<PAGE>
As filed with the Securities and Exchange Commission on May 26, 2000.
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 6162 87-0418807
- -------------------------------------- ------------------------------------ ----------------------------------
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
(Address, including zip code of Registrant's principal executive offices)
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
1999 STOCK OPTION PLAN
(Full title of the Plan)
ANTHONY J. SANTILLI
Chairman, President, Chief Executive
Officer and Chief Operating Officer
American Business Financial Services, Inc.
Bala Pointe Centre
111 Presidential Boulevard
Bala Cynwyd, PA 19004
(610) 668-2440
(Name, address and telephone number,
including area code, of agent for service)
Copies to:
JANE K. STORERO, ESQUIRE
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
(215) 569-5500
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================== ==================== ======================== ======================== ====================
Amount Proposed maximum
Title of each class of to be offering price Proposed maximum Amount of
securities to be registered registered(1) per share offering price registration fee
==================================== ==================== ======================== ======================== ====================
<S> <C> <C> <C> <C>
Common Stock........................ 500,000 (2) $6,189,950 $1,635
- ------------------------------------ -------------------- ------------------------ ------------------------ --------------------
</TABLE>
<PAGE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement covers, in addition to the number of shares set
forth above, an indeterminate number of shares which, by reason of
certain events specified in the Plans, may become subject to the Plan
pursuant to the anti-dilution provision of the Plan.
(2) Estimated in accordance with Rule 457(h), solely for the purpose of
calculating the registration fee. Of the 500,000 shares to be
registered, 207,500 are being registered based upon an exercise price of
$13.00 per share ($2,697,500 in the aggregate) and the remaining 292,500
shares, based upon the closing price of the common stock on the Nasdaq
National Market System of $11.94 per share on May 24, 2000 ($3,492,450
in the aggregate).
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participants in the American Business Financial
Services, Inc. 1999 Stock Option Plan (the "Plan") as specified by Rule
428(b)(1) promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act").
Such documents are not being filed with the Commission, but constitute
(along with the documents incorporated by reference into this Registration
Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
Item 2. Registrant Information and Employee Plan Annual Information.
The document(s) containing the information specified in Item 2 will be
sent or given to employees as specified in Rule 428(b)(1) and are not required
to be filed as part of this Registration Statement.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents previously or concurrently filed by American
Business Financial Services, Inc. ("ABFS" or the "Company") with the Commission
are hereby incorporated by reference in this Registration Statement:
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999 (File No. 0-22474) filed pursuant to Rule
13a-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and all amendments thereto;
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1999, December 31, 1999 and March 31, 2000
(File No. 0-22474) filed pursuant to Rule 13a-1 of the
Exchange Act and all amendments thereto;
(iii)All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal
year covered by the Annual Report on Form 10-K referred to in
(i) above; and
(iv) The description of the Company's Common Stock, which is
incorporated by reference to the Company's Registration
Statement on Form 8-A (File No. 0-22474) filed with the
Commission on January 8, 1997 and all amendments or reports
filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, after the date hereof, and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed
incorporated by reference into this Registration Statement and to be a part
thereof from the date of the filing of such documents. Any statement contained
in the documents incorporated, or deemed to be incorporated, be reference herein
or therein shall be deemed to be modified or superseded for purposes of this
Registration Statement and the Prospectus to the extent that a statement
contained herein or therein or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein or therein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement and the Prospectus.
II-1
<PAGE>
The Company shall furnish without charge to each person to whom the
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
to the information that is incorporated). Requests should be directed to Beverly
Santilli, Secretary of the Company, American Business Financial Services, Inc.,
Bala Pointe Centre, 111 Presidential Boulevard, Bala Cynwyd, PA 19004, telephone
number (610) 668-2440.
All information appearing in this Registration Statement and the
Prospectus is qualified in its entirety by the detailed information, including
financial statements, appearing in the documents incorporated herein or therein
by reference.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
The Amended and Restated Certificate of Incorporation (the "Certificate
of Incorporation") and the Amended and Restated Bylaws (the "Bylaws") of ABFS
provide for indemnification of its directors and officers to the full extent
permitted by Delaware law. In the event that the Delaware General Corporation
Law (the "Corporation Law") is amended to authorize corporate action further
eliminating or limiting the personal liability of directors and officers, the
Certificate of Incorporation and Bylaws provide the personal liability of the
directors and officers of ABFS shall be so eliminated or limited.
Section 145 of the Corporation Law provides, in substance, that
Delaware corporations shall have the power, under specified circumstances, to
indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred in any such
action, suit or proceeding.
Section 145 of the Corporation Law provides that a company may pay the
expenses incurred by an officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding upon an undertaking
by or on behalf of such director or officer to repay such amount if it is
ultimately determined that he or she is not entitled to be indemnified by the
corporation. The Certificate of Incorporation and Bylaws of ABFS provide that
ABFS shall pay such expenses.
II-2
<PAGE>
The Company has obtained insurance to cover the Company's directors and
executive officers for liabilities which may be incurred in connection with the
offer, sale and registration of the Common Stock.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement
or, where so indicated have been previously filed and are incorporated herein by
reference.
Regulation S-K
Exhibit Number Description
4.1 Certificate of Incorporation of American Business
Financial Services, Inc.*
4.2 Bylaws of American Business Financial Services, Inc.**
5 Opinion of Blank Rome Comisky & McCauley LLP regarding
legality.
10 American Business Financial Services, Inc. 1999 Stock
Option and Incentive Plan.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Blank Rome Comisky & McCauley LLP
(included in Exhibit 5).
24 Power of Attorney (included on the Signature Page).
- --------------------------------------
* Incorporated hereby by reference to Exhibit 3.1 of the Company's Annual
Report on Form 10-KSB (File No. 1-14268) for the fiscal year ended June 30,
1996 filed with the Commission on September 27, 1996.
** Incorporated hereby by reference to Exhibit 3.2 of the Company's
Registration Statement on Form SB-2 (Registration No. 333-18919) filed with
the Commission on December 27, 1996 (the "1996 Form SB-2").
II-3
<PAGE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule
424(b) if, in the aggregate, the changes in value and
price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" Table in the
effective Registration Statement; and
(iii) To include any additional material information
on the plan of distribution not previously disclosed
in this Registration Statement or any material change
to such information in this Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the
Registration Statement is on Form S-3 or Form S-8 and
the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
II-4
<PAGE>
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Philadelphia, Commonwealth of Pennsylvania on May 26,
2000.
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
Date: May 26, 2000 By:/s/ Anthony J. Santilli
-----------------------
Anthony J. Santilli, Chairman, President,
Chief Executive Officer and Chief
Operating Officer
(Duly Authorized Officer)
-------------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Anthony J. Santilli, his true and lawful
attorney-in-fact and agent with full power of substitution or resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documentation in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE Capacity Date
- --------------------------------------------------------------------------------------- ------------------------
<S> <C> <C>
/s/ Anthony J. Santilli Chairman, President, Chief Executive May 26, 2000
- --------------------------------------- Officer, Chief Operating Officer and
Anthony J. Santilli Director (Principal Executive and
Operating Officer)
/s/ Albert W. Mandia Executive Vice President and Chief May 26, 2000
- --------------------------------------- Financial Officer (Principal Financial
Albert W. Mandia and Accounting Officer)
/s/ Leonard Becker Director May 26, 2000
- ---------------------------------------
Leonard Becker
/s/ Richard Kaufman Director May 26, 2000
- ---------------------------------------
Richard Kaufman
/s/ Michael DeLuca Director May 26, 2000
- ---------------------------------------
Michael DeLuca
/s/ Harold Sussman Director May 26, 2000
- ---------------------------------------
Harold Sussman
</TABLE>
<PAGE>
EXHIBIT INDEX
S-K Exhibit Numbers Description
- ------------------- -----------
4.1 Certificate of Incorporation of American Business
Financial Services, Inc.*
4.2 Bylaws of American Business Financial Services, Inc.**
5 Opinion of Blank Rome Comisky & McCauley LLP regarding
legality.
10 American Business Financial Services, Inc. 1999 Stock
Option and Incentive Plan.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Blank Rome Comisky & McCauley LLP
(included in Exhibit 5).
24 Power of Attorney (included on the Signature Page).
- --------------------------------------
* Incorporated hereby by reference to Exhibit 3.1 of the Company's Annual
Report on Form 10-KSB (File No. 1-14268) for the fiscal year ended June
30, 1996 filed with the Commission on September 27, 1996.
** Incorporated hereby by reference to Exhibit 3.2 of the Company's
Registration Statement on Form SB-2 (Registration No. 333-18919) filed
with the Commission on December 27, 1996 (the "1996 Form SB-2").
<PAGE>
BLANK ROME COMISKY & MCCAULEY LLP_______________________________________________
May 26, 2000
American Business Financial Services, Inc.
111 Presidential Boulevard
Bala Cynwyd, PA 19004
Gentlemen:
We have acted as counsel to American Business Financial Services, Inc. (the
"Company") in connection with the preparation of the Registration Statement on
Form S-8 ("Registration Statement") to be filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to the offering of up to 500,000 shares of common stock, par value
$.001 per share ("Common Stock"), by the Company pursuant to the Company's 1999
Stock Option Plan (the "Plan"). This opinion is furnished pursuant to the
requirements of Item 601(b)(5) of Regulation S-K.
Although as counsel to the Company we have advised the Company in
connection with a variety of matters referred to us by it, our services are
limited to specific matters so referred. Consequently, we may not have knowledge
of many transactions in which the Company has engaged or its day-to-day
operations.
In rendering this opinion, we have examined the following documents: (i)
the Company's Certificate of Incorporation and Bylaws, as amended and restated
since the inception of the Company, (ii) resolutions adopted by the Board of
Directors related to the Plans; (iii) the Registration Statement (including all
exhibits thereto); and (iv) a certification from the Company's transfer agent.
We have assumed and relied, as to question of fact and mixed questions of law
and fact, on the truth, completeness, authenticity and due authorization of all
documents and records examined and the genuineness of all signatures.
We have not made any independent investigation in rendering this opinion
other than the document examination described. Our opinion is therefore
qualified in all respects by the scope of that document examination. We make no
representation as to the sufficiency of our investigation for your purposes.
This opinion is limited to the laws of the State of Delaware. In rendering this
opinion we have assumed (i) compliance with all other laws, including federal
laws, and (ii) compliance with all Delaware securities and antitrust laws.
<PAGE>
May 26, 2000
Page 2
Based upon and subject to the foregoing, we are of the opinion that:
The shares of Common Stock of the Company which are being offered by
the Company pursuant to the Registration Statement, when sold in the
manner and for the consideration contemplated by the Registration
Statement, will be legally issued, fully paid and non- assessable.
This opinion is given as of the date hereof. We assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur.
This opinion is strictly limited to the matters stated herein and no other
or more extensive opinion is intended, implied or to be inferred beyond the
matters expressly stated herein.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Blank Rome Comisky & McCauley LLP
-------------------------------------
BLANK ROME COMISKY & McCAULEY LLP
<PAGE>
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
1999 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this 1999 Stock Option Plan (the "Plan") is to provide
additional incentive to officers, other key employees, and directors of, and
important consultants to, American Business Financial Services, Inc., a Delaware
corporation (the "Company"), and each present or future parent or subsidiary
corporation of the Company, by encouraging them to invest in shares of the
Company's common stock, $0.001 par value per share ("Common Stock"), and thereby
acquire a proprietary interest in the Company and an increased personal interest
in the Company's continued success and progress.
2. Aggregate Number of Shares
500,000 shares of the Company's Common Stock shall be the aggregate number
of shares which may be issued under this Plan. Notwithstanding the foregoing, in
the event of any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee (defined in Section 4(a)), deems in its sole
discretion to be similar circumstances, the aggregate number and kind of shares
which may be issued under this Plan shall be appropriately adjusted in a manner
determined in the sole discretion of the Committee. Reacquired shares of the
Company's Common Stock, as well as unissued shares, may be used for the purpose
of this Plan. Common Stock of the Company subject to options which have
terminated unexercised, either in whole or in part, shall be available for
future options granted under this Plan.
3. Class of Persons Eligible to Receive Options
All officers and key employees of the Company and of any present or future
Company parent or subsidiary corporation are eligible to receive an option or
options under this Plan. All directors of, and important consultants to, the
Company and of any present or future Company parent or subsidiary corporation
are also eligible to receive an option or options under this Plan. The
individuals who shall, in fact, receive an option or options shall be selected
by the Committee, in its sole discretion, except as otherwise specified in
Section 4 hereof. No individual may receive options under this Plan for more
than 90% of the total number of shares of the Company's Common Stock authorized
for issuance under this Plan.
<PAGE>
4. Administration of Plan
(a) This Plan shall be administered either by the Company's Board of
Directors or a Compensation Committee appointed by the Company's Board of
Directors. The Compensation Committee shall consist of a minimum of two and a
maximum of five members of the Board of Directors, each of whom shall be a
"Non-Employee Director" within the meaning of Rule 16b- 3(b)(3) under the
Securities Exchange Act of 1934, as amended, or any future corresponding rule,
except that the failure of the Compensation Committee for any reason to be
composed solely of Non- Employee Directors shall not prevent an option from
being considered granted under this Plan. The term "Committee," as used herein,
shall refer to either the Company's Board of Directors or such Compensation
Committee, depending upon who is administering the Plan. The Committee shall, in
addition to its other authority and subject to the provisions of this Plan,
determine which individuals shall in fact be granted an option or options,
whether the option shall be an Incentive Stock Option or a Non-Qualified Stock
Option (as such terms are defined in Section 5(a)), the number of shares to be
subject to each of the options, the time or times at which the options shall be
granted, the rate of option exercisability, and, subject to Section 5 hereof,
the price at which each of the options is exercisable and the duration of the
option.
(b) The Committee shall adopt such rules for the conduct of its business
and administration of this Plan as it considers desirable. A majority of the
members of the Committee shall constitute a quorum for all purposes. The vote or
written consent of a majority of the members of the Committee on a particular
matter shall constitute the act of the Committee on such matter. The Committee
shall have the right to construe the Plan and the options issued pursuant to it,
to correct defects and omissions and to reconcile inconsistencies to the extent
necessary to effectuate the Plan and the options issued pursuant to it, and such
action shall be final, binding and conclusive upon all parties concerned. No
member of the Committee or the Board of Directors shall be liable for any act or
omission (whether or not negligent) taken or omitted in good faith, or for the
exercise of an authority or discretion granted in connection with the Plan to a
Committee or the Board of Directors, or for the acts or omissions of any other
members of a Committee or the Board of Directors. Subject to the numerical
limitations on Committee membership set forth in Section 4(a) hereof, the Board
of Directors may at any time appoint additional members of the Committee and may
at any time remove any member of the Committee with or without cause. Vacancies
in the Committee, however caused, may be filled by the Board of Directors, if it
so desires.
5. Incentive Stock Options and Non-Qualified Stock Options
(a) Options issued pursuant to this Plan may be either Incentive Stock
Options granted pursuant to Section 5(b) hereof or Non-Qualified Stock Options
granted pursuant to Section 5(c) hereof, as determined by the Committee. An
"Incentive Stock Option" is an option which satisfies all of the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations thereunder, and a "Non-Qualified Stock Option" is an option
which either does not satisfy all of those requirements or the terms of the
option provide that it will not be treated as an Incentive Stock Option. The
Committee may grant both an Incentive Stock Option and a Non-Qualified Stock
Option to the same person, or more than one of each type of option to the same
person. The option price for options issued under this Plan shall be equal at
least to the fair market
2
<PAGE>
value (as defined below) of the Company's Common Stock on the date of the grant
of the option. The fair market value of the Company's Common Stock on any
particular date shall mean the last reported sale price of a share of the
Company's Common Stock on any stock exchange on which such stock is then listed
or admitted to trading, or on the NASDAQ Stock Market, on such date, or if no
sale took place on such day, the last such date on which a sale took place, or
if the Common Stock is not then quoted on the NASDAQ Stock Market, or listed or
admitted to trading on any stock exchange, the average of the bid and asked
prices in the over-the-counter market on such date, or if none of the foregoing,
a price determined in good faith by the Committee to equal the fair market value
per share of the Common Stock.
(b) Subject to the authority of the Committee set forth in Section 4(a)
hereof, Incentive Stock Options issued pursuant to this Plan shall be issued
substantially in the form set forth in Appendix I hereof, which form is hereby
incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Incentive Stock
Options shall not be exercisable after the expiration of ten years from the date
such options are granted, unless terminated earlier under the terms of the
option, except that options granted to individuals described in Section
422(b)(6) of the Code shall conform to the provisions of Section 422(c)(5) of
the Code. At the time of the grant of an Incentive Stock Option hereunder, the
Committee may, in its discretion, amend or supplement any of the option terms
contained in Appendix I for any particular optionee, provided that the option as
amended or supplemented satisfies the requirements of Section 422 of the Code
and the regulations thereunder. Each of the options granted pursuant to this
Section 5(b) is intended, if possible, to be an "Incentive Stock Option" as that
term is defined in Section 422 of the Code and the regulations thereunder. In
the event this Plan or any option granted pursuant to this Section 5(b) is in
any way inconsistent with the applicable legal requirements of the Code or the
regulations thereunder for an Incentive Stock Option, this Plan and such option
shall be deemed automatically amended as of the date hereof to conform to such
legal requirements, if such conformity may be achieved by amendment. If such
conformity may not be achieved by amendment, such option shall be deemed to be a
Non-Qualified Stock Option.
(c) Subject to the authority of the Committee set forth in Section 4(a)
hereof, Non-Qualified Stock Options issued to officers and other key employees
pursuant to this Plan shall be issued substantially in the form set forth in
Appendix II hereof, which form is hereby incorporated by reference and made a
part hereof, and shall contain substantially the terms and conditions set forth
therein. Subject to the authority of the Committee set forth in Section 4(a)
hereof, Non-Qualified Stock Options issued to directors and important
consultants pursuant to this Plan shall be issued substantially in the form set
forth in Appendix III hereof, which form is hereby incorporated by reference and
made a part hereof, and shall contain substantially the terms and conditions set
forth therein. Non-Qualified Stock Options shall expire ten years after the date
they are granted, unless terminated earlier under the option terms. At the time
of granting a Non-Qualified Stock Option hereunder, the Committee may, in its
discretion, amend or supplement any of the option terms contained in Appendix II
or Appendix III for any particular optionee.
(d) Neither the Company nor any of its current or future parent,
subsidiaries or affiliates, nor their officers, directors, shareholders, stock
option plan committees, employees or agents shall have any liability to any
optionee in the event (i) an option granted pursuant to Section 5(b) hereof does
3
<PAGE>
not qualify as an "Incentive Stock Option" as that term is used in Section 422
of the Code and the regulations thereunder; (ii) any optionee does not obtain
the tax treatment pertaining to an Incentive Stock Option; or (iii) any option
granted pursuant to Section 5(c) hereof is an "Incentive Stock Option."
(e) Except as otherwise provided in Section 422 of the Code and regulations
thereunder or any successor provision, no Incentive Stock Option granted
pursuant to this Plan shall be transferable other than by will or the laws of
descent and distribution. Except as otherwise provided by the Rules and
Regulations of the Securities and Exchange Commission, the Committee at the time
of grant of a Non-Qualified Stock Option may provide that such stock option is
transferrable to any "family member" of the optionee by gift or qualified
domestic relations order. For purposes of this section, a family member includes
any child, stepchild, grandchild, parent, step-parent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the grantee's household (other than a tenant
or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the grantee)
controls the management of assets, and any other entity in which these persons
or the grantee own more than 50% of the voting interests.
6. Amendment, Supplement, Suspension and Termination
Options shall not be granted pursuant to this Plan after the expiration of
ten years from the date the Plan is adopted by the Board of Directors of the
Company. The Board of Directors reserves the right at any time, and from time to
time, to amend or supplement this Plan, including the forms of option agreement
attached hereto, in any way, or to suspend or terminate it, effective as of such
date, which date may be either before or after the taking of such action, as may
be specified by the Board of Directors; provided, however, that such action
shall not affect options granted under the Plan prior to the actual date on
which such action occurred. If an amendment or supplement of this Plan is
required by the Code or the regulations thereunder to be approved by the
shareholders of the Company in order to permit the granting of "Incentive Stock
Options" (as that term is defined in Section 422 of the Code and regulations
thereunder) pursuant to the amended or supplemented Plan, such amendment or
supplement shall also be approved by the shareholders of the Company in such
manner as is prescribed by the Code and the regulations thereunder. If the Board
of Directors voluntarily submits a proposed amendment, supplement, suspension or
termination for shareholder approval, such submission shall not require any
future amendments, supplements, suspensions or terminations (whether or not
relating to the same provision or subject matter) to be similarly submitted for
shareholder approval.
7. Effectiveness of Plan
This Plan shall become effective on the date of its adoption by the
Company's Board of Directors, subject however to approval by the holders of the
Company's Common Stock in the manner as prescribed in the Code and the
regulations thereunder. Options may be granted under this Plan prior to
obtaining shareholder approval, provided such options shall not be exercisable
until shareholder approval is obtained.
4
<PAGE>
8. General Conditions
(a) Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any employee the right to continue in the employ of the
Company or any affiliated or subsidiary corporation or interfere in any way with
the rights of the Company or any affiliated or subsidiary corporation to
terminate his employment in any way.
(b) Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any director or consultant the right to continue as a
director of, or consultant to, the Company or any affiliated or subsidiary
corporation or interfere in any way with the rights of the Company or any
affiliated or subsidiary corporation, or their respective shareholders, to
terminate the directorship of any such director or the consultancy relationship
of any such consultant.
(c) Corporate action constituting an offer of stock for sale to any person
under the terms of the options to be granted hereunder shall be deemed complete
as of the date when the Committee authorizes the grant of the option to the such
person, regardless of when the option is actually delivered to such person or
acknowledged or agreed to by him.
(d) The terms "parent corporation" and "subsidiary corporation" as used
throughout this Plan, and the options granted pursuant to this Plan, shall
(except as otherwise provided in the option form) have the meaning that is
ascribed to that term when contained in Section 422(b) of the Code and the
regulations thereunder, and the Company shall be deemed to be the grantor
corporation for purposes of applying such meaning.
(e) References in this Plan to the Code shall be deemed to also refer to
the corresponding provisions of any future United States revenue law.
(f) The use of the masculine pronoun shall include the feminine gender
whenever appropriate.
5
<PAGE>
APPENDIX I
INCENTIVE STOCK OPTION
To:_____________________________________________________________________________
Name
________________________________________________________________________________
Address
Date of Grant:__________________________________________________________________
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, $0.001 par value per share ("Common
Stock"), of American Business Financial Services, Inc., a Delaware corporation
(the "Company"), at a price of $____________ per share pursuant to the Company's
1999 Stock Option Plan (the "Plan").
Your option may first be exercised on and after one year from the date of
grant, but not before that time. On and after one year and prior to __________
years from the date of grant, your option may be exercised for up to _____% of
the total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted as the Committee in
its sole discretion determines for any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Each succeeding year thereafter, your
option may be exercised for up to an additional _____% of the total number of
shares subject to the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the outstanding shares of
the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Thus, this option is fully exercisable
on and after _____ years after the date of grant, except if terminated earlier
as provided herein. This option shall terminate and is not exercisable after ten
years from the date of its grant (the "Scheduled Termination Date"), except if
terminated earlier as hereafter provided.
In the event of a "Change of Control" (as defined below) of the Company,
your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly. A "Change
of Control" shall be deemed to have occurred upon the happening of any of the
following events:
I-1
<PAGE>
1. A change within a twelve-month period in the holders of more than 50%
of the outstanding voting stock of the Company; or
2. Any other event deemed to constitute a "Change of Control" by the
Committee.
You may exercise your option by giving written notice to the Secretary of
the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise"; (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). The use of the so-called
"attestation procedure" to exercise a stock option may be permitted by the
Committee. Any assignment of stock shall be in a form and substance satisfactory
to the Secretary of the Company, including guarantees of signature(s) and
payment of all transfer taxes if the Secretary deems such guarantees necessary
or desirable.
Your option will, to the extent not previously exercised by you, terminate
three months after the date on which your employment by the Company or a Company
subsidiary corporation is terminated (whether such termination be voluntary or
involuntary) other than by reason of disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder, or death (but in no event later than the Scheduled
Termination Date). After the date your employment is terminated, as aforesaid,
you may exercise this option only for the number of shares which you had a right
to purchase and did not purchase on the date your employment terminated. If you
are employed by a Company subsidiary corporation, your employment shall be
deemed to have terminated on the date your employer ceases to be a Company
subsidiary corporation, unless you are on that date transferred to the Company
or another Company subsidiary corporation. Your employment shall not be deemed
to have terminated if you are transferred from the Company to a Company
subsidiary corporation, or vice versa, or from one Company subsidiary
corporation to another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your executor or administrator, as the case may be, may, at any
time within one year after the date of your death (but in no event later than
the Scheduled Termination Date), exercise the option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment with the Company or a Company parent or subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of Section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of such termination
(but in no event later than the Scheduled Termination Date), exercise the option
as to any shares which you had a right to purchase and did not purchase prior to
such termination. Your executor, administrator, guardian or custodian must
present proof of his authority satisfactory to the Company prior to being
allowed to exercise this option.
I-2
<PAGE>
In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee deems in its sole discretion to be similar
circumstances, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted in a manner to be
determined in the sole discretion of the Committee.
Notwithstanding anything to the contrary contained in this option, in the
event of a sale or a proposed sale of the majority of the stock or assets of the
Company or a proposed Change of Control, the Committee shall have the right to
terminate this option upon thirty (30) days prior written notice to you, subject
to your right to exercise such option to the extent vested prior to such
termination.
This option is not transferable otherwise than by will or the laws of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option is
not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved by
the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or registered
with such federal, state and local regulatory bodies or agencies and securities
exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise, and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
The following two paragraphs shall be applicable if, on the date of exercise
of this option, the Common Stock to be purchased pursuant to such exercise has
not been registered under the
I-3
<PAGE>
Securities Act of 1933, as amended, and under applicable state securities laws,
and shall continue to be applicable for so long as such registration has not
occurred:
(a) The optionee hereby agrees, warrants and represents that he will acquire
the Common Stock to be issued hereunder for his own account for investment
purposes only, and not with a view to, or in connection with, any resale or
other distribution of any of such shares, except as hereafter permitted. The
optionee further agrees that he will not at any time make any offer, sale,
transfer, pledge or other disposition of such Common Stock to be issued
hereunder without an effective registration statement under the Securities Act
of 1933, as amended, and under any applicable state securities laws or an
opinion of counsel acceptable to the Company to the effect that the proposed
transaction will be exempt from such registration. The optionee shall execute
such instruments, representations, acknowledgments and agreements as the Company
may, in its sole discretion, deem advisable to avoid any violation of federal,
state, local or securities exchange rule, regulation or law.
(b) The certificates for Common Stock to be issued to the optionee hereunder
shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under applicable state securities
laws. The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and
under any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be exempt from
such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and legend
set forth in the two immediately preceding paragraphs is to prevent violations
of the Securities Act of 1933, as amended, and any applicable state securities
laws.
It is the intention of the Company and you that this option shall, if
possible, be an "Incentive Stock Option" as that term is used in Section 422 of
the Code and the regulations thereunder. In the event this option is in any way
inconsistent with the legal requirements of the Code or the regulations
thereunder for an "Incentive Stock Option," this option shall be deemed
automatically amended as of the date hereof to conform to such legal
requirements, if such conformity may be achieved by amendment. If such
conformity may not be achieved by amendment, such option shall be deemed to be a
Non-Qualified Stock Option.
Nothing herein shall modify your status as an at-will employee of the
Company. Further, nothing herein guarantees you employment for any specified
period of time. This means that either you or the Company may terminate your
employment at any time for any reason, or no reason. You recognize that, for
instance, you may terminate your employment or the
I-4
<PAGE>
Company may terminate your employment prior to the date on which your option
becomes vested.
Any dispute or disagreement between you and the Company with respect to any
portion of this option or its validity, construction, meaning, performance or
your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the date
this option is granted, which terms are hereby incorporated herein by reference
and made a part hereof. In the event of any conflict between the terms of this
option and the terms of the Plan in effect on the date of this option, the terms
of the Plan shall govern. This option constitutes the entire understanding
between the Company and you with respect to the subject matter hereof and no
amendment, supplement or waiver of this option, in whole or in part, shall be
binding upon the Company unless in writing and signed by the President of the
Company. This option and the performances of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
In consideration of the grant to you of this option, you hereby agree to the
confidentiality and non-interference provisions set forth in Attachment A
hereto.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions, including Attachment A hereto.
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.
By:_________________________________________
I-5
<PAGE>
I hereby acknowledge receipt of a copy of the foregoing stock option and the
1999 Stock Option Plan and, having read them hereby signify my understanding of,
and my agreement with, its terms and conditions including Attachment A hereto. I
accept this option in full satisfaction of any previous written or verbal
promises made to me by the Company with respect to option grants [except for
options granted to me pursuant to agreements dated ___________].
_____________________ ______________________________________________
(Date) (Signature)
I-6
<PAGE>
Attachment A to Stock Option
Confidentiality and Non-Interference.
------------------------------------
(a) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your employment with the Company or at
any time thereafter, except with the express prior written consent of the
Company or pursuant to the lawful order of any judicial or administrative agency
of government, directly or indirectly, disclose, communicate or divulge to any
individual or entity, or use for the benefit of any individual or entity, any
knowledge or information with respect to the conduct or details of the Company's
business which you, acting reasonably, believe or should believe to be of a
confidential nature and the disclosure of which not to be in the Company's
interest.
(b) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your employment with the Company and for
a period of two years thereafter, except with the express prior written consent
of the Company, directly or indirectly, whether as employee, owner, partner,
consultant, agent, director, officer, shareholder or in any other capacity,
engage in or assist any individual or entity to engage in any act or action
which you, acting reasonably, believe or should believe would be harmful or
inimical to the interests of the Company.
(c) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, for a period of two years after your employment
with the Company ceases for any reason whatsoever (whether voluntary or not),
except with the express prior written consent of the Company, directly or
indirectly, whether as employee, owner, partner, consultant, agent, director,
officer, shareholder or in any other capacity, for your own account or for the
benefit of any individual or entity, (i) solicit any customer of the Company for
business which would result in such customer terminating their relationship with
the Company; or (ii) solicit or induce any individual or entity which is an
employee of the Company to leave the Company or to otherwise terminate their
relationship with the Company.
(d) The parties agree that any breach by you of any of the covenants or
agreements contained in this Attachment A will result in irreparable injury to
the Company for which money damages could not adequately compensate the Company
and therefore, in the event of any such breach, the Company shall be entitled
(in addition to any other rights and remedies which it may have at law or in
equity) to have an injunction issued by any competent court enjoining and
restraining you and/or any other individual or entity involved therein from
continuing such breach. The existence of any claim or cause of action which you
may have against the Company or any other individual or entity shall not
constitute a defense or bar to the enforcement of such covenants. If the Company
is obliged to resort to the courts for the enforcement of any of the covenants
or agreements contained in this Attachment A, or if such covenants or agreements
are otherwise the subject of litigation between the parties, and the Company
prevails in such enforcement or litigation, then the term of such covenants and
agreements shall be extended for a period of time equal to the period of such
breach, which extension shall commence on the later of (a) the date on which the
original (unextended) term of such covenants and agreements is scheduled to
terminate or (b) the date of the final court order (without further right of
appeal) enforcing such covenant or agreement.
I-7
<PAGE>
(e) If any portion of the covenants or agreements contained in this
Attachment A, or the application hereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or the
application thereof shall not be affected and shall be given full force and
effect without regard to the invalid or enforceable portions to the fullest
extent possible. If any covenant or agreement in this Attachment A is held
unenforceable because of the area covered, the duration thereof, or the scope
thereof, then the court making such determination shall have the power to reduce
the area and/or duration and/or limit the scope thereof, and the covenant or
agreement shall then be enforceable in its reduced form.
(f) For purposes of this Attachment A, the term "the Company" shall include
the Company, any successor to the Company and all present and future direct and
indirect subsidiaries and affiliates of the Company.
I-8
<PAGE>
APPENDIX II
NON-QUALIFIED STOCK OPTION FOR OFFICERS
AND OTHER KEY EMPLOYEES
To:_____________________________________________________________________________
Name
________________________________________________________________________________
Address
Date of Grant:__________________________________________________________________
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, $0.001 par value per share ("Common
Stock"), of American Business Financial Services, Inc., a Delaware corporation
(the "Company"), at a price of $_______ per share pursuant to the Company's 1999
Stock Option Plan (the "Plan").
Your option may first be exercised on and after one year from the date of
grant, but not before that time. On and after one year and prior to _____ years
from the date of grant, your option may be exercised for up to _______ of the
total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted as the Committee in
its sole discretion determines for any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Each succeeding year thereafter, your
option may be exercised for up to an additional ____% of the total number of
shares subject to the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the outstanding shares of
the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Thus, this option is fully exercisable
on and after_____ years after the date of grant, except if terminated earlier as
provided herein. This option shall terminate and is not exercisable after ten
years from the date of its grant (the "Scheduled Termination Date"), except if
terminated earlier as hereafter provided.
In the event of a "Change of Control" (as defined below) of the Company,
your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly. A "Change
of Control" shall be deemed to have occurred upon the happening of any of the
following events:
II-1
<PAGE>
1. A change within a twelve-month period in the holders of more than 50%
of the outstanding voting stock of the Company; or
2. Any other event deemed to constitute a "Change of Control" by the
Committee.
You may exercise your option by giving written notice to the Secretary of
the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise"; (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). The use of the so-called
"attestation procedure" to exercise a stock option may be permitted by the
Committee. Any assignment of stock shall be in a form and substance satisfactory
to the Secretary of the Company, including guarantees of signature(s) and
payment of all transfer taxes if the Secretary deems such guarantees necessary
or desirable.
Your option will, to the extent not previously exercised by you, terminate
three months after the date on which your employment by the Company or a Company
subsidiary corporation is terminated (whether such termination be voluntary or
involuntary) other than by reason of disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder, or death (but in no event later than the Scheduled
Termination Date). After the date your employment is terminated, as aforesaid,
you may exercise this option only for the number of shares which you had a right
to purchase and did not purchase on the date your employment terminated. If you
are employed by a Company subsidiary corporation, your employment shall be
deemed to have terminated on the date your employer ceases to be a Company
subsidiary corporation, unless you are on that date transferred to the Company
or another Company subsidiary corporation. Your employment shall not be deemed
to have terminated if you are transferred from the Company to a Company
subsidiary corporation, or vice versa, or from one Company subsidiary
corporation to another Company subsidiary corporation.
If you die while employed by the Company or a Company subsidiary
corporation, your executor or administrator, as the case may be, may, at any
time within one year after the date of your death (but in no event later than
the Scheduled Termination Date), exercise the option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment with the Company or a Company parent or subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of Section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of such termination
(but in no event later than the Scheduled Termination Date), exercise the option
as to any shares which you had a right to purchase and did not purchase prior to
such termination. Your executor, administrator, guardian or custodian must
present proof of his authority satisfactory to the Company prior to being
allowed to exercise this option.
II-2
<PAGE>
In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee deems in its sole discretion to be similar
circumstances, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted in a manner to be
determined in the sole discretion of the Committee.
Notwithstanding anything to the contrary contained in this option, in the
event of a sale or a proposed sale of the majority of the stock or assets of the
Company or a proposed Change of Control, the Committee shall have the right to
terminate this option upon thirty (30) days prior written notice to you, subject
to your right to exercise such option to the extent vested prior to such
termination.
Except for transfers to ___________ under the terms set forth in the Plan,
this option is not transferable otherwise than by will or the laws of descent
and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option is
not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved by
the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
II-3
<PAGE>
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company to the effect that the
proposed transaction will be exempt from such registration. The optionee shall
execute such instruments, representations, acknowledgments and agreements as the
Company may, in its sole discretion, deem advisable to avoid any violation of
federal, state, local or securities exchange rule, regulation or law.
(b) The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under applicable state securities
laws. The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and
under any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be exempt from
such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and legend
set forth in the two immediately preceding paragraphs is to prevent violations
of the Securities Act of 1933, as amended, and any applicable state securities
laws.
It is the intention of the Company and you that this option shall not be an
"Incentive Stock Option" as that term is used in Section 422 of the Code and the
regulations thereunder.
Nothing herein shall modify your status as an at-will employee of the
Company. Further, nothing herein guarantees you employment for any specified
period of time. This means that either you or the Company may terminate your
employment at any time for any reason, or no reason. You recognize that, for
instance, you may terminate your employment or the Company may terminate your
employment prior to the date on which your option becomes vested.
II-4
<PAGE>
Any dispute or disagreement between you and the Company with respect to any
portion of this option or its validity, construction, meaning, performance or
your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the date
this option is granted, which terms are hereby incorporated herein by reference
and made a part hereof. In the event of any conflict between the terms of this
option and the terms of the Plan in effect on the date of this option, the terms
of the Plan shall govern. This option constitutes the entire understanding
between the Company and you with respect to the subject matter hereof and no
amendment, supplement or waiver of this option, in whole or in part, shall be
binding upon the Company unless in writing and signed by the President of the
Company. This option and the performances of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
In consideration of the grant to you of this option, you hereby agree to the
confidentiality and non-interference provisions set forth in Attachment A
hereto.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions, including Attachment A hereto.
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.
By:_________________________________________
II-5
<PAGE>
I hereby acknowledge receipt of a copy of the foregoing stock option and the
1999 Stock Option Plan and, having read them hereby signify my understanding of,
and my agreement with, its terms and conditions including Attachment A hereto. I
accept this option in full satisfaction of any previously written or verbal
promises made to me by the Company with respect to option grants [except for
options granted to me pursuant to agreements dated _______________].
_________________ _____________________________________________
(Date) (Signature)
II-6
<PAGE>
Attachment A to Stock Option
Confidentiality and Non-Interference.
------------------------------------
(a) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your employment with the Company or at
any time thereafter, except with the express prior written consent of the
Company or pursuant to the lawful order of any judicial or administrative agency
of government, directly or indirectly, disclose, communicate or divulge to any
individual or entity, or use for the benefit of any individual or entity, any
knowledge or information with respect to the conduct or details of the Company's
business which you, acting reasonably, believe or should believe to be of a
confidential nature and the disclosure of which not to be in the Company's
interest.
(b) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your employment with the Company and for
a period of two years thereafter, except with the express prior written consent
of the Company, directly or indirectly, whether as employee, owner, partner,
consultant, agent, director, officer, shareholder or in any other capacity,
engage in or assist any individual or entity to engage in any act or action
which you, acting reasonably, believe or should believe would be harmful or
inimical to the interests of the Company.
(c) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, for a period of two years after your employment
with the Company ceases for any reason whatsoever (whether voluntary or not),
except with the express prior written consent of the Company, directly or
indirectly, whether as employee, owner, partner, consultant, agent, director,
officer, shareholder or in any other capacity, for your own account or for the
benefit of any individual or entity, (i) solicit any customer of the Company for
business which would result in such customer terminating their relationship with
the Company; or (ii) solicit or induce any individual or entity which is an
employee of the Company to leave the Company or to otherwise terminate their
relationship with the Company.
(d) The parties agree that any breach by you of any of the covenants or
agreements contained in this Attachment A will result in irreparable injury to
the Company for which money damages could not adequately compensate the Company
and therefore, in the event of any such breach, the Company shall be entitled
(in addition to any other rights and remedies which it may have at law or in
equity) to have an injunction issued by any competent court enjoining and
restraining you and/or any other individual or entity involved therein from
continuing such breach. The existence of any claim or cause of action which you
may have against the Company or any other individual or entity shall not
constitute a defense or bar to the enforcement of such covenants. If the Company
is obliged to resort to the courts for the enforcement of any of the covenants
or agreements contained in this Attachment A, or if such covenants or agreements
are otherwise the subject of litigation between the parties, and the Company
prevails in such enforcement or litigation, then the term of such covenants and
agreements shall be extended for a period of time equal to the period of such
breach, which extension shall commence on the later of (a) the date on which the
original (unextended) term of such covenants and agreements is scheduled to
terminate or (b) the date of the final court order (without further right of
appeal) enforcing such covenant or agreement.
II-7
<PAGE>
(e) If any portion of the covenants or agreements contained in this
Attachment A, or the application hereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or the
application thereof shall not be affected and shall be given full force and
effect without regard to the invalid or enforceable portions to the fullest
extent possible. If any covenant or agreement in this Attachment A is held
unenforceable because of the area covered, the duration thereof, or the scope
thereof, then the court making such determination shall have the power to reduce
the area and/or duration and/or limit the scope thereof, and the covenant or
agreement shall then be enforceable in its reduced form.
(f) For purposes of this Attachment A, the term "the Company" shall include
the Company, any successor to the Company and all present and future direct and
indirect subsidiaries and affiliates of the Company.
II-8
<PAGE>
APPENDIX III
NON-QUALIFIED STOCK OPTION FOR DIRECTORS
AND IMPORTANT CONSULTANTS
To:_____________________________________________________________________________
Name
_____________________________________________________________________________
Address
Date of Grant:__________________________________________________________________
You are hereby granted an option, effective as of the date hereof, to
purchase __________ shares of common stock, $0.001 par value per share ("Common
Stock"), of American Business Financial Services, Inc., a Delaware corporation
(the "Company"), at a price of $_______ per share pursuant to the Company's 1999
Stock Option Plan (the "Plan").
Your option may first be exercised on and after one year from the date of
grant, but not before that time. On and after one year and prior to ______years
from the date of grant, your option may be exercised for up to ______% of the
total number of shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted as the Committee in
its sole discretion determines for any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Each succeeding year thereafter, your
option may be exercised for up to an additional ______% of the total number of
shares subject to the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the outstanding shares of
the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances). Thus, this option is fully exercisable
on and after _____ years after the date of grant, except if terminated earlier
as provided herein. This option shall terminate and is not exercisable after ten
years from the date of its grant (the "Scheduled Termination Date"), except if
terminated earlier as hereafter provided.
In the event of a "Change of Control" (as defined below) of the Company,
your option may, from and after the date of the Change of Control, and
notwithstanding the immediately preceding paragraph, be exercised for up to 100%
of the total number of shares then subject to the option minus the number of
shares previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the Committee deems in
its sole discretion) and your vesting date may accelerate accordingly. A "Change
of Control" shall be deemed to have occurred upon the happening of any of the
following events:
III-1
<PAGE>
1. A change within a twelve-month period in the holders of more than 50%
of the outstanding voting stock of the Company; or
2. Any other event deemed to constitute a "Change of Control" by the
Committee.
You may exercise your option by giving written notice to the Secretary of
the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-called "cashless exercise"; (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or (c)
(unless prohibited by the Committee) any combination of cash and Common Stock of
the Company valued as provided in clause (b). The use of the so-called
"attestation procedure" to exercise a stock option may be permitted by the
Committee. Any assignment of stock shall be in a form and substance satisfactory
to the Secretary of the Company, including guarantees of signature(s) and
payment of all transfer taxes if the Secretary deems such guarantees necessary
or desirable.
Your option will, to the extent not previously exercised by you, terminate
three months after the date on which you cease for any reason to be a director
of, or consultant to, the Company or a subsidiary corporation (whether by death,
disability, resignation, removal, failure to be reappointed, reelected or
otherwise, or the expiration of any consulting arrangement, and regardless of
whether the failure to continue as a director or consultant was for cause or
without cause or otherwise), but in no event later than ten years from the date
this option is granted. After the date you cease to be a director or consultant,
you may exercise this option only for the number of shares which you had a right
to purchase and did not purchase on the date you ceased to be a director or
consultant. If you are a director of a subsidiary corporation, your directorship
shall be deemed to have terminated on the date such company ceases to be a
subsidiary corporation, unless you are also a director of the Company or another
subsidiary corporation, or on that date became a director of the Company or
another subsidiary corporation. Your directorship or consultancy shall not be
deemed to have terminated if you cease being a director of, or consultant to,
the Company or a subsidiary corporation but are or concurrently therewith become
(a) a director of, or consultant to, the Company or another subsidiary
corporation or (b) an employee of the Company or a subsidiary corporation.
In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee deems in its sole discretion to be similar
circumstances, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted in a manner to be
determined in the sole discretion of the Committee.
Notwithstanding anything to the contrary contained in this option, in the
event of a sale or a proposed sale of the majority of the stock or assets of the
Company or a proposed Change
III-2
<PAGE>
of Control, the Committee shall have the right to terminate this option upon
thirty (30) days prior written notice to you, subject to your right to exercise
such option to the extent vested prior to such termination.
Except for transfers to __________ under the terms set forth in the Plan,
this option is not transferable otherwise than by will or the laws of descent
and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option is
not exercisable until all the following events occur and during the following
periods of time:
(a) Until the Plan pursuant to which this option is granted is approved by
the shareholders of the Company in the manner prescribed by the Code and the
regulations thereunder;
(b) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Company may deem necessary or desirable; or
(c) During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more shares than the Company is legally entitled to issue or sell.
(d) Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Committee) (i) all federal, state and local income tax withholding required to
be withheld by the Company in connection with the option exercise and (ii) your
portion of other federal, state and local payroll and other taxes due in
connection with the option exercise.
The following two paragraphs shall be applicable if, on the date of exercise
of this option, the Common Stock to be purchased pursuant to such exercise has
not been registered under the Securities Act of 1933, as amended, and under
applicable state securities laws, and shall continue to be applicable for so
long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any of such shares, except as hereafter
permitted. The optionee further agrees that he will not at any time make any
offer, sale, transfer, pledge or other disposition of such Common Stock to be
issued hereunder without an effective
III-3
<PAGE>
registration statement under the Securities Act of 1933, as amended, and under
any applicable state securities laws or an opinion of counsel acceptable to the
Company to the effect that the proposed transaction will be exempt from such
registration. The optionee shall execute such instruments, representations,
acknowledgments and agreements as the Company may, in its sole discretion, deem
advisable to avoid any violation of federal, state, local or securities exchange
rule, regulation or law.
(b) The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under applicable state securities
laws. The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and
under any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be exempt from
such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and legend
set forth in the two immediately preceding paragraphs is to prevent violations
of the Securities Act of 1933, as amended, and any applicable state securities
laws.
It is the intention of the Company and you that this option shall not be an
"Incentive Stock Option" as that term is used in Section 422 of the Code and the
regulations thereunder.
Any dispute or disagreement between you and the Company with respect to any
portion of this option or its validity, construction, meaning, performance or
your rights hereunder shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association or its
successor, as amended from time to time. However, prior to submission to
arbitration you will attempt to resolve any disputes or disagreements with the
Company over this option amicably and informally, in good faith, for a period
not to exceed two weeks. Thereafter, the dispute or disagreement will be
submitted to arbitration. At any time prior to a decision from the arbitrator(s)
being rendered, you and the Company may resolve the dispute by settlement. You
and the Company shall equally share the costs charged by the American
Arbitration Association or its successor, but you and the Company shall
otherwise be solely responsible for your own respective counsel fees and
expenses. The decision of the arbitrator(s) shall be made in writing, setting
forth the award, the reasons for the decision and award and shall be binding and
conclusive on you and the Company. Further, neither you nor the Company shall
appeal any such award. Judgment of a court of competent jurisdiction may be
entered upon the award and may be enforced as such in accordance with the
provisions of the award.
This option shall be subject to the terms of the Plan in effect on the date
this option is granted, which terms are hereby incorporated herein by reference
and made a part hereof. In the event of any
III-4
<PAGE>
conflict between the terms of this option and the terms of the Plan in effect on
the date of this option, the terms of the Plan shall govern. This option
constitutes the entire understanding between the Company and you with respect to
the subject matter hereof and no amendment, supplement or waiver of this option,
in whole or in part, shall be binding upon the Company unless in writing and
signed by the President of the Company. This option and the performances of the
parties hereunder shall be construed in accordance with and governed by the laws
of the State of Delaware.
In consideration of the grant to you of this option, you hereby agree to the
confidentiality and non-interference provisions set forth in Attachment A
hereto.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions, including Attachment A hereto.
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.
By:_________________________________________
I hereby acknowledge receipt of a copy of the foregoing stock option and the
1999 Stock Option Plan and, having read them hereby signify my understanding of,
and my agreement with, its terms and conditions, including Attachment A hereto.
I accept this option in full satisfaction of any previous written or verbal
promises made to me by the Company with respect to option grants [except for
options granted to me pursuant to agreements dated ________].
______________________ _____________________________________________
(Date) (Signature)
III-5
<PAGE>
Attachment A to Stock Option
Confidentiality and Non-Interference.
------------------------------------
(a) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your term as a director of, or a
consultant to, the Company or at any time thereafter, except with the express
prior written consent of the Company or pursuant to the lawful order of any
judicial or administrative agency of government, directly or indirectly,
disclose, communicate or divulge to any individual or entity, or use for the
benefit of any individual or entity, any knowledge or information with respect
to the conduct or details of the Company's business which you, acting
reasonably, believe or should believe to be of a confidential nature and the
disclosure of which not to be in the Company's interest.
(b) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, during your term as a director of, or a
consultant to, the Company and for a period of two years thereafter, except with
the express prior written consent of the Company, directly or indirectly,
whether as employee, owner, partner, consultant, agent, director, officer,
shareholder or in any other capacity, engage in or assist any individual or
entity to engage in any act or action which you, acting reasonably, believe or
should believe would be harmful or inimical to the interests of the Company.
(c) You covenant and agree that, in consideration of the grant to you of
this stock option, you will not, for a period of two years after your term as a
director of, or a consultant to, the Company ceases for any reason whatsoever
(whether voluntary or not), except with the express prior written consent of the
Company, directly or indirectly, whether as employee, owner, partner,
consultant, agent, director, officer, shareholder or in any other capacity, for
your own account or for the benefit of any individual or entity, (i) solicit any
customer of the Company for business which would result in such customer
terminating their relationship with the Company; or (ii) solicit or induce any
individual or entity which is an employee of the Company to leave the Company or
to otherwise terminate their relationship with the Company.
(d) The parties agree that any breach by you of any of the covenants or
agreements contained in this Attachment A will result in irreparable injury to
the Company for which money damages could not adequately compensate the Company
and therefore, in the event of any such breach, the Company shall be entitled
(in addition to any other rights and remedies which it may have at law or in
equity) to have an injunction issued by any competent court enjoining and
restraining you and/or any other individual or entity involved therein from
continuing such breach. The existence of any claim or cause of action which you
may have against the Company or any other individual or entity shall not
constitute a defense or bar to the enforcement of such covenants. If the Company
is obliged to resort to the courts for the enforcement of any of the covenants
or agreements contained in this Attachment A, or if such covenants or agreements
are otherwise the subject of litigation between the parties, and the Company
prevails in such enforcement or litigation, then the term of such covenants and
agreements shall be extended for a period of time equal to the period of such
breach, which extension shall commence on the later of (a) the date on which the
original (unextended) term of such covenants and agreements is scheduled to
terminate or (b) the date of the final court order (without further right of
appeal) enforcing such covenant or agreement.
III-6
<PAGE>
(e) If any portion of the covenants or agreements contained in this
Attachment A, or the application hereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or the
application thereof shall not be affected and shall be given full force and
effect without regard to the invalid or enforceable portions to the fullest
extent possible. If any covenant or agreement in this Attachment A is held
unenforceable because of the area covered, the duration thereof, or the scope
thereof, then the court making such determination shall have the power to reduce
the area and/or duration and/or limit the scope thereof, and the covenant or
agreement shall then be enforceable in its reduced form.
(f) For purposes of this Attachment A, the term "the Company" shall include
the Company, any successor to the Company and all present and future direct and
indirect subsidiaries and affiliates of the Company.
III-7
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
American Business Financial Services, Inc.
Bala Cynwyd, PA
We hereby consent to the incorporation by reference in this Registration
Statement on the Form S-8 of our report dated September 9, 1999, relating to the
consolidated financial statements of American Business Financial Services, Inc.
and subsidiaries appearing in the Company's Annual Report on Form 10-K for the
year ended June 30, 1999.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
-------------------------------
BDO SEIDMAN, LLP
Philadelphia, PA
May 24, 2000
