Document:

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                                 [LOGO] PATRIOT
                             The Patriot Group, LLC

                                January 14, 2005

                   American Business Financial Services, Inc.
                Amended and Restated Master Repurchase Agreement
                ------------------------------------------------

American Business Financial Services, Inc.
The Wanamaker Building
100 Penn Square East, 8th Floor
Philadelphia, Pennsylvania 19109

Attention:      Anthony J. Santilli, Chairman, President, Chief Executive
                Officer and Chief Operating Officer

Ladies and Gentlemen:

        Reference is made to the Amended and Restated Master Repurchase
Agreement dated as of November 15, 2004 and amended and restated as of December
21, 2004, among ABFS Warehouse Trust 2004-2, as Seller ("TRUST 2004-2"),
American Business Financial Services, Inc. (the "PARENT"), ABFS Consolidated
Holdings, Inc. ("Holdings"), American Business Credit, Inc. ("ABC"; Trust
2004-2, the Parent, Holdings and ABC, collectively, "ABFS"), and The Patriot
Group, LLC (the "Buyer"; as amended by that certain Amendment No. 1 to Master
Repurchase Agreement ("Amendment No. 1") dated January 14, 2005, the "REPURCHASE
AGREEMENT") and the other Program Documents referred to in the Repurchase
Agreement. Terms not defined herein shall have the meanings ascribed to them in
the Repurchase Agreement.

        This letter is intended to describe the current state of the
relationship between the Buyer and ABFS concerning the Repurchase Agreement and
the Obligations, and to confirm certain understandings between the parties with
respect thereto.

        ABFS acknowledges that several Events of Default of the kinds described
in Section 18 of the Repurchase Agreement have occurred and are continuing.

        As a result of the occurrence and continuance of these Events of
Default, the Buyer is entitled to exercise the rights and remedies granted or
otherwise available to it under the Repurchase Agreement (including Section 19
thereof), the other Program Documents and applicable law. ABFS further
acknowledges and agrees that the Repurchase Price, as of January 13, 2005, was
approximately $21,375,000 (such amount is approximate because not all expenses
have been reflected and such amount includes all owed Quarterly Maintenance Fees
and Monitoring Fees).

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        It is the position of the Buyer that the Termination Date of the
Transaction occurred on December 12, 2004, whereupon all of the Obligations
became due and payable. In view of the accommodation being made by Buyer to
Seller as set forth in Amendment No. 1, and without acknowledging the date
Events of Default in fact occurred or whether the Termination Date has
heretofore occurred, ABFS is willing to acknowledge and accept the imposition of
the Default Rate beginning no later than December 12, 2004. To the extent, if
any, that the Repurchase Price and all other Obligations are not already due and
payable, the Buyer hereby declares the Termination Date to have immediately
occurred and all Obligations to be immediately due and payable.

        Notwithstanding the occurrence and continuance of the existing Events of
Default, the Seller has requested and, subject to the terms of Amendment No. 1
and the provisions of this letter, the Buyer has agreed to increase the
Securities Purchase Price by $750,000.

        The Buyer also notifies ABFS that, notwithstanding the execution and
delivery of Amendment No. 1 and the increase in the Securities Purchase Price
set forth therein, (i) the existing Events of Default are not waived and (ii) as
a result of such existing Events of Default, the Buyer retains and reserves all
of its other rights and remedies under the Program Documents, including but not
limited to the right to sell or give credit for the Purchased Assets, and to
sell, collect or otherwise realize upon the other Collateral, the respective
"Collateral" referred to in the Pledge Agreements and the Security Agreement,
and the funds in the "Blocked Account" referred to in the Servicing Advances
Control Agreement.

        Finally, notwithstanding the occurrence and continuance of the Events of
Default described above, at the request of the Seller, the Buyer has, from
January 5, 2005 and through January 13, 2005, remitted to ABFS $1,338,797.80
constituting the cash proceeds of the Servicer Reimbursement and Fee Collateral
received by the Buyer beginning on January 5, 2005, net of wire charges. The
Buyer had no obligation to release such amounts to ABFS, and may terminate such
remittances at any time and apply such amounts to any Obligations in accordance
with the Program Documents. Moreover, the Buyer hereby advises ABFS that it
intends, no later than January 14, 2005, to cease releasing such remittances.
The remittances of Servicer Reimbursement and Fee Collateral by the Buyer do not
constitute an agreement by the Buyer to release any other Collateral or the
proceeds thereof to ABFS.

        The Buyer hereby expressly reserves all rights and remedies available to
it under the Program Documents and at law with respect to the existing Events of
Default. The Buyer shall not be deemed to have waived or modified any of its
rights hereunder or under any other agreement, instrument or paper signed by
ABFS unless such waiver or modification is in writing and signed by the Buyer.
No failure or delay on the part of the Buyer in exercising any right, power or
remedy under any of the Program Documents or hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies provided, in the Program
Documents are cumulative and not exclusive of any remedies provided by law.

        Please be advised that the Buyer desires to be kept fully informed of
all efforts being made by or on behalf of ABFS to satisfy the Obligations, and
ABFS agrees to use all reasonable efforts to timely provide all such information
(including, without limitation, any drafts of

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proposed court orders authorizing debtor in possession financing, it being
understood that interest rate, fee and other pricing information may be redacted
therefrom), and such other information as may reasonably be requested by the
Buyer.

                                Very truly yours,

                                THE PATRIOT GROUP, LLC

                                By:    /s/ Charles A. Forbes, Jr.
                                   ------------------------------------
                                Name:  Charles A. Forbes, Jr.
                                Title: Chief Executive Officer

Acknowledged and agreed to as of
the date first written above by:

AMERICAN BUSINESS FINANCIAL SERVICES, INC.

By:    /s/ Anthony J. Santilli, Jr.
   --------------------------------------------------
Name:  Anthony J. Santilli, Jr.
Title: Chairman and Chief Executive Officer

ABFS WAREHOUSE TRUST 2004-2, as Seller

By: Wilmington Trust Company, not in its individual capacity but solely as
trustee of ABFS WAREHOUSE TRUST 2004-2

By:    /s/ Jeffrey J. Rossi
   --------------------------------------------------
Name:  Jeffrey J. Rossi
Title: Senior Financial Services Officer

ABFS CONSOLIDATED HOLDINGS, INC.

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

AMERICAN BUSINESS CREDIT, INC.

By:    /s/ Jeffrey M. Ruben
   --------------------------------------------------
Name:  Jeffrey M. Ruben
Title: Executive Vice President<PAGE>

                                                                    Exhibit 10.6

                 SECOND AMENDED AND RESTATED SECURITY AGREEMENT

        This Second Amended and Restated Security Agreement ("Agreement") dated
December 21, 2004, among ABFS CONSOLIDATED HOLDINGS, INC., a Delaware
corporation, AMERICAN BUSINESS MORTGAGE SERVICES, INC., a New Jersey
corporation, HOMEAMERICAN CREDIT, INC., a Pennsylvania corporation, and AMERICAN
BUSINESS CREDIT, INC., a Pennsylvania corporation (each a "Grantor" and
collectively, the "Grantors") and U.S. BANK, NATIONAL ASSOCIATION, a national
banking association, as trustee for the Securityholders (as defined below)
("Secured Party").

                                    RECITALS

        A.      On December 31, 2003, American Business Financial Services, Inc.
("Company") entered into a certain Indenture (as it may hereafter be amended,
supplemented or replaced from time to time, "2003 Indenture"), pursuant to which
the Company issued Senior Collateralized Notes to the Securityholders defined
therein ("2003 Holders"). Secured Party is acting as trustee for the benefit of
the 2003 Holders in accordance with the terms of the 2003 Indenture.

        B.      On June 30, 2004, Company entered into a certain Indenture (as
it may hereafter be amended, supplemented or replaced from time to time, "June
2004 Indenture"), pursuant to which the Company issued Senior Collateralized
Notes to the Securityholders defined therein ("June 2004 Holders"). Secured
Party is acting as trustee for the benefit of the June 2004 Holders in
accordance with the terms of the June 2004 Indenture.

        C.      Company is entering into, or will enter into, a certain
Indenture (as it may hereafter be amended, supplemented or replaced from time to
time, "December 2004 Indenture" and collectively with the 2003 Indenture and the
June 2004 Indenture, the "Indentures"), pursuant to which the Company expects to
issue Senior Collateralized Notes to the Securityholders defined therein ("2004
Holders", and together with the 2003 Holders and the June 2004 Holders, the
"Securityholders"). Secured Party will be acting as trustee for the benefit of
the December 2004 Holders in accordance with the terms of the December 2004
Indenture.

        D.      To secure repayment of the Note Obligations and all other
undertakings of the Company to the Secured Party and the Securityholders under
the Indentures, each Grantor granted to Secured Party, for the benefit of the
Securityholders, security interests in certain property of each Grantor more
particularly described in that certain (i) Security Agreement executed by
Grantors and accepted by Secured Party dated December 31, 2003 (as it may have
been amended, supplemented or replaced from time to time, "2003 Security
Agreement") (ii) Security Agreement executed by Grantors and accepted by Secured
Party dated June 30, 2004 (as it may have been amended, supplemented or replaced
from time to time, "June 2004 Security Agreement"), and (iii) the Amended and
Restated Security Agreement executed by Grantors and accepted by Secured Party
dated November 15, 2004 (as it may have been amended, supplemented or replaced
from time to time, "November 2004 Security Agreement"; and

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together with the 2003 Security Agreement and the June 2004 Security Agreement,
collectively, the "Security Agreements").

        E.      In order to secure repayment of the Note Obligations, and all
other undertakings of the Company to the Secured Party and the Securityholders
under the Indentures, each Grantor desires to amend and restate the Security
Agreements which shall include a reconfirmation of the prior grant of the
security interests to Secured Party.

        NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

                            SECTION 1 - DEFINITIONS

        1.1     Capitalized terms used but not defined herein shall have the
meanings given to such terms as set forth in the Indentures, as applicable.

        1.2     As used in this Pledge Agreement, the following terms shall have
the following respective meanings:

                "2003-1 TRUST AGREEMENT" means that certain Trust Agreement,
        dated as of September 26, 2003, between Grantors, as depositors,
        Wilmington Trust Company, as owner trustee and Company, as indemnitor,
        whereby Trust 2003-1 was created, as amended and restated by the Amended
        and Restated Trust Agreement dated as of October 14, 2003, as further
        amended by that certain Amendment Number One to Trust Agreement, dated
        as of December 31, 2004, and as further amended, restated, supplemented
        or otherwise modified from time to time in accordance with the terms
        thereof.

                "COLLATERAL" shall have the meaning specified therefor in
        Section 2.1 hereof.

                "COMPANY" shall have the meaning specified therefor in the
        Recitals hereto

                "INDENTURES" shall have the meaning specified therefor in the
        Recitals hereto.

                "PERSON" shall mean any individual, corporation, partnership,
        joint venture, association, joint-stock company, trust, national banking
        association, unincorporated organization or government or any agency or
        political subdivisions thereof.

                "R CERTIFICATES" shall mean, collectively, each R Certificate
        held by the applicable Grantor in Trust 2003-1 as more particularly
        described on Schedule "I" attached hereto.

                "TRIGGERING EVENT" shall mean: (a) a default or an event of
        default under any of the Indentures or any documents related thereto
        that results in a right by

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        the Secured Party or any of the Securityholders, irrespective of whether
        exercised, to accelerate the maturity of the obligations owed to the
        Secured Party or any of the Securityholders; (b) the acceleration by the
        Secured Party or any of the Securityholders of the obligations owed to
        any of them under the Indentures or any documents related thereto, or
        (c) the exercise by the Secured Party or any of the Securityholders of
        their enforcement rights or remedies or any other action by the Secured
        Party or any of the Securityholders to exercise control over Trust
        2003-1 (whether under the 2003-1 Trust Agreement, the Indentures, or
        otherwise).

                "TRUST 2003-1" means that certain Delaware statutory trust named
        ABFS Warehouse Trust 2003-1, created by the 2003-1 Trust Agreement.

                "TRUST 2003-1 PAYMENT INTANGIBLES" means each Grantor's now
        owned and hereafter acquired, created, or arising right to receive any
        and all cash due, if, and when, received, under the Trust 2003-1 Trust
        Agreement.

                "UCC" shall mean, except where the context refers to the Uniform
        Commercial Code of another State of the United States of America, the
        Uniform Commercial Code as amended from time to time in force in the
        State of Delaware, or any successor codes thereto.

                          SECTION 2 - SECURITY INTEREST

        2.1     DESCRIPTION: As security for the payment of the Note Obligations
and undertakings of every kind or nature whatsoever of the Company to the
Securityholders and Secured Party under each of the Indentures, whether now
existing or hereafter incurred, matured or unmatured, direct or indirect,
primary or secondary, related or unrelated or due or to become due, arising
under the Indenture, and any extensions, modifications, substitutions, increases
and renewals thereof, and substitutions therefor; and the payment of all amounts
advanced by Secured Party to preserve, protect, defend, and enforce its rights
hereunder and in the following property in accordance with the terms of this
Agreement, each Grantor hereby confirms, assigns and grants to Secured Party
(for the benefit of the Securityholders) a continuing lien on and security
interest in, upon and to the each Grantor's rights with respect to the R
Certificate, including the Trust 2003-1 Payment Intangibles, and all proceeds,
products, offspring, and profits thereof (hereinafter collectively referred to
as the "COLLATERAL"). Upon the occurrence of a Triggering Event, the Grantor's
and Secured Party's rights with respect to the R Certificate are limited solely
to the right to receive the Trust 2003-1 Payment Intangibles.

        2.2     LIEN DOCUMENTS: As Secured Party deems necessary, each Grantor
shall execute and deliver to Secured Party, or have executed and delivered (all
in form and substance satisfactory to Secured Party), any agreements, documents,
instruments and writings, required to evidence, perfect or protect Secured
Party's lien and security interest in the Collateral required hereunder.

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        2.3     DELIVERY OF COLLATERAL. Each Grantor shall deliver possession of
the Collateral, and all other certificates or instruments representing or
evidencing the Collateral, to Secured Party together with endorsements in blank.
Upon any transfer, exchange, release or disposition of the Collateral in
conformity with the terms of this Agreement and the Indentures, Secured Party
hereby agrees that Secured Party is obligated to, and shall, return or deliver
any certificate evidencing the Collateral as directed by the Company. In
addition to any other legend required to be reflected on each R Certificate,
each R Certificate shall contain the following legend:

                "Upon the occurrence of a Triggering Event, the rights of the
                holder of this R Certificate shall be limited solely to the
                right to receive the Trust 2003-1 Payment Intangibles.

                "Triggering Event" and "Trust 2003-1 Payment Intangibles" shall
                have their respective meanings as set forth in that certain
                Trust Agreement, dated as of September 26, 2003, between the
                Loan Depositors identified therein, the IOS Depositor identified
                therein, and Wilmington Trust Company, as owner trustee, as
                amended, restated, supplemented or otherwise modified from time
                to time in accordance with the terms thereof.

If at any time, any Grantor transfers, exchanges, releases or disposes of any
portion of the Collateral in conformity with the provisions of this Agreement or
the Indentures in connection with any financing, re-financing, sale or exchange
transaction, the security interest granted herein shall, without further action
on the part of any Grantor or Secured Party, be automatically released.

        2.4     OTHER ACTIONS:

                (a)     Secured Party is hereby authorized to file financing
statements and amendments to financing statements without any Grantor's
signature in accordance with the UCC describing the Collateral. Each Grantor
agrees to comply with the requirements of all state and federal laws and
requests of Secured Party in order for Secured Party to have and maintain a
valid and perfected first security interest in the Collateral.

                (b)     In addition to the foregoing, each Grantor shall do
anything further that may be reasonably required by Secured Party to secure
Secured Party and effectuate the intentions and objects of this Agreement,
including, without limitation, the execution and delivery of security
agreements, contracts and any other documents required hereunder. At Secured
Party's request, each Grantor shall also immediately deliver (with execution by
such Grantor of all necessary documents or forms to reflect, implement or
enforce the Note Liens described herein) to Secured Party all items of which
Secured Party must receive possession to obtain a perfected security interest in
the Collateral.

                (c)     Each Grantor shall retain the sole right to vote the
Collateral, if any right so exists, and exercise all rights of ownership in
connection with the Collateral.

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        2.5     FILING SECURITY AGREEMENT: A carbon, photographic or other
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement.

        2.5     POWER OF ATTORNEY: Each of the officers of Secured Party or its
representative is hereby irrevocably made, constituted and appointed the true
and lawful attorney for each Grantor (without requiring it to act as such) with
full power of substitution to do the following, subject to the rights of the
holders of any Senior Debt existing on the date hereof or arising in the future:
(a) execute in the name of each Grantor, schedules, assignments, instruments,
documents and statements that such Grantor is obligated to give Secured Party
hereunder or is necessary to perfect (or continue to evidence the perfection of
such security interest or Lien); (b) during the continuance of a Default,
endorse the name of Grantor upon any and all checks, drafts, money orders and
other instruments for the payment of monies that are payable to such Grantor and
constitute collections on such Grantor's Collateral; and (c) during the
continuance of a Default, do such other and further acts and deeds in the name
of such Grantor that Secured Party may reasonably deem necessary or desirable to
enforce any Collateral or perfect Secured Party's security interest or Note Lien
in the Collateral.

        2.6     RESTATEMENT: This Agreement amends, restates and supercedes the
Security Agreements. This Agreement is not intended to alter or impair the
scope, validity, enforceability or priority of the liens created under the
Security Agreements, which continue in full force and effect.

                   SECTION 3 - REPRESENTATIONS AND WARRANTIES

        3.1     Each Grantor represents and warrants to Secured Party that:

                (a)     ORGANIZATION - Such Grantor (i) is duly organized and
validly existing under the laws of its state of incorporation, (ii) has the
power and authority to operate its business and to own its Property and (iii) is
duly qualified, is validly existing and in good standing and has lawful power
and authority to engage in the business;

                (b)     NON-CONTRAVENTION - The making and performance of this
Agreement and other agreements executed in connection herewith will not
(immediately, with the passage of time or with the giving of notice or both):

                        (i)     violate the certificate of incorporation or
by-laws of such Grantor or result in a default under any contract, agreement or
instrument to which such Grantor is a party or by which such Grantor or its
property is or may be bound, or

                        (ii)    result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the assets of such
Grantor, except such as are in favor of Secured Party;

                (c)     POWER AND AUTHORITY - such Grantor has the power and
authority to enter into and perform this Agreement and to incur the obligations
herein and therein provided for, and

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<PAGE>

has taken all proper and necessary action, corporate or otherwise, to authorize
the execution, delivery and performance of this Agreement;

                (d)     ENFORCEABLE - This Agreement is valid, binding and
enforceable against such Grantor in accordance with its terms;

                (e)     CONSENTS AND APPROVALS - All necessary consents,
approvals or authorizations of, or filing, registration or qualification with,
any Person, required to be obtained by such Grantor in connection with the
execution and delivery of this Agreement or the undertaking or performance of
any obligation hereunder has been obtained;

                (f)     TITLE - The Collateral is free and clear of any and all
liens, claims, encumbrances or security interests other than Permitted Liens (as
defined in the Indenture);

                (g)     GOVERNMENTAL CONSENT - Neither the nature of any Grantor
or of its business or Property, nor any relationship between such Grantor and
any other Person, nor any circumstance affecting such Grantor in connection with
the issuance or delivery of this Agreement is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority on the part of such Grantor;

                (h)     GOVERNMENT REGULATIONS - (i) such Grantor has obtained
all licenses, permits, franchises or other governmental authorizations necessary
for the ownership of its Property and for the conduct of its business; and (ii)
such Grantor is not in violation of or receipt of written notice that it is in
violation of any applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town, municipality, county or of any
other jurisdiction, or of any agency, or department thereof, (including, without
limitation, Environmental Laws or government procurement regulations), a
violation of which causes or could cause a material adverse effect; and

                (i)     PERFECTION - This Agreement is effective to create in
favor of Secured Party legal, valid and enforceable Liens in all right, title
and interest of such Grantor in the Collateral, and when financing statements
have been filed in the offices of the jurisdiction shown on Schedule "2.1(i)"
attached hereto and made a part hereof under such Grantor's name, Secured Party
has and will continue to have perfected Liens in the Collateral, superior in
right to any and all other consensual Liens, existing or future, other than
Permitted Liens.

                              SECTION 4 - COVENANTS

        4.1     Each Grantor covenants that:

                (a)     PAYMENT OF TAXES AND CLAIMS - such Grantor shall pay,
before they become delinquent,

                        (i)     all taxes, assessments and governmental charges
or levies imposed upon it or upon such Grantor's Property, and

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<PAGE>

                        (ii)    all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other Persons entitled to the benefit of
statutory or common law Liens, which, if unpaid, would result in the imposition
of a Lien upon its Property; provided, however, that such Grantor shall not be
required to pay any such tax, assessment, charge, levy, claim or demand if the
amount, applicability or validity thereof shall at the time be contested in good
faith and by appropriate proceedings by such Grantor, and if such Grantor shall
have set aside on its books adequate reserves in respect thereof, if so required
in accordance with GAAP; which deferment of payment is permissible so long as no
Lien has been entered and such Grantor's title to, and its right to use, its
Property are not materially adversely affected thereby;

                (b)     PROPERTY INSURANCE, PUBLIC AND PRODUCTS LIABILITY
INSURANCE - such Grantor shall maintain insurance (i) on all insurable tangible
Property against fire, flood, casualty and such other hazards (including,
without limitation, extended coverage, workmen's compensation, boiler and
machinery, with inflation coverage by endorsement) and (ii) against public
liability, product liability and business interruption, in each case in such
amounts, with such deductibles and with such insurers as are customarily used by
companies operating in the same industry as such Grantor. Each Grantor further
covenants that all insurance premiums owing under its current policies have been
paid. Each Grantor shall notify Secured Party, immediately, upon such Grantor's
receipt of a notice of termination, cancellation, or non-renewal from its
insurance company of any such policy;

                (c)     FINANCIAL RECORDS - such Grantor shall keep current and
accurate books of records and accounts in which full and correct entries will be
made of all of its business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP;

                (d)     CORPORATE EXISTENCE AND RIGHTS - such Grantor shall do
(or cause to be done) all things necessary to preserve and keep in full force
and effect its existence, good standing, rights and franchises. Each Grantor
shall maintain any and all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its Property or to the conduct of
its businesses;

                (e)     COMPLIANCE WITH LAWS - such Grantor: (i) shall be in
compliance with any and all laws, ordinances, governmental rules and
regulations, and court or administrative orders or decrees to which it is
subject, whether federal, state or local, and (ii) shall obtain any and all
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its Property or to the conduct of its businesses, which
violation or failure to obtain causes or could cause a material adverse effect.
Each Grantor shall timely satisfy all assessments, fines, costs and penalties
imposed (after exhaustion of all appeals, provided a stay has been put in effect
during such appeal) by any governmental authority against such Grantor or any
Property of such Grantor;

                (f)     ISSUE TAXES - such Grantor shall pay all taxes (other
than taxes based upon or measured by any Secured Party's income or revenues or
any personal property tax), if any, in connection with the recording of any lien
documents. The obligations of each Grantor hereunder shall survive the
termination of this Agreement;

                                       7
<PAGE>

                (g)     MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION - No
Grantor may consolidate or merge with or into, 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) such Grantor is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
such Grantor) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation, Person or entity
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 such Grantor) 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 such Grantor
under this Agreement; and (c) after giving effect to such sale, assignment,
transfer, lease, conveyance or other disposition, no Default shall occur under
the Indenture;

                (h)     LIENS AND ENCUMBRANCES - such Grantor shall not cause or
permit or agree or consent to cause or permit in the future (upon the happening
of a contingency or otherwise) the Collateral, whether now owned or hereafter
acquired, to be subject to a Lien or be subject to any claim unless (i) such
Lien is a Permitted Liens or (ii) at the time of granting such Lien, the
Collateral Coverage Ratio is at least 1.5 to 1;

                (i)     OTHER AGREEMENTS - such Grantor shall not become or be a
party to any contract or agreement which at the time of becoming a party to such
contract or agreement materially impairs such Grantor's ability to perform under
this Agreement, or under any other instrument, agreement or document to which
such Grantor is a party or by which it is or may be bound; and

                (j)     CHANGE OF LOCATION OR JURISDICTION OF ORGANIZATION -
such Grantor agrees that it shall not change its name or jurisdiction of
organization without thirty (30) days prior written notice to Secured Party.

        4.2     SUBORDINATION: Notwithstanding anything to the contrary
contained in this Agreement, Secured Party's rights and the Liens created
hereunder, shall be subject and subordinate to the rights of the holder of any
Priority Liens. By its acceptance and acknowledgment hereof, Secured Party (on
behalf of the Securityholders) hereby confirms that Secured Party shall execute
and deliver to any holder of the Senior Debt any and all documents, instruments
or agreements required by such holder to evidence the subordination of the Lien
granted hereunder to the priority of the Priority Lien.

                               SECTION 5 - DEFAULT

        5.1     DEFAULT: The occurrence of an Event of Default under the
Indentures shall constitute a default ("Default") hereunder and Secured Party
shall thereupon have the option to declare Grantors in default under this
Agreement, and all other existing and future agreements of any kind (related or
unrelated) with Secured Party, and declare all existing and future liabilities,
indebtedness and obligations of each Grantor to Secured Party, whether matured
or contingent, related or unrelated, due or to become due, immediately due and
payable including, but not

                                       8
<PAGE>

limited to, interest, principal, and expenses and all of Secured Party's rights
hereunder and thereunder, all without demand, notice, presentment or protest or
further action of any kind.

        5.2     RIGHTS AND REMEDIES ON DEFAULT: In addition to all other rights,
options and remedies granted to Secured Party under this Agreement (each of
which is also then exercisable by Secured Party), Secured Party may, upon the
occurrence of a Default, exercise any other rights granted to it under the UCC
and any other applicable law, including, without limitation, the following
rights and remedies: take possession of, send notices, and collect directly the
Collateral, with or without judicial process (including, without limitation the
right to notify the United States postal authority to redirect all mail
addressed to each Grantor to an address designated by Secured Party).

        5.3     NATURE OF REMEDIES: Secured Party shall have the right to
proceed against all or any portion of the Collateral in any order and may apply
such Collateral to the liabilities and obligations of the Company and/or any
Grantor to Secured Party in any order. All rights and remedies granted Secured
Party hereunder and under any agreement referred to herein, or otherwise
available at law or in equity, shall be deemed concurrent and cumulative, and
not alternative remedies, and Secured Party may proceed with any number of
remedies at the same time until all existing and future liabilities and
obligations of the Company and/or the Grantors to Secured Party, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and Secured Party, upon the occurrence of
a Default, may proceed against the Company, any Grantor, and/or the Collateral,
at any time, under any agreement, with any available remedy and in any order.

                            SECTION 6 - MISCELLANEOUS

        6.1     GOVERNING LAW: This Agreement, and all related agreements and
documents shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to its otherwise applicable principles of
conflicts of laws.

        6.2     NOTICES. Any notice, instruction, direction, request or other
communication by the Company, any Grantor, the Secured Party 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:

        If to the Company:

                AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                The Wanamaker Building
                100 Penn Square East
                Philadelphia, Pennsylvania  19004
                Attention:      Stephen M. Giroux
                                Senior Vice President and General Counsel
                Telecopier:     (215) 940-4537

                                       9
<PAGE>

        If to any Grantor:

                c/o AMERICAN BUSINESS FINANCIAL SERVICES, INC.
                The Wanamaker Building
                100 Penn Square East
                Philadelphia, Pennsylvania  19004
                Attention:      Stephen M. Giroux
                                Senior Vice President and General Counsel
                Telecopier:     (215) 940-4537

        With a copy to:

                BLANK ROME LLP
                One Logan Square
                Philadelphia, Pennsylvania  19103-2599
                Attention:      Lawrence F. Flick, II, Esquire
                Telecopier:     (215) 569-5556

        If to the Secured Party:

                U.S. BANK NATIONAL ASSOCIATION Mail Code EP-MN-WS3C 60
                Livingston Avenue St. Paul, Minnesota 55107
                Attention:      Mr. Richard Prokosch, Corporate Trust
                Phone:          (651) 495-3918
                Telecopier:     (651) 495-8097

        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 Secured Party.

        Any Grantor, the Secured Party or a holder of Senior Debt by notice to
the Company, the Grantors and the Secured Party may designate additional or
different addresses for subsequent notices or communications.

        All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five 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 nationally recognized overnight
air courier guaranteeing next day delivery.

        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 any Grantor mails a notice or communication to Holders, it shall mail
a copy to the Secured Party and each Agent at the same time.

                                       10
<PAGE>

        6.3     WAIVER:

                (a)     No omission or delay by Secured Party in exercising any
right or power under this Agreement or any other document will impair such right
or power or be construed to be a waiver of any Default or an acquiescence
therein, and any single or partial exercise of any such right or power will not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver of Secured Party's rights hereunder will be valid unless in
writing and signed by Secured Party, and then only to the extent specified.

                (b)     Each Grantor releases Secured Party, its agents,
administrators and executors, its officers, employees and agents, of and from
any claims for loss or damage resulting from acts or conduct of any or all of
them arising through the date hereof, unless caused solely by willful misconduct
or gross negligence.

        6.4     MODIFICATION: No modification hereof or any agreement referred
to herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought.

        6.5     SIGNATORIES: Each individual signatory hereto represents and
warrants that he/she is duly authorized to execute this Agreement on behalf of
his/her principal and that he/she executes the Agreement in such capacity and
not as a party.

        6.6     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.

        6.7     SUCCESSORS AND ASSIGNS: All provisions herein shall inure to,
become binding upon the successors, representatives, trustees, administrators,
executors, heirs and assigns of the parties hereto.

        6.8     HEADINGS, ETC.: Any cross-reference, table and headings of the
Articles and Sections of the 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.

        6.9     CONSENT TO JURISDICTION: Each Grantor irrevocably consents to
the jurisdiction of the Courts of Delaware or the United States District Court
for the District of Delaware in any and all actions and proceedings whether
arising hereunder or under any other agreement or undertaking and irrevocably
agrees to service of process to the address of such Grantor set forth herein by
certified mail, return receipt requested.

        6.10    WAIVER OF JURY TRIAL: EACH GRANTOR AND SECURED PARTY HEREBY
WAIVE ANY AND ALL RIGHTS ANY MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
LITIGATION COMMENCED BY OR AGAINST SECURED PARTY WITH RESPECT TO RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO.

                                       11
<PAGE>

                     [SIGNATURES TO FOLLOW ON SEPARATE PAGE]

                                       12
<PAGE>

        IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the day and year first above written.

                                ABFS CONSOLIDATED HOLDINGS, INC.

                                By: /s/ Stephen M. Giroux
                                   ---------------------------------------------
                                   Stephen M. Giroux, Executive Vice President

                                AMERICAN BUSINESS MORTGAGE SERVICES, INC.

                                By: /s/ Stephen M. Giroux
                                   ---------------------------------------------
                                    Stephen M. Giroux, Executive Vice President

                                HOMEAMERICAN CREDIT, INC.

                                By: /s/ Stephen M. Giroux
                                   ---------------------------------------------
                                    Stephen M. Giroux, Executive Vice President

                                AMERICAN BUSINESS CREDIT, INC.

                                By: /s/ Stephen M. Giroux
                                    --------------------------------------------
                                    Stephen M. Giroux, Executive Vice President

Acknowledged and Accepted:
U.S. BANK, NATIONAL ASSOCIATION
AS TRUSTEE FOR THE SECURITYHOLDERS,
AS SECURED PARTY

By: /s/ Richard Prokosch
   --------------------------------------
Name: Richard Prokosch
Title: Vice President

       (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT)

                                       S-1

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