless from
and against any loss, including reasonable attorneys' fees and costs,
attributable to the failure of a title insurance company, agent or approved
attorney to comply with the disbursement or instruction letter or letters of the
Borrowers relating to any Mortgage Loan. The Lender shall have the right to
pre-approve the Borrowers' forms of closing instructions to title insurance
companies, agents or attorneys, and any departure therefrom in any case where
the Mortgage Loan to be created at settlement is intended to be warehoused by
the Borrowers to be included as Collateral pursuant hereto.

         6.10 Subordination of Certain Indebtedness. Cause any indebtedness of
the Borrowers, incurred after the date of this Agreement, to any shareholder,
director or officer of the Borrowers, or to any Affiliate of the Borrowers or of
any Subsidiary of the Borrowers, or to any Guarantor, which indebtedness has a
term of more than 1 year or is in excess of $25,000 to be subordinated to all
Obligations by the execution of a Subordination of Debt Agreement in the form of
Exhibit F hereto and deliver to the Lender an executed copy of said Agreement.

         6.11 Other Loan Obligations. Perform all material obligations under the
terms of each loan agreement, note, mortgage, security agreement or debt
instrument by which the Borrowers are bound or to which any of its property is
subject, and promptly notify the Lender in writing of a declared default under
or the termination, cancellation, reduction or nonrenewal of any of its other
lines of credit or agreements with any other lender. Exhibit J hereto is a true
and complete list of all lines of credit or agreements to which the Guarantor or
any Borrower are a party as of the date hereof (including Gestation Agreements),
and the Borrowers hereby agree to give the Lender Notice before the Guarantor or
any Borrower obtains financing under any additional lines of credit or
agreements.

         6.12 Use of Proceeds of Advances. Use the proceeds of each Advance
solely for the purpose set forth in Section 2.1(b) for Advances of that type.

         6.13     Special Affirmative Covenants Concerning Collateral.

                  6.13(a) Warrant and defend the right, title and interest of
the Lender in and to the Collateral against the claims and demands of all
Persons whomsoever.

                  6.13(b) Service or cause to be serviced all Mortgage Loans in
accordance with the standard requirements of the issuers of Purchase Commitments
covering the same, the requirements of any Investor with which the Borrowers
have agreements or other arrangements to sell similar Mortgage Loans, and all
applicable FHA and VA requirements, including without limitation taking all

                                       38
<PAGE>

actions necessary to enforce the obligations of the obligors under such Mortgage
Loans. The Borrowers shall service or cause to be serviced all Mortgage Loans
backing Pledged Securities in accordance with applicable governmental
requirements and requirements of issuers of Purchase Commitments covering the
same. The Borrowers shall hold all escrow funds collected in respect of Pledged
Mortgages and Mortgage Loans backing Pledged Securities in trust, without
commingling the same with non-custodial funds, and apply the same for the
purposes for which such funds were collected.

                  6.13(c) Execute and deliver to the Lender such Uniform
Commercial Code financing statements with respect to the Collateral as the
Lender may reasonably request. The Borrowers shall also execute and deliver to
the Lender such further instruments of sale, pledge or assignment or transfer,
and such powers of attorney, as required by the Lender, and shall do and perform
all matters and things necessary or desirable to be done or observed, for the
purpose of effectively creating, maintaining and preserving the security and
benefits intended to be afforded the Lender under this Agreement. The Lender
shall have all the rights and remedies of a secured party under the Uniform
Commercial Code of Minnesota, or any other applicable law, in addition to all
rights provided for herein.

                  6.13(d)..Notify the Lender within 2 Business Days of any
default under, or of the termination of, any Purchase Commitment relating to any
Pledged Mortgage, Eligible Mortgage Pool or Pledged Security.

                  6.13(e) Promptly comply in all respects with the terms and
conditions of all Purchase Commitments, and all extensions, renewals and
modifications or substitutions thereof or thereto. The Borrowers will cause to
be delivered to the Investor the Pledged Mortgages and Pledged Securities to be
sold under each Purchase Commitment prior to the mandatory delivery date
thereof.

                  6.13(f) Maintain, at its principal office or in a regional
office approved by the Lender, or in the office of a computer service bureau
engaged by the Borrowers and approved by the Lender, and, upon request, make
available to the Lender the originals, or copies in any case where the originals
have been delivered to the Lender or to an Investor, of its Mortgage Notes and
Mortgages included in Pledged Mortgages, Mortgage-backed Securities delivered to
the Lender as Pledged Securities, Purchase Commitments, and all related Mortgage
Loan documents and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other information and data relating to the Collateral.

7.       NEGATIVE COVENANTS.

         The Borrowers hereby covenant and agree that, so long as the Commitment
is outstanding or there remain any Obligations to be paid or performed, the
Borrowers shall not, either directly or indirectly, without the prior written
consent of the Lender:

                                       39
<PAGE>

         7.1 Contingent Liabilities. Assume, guarantee, endorse, or otherwise
become contingently liable for the obligation of any Person, except (a) by one
Borrower of the obligations of another, (b) by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, and
(c) by any Borrower of the obligations of an Affiliate provided the aggregate
amount of such obligations outstanding does not exceed $109,000.

         7.2 Sale or Pledge of Servicing Contracts. Sell, pledge or grant a
security interest in any existing or future Servicing Contracts of the Borrowers
other than to the Lender, except as otherwise expressly permitted in this
Agreement, or omit to take any action required to keep all such Servicing
Contracts in full force and effect; provided, however, that if no Event of
Default has occurred and is continuing, servicing on individual Mortgage Loans
may be sold concurrently with and incidental to the sale of such Mortgage Loans
(with servicing released) in the ordinary course of the Borrowers' business.

         7.3 Merger; Sale of Assets; Acquisitions. Liquidate, dissolve,
consolidate or merge or sell any substantial part of its assets, or acquire any
substantial part of the assets of another; provided, however, the Borrowers may
acquire a substantial part of the assets of another as long as such assets
consist of (i) Eligible Assets or similar assets acceptable to the Credit Agent,
and (ii) other assets related to the mortgage banking business with an aggregate
value not to exceed $1,000,000 in any fiscal year, and the Borrowers provide the
Lender with at least 5 Business Days advance Notice of such acquisition.

         7.4 Deferral of Subordinated Debt. Pay in advance of the stated
maturity thereof any Subordinated Debt of the Borrowers or, if a Default or
Event of Default hereunder shall have occurred, make any payment of any kind
thereafter on such Subordinated Debt until all Obligations have been paid and
performed in full and any applicable preference period has expired.

         7.5 Loss of Eligibility. Take any action that would cause the Borrowers
to lose all or any part of their status as an eligible lender, seller/servicer
and issuer as described under Section hereof.

         7.6 Debt to Tangible Net Worth Ratio. Permit the ratio of Debt
(excluding, for this purpose only, Debt arising under the Hedging Arrangements,
to the extent of assets arising under the same Hedging Arrangements) to Tangible
Net Worth, determined for the Guarantor and its Subsidiaries, on a consolidated
basis, at any time to exceed 12 to 1.

         7.7 Minimum Tangible Net Worth. Permit Tangible Net Worth of the
Guarantor and its Subsidiaries, on a consolidated basis, at any time to be less
than $30,000,000 plus 50% of the Guarantor's consolidated net income for all
completed fiscal years ending after the Closing Date in which such consolidated
net income was positive.

         7.8 Net Income. Permit the net income of the Guarantor and its
Subsidiaries, on a consolidated basis, to be less than zero for any period of
two (2) consecutive Calendar Quarters.

                                       40
<PAGE>

         7.9 Transactions with Affiliates. Directly or indirectly (a) make any
loan, advance, extension of credit or capital contribution to any of its
Affiliates, except to the other Borrowers or in the ordinary course of business
on terms no less favorable than those that such Borrower could obtain in an
arms-length transaction with an unaffiliated Person, (b) transfer, sell, pledge,
assign or otherwise dispose of any of its assets to or on behalf of such
Affiliates, (c) merge or consolidate with or purchase or acquire assets from
such Affiliates, except from the other Borrowers or in the ordinary course of
business on terms no less favorable than those such Borrower could obtain in an
arms-length transaction with an unaffiliated Person, or (d) pay management fees
to or on behalf of such Affiliates.

         7.10 Acquisition of Recourse Servicing Contracts. Acquire Servicing
Contracts under which the Borrowers are obligated to repurchase or indemnify the
holder of the Mortgage Loans as a result of defaults on the Mortgage Loans at
any time during the term of such Mortgage Loans.

         7.11 Gestation Facilities. Directly or indirectly sell or finance
Pledged Mortgages under any Gestation Agreements, except pursuant to the
Gestation Agreement described on Exhibit J attached hereto and made a part
hereof.

         7.12 Special Negative Covenants Concerning Collateral.

                  7.12(a) The Borrowers shall not amend or modify, or waive any
of the terms and conditions of, or settle or compromise any claim in respect of,
any Pledged Mortgages or Pledged Securities.

                  7.12(b) The Borrowers shall not sell, assign, transfer or
otherwise dispose of, or grant any option with respect to, or pledge or
otherwise encumber (except pursuant to this Agreement or as permitted herein)
any of the Collateral or any interest therein.

                  7.12(c) The Borrowers shall not make any compromise,
adjustment or settlement in respect of any of the Collateral or accept other
than cash in payment or liquidation of the Collateral.

8.       DEFAULTS; REMEDIES.

         8.1 Events of Default. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):

                  8.1(a) Failure to pay the principal of any Advance when due,
whether at stated maturity, by acceleration, or otherwise; or failure to pay any
installment of interest on any Advance or any other amount due under this
Agreement within 10 days after the due date; or failure to pay, within any
applicable grace period, any other Obligations of the Borrowers due the Lender;
or

                                       41
<PAGE>
                  8.1(b) Failure of the Guarantor or any of its Subsidiaries
to pay, or any default in the payment of, any principal or interest on any other
indebtedness or in the payment of any contingent obligation within any period of
grace provided; breach or default with respect to any other material term of any
other indebtedness or of any loan agreement, mortgage, indenture or other
agreement relating thereto, if the effect of such breach or default is to cause,
or to permit the holder or holders thereof (or a trustee on behalf of such
holder or holders) to cause, indebtedness of the Guarantor or its Subsidiaries
in the aggregate amount of $250,000 or more to become or be declared due prior
to its stated maturity (upon the giving or receiving of notice, lapse of time,
both, or otherwise); or

                  8.1(c) Failure of the Borrowers to perform or comply with
any term or condition applicable to it contained in Sections ________, or
________ or in any Section of Article 7 of this Agreement; or

                  8.1(d) Any of the Borrowers' representations or warranties
made or deemed made herein or in any other Loan Document (other than the
representations and warranties set forth in Section 5.15 hereof), or in any
statement or certificate at any time given by the Borrowers in writing pursuant
hereto or thereto shall be inaccurate or incomplete in any material respect on
the date as of which made or deemed made; or

                  8.1(e) The Borrowers or the Guarantor shall default in the
performance of or compliance with any term contained in this Agreement or any
other Loan Document other than those referred to above in Subsections , or and
such default shall not have been remedied or waived within 30 days after the
earliest of (i) receipt by the Borrowers of Notice from the Lender of such
default, (ii) receipt by the Lender of Notice from the Borrowers or the
Guarantor of such default, or (iii) the date the Borrowers should have notified
the Lender of such default pursuant to Section (c); or

                  8.1(f) (1) A court having jurisdiction shall enter a decree or
order for relief in respect of the Guarantor, the Borrowers or any other
Subsidiary of the Guarantor in an involuntary case under any applicable
bankruptcy, insolvency or other similar law in respect of the Guarantor, the
Borrowers or any other Subsidiary of the Guarantor now or hereafter in effect,
which decree or order is not stayed; the Guarantor, the Borrowers or any other
Subsidiary of the Guarantor shall consent to the entry of any such decree or
order; or a filing of a voluntary case under any applicable bankruptcy,
insolvency or other similar law in respect of the Guarantor, the Borrowers or
any other Subsidiary of the Guarantor has occurred; or any other similar relief
shall be granted under any applicable federal or state law; or (2) the filing of
an involuntary case in respect of the Guarantor, the Borrowers or any other
Subsidiary of the Guarantor under any applicable bankruptcy, insolvency or other
similar law; or a decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Guarantor, the Borrowers or any other
Subsidiary of the Guarantor, or over all or a substantial part of their
respective property, shall have been entered; or the involuntary appointment of
an interim or permanent receiver, trustee or other custodian of the Guarantor,

                                       42
<PAGE>

the Borrowers or any other Subsidiary of the Guarantor for all or a substantial
part of their respective property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the property of the
Guarantor, the Borrowers or any other Subsidiary of the Guarantor, and the
continuance of any such events in Subsection (2) above for 60 days unless
dismissed, bonded off or discharged; or

                  8.1(g) The Guarantor, the Borrowers or any other Subsidiary
of the Guarantor shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; the making by the Guarantor, the Borrowers or any other Subsidiary of
the Guarantor of any assignment for the benefit of creditors; or the inability
or failure of the Guarantor, the Borrowers or any other Subsidiary of the
Guarantor, or the admission by the Guarantor, the Borrowers or any other
Subsidiary of the Guarantor in writing of its inability, to pay its debts as
such debts become due; or

                  8.1(h) Failure of the Borrowers to perform any contractual
obligations which they may have to repurchase Mortgage Loans, if such
obligations in the aggregate exceed $500,000; or

                  8.1(i) Any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of $250,000 shall be
entered or filed against the Guarantor or any of its Subsidiaries or any of
their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 30 days or in any event later than 5 days prior to the
date of any proposed sale thereunder; or

                  8.1(j) Any order, judgment or decree shall be entered
against the Borrowers decreeing the dissolution or split up of the Borrowers and
such order shall remain undischarged or unstayed for a period in excess of 20
days; or

                  8.1(k) Any Plan maintained by the Guarantor or any of its
Subsidiaries shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof the liability
of the Guarantor or any Subsidiary (after giving effect to the tax consequences
thereof) to the Pension Benefit Guaranty Corporation (or any successor thereto)
for unfunded guaranteed vested benefits under the Plan exceeds the then current
value of assets accumulated in such Plan by more than $25,000 (or in the case of
a termination involving the Guarantor or any of its Subsidiaries as a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA) the
withdrawing employer's proportionate share of such excess shall exceed such
amount); or

                  8.1(l) The Guarantor or any of its Subsidiaries as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from
such Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall
have notified such withdrawing employer that such employer has incurred a
withdrawal liability in an annual amount exceeding $25,000; or

                                       43
<PAGE>

                  8.1(m) The Borrowers or the Guarantor shall purport to
disavow their obligations hereunder or under the Guaranty, as the case may be,
or shall contest the validity or enforceability hereof or of the Guaranty; or
the Lender's security interest on any portion of the Collateral shall become
unenforceable or otherwise impaired; provided that, subject to the Lender's
approval, no Event of Default shall occur as a result of such impairment if all
Advances made against any such Collateral shall be paid in full within 10 days
of the date of such impairment; or

                  8.1(n) Anthony J. Santilli shall cease to be the Chief
Executive Officer of the Guarantor unless the same results from unsolicited
resignation, death, disability, unsolicited retirement or termination for cause
and the Guarantor has, within 60 days, selected a replacement officer reasonably
acceptable to the Lender; or

                  8.1(o) Any Lien for any taxes, assessments or other
governmental charges (i) is filed against the Borrowers or any of their
property, or is otherwise enforced against the Borrowers or any of their
property, or (ii) obtains priority that is equal or greater than the priority of
the Lender's security interest in any of the Collateral; or

                  8.1(p) A material adverse change occurs, or is reasonably
likely to occur, in the business condition (financial or otherwise), operations,
properties or prospects of the Borrowers, or in the ability of the Borrowers to
repay the Obligations.

         8.2 Remedies.

                  8.2(a) Upon the occurrence of any Event of Default described
in Sections or , the Commitment shall be terminated and the unpaid principal
amount of and accrued interest on the Note and all other Obligations shall
automatically become due and payable, without presentment, demand or other
requirements of any kind, all of which are hereby expressly waived by the
Borrowers.

                  8.2(b) Upon the occurrence of any Event of Default, other
than those described in Sections and , the Lender may, by Notice to the
Borrowers, terminate the Commitment and/or declare all Obligations to be
immediately due and payable, whereupon the same shall forthwith become due and
payable, together with all accrued interest thereon, and the obligation of the
Lender to make any Advances shall thereupon terminate.

                  8.2(c) Upon the occurrence of any Event of Default, the Lender
may also do any of the following:

                                       44
<PAGE>

                           (1) Foreclose upon or otherwise enforce its security
interest in and Lien on the Collateral to secure all payments and performance of
the Obligations in any manner permitted by law or provided for hereunder.

                           (2) Notify all obligors in respect of Collateral that
the Collateral has been assigned to the Lender and that all payments thereon are
to be made directly to the Lender or such other party as may be designated by
the Lender; settle, compromise, or release, in whole or in part, any amounts
owing on the Collateral, any such obligor or any Investor or any portion of the
Collateral, on terms acceptable to the Lender; enforce payment and prosecute any
action or proceeding with respect to any and all Collateral; and where any such
Collateral is in default, foreclose on and enforce security interests in such
Collateral by any available judicial procedure or without judicial process and
sell property acquired as a result of any such foreclosure.

                           (3) Act, or contract with a third party to act, as
servicer or subservicer of each item of Collateral requiring servicing and
perform all obligations required in connection with Servicing Contracts and
Purchase Commitments, such third party's fees to be paid by the Borrowers.

                           (4) Require the Borrowers to assemble the Collateral
and/or books and records relating thereto and make such available to the Lender
at a place to be designated by the Lender.

                           (5) Enter onto property where any Collateral or books
and records relating thereto are located and take possession thereof with or
without judicial process; and obtain access to the Borrowers' data processing
equipment, computer hardware and software relating to the Collateral and to use
all of the foregoing and the information contained therein in any manner the
Lender deems necessary for the purpose of effectuating its rights under this
Agreement and any other Loan Document.

                           (6) Prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the Lender deems
appropriate.

                           (7) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of Minnesota or other applicable law,
including, but not limited to, selling or otherwise disposing of the Collateral,
or any part thereof, at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as the Lender may determine,
including, without limitation, sale pursuant to any applicable Purchase
Commitment. If notice is required under such applicable law, the Lender will
give the Borrowers not less than 10 days' notice of any such public sale or of
the date after which any private sale may be held. The Borrowers agree that 10
days' notice shall be reasonable notice. The Lender may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or

                                       45
<PAGE>

for future delivery, the Collateral so sold may be retained by the Lender until
the selling price is paid by the purchaser thereof, but the Lender shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Lender may, however, instead of exercising
the power of sale herein conferred upon it, proceed by a suit or suits at law or
in equity to collect all amounts due upon the Collateral or to foreclose the
pledge of and sell the Collateral or any portion thereof under a judgment or
decree of a court or courts of competent jurisdiction, or both.

                           (8) Proceed against the Borrowers on the Note or
against the Guarantor under the Guaranty or both.

                  8.2(d) The Lender shall incur no liability as a result of
the sale or other disposition of the Collateral, or any part thereof, at any
public or private sale or disposition. The Borrowers hereby waive (to the extent
permitted by law) any claims it may have against the Lender arising by reason of
the fact that the price at which the Collateral may have been sold at such
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the outstanding Advances and the
unpaid interest accrued thereon, even if the Lender accepts the first offer
received and does not offer the Collateral to more than one offeree. Any sale of
Collateral pursuant to the terms of a Purchase Commitment, or any other
disposition of Collateral arranged by the Borrowers, whether before or after the
occurrence of an Event of Default, shall be deemed to have been made in a
commercially reasonable manner.

                  8.2(e) The Borrowers acknowledge that Mortgage Loans and
Mortgage-backed Securities are collateral of a type which is customarily sold on
a recognized market. The Borrowers waive any right they may have to prior notice
of the sale of any Pledged Mortgage or Pledged Security, and agrees that the
Lender may purchase any Pledged Mortgages or Pledged Securities at a private
sale of such Collateral.

                  8.2(f) The Borrowers specifically waive and release (to the
extent permitted by law) any equity or right of redemption, all rights of
redemption, stay or appraisal which the Borrowers have or may have under any
rule of law or statute now existing or hereafter adopted, and any right to
require the Lender to (1) proceed against any Person, (2) proceed against or
exhaust any of the Collateral or pursue its rights and remedies as against the
Collateral in any particular order, or (3) pursue any other remedy in its power.
The Lender shall not be required to take any steps necessary to preserve any
rights of the Borrowers against holders of mortgages prior in lien to the Lien
of any Mortgage included in the Collateral or to preserve rights against prior
parties.

                  8.2(g) The Lender may, but shall not be obligated to,
advance any sums or do any act or thing necessary to uphold and enforce the Lien
and priority of, or the security intended to be afforded by, any Mortgage
included in the Collateral, including, without limitation, payment of delinquent
taxes or assessments and insurance premiums. All advances, charges, costs and

                                       46
<PAGE>

expenses, including reasonable attorneys' fees and disbursements, incurred or
paid by the Lender in exercising any right, power or remedy conferred by this
Agreement, or in the enforcement hereof, together with interest thereon, at the
Default Rate, from the time of payment until repaid, shall become a part of the
principal balance outstanding hereunder and under the Note.

                  8.2(h) No failure on the part of the Lender to exercise, and
no delay in exercising, any right, power or remedy provided hereunder, at law or
in equity shall operate as a waiver thereof; nor shall any single or partial
exercise by the Lender of any right, power or remedy provided hereunder, at law
or in equity preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. Without intending to limit the foregoing, all
defenses based on the statute of limitations are hereby waived by the Borrowers
to the extent permitted by law. The remedies herein provided are cumulative and
are not exclusive of any remedies provided at law or in equity.

                  8.2(i) The Lender is hereby granted a license or other right
to use, without charge, the Borrowers' computer programs, other programs,
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral, and the Borrowers' rights under all licenses and all
other agreements related to the foregoing shall inure to the Lender's benefit
until the Obligations are paid in full, subject to the terms of any applicable
lease or license of any related software.

         8.3 Application of Proceeds. The proceeds of any sale, disposition or
other enforcement of the Lender's security interest in all or any part of the
Collateral shall be applied by the Lender to the Obligations in such order as
the Lender, in its sole and absolute discretion, will determine.

                  If the proceeds of any sale, disposition or other enforcement
are insufficient to cover the costs and expenses of the sale, and the payment in
full of all Obligations, the Borrowers will remain liable for any deficiency.

         8.4 Lender Appointed Attorney-in-Fact. The Lender is hereby appointed
the attorney-in-fact of the Borrowers, with full power of substitution, for the
purpose of carrying out the provisions hereof and taking any action and
executing any instruments which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Lender shall have the right and power to give notices of its
security interest in the Collateral to any Person, either in the name of the
Borrowers or in their own name, to endorse all Pledged Mortgages or Pledged
Securities payable to the order of the Borrowers, to change or cause to be
changed the book-entry registration or name of subscriber or Investor on any
Pledged Security, or to receive, endorse and collect all checks made payable to
the order of the Borrowers representing any payment on account of the principal
of or interest on, or the proceeds of sale of, any of the Pledged Mortgages or
Pledged Securities and to give full discharge for the same. Except as set forth
in the preceding sentence, the Lender shall not exercise the foregoing power of
attorney except following the occurrence and during the continuance of a Default
or Event of Default.

                                       47
<PAGE>
         8.5 Right of Set-Off. If the Borrowers shall default in the payment of
the Note, any interest accrued thereon, or any other sums which may become
payable hereunder when due, or in the performance of any of its other
obligations or liabilities under this Agreement, the Lender shall have the
right, at any time and from time to time, without notice, to set-off and to
appropriate or apply any and all property or indebtedness of any kind at any
time held or owing by the Lender to or for the credit or the account of the
Borrowers against and on account of the Obligations of the Borrowers under the
Note and this Agreement, irrespective of whether or not the Lender shall have
made any demand hereunder and whether or not said Obligations shall have
matured.

9.       NOTICES.

         All notices, demands, consents, requests and other communications
required or permitted to be given or made hereunder (collectively, "Notices")
shall, except as otherwise expressly provided hereunder, be in writing and shall
be delivered in person or telecopied or mailed, first class or delivered by
overnight courier, return receipt requested, postage prepaid, addressed to the
respective parties hereto at their respective addresses hereinafter set forth
or, as to any such party, at such other address as may be designated by it in a
Notice to the other. All Notices shall be conclusively deemed to have been
properly given or made when duly delivered, in person, by telecopy or by
overnight courier, or if mailed, on the date of receipt as noted on the return
receipt, addressed as follows:

                  if to the Borrowers:

                  NEW JERSEY MORTGAGE AND INVESTMENT CORP.
                  AMERICAN BUSINESS CREDIT, INC.
                  HOMEAMERICAN CREDIT, INC. d/b/a
                       UPLAND MORTGAGE
                  111 Presidential Boulevard, Suite 125
                  Bala Cynwyd, PA  19004
                  Attention:  Jeffrey M. Ruben, EVP
                  Telecopier No.:  (610) 668-4164

                                       48
<PAGE>
                  if to the Lender:

                  RESIDENTIAL FUNDING CORPORATION
                  440 Sawgrass Corp. Parkway
                  Suite 204
                  Sunrise, Florida  33325
                  Attention: Robin Swanson, Director
                  Telecopier No.:  (954) 846-8352

10.      REIMBURSEMENT OF EXPENSES; INDEMNITY.

         The Borrowers shall: (a) pay a documentation production fee of $7,500
in connection with the preparation and negotiation of this Agreement; (b) pay
such additional documentation production fees as the Lender may require and all
out-of-pocket costs and expenses of the Lender, including, without limitation,
reasonable fees, service charges and disbursements of counsel (including
allocated costs of internal counsel), in connection with the amendment,
enforcement and administration of this Agreement, the Note, and other Loan
Documents and the making and repayment of the Advances and the payment of
interest thereon; (c) indemnify, pay, and hold harmless the Lender and any
holder of the Note from and against, any and all present and future stamp,
documentary and other similar taxes with respect to the foregoing matters and
save the Lender and the holder or holders of the Note harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
to pay such taxes; and (d) indemnify, pay and hold harmless the Lender and any
of its officers, directors, employees or agents and any subsequent holder of the
Note (collectively called the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including without
limitation, the reasonable fees and disbursements of counsel of the Indemnitees
(including allocated costs of internal counsel) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto) which may be imposed upon,
incurred by or asserted against such Indemnitees in any manner relating to or
arising out of this Agreement, the Note, or any other Loan Document or any of
the transactions contemplated hereby or thereby (the "Indemnified Liabilities");
provided, however, that the Borrowers shall have no obligation hereunder with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of any such Indemnitees. To the extent that the undertaking to
indemnify, pay and hold harmless as set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrowers
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. The agreement of the
Borrowers contained in this Subsection (d) shall survive the expiration or
termination of this Agreement and the payment in full of the Note. Attorneys'
fees and disbursements incurred in enforcing, or on appeal from, a judgment
pursuant hereto shall be recoverable separately from and in addition to any
other amount included in such judgment, and this clause is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into such judgment.

                                       49
<PAGE>

11.      FINANCIAL INFORMATION.

         All financial statements and reports furnished to the Lender hereunder
shall be prepared in accordance with GAAP, applied on a basis consistent with
that applied in preparing the financial statements as at the end of and for the
last fiscal year ended (except to the extent otherwise required to conform to
good accounting practice).

12.      MISCELLANEOUS.

         12.1 Terms Binding Upon Successors; Survival of Representations. The
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. All
representations, warranties, covenants and agreements herein contained on the
part of the Borrowers shall survive the making of any Advance and the execution
of the Note, and shall be effective so long as the Commitment is outstanding or
there remain any Obligations to be paid or performed.

         12.2 Assignment. This Agreement cannot be assigned by the Borrowers.
This Agreement and the Note, along with the Lender's security interest in any or
all of the Collateral, may, at any time, be transferred or assigned, in whole or
in part, by the Lender, with the prior written consent of the Borrowers, which
shall not be unreasonably withheld, and any assignee thereof may enforce this
Agreement, the Note and its security interest in the Collateral so assigned.
Notwithstanding the foregoing or anything in Section 12.5 below, nothing
contained in this Agreement shall in any manner or to any extent affect the
right of the Lender to assign, pledge or participate the Notes and its right to
receive and retain payments on the Notes in connection with any arrangement
maintained by the Lender to fund credit facilities provided by the Lender,
provided the Lender remains primarily and directly liable to perform all of its
obligations under this Agreement.

         12.3 Amendments. Except as otherwise provided in this Agreement, this
Agreement may not be amended, modified or supplemented unless such amendment,
modification or supplement is set forth in a writing signed by the parties
hereto.

         12.4 Governing Law. This Agreement and the other Loan Documents shall
be governed by the laws of the State of Minnesota, without reference to its
principles of conflicts of laws.

         12.5 Participations. The Lender may at any time sell, assign or grant
participations in, or otherwise transfer to any other Person (a "Participant"),
all or part of the Obligations. Without limitation of the exclusive right of the
Lender to collect and enforce such Obligations, the Borrowers agrees that each
disposition will give rise to a debtor-creditor relationship of the Borrowers to
the Participant, and the Borrowers authorize each Participant, upon the
occurrence of an Event of Default, to proceed directly by right of setoff,
banker's lien, or otherwise, against any assets of the Borrowers which may be in
the hands of such Participant. Notwithstanding the sale by the Lender of any

                                       50

<PAGE>
participation hereunder, (i) no participant shall be deemed to be or have the
rights and obligations of the Lender hereunder except as provided in the
preceding sentence, and (ii) the Lender shall not in connection with selling any
such participation condition the Lender's rights in connection with consenting
to amendments or granting waivers concerning any matter under any Loan Document
upon obtaining the consent of such participant other than on matters relating to
(A) any reduction in the amount of any principal of, or the amount of or rate of
interest on, the Notes or any Advances in which such participation is sold, (B)
any postponement of the date fixed for any payment of principal of or interest
on the Notes or any Advance, or the termination of the Warehousing Commitment or
the Term Loan Commitment, or (C) the release or subordination of any material
portion of the Collateral. The Borrowers authorize the Lender to disclose to any
prospective Participant and any Participant any and all information in the
Lender's possession concerning the Borrowers, this Agreement and the Collateral.

         12.6 Relationship of the Parties. This Agreement provides for the
making of Advances by the Lender, in its capacity as a lender, to the Borrowers,
in their capacity as a borrower, and for the payment of interest, repayment of
principal by the Borrowers to the Lender, and for the payment of certain fees by
the Borrowers to the Lender. The relationship between the Lender and the
Borrowers are limited to that of creditor/secured party, on the one hand, and
debtor, on the other hand. The provisions herein for compliance with financial
covenants and delivery of financial statements are intended solely for the
benefit of the Lender to protect its interests as lender in assuring payments of
interest and repayment of principal and payment of certain fees, and nothing
contained in this Agreement shall be construed as permitting or obligating the
Lender to act as a financial or business advisor or consultant to the Borrowers,
as permitting or obligating the Lender to control the Borrowers or to conduct
the Borrowers' operations, as creating any fiduciary obligation on the part of
the Lender to the Borrowers, or as creating any joint venture, agency, or other
relationship between the parties hereto other than as explicitly and
specifically stated in this Agreement. The Borrowers acknowledge that it has had
the opportunity to obtain the advice of experienced counsel of its own choosing
in connection with the negotiation and execution of this Agreement and to obtain
the advice of such counsel with respect to all matters contained herein. The
Borrowers further acknowledge that it is experienced with respect to financial
and credit matters and has made its own independent decisions to apply to the
Lender for credit and to execute and deliver this Agreement.

         12.7 Severability. If any provision of this Agreement shall be declared
to be illegal or unenforceable in any respect, such illegal or unenforceable
provision shall be and become absolutely null and void and of no force and
effect as though such provision were not in fact set forth herein, but all other
covenants, terms, conditions and provisions hereof shall nevertheless continue
to be valid and enforceable.

         12.8 Operational Reviews. From time to time upon reasonable advance
request, the Borrowers shall permit the Lender or its representative access to
its premises and records, for the purpose of conducting a review of the
Borrowers' general mortgage business methods, policies, and procedures, auditing
loan files and reviewing financial and operational aspects of the Borrowers'
business; provided, that unless a Default or an Event of Default has occurred
and is continuing the Lender shall not conduct more than 2 such reviews in any
calendar.

                                       51
<PAGE>
         12.9 Consent to Credit References. The Borrowers hereby consent to the
disclosure of information regarding the Borrowers and their relationships with
the Lender to Persons making credit inquiries to the Lender. This consent is
revocable by the Borrowers at any time upon Notice to the Lender as provided in
Section hereof.

         12.10 Consent to Jurisdiction. The Borrowers hereby agree that any
action or proceeding under the Loan Documents, the Note or any document
delivered pursuant hereto may be commenced against it in any court of competent
jurisdiction within the State of Minnesota, by service of process upon the
Borrowers by first class registered or certified mail, return receipt requested,
addressed to the Borrowers at its address last known to the Lender. The
Borrowers agree that any such suit, action or proceeding arising out of or
relating to this Agreement or any other such document may be instituted in the
Hennepin County State District Court or in the United States District Court for
the District of Minnesota at the option of the Lender; and the Borrowers hereby
waive any objection to the jurisdiction or venue of any such court with respect
to, or the convenience of any court as a forum for, any such suit, action or
proceeding. Nothing herein shall affect the right of the Lender to accomplish
service of process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrowers in any other jurisdiction
or court.

         12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument.

         12.12 Entire Agreement. This Agreement, the Note and the other Loan
Documents represent the final agreement among the parties hereto and thereto
with respect to the subject matter hereof and thereof, and may not be
contradicted by evidence of prior or contemporaneous oral agreements among such
parties. There are no oral agreements among the parties with respect to the
subject matter hereof and thereof.

         12.13 WAIVER OF JURY TRIAL. THE BORROWERS AND THE LENDER EACH HEREBY
(a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY A JURY, AND (b) FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT
THAT ANY SUCH RIGHT NOW EXISTS OR HEREAFTER ARISES. THE LENDER AND THE BORROWERS
EACH GIVES THIS WAIVER OF RIGHT TO JURY TRIAL KNOWINGLY AND VOLUNTARILY. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY,
BY THE BORROWERS AND THE LENDER, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT OF A JURY TRIAL
WOULD OTHERWISE ACCRUE. THE LENDER AND THE BORROWERS ARE EACH HEREBY AUTHORIZED
AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE

                                       52
<PAGE>

SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF
THIS WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, THE BORROWERS AND THE LENDER
EACH HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY,
INCLUDING THE OTHER PARTY'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO
ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                   NEW JERSEY MORTGAGE AND INVESTMENT
                                            CORP., a New Jersey corporation

                                   By:
                                      ----------------------------------------

                                   Its:
                                       ---------------------------------------

                                   AMERICAN BUSINESS CREDIT, INC.,
                                   a Pennsylvania corporation

                                   By:
                                      ----------------------------------------

                                   Its:
                                       ---------------------------------------

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

                                   By:
                                      ----------------------------------------

                                   Its:
                                       ---------------------------------------

                                   RESIDENTIAL FUNDING CORPORATION,
                                   a Delaware corporation

                                   By:
                                      ----------------------------------------

                                   Its:  Director

                                       53
<PAGE>

STATE OF _______________   )
                           ) ss
COUNTY OF ______________   )

         On __________,2000, before me, a Notary Public, personally
appeared _______________, the ________ of NEW JERSEY MORTGAGE AND INVESTMENT
CORP., a New Jersey corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.

         WITNESS my hand and official seal.

                                                     Notary Public
(SEAL)                                      My Commission Expires:

STATE OF _______________   )
                           ) ss
COUNTY OF ______________   )

         On __________,2000, before me, a Notary Public, personally appeared
_______________, the ________ of AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.

                                                     Notary Public
  (SEAL)                                    My Commission Expires:

                                       54

<PAGE>

STATE OF _______________   )
                           ) ss
COUNTY OF ______________   )

         On __________, 2000, before me, a Notary Public, personally appeared
_______________, the ________ of HOMEAMERICAN CREDIT, INC. d/b/a UPLAND
MORTGAGE, a Pennsylvania corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

         WITNESS my hand and official seal.

                                                     Notary Public
(SEAL)                                      My Commission Expires:

STATE OF _______________   )
                           ) ss
COUNTY OF ______________   )

         On __________, 2000, before me, a Notary Public, personally appeared
_______________, the Director of RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

         WITNESS my hand and official seal.

                                                     Notary Public
(SEAL)                                      My Commission Expires:

                                       55

<PAGE>

                                  EXHIBIT I-SF

                              OFFICER'S CERTIFICATE

         Reference is made to that certain Warehousing Credit and Security
Agreement (Single Family Mortgage Loans) between NEW JERSEY MORTGAGE AND
INVESTMENT CORP., a New Jersey corporation, AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation, and HOMEAMERICAN CREDIT, INC. d/b/a UPLAND MORTGAGE, a
Pennsylvania corporation (the "Borrowers") and RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation (the "Lender"), dated as of May 5, 2000 (as the same may
be amended, modified, supplemented, renewed or restated from time to time, the
"Agreement"). All capitalized terms used herein and all Section numbers given
herein refer to those terms and Sections set forth in the Agreement. This
Officer's Certificate is submitted to the Lender pursuant to Section of the
Agreement.

         The undersigned hereby certifies to the Lender that as of the close of
business on ________________, ("Statement Date"), and with respect to American
Business Financial Services, Inc. (the "Guarantor") and its Subsidiaries on a
consolidated basis:

1.       I am the chief financial officer of American Business Financial
         Services, Inc., and my current title at American Business Financial
         Services, Inc. is ___________________ .

2.       As illustrated in the attached calculations supporting this Officer's
         Certificate, the Guarantor and its Subsidiaries met the covenants set
         forth in Sections , , and , or if the Guarantor and its Subsidiaries
         did not meet any of such covenants, a detailed explanation is attached
         setting forth the nature and period of the existence of the Default and
         the action the Guarantor and its Subsidiaries have taken, are taking,
         and propose to take with respect thereto.

3.       No Servicing Contracts have been sold or pledged by the Borrowers
         except as permitted under the terms of the Agreement.

4.       No recourse Servicing Contracts have been acquired by the Borrowers.

5.       No payments in advance of the scheduled maturity date have been made
         with respect to any Subordinated Debt. The Borrowers have incurred no
         Debt required to be subordinated pursuant to Section .

6.       The Borrowers were in compliance with the applicable HUD, Ginnie Mae or
         Investor net worth requirements, and in good standing with VA, HUD,
         Ginnie Mae and each Investor.

7.       The representation set forth in Section of the Agreement is true and
         correct as of the date of this Officer's Certificate, or, if such
         representation is not true and correct as of such date, the nature of
         the problem and the action the Guarantor and its Subsidiaries have
         taken, are taking and propose to take with respect thereto are
         specified in the statement attached hereto.

                                       56

<PAGE>
8.       I have reviewed the terms of the Agreement and have made, or caused to
         be made under my supervision, a review in reasonable detail of the
         transactions and conditions of the Guarantor and its Subsidiaries and
         such review has not disclosed the existence, and I have no knowledge of
         the existence, of any Default or Event of Default, or if any Default or
         Event of Default existed or exists, a detailed explanation is attached
         specifying the nature and period of the existence of the Default and
         the action the Guarantor and its Subsidiaries have taken, are taking
         and propose to take with respect thereto.

9.       Pursuant to Section 6.2 of the Agreement, enclosed are the financial
         statements of the Guarantor as of the Statement Date. The financial
         statements for the period ending on the Statement Date fairly present
         the financial condition and results of operations of the Guarantor and
         its Subsidiaries as of the Statement Date.

                   NEW JERSEY MORTGAGE AND INVESTMENT CORP.
                   AMERICAN BUSINESS CREDIT, INC.
                   HOMEAMERICAN CREDIT, INC. d/b/a
                       UPLAND MORTGAGE

                   Name:
                           -----------------------------------

                   Title:
                         -------------------------------------

                                       57
<PAGE>

                  CALCULATIONS SUPPORTING OFFICER'S CERTIFICATE

Company Name: AMERICAN BUSINESS FINANCIAL SERVICES, INC. and its Subsidiaries

Statement Date:
               -----------------------------------

All financial calculations set forth herein are as of the Statement Date.

I.       TANGIBLE NET WORTH

A.       Consolidated Tangible Net Worth of American Business
             Financial Services, Inc. is:

             Excess of total assets over total liabilities:  $

             Minus:  Advances to owners, officers, employees or Affiliates:  $

             Minus:  Investments in Affiliates:  $

             Minus:  Assets pledged to secure liabilities not
                     included in Debt: $

             Minus:  Intangible assets:  $

             Minus:  Any other HUD nonacceptable assets:  $

             Minus:  Other assets unacceptable to the Lender: $

             TANGIBLE NET WORTH OF AMERICAN BUSINESS FINANCIAL SERVICES, INC. $

         B.  Requirements of Section  of the Agreement:

             MINIMUM TANGIBLE NET WORTH OF AMERICAN BUSINESS FINANCIAL SERVICES,
             INC. AND ITS SUBSIDIARIES OF $30,000,000, PLUS 50% OF NET INCOME,
             IF POSITIVE, FOR COMPLETED FISCAL YEARS.

         C.  Covenant Satisfied:____   Covenant Not Satisfied:____

II.      DEBT OF AMERICAN BUSINESS FINANCIAL SERVICES, INC.

         Total liabilities $

                  Minus:    Debt arising under Hedging Arrangements
                               (to the extent of offsetting assets)    $

                  Minus:    Deferred taxes arising from capitalized excess
                               servicing fees and capitalized servicing
                               rights:   $

                  DEBT         $

                                       58
<PAGE>
III.     RATIO OF DEBT TO TANGIBLE NET WORTH

A.       The ratio of Debt to Tangible Net Worth ( to I) is:      to 1

         B.       Requirements of Section  of the Agreement:

                  THE RATIO OF DEBT TO TANGIBLE NET WORTH OF AMERICAN BUSINESS
                  FINANCIAL SERVICES, INC. AND ITS SUBSIDIARIES SHALL NOT
                  EXCEED 12 TO 1.

         C.       Covenant Satisfied:____   Covenant Not Satisfied:____

IV.      NET INCOME

         A.       Consolidated net income of American Business Financial
                  Services, Inc. and its Subsidiaries for the most recently
                  completed two Calendar Quarters:   $

         B.       Requirements of Section  of the Agreement:

                  CONSOLIDATED NET INCOME SHALL NOT BE LESS THAN ZERO FOR ANY
TWO CALENDAR QUARTER PERIOD.

         C.       Covenant Satisfied:____   Covenant Not Satisfied:____

V.       TRANSACTIONS WITH AFFILIATES

         A.       Loans, advances, and extensions of credit made by American
                  Business Financial Services, Inc. to its Affiliates total:
                  $

         B.       Capital contributions made by American Business Financial
                  Services, Inc. to its Affiliates total:        $

         C.       Management fees paid to Affiliates during the current
                  fiscal year total:    $

         D.       Transfers, sales, pledges, assignments or other dispositions
                  of assets made by American Business Financial Services,
                  Inc. to its Affiliates total:      $

         E.       Requirements of Section  of the Agreement:

                  1.       No loans, advances, extensions of credit or capital
                           contributions shall be made by American Business
                           Financial Services, Inc. to Affiliates.

                  Covenant Satisfied:____   Covenant Not Satisfied:____

                                       59
<PAGE>
                  2.       No transfers, sales, pledges assignments or other
                           dispositions of assets by American Business Financial
                           Services, Inc. to Affiliates.

                  Covenant Satisfied:____   Covenant Not Satisfied:____

                  3.       No merger, consolidation, purchase or acquisition of
                           assets by American Business Financial Services, Inc.
                           to Affiliates.

                  Covenant Satisfied:____   Covenant Not Satisfied:____

                  4.       No Management fees shall be paid by American Business
                           Financial Services, Inc. to Affiliates.

                  Covenant Satisfied:____   Covenant Not Satisfied:____

                                       60

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