<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
American Business Financial Services, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[LETTERHEAD OF ABFS]
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of American Business Financial Services, Inc. ("ABFS" or the
"Company") which will be held on December 19, 2000 at 2:00 P.M. (Eastern
Standard Time) at the offices of ABFS, 111 Presidential Blvd., Bala Cynwyd, PA
19004. The official notice of the Annual Meeting together with a proxy statement
and form of proxy are enclosed. Please give this information your careful
attention.
Whether or not you expect to attend the meeting in person, it is
important that your shares be voted at the meeting. I urge you to specify your
choices by marking the enclosed proxy and returning it promptly.
Sincerely,
/s/ Anthony J. Santilli
------------------------------------
Anthony J. Santilli
Chairman and Chief Executive Officer
<PAGE>
American Business Financial Services, Inc.
111 Presidential Blvd.
Bala Cynwyd, PA 19004
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held December 19, 2000
---------------------------
TO OUR STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Company"
or "ABFS") will be held on December 19, 2000 at 2:00 P.M. (Eastern Standard
Time), at the offices of ABFS, 111 Presidential Boulevard, Bala Cynwyd, PA 19004
for the following purposes:
1. To elect two Class I directors named herein to serve for the
terms described in the accompanying Proxy Statement and until
their successors are elected and qualified, as more fully
described in the accompanying Proxy Statement; and
2. To act upon such other business as may properly come before this
meeting or any postponement or adjournment thereof.
The Board of Directors is not aware of any other business to come
before the Annual Meeting.
The Board has fixed October 23, 2000 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting. Only
stockholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
/s/ Beverly Santilli
---------------------
Beverly Santilli
Secretary
Bala Cynwyd, Pennsylvania
October 30, 2000
<PAGE>
American Business Financial Services, Inc.
111 Presidential Blvd.
Bala Cynwyd, PA 19004
----------------------------
PROXY STATEMENT
----------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of American Business Financial Services, Inc. (the "Company" or
"ABFS") for use at the Annual Meeting of Stockholders (the "Annual Meeting") to
be held on December 19, 2000 at 2:00 P.M. (Eastern Standard Time) at the offices
of ABFS, 111 Presidential Boulevard, Bala Cynwyd, PA 19004 and at any
postponement or adjournment thereof. The approximate date on which this proxy
statement and the accompanying form of proxy will first be sent or given to
stockholders is October 30, 2000.
Sending in a signed proxy will not affect the stockholder's right to
attend the Annual Meeting and vote in person since the proxy is revocable. Any
stockholder giving a proxy has the power to revoke it by, among other methods,
delivering a later dated proxy or giving written notice to the Secretary of ABFS
at any time before the proxy is exercised.
The expense of the proxy solicitation will be borne by ABFS. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype by directors, officers or employees of ABFS and
its subsidiaries without additional compensation. Upon request by brokers,
dealers, banks or voting trustees, or their nominees who are record holders of
the Company's common stock, par value $0.001 per share (the "Common Stock"),
ABFS is required to pay the reasonable expenses incurred by such record holders
for mailing proxy materials and annual stockholder reports to any beneficial
owners of the Common Stock.
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Common Stock for election of the nominees for director hereinafter named.
The enclosed proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the Annual Meeting:
(i) matters which ABFS has not received notice at least 45 days prior to October
28, 2000, (ii) approval of the minutes of a prior meeting of stockholders, if
such approval does not amount to ratification of the action taken at the Annual
Meeting; (iii) the election of any person to any office for which a bona fide
nominee is unable to serve or for good cause will not serve; (iv) any proposal
omitted from this proxy statement and form of proxy pursuant to Rules 14a-8 or
14a-9 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); and (v) matters incident to the conduct of the Annual Meeting. In
connection with such matters, the persons named in the enclosed form of proxy
will vote in accordance with their best judgment.
<PAGE>
ABFS is not currently aware of any matters which will be brought before
the Annual Meeting (other than procedural matters) which are not referred to in
the enclosed notice of the Annual Meeting.
ABFS had 3,323,674 shares of Common Stock outstanding at the close of
business on October 23, 2000 (the "Record Date"). Stock price and share
information contained in this proxy statement has been adjusted to give effect
to a five percent stock dividend paid on September 27, 1999 (the "Stock
Dividend"). In order for a quorum to be present at the Annual Meeting, a
majority of the outstanding shares of ABFS' Common Stock as of the close of
business on the Record Date must be present in person or represented by proxy at
the Annual Meeting. All such shares that are present in person or represented by
proxy at the Annual Meeting will be counted in determining whether a quorum is
present, including abstentions and broker non-votes.
Each share of Common Stock outstanding is entitled to one vote on each
matter which may be brought before the Annual Meeting. The election of directors
will be determined by a plurality vote. The affirmative vote of a majority of
the shares present or represented by proxy is required to approve any other
business matters properly brought before the Annual Meeting. Under the Delaware
General Corporation Law, an abstention, withholding of authority to vote or
broker non-vote on any proposal, other than the election of directors, will have
the same legal effect as an "against" vote.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of October 23, 2000, the beneficial
ownership of ABFS' Common Stock: (i) by each person known by the Company to be
the beneficial owner of five percent or more of ABFS' outstanding Common Stock,
(ii) by each director and nominee for director of ABFS, (iii) by each executive
officer whose compensation exceeded $100,000 during fiscal 2000 (the "Named
Officers"), and (iv) by the directors, director nominees and executive officers
of ABFS as a group. Unless otherwise specified, all persons listed below have
sole voting and investment power with respect to their shares. The business
address of the officers of ABFS is that of ABFS.
2
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<TABLE>
<CAPTION>
Name, Position and Address Number of Shares Percentage
of Beneficial Owner Beneficially Owned(1) of Class
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anthony J. Santilli, Chairman, President, 990,046 (2) (3) 29.8%
Chief Executive Officer, Chief Operating
Officer and Director of ABFS
and Beverly Santilli, President of American Business
Credit and First Executive Vice President and Secretary of
ABFS
Michael DeLuca, Director of ABFS 229,722 (4) 6.9
Lux Products
6001 Commerce Park
Mt. Laurel, NJ 08054
Richard Kaufman, Director of ABFS 204,339 (5) 6.1
1126 Bryn Tyddyn Drive
Gladwyne, PA 19035
Leonard Becker, Director of ABFS 128,167 (6) 3.9
Becker Associates
111 Presidential Blvd., Suite 140
Bala Cynwyd, PA 19004
Harold E. Sussman, Director of ABFS 132,047 (7) 4.0
Colliers, Lanard & Axilbund
399 Market Street, 3rd Floor
Philadelphia, PA 19106
Jeffrey M. Ruben 23,425 (8) (9)
Executive Vice President and General
Counsel of ABFS
Albert W. Mandia 11,155 (10) (9)
Executive Vice President - Finance and Chief Financial
Officer of ABFS
Milton Riseman 4,000 (11) (9)
Chairman of Consumer Mortgage Group of ABFS
Ralph J. Hall 0 (12) (9)
Chairman of Business Alliance Group of ABFS
All executive officers and directors as a group 1,722,901(13) 51.9
(10 persons)
</TABLE>
--------------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC. Accordingly, they may include securities owned by
or for, among others, the wife and/or minor children or the individual and
any other relative who has the same home as such individual, as well as
3
<PAGE>
other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days after the date of this table. Beneficial ownership
may be disclaimed as to certain of the securities.
(2) The 920,896 shares of Common Stock are held directly by Mr. and Mrs.
Santilli as joint tenants with right of survivorship.
(3) Includes options to purchase 54,125 shares of Common Stock awarded to Mr.
Santilli pursuant to ABFS' Stock Option Plans, all of which are
exercisable within 60 days of the Record Date. Also includes options to
purchase 15,025 shares of Common Stock awarded to Mrs. Santilli pursuant
to the Company's Stock Option Plans, which are currently exercisable.
Excludes options to purchase 23,350 shares of Common Stock which are not
currently exercisable.
(4) Includes 175,597 shares of Common Stock held directly and options to
purchase 54,125 shares of Common Stock awarded pursuant to the Company's
Stock Option Plans which are currently exercisable.
(5) Includes 150,214 shares of Common Stock held directly and options to
purchase 54,125 shares of Common Stock awarded pursuant to the Company's
Stock Option Plans which are currently exercisable.
(6) Includes 97,667 shares of Common Stock held directly and options to
purchase 30,500 shares of Common Stock awarded pursuant to the Company's
Stock Option Plan for Non-Employee Directors which are currently
exercisable.
(7) Includes 77,922 shares of Common Stock held directly and options to
purchase 54, 125 shares of Common Stock awarded pursuant to the Company's
Stock Option Plans which are currently exercisable.
(8) Includes 8,400 shares of Common Stock held directly and options to
purchase 15,025 shares of Common Stock awarded to Mr. Ruben pursuant to
the Company's Stock Option Plans, which are currently exercisable.
Excludes options to purchase 23,350 shares of Common Stock which are not
currently exercisable.
(9) Less than one percent.
(10) Includes 1,000 shares of Common Stock held directly, 905 shares of Common
Stock held through the Company's 401(k) Plan, and options to purchase
9,250 shares of Common Stock awarded to Mr. Mandia pursuant to the
Company's Stock Option Plans which are currently exercisable. Excludes
options to purchase 23,875 shares of Common Stock which are not currently
exercisable.
(11) Includes options to purchase 4,000 shares of Common Stock awarded to Mr.
Riseman pursuant to the Company's Stock Option Plans which are currently
exercisable. Excludes options to purchase 16,000 shares of Common Stock
which are not currently exercisable.
(12) Excludes options to purchase 20,000 shares of Common Stock, which are not
currently exercisable.
(13) Includes options to purchase 294,830 shares of Common Stock awarded to
directors and officers of ABFS pursuant to the Company's Stock Option
Plans which are currently exercisable. Excludes options to purchase
103,950 shares of the Company's Common Stock awarded to directors and
officers of ABFS pursuant to the Company's Stock Option Plans which are
not currently exercisable.
4
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation
currently provides that the Board shall consist of not less than one nor more
than fifteen directors and that within these limits the number of directors
shall be as established by the Board. The Board has set the number of directors
at five or until their successors are elected and qualified. The Company's
Amended and Restated Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, having staggered terms of office,
which are as equal in number as possible. The members of each class of directors
are to be elected for a term of three years. The Company's Amended and Restated
Articles of Incorporation does not permit stockholders to cumulate their votes
for the election of directors.
The following table sets forth certain information, as of the Record
Date, regarding the Company's Board of Directors. The Board has nominated the
nominees named below, which nominees are currently serving as directors and have
indicated their willingness to continue serving as directors. The Board knows of
no reason why such nominees would be unable to serve as directors. If either of
the nominees should for any reason become unable to serve, then valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may designate or the Board may reduce the number of directors to
eliminate the vacancy.
<TABLE>
<CAPTION>
Position(s) Held Director Term to
Name Age(1) in the Company Since Expire
------------------------------------ ----------- -------------------------------- ---------------- -------------
Nominees
--------
<S> <C> <C> <C> <C>
Michael DeLuca..................... 69 Director 1993 2003
Harold E. Sussman.................. 75 Director 1993 2003
Directors Remaining in Office
------------------------------
Anthony J. Santilli................
58 Chairman, President, Chief 1993 2001
Executive Officer, Chief
Operating Officer and Director
Richard Kaufman.................... 58 Director 1993 2001
Leonard Becker..................... 77 Director 1993 2002
</TABLE>
------------------
(1) As of the Record Date.
5
<PAGE>
The principal occupation of each director of the Company and each of
the nominees for director is set forth below. All directors have held their
present position for at least five years unless otherwise indicated.
Anthony J. Santilli is the Chairman, President, Chief Executive Officer
and Chief Operating Officer of the Company and is an executive officer of its
subsidiaries. He has held the positions with the Company since early 1993 when
the Company became the parent company of American Business Credit, Inc. ("ABC")
and the positions with the subsidiaries since the formation of ABC in June 1988.
Prior to the founding of ABC in 1988, Mr. Santilli was Vice President
and Department Head of The Philadelphia Savings Fund Society ("PSFS"). As such,
Mr. Santilli was responsible for PSFS' commercial relationships with small and
middle market business customers. Mr. Santilli also served as the secretary of
PSFS' Asset/Liability Committee and Policy Committee from May 1983 to June 1985
and June 1986 to June 1987.
Leonard Becker is a self-employed real estate investor, and has been
since 1980. Mr. Becker was a former 50% owner and officer of the SBIC of the
Eastern States, Inc., a federally licensed small business corporation which made
medium term loans to small business concerns. For the last 30 years, Mr. Becker
has been heavily involved in the investment in and management of real estate and
has been involved in the ownership of numerous shopping centers, office
buildings and apartments. Mr. Becker formerly served as a director of Eagle
National Bank and Cabot Medical Corp.
Michael DeLuca is Chief Executive Officer and a Director of Lux
Products Corporation, a position he has held since 1991. Mr. DeLuca was
President, Chairman of the Board, Chief Executive Officer and a former owner of
Bradford-White Corporation, a manufacturer of plumbing products from 1982 to the
end of 1991. Presently, Mr. DeLuca serves as a Director of BWC-West, Inc., and
Bradford-White International.
Richard Kaufman is Chairman and Chief Executive Officer of Academy
Industries, Inc., a paper converting company, a position he has held since
December 1996. From 1982 until 1996, he was self-employed and involved in making
and managing various investments for his own benefit. From 1976 to 1982, Mr.
Kaufman was President and Chief Operating Officer of Morlan International, Inc.,
a cemetery and financial services conglomerate. From 1970 to 1976, Mr. Kaufman
served as a Director and Vice President-Real Estate and Human Services Division
of Texas International, Inc., an oil and gas conglomerate.
Harold E. Sussman is currently a principal in and Chairman of the Board
of the real estate firm of Colliers, Lanard & Axilbund, a major commercial and
industrial real estate brokerage and management firm in the Philadelphia area,
with which he has been associated since 1972.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES FOR DIRECTOR.
6
<PAGE>
Board, Committees and Attendance at Meetings
The Board of Directors of the Company held five meetings during the
fiscal year ended June 30, 2000. During fiscal 2000, no director attended fewer
than 75% of the aggregate of the total number of Board meetings and the total
number of meetings held by committees of the Board of Directors on which he
served. The following is a description of each of the committees of the Board of
Directors of the Company.
Audit Committee. The members of the Audit Committee are Messrs. DeLuca,
Sussman and Becker. The Audit Committee reviews the Company's audited financial
statements and makes recommendations to the Board concerning the Company's
accounting practices and policies and the selection of independent accountants.
The Audit Committee met three times during the year ended June 30, 2000.
Compensation Committee. The members of the Compensation Committee are
Messrs. Becker, DeLuca, Sussman and Kaufman. The Compensation Committee is
responsible for establishing salaries, bonuses and other compensation for the
executive officers and administers the Company's stock option plans. The
Compensation Committee met once during the year ended June 30, 2000.
Finance Committee. The members of the Finance Committee are Messrs.
Santilli, Becker, Kaufman and DeLuca. The Finance Committee monitors and makes
suggestions as to the interest rates paid by the Company on its debt
instruments, develops guidelines and sets policy relating to the amount and
maturities of investments to be accepted by the Company and performs cash
management functions. The Finance Committee met twice during the year ended June
30, 2000.
Executive Committee. The members of the Executive Committee are Messrs.
Santilli, Kaufman and Becker. The Executive Committee is empowered by the Board
to act in its stead between meetings of the Board. The Executive Committee met
three times during the year ended June 30, 2000.
Audit Committee Report
In September 2000, the Audit Committee met with management to review
and discuss the audited financial statements. The Audit Committee also conducted
discussions with its independent auditors, BDO Seidman LLP, regarding the
matters required by the Statement on Auditing Standards No. 61. As required by
Independence Standards Board Standard No. 1, "Independence Discussion with Audit
Committees," the Audit Committee has discussed with and received the required
written disclosures and a confirming letter from BDO Seidman LLP regarding its
independence and has discussed with BDO Seidman LLP its independence. Based upon
the review and discussions referred to above, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended June 30, 2000.
7
<PAGE>
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the Securities
and Exchange Commission that incorporates by reference all or any portion of
this proxy statement, except to the extent that the Company specifically
requests that the Report be specifically incorporated by reference.
The Audit Committee
Michael DeLuca Leonard Becker Harold E. Sussman
Compensation of Directors
General. During fiscal 2000, non-employee directors of the Company
received an annual stipend of $20,000, a monthly stipend of $1,500 and $1,500
for each committee meeting attended if such committee meeting is held on a day
other than the day of a board of directors meeting. Mr. Santilli, the only
director who is also an officer of the Company, does not receive any separate
fee for acting in his capacity as a director.
1995 Non-Employee Director Plan. The Company adopted the 1995 Stock
Option Plan for Non-Employee Directors (the "1995 Non-Employee Director Plan")
in order to attract, retain and motivate non-employee directors and to encourage
such individuals to increase their ownership interest in the Company. The 1995
Non-Employee Director Plan was adopted by the Board of Directors on September
12, 1995 and became effective upon its ratification by the stockholders at the
annual meeting held on May 31, 1996. Such plan provides for the award of options
to purchase up to 135,000 shares of the Company's Common Stock from the
Company's authorized but unissued shares. As of June 30, 2000, 25,000 shares
remain available for future issuances under this plan.
The 1995 Non-Employee Director Plan is administered by the Board of
Directors of the Company who shall have the exclusive right to determine the
amount and conditions applicable to the options issued pursuant to such plan.
Any non-employee director of the Company or its subsidiaries is eligible to
participate in such plan.
Options granted under the 1995 Non-Employee Director Plan are not
Incentive Stock Options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). Options that do not qualify as Incentive Stock
Options are referred to as Non-Qualified Stock Options in this document. The
exercise price of the stock options granted under the 1995 Non-Employee Director
Plan shall be equal to the fair market value of the Company's Common Stock on
the date of grant. Payment of the exercise price for options granted under the
1995 Non-Employee Director Plan may be made (i) in cash, or (ii) unless
prohibited by the Board of Directors in shares of Common Stock, or a combination
of cash and shares. Except in the event of death or disability of the director
as described below, all options granted pursuant to the 1995 Non-Employee
Director Plan are exercisable during the lifetime of the director only by the
director and may not be exercised more than ten years from the date of the
grant. Unless terminated earlier as provided in the 1995 Non-Employee Director
Plan, all unexercised options terminate three months following the date on which
an optionee ceases to be a director of the Company but in no event shall an
option be exercisable after ten years from the date of grant thereof. In the
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<PAGE>
event that a non-employee director dies or becomes disabled during the option
term, the director's executor or legal guardian, as applicable, may exercise
such option during the three month period following such event to the same
extent that the director was entitled to exercise such option prior to his death
or disability but in no event later than ten years from the date of grant.
In connection with the adoption of such plan, each non-employee
director of the Company received an option to purchase 22,500 shares (as
adjusted to 23,625 shares as a result of the Stock Dividend) of Common Stock at
an exercise price of $4.75 per share as adjusted as a result of the Stock
Dividend. Each new outside director elected subsequent to the adoption of the
1995 Non-Employee Director Plan would also receive an option to purchase 22,500
shares of Common Stock, subject to availability, at the market price on the date
of grant. In addition, on October 22, 1996, the Board of Directors awarded each
non-employee director an option to purchase 5,000 (as adjusted to 5,250 as a
result of the Stock Dividend) shares of the Company's Common Stock. Such options
had an exercise price of $16.86 as adjusted as a result of the Stock Dividend.
1997 Non-Employee Director Plan. The Company adopted the 1997 Stock
Option Plan for Non-Employee Directors (the "1997 Non-Employee Director Plan")
in order to attract, retain and motivate non-employee directors and to encourage
such individuals to increase their ownership interest in the Company. The 1997
Non-Employee Director Plan was adopted by the Board of Directors on September
30, 1997 and became effective upon its ratification by the stockholders at the
annual meeting held on December 16, 1997. Only directors of the Company who are
not full-time employees of the Company or its subsidiaries may receive awards
under the 1997 Non-Employee Stock Option Plan. The aggregate number of shares
which may be issued upon the exercise of options under the 1997 Non-Employee
Director Plan is 120,000 shares of the Company's Common Stock.
The 1997 Non-Employee Director Plan is administered by the Board of
Directors of the Company, or a committee appointed by the Company's Board of
Directors who shall adopt such rules and regulations for the conduct of its
business and administration of the 1997 Non-Employee Director Plan. References
to the term "Committee" in this section refer to either the Company's Board of
Directors or such committee.
Only Non-Qualified Stock Options may be awarded pursuant to the 1997
Non-Employee Director Plan. The exercise price of the stock options granted
under the 1997 Non-Employee Director Plan shall be equal to the fair market
value of the Company's Common Stock on the date of grant. Payment of the
exercise price for options granted under the 1997 Non-Employee Director Plan may
be made (i) in cash, or (ii) unless prohibited by the Board of Directors in
shares of Common Stock, or a combination of cash and shares. No option granted
under the 1997 Non-Employee Director Plan is assignable or transferable,
otherwise than by will or by the laws of descent and distribution. Except in the
event of death or disability, all options granted under the 1997 Non-Employee
Director Plan are exercisable during the lifetime of an optionee, and are
exercisable only by such optionee. In the event that a non-employee director
dies or becomes disabled during the option term, the director's executor or
legal guardian, as applicable, may exercise such option during the three month
period following such event to the same extent that the director was entitled to
exercise such option prior to his death or disability but in no event later than
ten years from the date of grant.
9
<PAGE>
Each non-employee director of the Company shall be automatically
granted an option to purchase 5,000 shares of the Company's Common Stock on
October 1st of each year commencing in fiscal 1997 for a period of three years.
Notwithstanding the foregoing, no award of options may be made pursuant to the
non-employee director plan unless such award is approved by the Board of
Directors prior to October 1st of each year. Options to purchase 10,500 shares
of Common Stock (as adjusted as a result of the Stock Dividend) were awarded to
each non-employee director pursuant to the 1997 Non-Employee Director Plan of
which options to purchase 5,250 shares expired unexercised.
Options granted pursuant to the 1997 Non-Employee Director Plan shall
be immediately exercisable following their grant. Unless terminated earlier by
the option's terms, options granted under the 1997 Non-Employee Director Plan
will expire three years after the date they are granted. All unexercised options
terminate three months after the optionee ceases to be a director of the Company
(whether by death, disability, resignation, removal, failure to be reelected or
otherwise, and regardless of whether the failure to continue as a director was
for cause or otherwise), but not later than three years after the date of option
grant.
Unless terminated earlier by the Company's Board of Directors, the 1997
Non-Employee Director Plan will remain in effect until all awards granted
pursuant to such plan have been satisfied by the issuance of shares, provided
that no new awards shall be granted under the 1997 Non-Employee Director Plan
more than three years from the date of adoption of such plan by the Board of
Directors. Pursuant to the terms of the plan, no more awards may be made under
this plan.
The Non-Employee Director Plans provide for adjustments to the number
of shares subject to outstanding options and to the exercise price of such
outstanding options in the discretion of the Board of Directors in event of a
declaration of stock dividend, stock split, merger, consolidation, split up,
combination, recapitalization, conversion or similar circumstances.
The Board of Directors may amend or supplement the Non-Employee
Director Plans in any way, or suspend or terminate such plan at any time, as
determined by the Board of Directors; provided, however, that such action shall
not affect options granted under the Non-Employee Director Plans prior to the
actual date on which such action occurred.
10
<PAGE>
Executive Compensation
The following table sets forth information regarding compensation paid
by the Company and its subsidiaries to the Chief Executive Officer and each
Named Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
-------------------------------------------- --------------------------------
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options/ All Other
Principal Position Year Salary Bonus Compensation(1) Award(s) SARS (#) Compensation
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony J. Santilli 2000 $548,438 $575,000 -- -- 10,000(2) $ 2,313(14)
Chairman, President, Chief 1999 421,875 512,344 -- -- 5,250(3) 2,000
Executive Officer, Chief 1998 356,250 579,030 -- -- 5,250(4) 2,000
Operating Officer and Director
of ABFS
Beverly Santilli 2000 $ 381,125 $400,000 -- -- 20,000(5) $ 2,313(14)
President, ABC and First 1999 281,252 341,562 -- -- 0 961
Executive 1998 237,503 374,908 -- -- 5,250(6) 2,000
Vice President and Secretary of
ABFS
Jeffrey M. Ruben 2000 $ 287,500 $150,000 -- -- 20,000(5) $ 2,313(14)
Executive Vice President and 1999 232,200 112,500 -- -- 0 2,018
General Counsel of ABFS 1998 152,083 71,250 -- -- 5,250(6) 1,979
Albert W. Mandia 2000 $ 340,000 $170,000 -- -- 20,000(5) $1,204
Executive Vice President - 1999 282,825 137,500 -- -- 0 0
Finance and Chief Financial 1998 22,917 -- -- -- 13,125(8) --
Officer of ABFS (7)
Ralph J. Hall 2000 $46,250(10) $0 -- -- 20,000(11) $0
Chairman of the Business Alliance
Group of ABFS (9)
Milton Riseman 2000 $335,000 $100,000 -- -- 6,875(13) $ 1,919
Chairman of the Consumer Mortgage
Group of ABFS (12)
</TABLE>
--------------------------
(1) Excludes perquisites and other personal benefits that do not exceed
$50,000 or 10% of each officer's total salary and bonus.
(2) Represents an option to purchase 10,000 shares of Common Stock granted to
Mr. Santilli in fiscal 2000 at an exercise price of $13.00 per share.
(3) Represents an option to purchase 5,250 shares of Common Stock (as adjusted
as a result of the Stock Dividend) granted to Mr. Santilli in fiscal 1999
at an exercise price of $14.29 per share as adjusted as a result of the
Stock Dividend.
(4) Represents an option to purchase 5,250 shares of Common Stock (as adjusted
as a result of the Stock Dividend) granted to Mr. Santilli in fiscal 1998
at an exercise price of $22.14 per share as adjusted as a result of the
Stock Dividend.
(5) Represents an option to purchase 20,000 shares of Common Stock granted at
an exercise price of $13.00 per share. Such option will vest at a rate of
20% per year over a five year period with the first portion vesting on
October 1, 2000, the first anniversary of the date of grant.
11
<PAGE>
(6) Represents an option to purchase 5,250 shares of Common Stock (as adjusted
as a result of the Stock Dividend) granted at an exercise price of $22.32
per share as adjusted as a result of the Stock Dividend. Such option will
vest at a rate of 20% per year over a five year period with the first
portion vesting on September 30,1999, the first anniversary of the date of
grant.
(7) Albert W. Mandia became an executive officer of the Company effective May
15, 1998 at an annual salary of $275,000.
(8) Represents an option to purchase 13,125 shares of Common Stock (as
adjusted as a result of the Stock Dividend) at an exercise price of $21.85
per share.
(9) Information is provided only for the year ended June 30, 2000 as such
individual was not an executive officer during the prior fiscal year.
(10) Ralph J. Hall became an executive officer of the Company effective May 15,
2000 at an annual salary of $370,000.
(11) Represents an option to purchase 20,000 shares of Common Stock granted to
Mr. Hall at an exercise price of $13.00 per share.
(12) Milton Riseman became an executive officer of the Company as of July 1,
2000 at an annual salary of $335,000.
(13) Represents an option to purchase 6,875 shares of Common Stock granted to
Riseman in fiscal 2000 at a stock price of $13.00 per share.
(14) Represents the Company's contribution to the 401(k) Plan on behalf of each
Named Officer.
Management Incentive Plan. During fiscal 1997, the Board of Directors
adopted a Management Incentive Plan for the benefit of certain officers of the
Company and its subsidiaries, including certain of the Company's executive
officers. The plan is intended to motivate management toward the achievement of
the Company's business goals and objectives by rewarding management in the form
of an annual cash bonus if certain established Company and individual goals are
attained. Officers eligible to participate in the plan include selected officers
at the level of Vice President and above. Bonuses are determined based upon the
achievement of qualitative and quantitative individual, departmental and Company
goals pursuant to an established formula under which the various factors are
weighted based upon each individual's position, years of service and
contribution to the overall performance of the Company or a subsidiary thereof.
The maximum annual bonus awarded can range from 15% to 50% of an individual's
annual base salary for all officers of the Company. Bonuses may be prorated to
the extent an eligible participant has not been employed by the Company for a
full 12 month period. The Management Incentive Plan, does not, however, include
the Chairman, First Executive Vice President or General Counsel as their annual
cash bonus is determined in accordance with the terms of their respective
employment agreements.
1993 Stock Option Plan. In 1993, the Company adopted, and the
stockholders approved, the Company's Amended and Restated Stock Option Plan (the
"1993 Stock Option Plan"). At June 30, 2000, options to purchase 308,250 shares
of Common Stock were issued and outstanding under the 1993 Stock Option Plan.
Officers and key employees of the Company who are in positions in which their
decisions, actions and counsel will have a significant impact upon the
profitability and success of the Company are eligible to receive options under
the 1993 Stock Option Plan. Options granted under the 1993 Stock Option Plan may
be Incentive Stock Options, or Non-Qualified Stock Options.
The 1993 Stock Option Plan is administered by the Compensation
Committee which is comprised of three or more members of the Board of Directors
of the Company, each of whom must meet certain requirements imposed by SEC
regulations and the Code. The Compensation Committee has the discretion to
interpret the provisions of the 1993 Stock Option Plan; to determine the persons
12
<PAGE>
to receive options under the 1993 Stock Option Plan; to determine the type of
awards to be made and the amount, size and terms of each such award, to
determine the time when awards shall be granted; and to make all other
determinations necessary or advisable for the administration of the 1993 Stock
Option Plan.
Options granted under the 1993 Stock Option Plan may be options
intended to qualify under Section 422 of the Code ("Incentive Stock Options"),
or Non-Qualified Stock Options. The 1993 Stock Option Plan requires the exercise
price of all stock options to be at least equal to the fair market value of the
Common Stock on the date of the grant. Except as set forth below, all options
granted pursuant to the 1993 Stock Option Plan are exercisable in accordance
with a vesting schedule which is established at the time of grant and may not be
exercised more than ten years from the date of the grant. No individual may
receive more than 75% of the shares reserved for issuance under the 1993 Stock
Option Plan.
The following rules apply to Incentive Stock Options awarded under the
Company's Stock Option Plans. In the case of Incentive Stock Options granted to
a stockholder owning, directly or indirectly, in excess of 10% of the Common
Stock, the option exercise price must be at least equal to 110% of the fair
market value of the Common Stock on the date of grant and such options may not
be exercised more than five years from the date of grant. Payment of the
exercise price for options granted under the 1993 Stock Option Plan may be made
in cash, shares of Common Stock, or a combination of both as determined by the
Compensation Committee. Additionally, the maximum aggregate fair market value of
the shares of Common Stock (determined when the Incentive Stock Option is
granted) with respect to which Incentive Stock Options are first exercisable by
an employee in any calendar year cannot exceed $100,000.
All options granted pursuant to the 1993 Stock Option Plan are
exercisable in accordance with a vesting schedule which was set by the
Compensation Committee at the time of grant. The Compensation Committee may in
its sole discretion, provide in an option agreement the circumstances under
which the option shall become immediately exercisable and may accelerate the
date on which all or any portion of an option may be exercised. All unexercised
Incentive Stock Options terminate three months following the date on which an
optionee's employment by the Company terminates, other than by reason of
disability or death. An exercisable option held by an optionee who dies or who
ceases to be employed by the Company because of disability may be exercised by
the employee or his representative within one year after the employee dies or
becomes disabled (but not later than the scheduled option termination date). No
option granted under the 1993 Stock Option Plan is assignable or transferable,
otherwise than by will or by the laws of descent and distribution. Except in the
event of death or disability, all options granted under the 1993 Stock Option
Plan are exercisable during the lifetime of an optionee, and are exercisable
only by such optionee.
The 1993 Stock Option Plan provides for adjustments to the number of
shares subject to outstanding options and to the exercise price of such
outstanding options in the discretion of the Compensation Committee in the event
of a declaration of a stock dividend, distribution or other offering of shares,
merger, consolidation, split up, combination, exchange, or recapitalization.
13
<PAGE>
The Compensation Committee may amend or terminate the 1993 Stock Option
Plan at any time except that the Compensation Committee may not amend the 1993
Stock Option Plan without stockholder approval to (i) increase the number of
shares which may be issued under the 1993 Stock Option Plan (other than pursuant
to Section 14 of the 1993 Stock Option Plan); (ii) change the minimum option
price (other than pursuant to Section 14 of the 1993 Stock Option Plan); (iii)
extend the term of the 1993 Stock Option Plan, or (iv) extend the period during
which an option may be exercised or changed. In addition, no amendment or
modification to the 1993 Stock Option Plan shall impair the rights of any
optionee under any previously granted award without the consent of such
optionee.
1999 Stock Option Plan. The Company adopted the 1999 Stock Option Plan
on September 22, 1999. 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 the 1999 Stock Option 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 the 1999 Stock Option Plan. The aggregate number of shares which
may be issued upon the exercise of options under the 1999 Stock Option Plan is
500,000 shares of the Company's Common Stock.
The Compensation Committee appointed by the Company's Board of
Directors administers the 1999 Stock Option Plan. Options granted under the 1999
Stock Option Plan may be Incentive Stock Options, or Non-Qualified Stock
Options. The exercise price for options issued under the 1999 Stock Option Plan
will be equal to the fair market value of the Company's Common Stock on the date
of grant of the option. The exercise price of an option may be paid in cash, the
delivery of previously owned shares of Common Stock of the Company having a fair
market value equal to the exercise price, or a combination of cash and
previously owned shares.
Since Incentive Stock Options may be granted pursuant to the 1999 Stock
Option Plan, grants under this plan are subject to special provisions applicable
to Incentive Stock Options under the Code which are described under the 1993
Stock Option Plan. The 1999 Stock Option Plan provides that the maximum number
of options which may be awarded to any single optionee under the 1999 Stock
Option Plan shall be no more than is equal to 90% of the shares reserved for
issuance under the 1999 Stock Option Plan. No Incentive Stock Option granted
under the 1999 Stock Option Plan is assignable or transferable, otherwise than
by will or by the laws of descent and distribution. Except in the event of death
or disability, any Incentive Stock Option granted under the 1999 Stock Option
Plan is exercisable only during the lifetime of an optionee, and is exercisable
only by such optionee. Awards of Non-Qualified Stock Options are not subject to
these special limitations.
All options granted pursuant to the 1999 Stock Option Plan are
exercisable in accordance with a vesting schedule (if any) which is set by the
Compensation Committee at the time of grant. The expiration date of an option is
also determined by the Compensation Committee at the time of the grant, but in
no event will an option be exercisable after the expiration of ten years from
the date of grant of the option. All unexercised options terminate three months
following the date on which an optionee's employment with the Company
terminates, other than by reason of disability or death. An exercisable option
held by an optionee who dies or who ceases to be employed by the Company because
14
<PAGE>
of disability may be exercised by the employee or his representative within one
year after the employee dies or becomes disabled (but not later than the
scheduled option termination date). The Compensation Committee may, in its sole
discretion, provide in an option agreement the circumstances under which the
option shall become immediately exercisable and may accelerate the date on which
all or any portion of an option may be exercised. Also, except as otherwise
provided by the Rules and Regulations of the SEC, the 1999 Stock Option Plan
provides that the Compensation Committee at the time of grant of a Non-Qualified
Stock Option may provide that the stock option is transferable to any "family
member" of the optionee by gift or qualified domestic relations order.
Unless terminated earlier by the Board of Directors, the 1999 Stock
Option Plan will remain in effect until all awards granted under 1999 Stock
Option Plan have been satisfied by the issuance of shares provided that no new
awards may be granted under such 1999 Stock Option Plan more than ten years from
of the date the 1999 Stock Option Plan was adopted by the Company.
Except as required pursuant to Rule 422 of the Code or any successor or
provision, the Board of Directors may amend or supplement the 1999 Stock Option
Plan, including the form of option agreement, in any way, or suspend or
terminate such plan at any time, as determined by the Board of Directors without
the approval of stockholders; provided, however, that such action shall not
affect options granted under the 1999 Stock Option Plan prior to the actual date
on which such action occurred.
15
<PAGE>
The following table sets forth information regarding options exercised
by the Named Officers during fiscal 2000 under the 1993 Stock Option Plan and
the 1999 Stock Option Plan and the option values of options held by such
individuals at fiscal year end.
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options / SARs at
Shares Options / SARs at Fiscal Fiscal Year End
Acquired on Value Year End Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable (1) Unexercisable (2)
------------------------------- ------------ ----------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
Anthony J. Santilli -- -- 49,375/0 $329,825/$0 (3)
Chairman, President, Chief
Executive Officer, Chief
Operating Officer and
Director of ABFS
Beverly Santilli -- -- 15,025/23,350 $0/$0 (4)
President of ABC and First
Executive Vice President and
Secretary of ABFS
Jeffrey M. Ruben -- -- 15,025/23,350 $0/$0 (5)
Executive Vice President and
General Counsel of ABFS
Albert W. Mandia
Executive Vice President - -- -- 9,250/23,875 $0/$0 (6)
Finance and Chief Financial
Officer of ABFS
Ralph J. Hall -- -- 0/20,000 $0/$0 (7)
Chairman of Business Alliance
Group of ABFS
-- -- 4,000/16,000 $0/$0 (8)
Milton Riseman
Chairman of Consumer Mortgage
Group of ABFS
</TABLE>
------------------
(1) Shares subject to options and exercise prices have been adjusted as a
result of the Stock Dividend.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options granted based upon the closing
sales price per share of $11.44 on June 30, 2000.
(3) The exercise prices of options to purchase 23,625 shares, 5,250 shares,
5,250 shares, 5,250 shares and 10,000 shares held by Mr. Santilli are
$4.76 per share, $16.91 per share, $22.14 per share, $14.29 per share and
$13.00 per share, respectively.
16
<PAGE>
(4) The exercise prices of the options to purchase 13,125 shares, 5,250 shares
and 20,000 shares held by Mrs. Santilli are $19.05 per share, $22.38 per
share and $13.00 per share, respectively. Such options vest at a rate of
20% of the initial award per year over a five year period commencing on
February 13, 1998, September 30, 1998 and October 1, 1999, respectively.
(5) The exercise prices of options to purchase 13,125 shares, 5,250 shares and
20,000 shares held by Mr. Ruben are $19.05 per share, $22.38 per share and
$13.00 per share, respectively. Such options vest at a rate of 20% of the
initial award per year over a five year period commencing on February 13,
1998, September 30, 1998 and October 1, 1999, respectively.
(6) The exercise price of the options to purchase 13,125 shares and 20,000
shares held by Mr. Mandia are $21.91 and $13.00, respectively. Such
options vest at a rate of 20% of the initial award per year over a five
year period commencing June 1, 1999 and October 1, 1999.
(7) The exercise price of the options to purchase 20,000 shares of Common
Stock held by Mr. Hall is $13.00. Such options vest at a rate of 20% per
year over a five year period commencing on May 24, 2000.
(8) The exercise price of the options to purchase 20,000 shares of Common
Stock held by Mr. Riseman is $13.00. Such options vest at a rate of 20%
per year over a five year period commencing on June 15, 1999.
17
<PAGE>
The following table sets forth information regarding options to
purchase shares of Common Stock granted to the Named Officers during fiscal
2000. The 1993 Stock Option Plan and the 1999 Stock Option Plan do not provide
for the grant of stock appreciation rights ("SARs").
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs Black Scholes
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Present
Name Granted (#)(1) Fiscal Year ($/sh) Expiration Date Value ($) (2)
--------------------------------- --------------- ------------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Anthony J. Santilli 10,000 4.9 % $ 13.00 9/30/2009 $4.17
Chairman, President, Chief
Executive Officer, Chief Operating
Officer and Director of ABFS
Beverly Santilli 20,000 9.8% 13.00 9/30/2009 4.17
President of ABC and First
Executive Vice President and
Secretary of ABFS
Jeffrey M. Ruben 20,000 9.8% 13.00 9/30/2009 4.17
Executive Vice President and General
Counsel of ABFS
Albert W. Mandia 20,000 9.8% 13.00 9/30/2009 4.17
Executive Vice President - Finance
and Chief Financial Officer of ABFS
Ralph J. Hall 20,000 9.8% 13.00 5/24/2010 4.75
Chairman of Business Alliance Group
of ABFS
Milton Riseman 6,875 3.4% 13.00 9/30/2009 4.17
Chairman of Consumer Mortgage Group
of ABFS
</TABLE>
----------------------------
(1) Such options have a term of ten years and vest over five years, except
for those of Mr. Santilli, which vested immediately upon grant.
(2) The Company utilized the Black-Scholes option pricing model. The
following Black-Scholes assumptions were utilized:
Risk-free interest rate 6.7%
Dividend yield 2.00%
Expected time of exercise 8 years
Market price at grant $11.75 to 12.625
Expected volatility 0.30
18
<PAGE>
Employment Agreements
On January 29, 1997, the Company entered into employment agreements
with each of Anthony J. Santilli, Beverly Santilli and Jeffrey M. Ruben pursuant
to which their initial annual base salaries were $300,000, $200,000 and
$125,000, respectively. The employment agreements with Mr. and Mrs. Santilli
were subsequently amended in October 1997. The salaries of Mr. and Mrs. Santilli
are subject to increase but not decrease, on an annual basis based upon the
Consumer Price Index and may also be increased from time to time by the
Compensation Committee for Mr. Santilli and from time to time for Mrs. Santilli
by Mr. Santilli based on the recommendations of the Compensation Committee. Mr.
Ruben's salary is subject to increase on an annual basis based upon the Consumer
Price Index and may also be increased from time to time by Mr. Santilli. Once
increased, Mr. Ruben's salary may not be decreased following a "change in
control" of the Company. The employment agreements are designed to assist the
Company in maintaining a stable and competent management team. Certain of the
terms of such agreements, including the amendments thereto, are described below.
The term of each agreement terminates upon the earlier of: (a) the
employee's death, permanent disability, termination of employment for cause,
voluntary resignation or seventieth birthday or (b) the later of: (i) the fifth
year anniversary of the execution of the agreement (or three years in the case
of Mr. Ruben); or (ii) five years from any anniversary date of an agreement (or
three years in the case of Mr. Ruben). Notwithstanding the preceding, if the
Company notifies: (a) Mr. or Mrs. Santilli of its intent to terminate their
respective employment without cause during the term of their respective
agreements, their agreements terminate five years from the date of the notice,
or (b) Mr. Ruben of its intent to terminate his employment without cause during
the term of his agreement, his agreement would terminate three years from the
date of such notice except that while Mr. Santilli is Chief Executive Officer of
the Company, the Company may terminate Mr. Ruben without cause upon payment to
Mr. Ruben of an amount equal to his then current annual base salary.
The employment agreements with each of Mr. and Mrs. Santilli also
provide for a cash payment to each employee equal to 299% of the last five
years' average annual compensation as calculated in accordance with Section 280G
of the Code, (in addition to any other payments and benefits due under the
agreements) in the event of a "change in control" (as defined in such
agreements), of the Company during the term of the agreements to which such
employee does not consent in such individual's capacity as a director or
stockholder of the Company. Mr. Ruben's agreement provides for a similar cash
payment only if his employment is terminated in the event of a "change in
control," which payment shall be in lieu of any additional payment which may be
due pursuant to the terms of his agreement. The agreements with Mr. Ruben and
Mrs. Santilli also provide that in the event of a "change in control" of the
Company, each employee's stock options shall vest in full (provided, that in the
case of Mrs. Santilli, she does not consent to such "change in control"). The
vesting of options and the receipt of other payments and benefits provided for
under the agreements upon a "change in control" of the Company may subject an
employee to the payment of an excise tax equal to 20% of all payments contingent
upon a "change in control" made in excess of the employee's base compensation.
Under the terms of the agreements, in such event the Company will pay the
employees an additional amount such that the net amount of payments retained by
the employees after the payment of any excise tax and any federal, state and
local income and employment taxes and the excise tax on the additional amount
19
<PAGE>
paid by the Company shall be equal to the total payments or benefits to be
received by the employees under their respective agreements. The Company is not
entitled to a deduction for any payments subject to the excise tax made to
employees pursuant to the terms of the agreements. For purposes of all of the
employment agreements, a "change in control" of the Company shall include: (a) a
change in the majority of the members of the Board of Directors within a
two-year period, excluding a change due to the voluntary retirement or death of
any board member (with respect to Mr. Ruben's agreement, no "change in control"
as a result of a change in the majority of the directors will be deemed to occur
under the terms of his agreement if Mr. Santilli remains Chairman of the Board),
or (b) a person or group of persons acting in concert (as defined in Section
13(a) of the Exchange Act) acquires beneficial ownership, within the meaning of
Rule 13(d)(3) of the Rules and Regulations of the Commission promulgated
pursuant to the Exchange Act, of a number of voting shares of the Company which
constitutes (i) 50% or more of the Company's shares voted in the election of
directors, or (ii) more than 25% of the Company's outstanding voting shares.
Based upon their current salaries, if Mr. and Mrs. Santilli and Mr. Ruben had
been terminated as of June 30, 2000 under circumstances entitling them to change
in control payments (excluding the value realized upon the exercise of options
or any excise tax and other payments described above, which amounts may vary
based upon a variety of factors, including but not limited to, the acquisition
price and the timing of the change in control), Mr. Santilli, Mrs. Santilli and
Mr. Ruben would have been entitled to receive a lump sum payment of
approximately $2,573,000, $1,619,000 and $797,000, respectively. In addition,
Mr. and Mrs. Santilli's agreements would continue to be in force for the
remainder of their term as described above.
Each employment agreement also prohibits the employee from divulging
confidential information regarding the Company's business to any other party and
prohibits the employee, during the term of the agreement, from engaging in a
business or being employed by a competitor of the Company without the prior
written consent of the Company. The Company may extend the non-compete
provisions of any of the agreements at its option (or in the case of Mr. Ruben,
with his consent) for up to one year following the termination of such agreement
upon payment to the employee of an amount equal to the highest annual salary and
bonus received by the employee during any fiscal year during the term of the
agreement; provided, however, that the non-compete provisions of Mr. Ruben's
contract shall be automatically extended for one year in the event he is
terminated without cause and receives a severance payment pursuant to the terms
of his agreement unless he returns a pro rata portion of the severance payment
received from the Company.
The employment agreements with Mr. and Mrs. Santilli also provide for
the payment of an annual cash bonus if the Company meets at least eighty percent
(80%) of the targets established by the Board. Mr. Ruben's agreement provides
that his participation in the Company's annual cash bonus plan is established by
the Board. Each employment agreement also provides the employees with certain
other benefits including an allowance for company car for each of Mr. and Mrs.
Santilli, payment of certain life, health (including the payment of health
insurance benefits for the family of Mr. and Mrs. Santilli) and disability
insurance payments and reimbursement for all reasonable expenses incurred by the
employee in the performance of his or her duties. In the event Mr. Santilli
becomes disabled (as defined in the agreement) during the term of his agreement,
such employment agreement also provides for the payment of monthly disability
20
<PAGE>
payments to him in an amount equal to his monthly salary prior to the disability
less any disability benefits received by Mr. Santilli pursuant to any disability
insurance paid for, in whole or in part, by the Company for the period of his
disability, but in no event beyond the date Mr. Santilli reaches 65 years of
age.
The Company entered into a letter agreement with Albert Mandia in
connection with his employment as Chief Financial Officer of the Company. The
agreement, as amended, provides that Mr. Mandia shall receive an initial annual
base salary of $275,000 and shall be eligible to receive a bonus of up to 50% of
his annual salary if the Company achieves certain goals as described in the
Management Incentive Plan. Mr. Mandia's annual base salary may be increased from
time to time by Mr. Santilli. The agreement also provides Mr. Mandia with
certain other benefits including a car allowance and life insurance. Mr. Mandia
also received options to purchase 13,125 shares (as adjusted as a result of the
Stock Dividend) of the Company's Common Stock. If Mr. Mandia's employment is
terminated for any reason, except for cause as defined in the letter agreement,
he will be entitled to receive one year's base salary. The Company and Mr.
Mandia are also parties to a supplementary letter agreement dated October 1,
1998. This supplementary letter agreement provides that Mr. Mandia shall be paid
a certain sum in the event his employment is terminated after a change in
control. In the event of a change in control, Mr. Mandia will receive his
highest annual salary for the twelve month period preceding the termination of
his employment and his highest annual bonus paid in any of the three fiscal
years preceding termination. A change is control is defined in the supplementary
letter agreement as: (a) a merger or consolidation except where the Company
would retain 75% voting power after giving effect to such merger or
consolidation or where an employee group (then existing management and
employees) would control 20% of the voting securities after giving effect to the
merger or consolidation; (b) all or substantially all of the assets of the
Company are sold or liquidated pursuant to a plan approved by the stockholders
of the Company except if an employee group would retain at least 20% of such
assets after giving effect to such plan; (c) the acquisition of 50% or more of
the voting securities of the Company then outstanding except if such acquisition
was by an employee group or pursuant to an agreement negotiated with the
Company; or (d) the majority of the Board of Directors is replaced during any 24
month period (excluding voluntary resignations and placements made by the Board
of Directors or an employee group). The payments are not payable under the
supplementary agreement if Mr. Mandia is terminated for cause, however he is
still entitled to the payments related to a change in control in the event that
he resigns within twenty four months of a change in control because of a
material reduction in his salary or benefits, a material change in his job
responsibilities, a request to relocate that would increase his commute by more
than 50 miles or the failure of the Company to expressly assume the
supplementary agreement after a change in control. If a change in control were
to occur as of June 30, 2000 and his employment terminated, Mr. Mandia would be
entitled to a payment of $510,000.
The Company entered into an employment agreement with Milton Riseman in
connection with his employment as Chairman, Consumer Mortgage Group. The
agreement provides that Mr. Riseman shall receive an annual salary of $335,000
per year and shall be eligible to receive a bonus of up to 50% of salary,
beginning fiscal 2000, if the Company achieves certain goals as described in the
Management Incentive Plan. The agreement also provides Mr. Riseman with a car
allowance and the customary benefits afforded Company employees.
21
<PAGE>
The Company entered into a letter agreement with Ralph Hall in
connection with his employment as Chairman, Business Alliance Group. The
agreement provides that Mr. Hall shall receive an annual salary of $370,000 per
year and shall be eligible to receive a bonus of up to 50% of salary, beginning
in fiscal 2001, if the Company achieves certain goals as described in the
Management Incentive Plan. The agreement also provides Mr. Hall with certain
other benefits including a car allowance and the customary benefits afforded
Company employees. Mr. Hall also received options to purchase 20,000 shares of
the Company's common stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee is comprised entirely of
non-employee members of the Board of Directors. The Compensation Committee
reviews and approves each of the elements of the executive compensation program.
Certain aspects of executive compensation are then submitted to the full Board
for review. The Compensation Committee recommends changes in compensation for
those individuals whose compensation is governed by employment agreements to the
Board of Directors for action and determines the compensation of officers whose
compensation is not governed by the terms of employment agreements.
Compensation Objectives. The Compensation Committee believes that
compensation for the executive officers should be determined in a manner which
emphasizes increasing value for stockholders. Based upon this objective, the
Compensation Committee's executive compensation program is designed to pay base
salaries to executives at levels that enable the Company to attract, motivate
and retain talented executives. In addition, the Compensation Committee may
provide annual cash bonuses as well as stock option grants as a component of
compensation and/or as a reward for performance based upon: (i) individual
performance, (ii) the Company's operating and financial results and departmental
goals, and (iii) other performance measures. Stock option grants which are made
at the fair market value of the Common Stock on the grant date are intended to
result in no reward if the stock price does not appreciate, but may provide
substantial rewards to executives as stockholders benefit from stock price
appreciation. Consistent with this overall philosophy, the Compensation
Committee's specific objectives are to:
o Align the financial interests of executive officers with those
of stockholders by providing equity-based incentives.
o Provide annual variable cash bonus compensation awards that
take into account the overall Company performance, individual
contributions and other factors that increase stockholder
value.
o Offer a total compensation program that takes into account the
compensation practices and financial performance of companies
in the Company's industry and other comparable companies as
well as the future needs.
o Emphasize performance-based and equity-based compensation for
officers at the level of vice president and above which reward
significantly upside performance that exceeds targeted goals.
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In particular, for the senior officers, the Compensation
Committee focuses more on overall Company performance, and
individual contributions to the achievement of established
departmental and Company goals and less on comparable
marketplace compensation comparisons in determining the amount
of equity based compensation and annual cash bonuses.
Components of Compensation. There are three major components of the
executive officer compensation: (i) base salary, (ii) annual cash bonus awards,
and (iii) equity-based incentive awards in the form of stock option grants.
Executive officers also receive other benefits including medical, disability and
life insurance and in certain cases family insurance coverage as well as a car
allowance.
The Compensation Committee uses its subjective judgment in determining
executive officer compensation levels and takes into account both qualitative
and quantitative factors. Except as described below, the Compensation Committee
does not generally assign specific weights to these factors. Among the factors
considered by the Compensation Committee are the recommendations of Mr.
Santilli, with respect to the compensation of other key executive officers
(other than Mrs. Santilli). However, the Compensation Committee makes the final
compensation decisions concerning all officers, other than those governed by
employment agreements that require full board approval or specific officer
approval. In these cases, the Compensation Committee makes recommendations on
compensation to the Board or officer with final approval authority.
In making compensation decisions, the Compensation Committee considers
compensation practices and financial performance of companies in the Company's
industry and other comparable companies. This information provides guidance and
a framework to the Compensation Committee, but the Compensation Committee does
not target total executive compensation or any component thereof to any
particular point within, or outside, the range of companies in the Company's
industry and other comparable companies' results. Specific compensation for
individual officers will vary from these levels as the result of subjective
factors considered by the Compensation Committee unrelated to compensation
practices of comparable companies. In making compensation decisions, the
Compensation Committee also receives assessments and advice regarding the
compensation practices from independent compensation consultants. The
Compensation Committee believes that the attraction and retention of superior
officers is essential to the Company's ability to compete effectively with
larger competitors and continue to implement its growth strategy.
Base Salary and Cash Bonuses. Each Company executive receives a base
salary, which when aggregated with their bonus, is intended to be competitive
with similarly situated executives in the Company's industry and executives at
other comparable companies. The Company targets base pay at the level required
to attract and retain highly qualified executives. In determining salaries, the
Compensation Committee also takes into account, among other factors, individual
experience and performance and specific needs particular to the Company. During
fiscal 1997, the Company entered into employment agreements with Messrs.
Santilli and Ruben and Mrs. Santilli. The base salaries of Mr. Santilli, Mrs.
Santilli, and Mr. Ruben are structured in accordance with their employment
agreements which provide that salaries of such individuals may be increased but
not decreased and provide for annual increases which may not be less than the
increase in the cost of living for the prior year. Mr. Ruben's agreement
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provides that Mr. Santilli shall determine the amount of any salary increases
over the cost of living increases. Mr. Santilli, with the recommendation of the
Compensation Committee, determines the compensation increases for the remaining
named officers.
In addition to base salary, officers at the level of vice president and
above are eligible to receive an annual cash bonus under the Management
Incentive Plan. The bonuses are based upon executive performance and certain
other factors. Bonuses are determined based upon the achievement of qualitative
and quantitative individual, departmental and company goals pursuant to an
established formula under which the various factors are weighted based upon each
individual's position, years of service and contribution to the overall
performance of the Company or a subsidiary thereof. The maximum annual bonus
awarded can range from 15% to 50% of an individual's annual salary for all
officers, other than Mr. Santilli and Mrs. Santilli. Mr. Mandia may receive an
annual bonus equal to up to 40% of his salary pursuant to the terms of his
employment agreement if the Company achieves certain performance goals described
in the Management Incentive Plan. Mr. Riseman and Mr. Hall may receive annual
bonuses up to 50% of their salaries pursuant to the terms of their employment
agreements, beginning in fiscal 2000 and fiscal 2001, respectively, if the
Company achieves specified goals set forth in the Management Incentive Plan.
The annual cash bonus payable to each of Mr. Santilli and Mrs. Santilli
under their respective employment agreements is as follows: (a) if 80% of the
targets established by the Board of Directors ("Targets") are met, a bonus of
50% of the individual's annual base salary, as adjusted, is payable under the
employment agreement; (b) if 100% of the Targets are reached, a bonus equal to
100% of the individual's annual base salary, as adjusted, is payable under the
agreement; or (c) if more than 100% of the Targets are achieved, the individual
will receive and additional 2.5% of their annual base salary for each 1% by
which the Targets are achieved. In no event, however, will the annual cash bonus
paid to Mr. Santilli or Mrs. Santilli exceed 225% of their annual base salary,
as adjusted and no bonuses are required to be paid in any year where the Company
fails to meet at least 80% of the Targets. The cash bonus program for Mr. Ruben
is established from time to time by the Compensation Committee. Currently, the
Compensation Committee has directed Mr. Ruben's annual cash bonus not exceed
fifty percent (50%) of Mr. Ruben's annual base salary at the time of the award
with the actual amount of the award subject to the discretion of Mr. Santilli.
The Company believes that bonuses paid to the Named Officers in fiscal
2000 are consistent with the Management Incentive Plan and the Targets. Under
the Management Incentive Plan, the amount of bonus and the performance criteria
vary with the position and role of the executive within the Company, although
bonuses are significantly tied to the Company's financial performance. Base
salary and cash bonuses of executives for fiscal 2000 were determined and paid
in accordance with the compensation objectives discussed in this report.
Stock Options. The Company believes that it is important for executives
to have an equity stake in the Company and, toward this end, makes stock option
grants to key executives from time to time. In making option awards, the
Compensation Committee reviews the level of awards granted to executives at
companies in the Company's industry and executives at other comparable
companies, the awards granted to other executives within the Company and the
individual officer's specific role and contribution at the Company. During
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<PAGE>
fiscal 2000, options to purchase 204,350 shares were granted to officers and
employees of the Company at exercise prices of $13.00 which represent at least
the fair market value of the Common Stock on the date of grant. Except for
options granted to the Chief Executive Officer which vest immediately, all other
options granted become exercisable over a five year period on each successive
anniversary of the date of grant and each vested portion is exercisable for five
years from date vested. Mr. Santilli was granted options to purchase 10,000
shares of Common Stock in fiscal 2000. Each of Mrs. Santilli, and Messrs. Ruben,
Mandia and Hall received options to purchase 20,000 shares of Common Stock. Mr.
Riseman was granted options to purchase 6,875 shares of Common Stock in fiscal
2000.
Chief Executive Officer Compensation. Mr. Santilli was the founder of
the Company and has served as its Chairman, President and Chief Executive
Officer since the Company's inception. On January 29, 1997, the Company entered
into an employment agreement with Mr. Santilli. The agreement established Mr.
Santilli's base salary at $300,000 and provided that his base salary may be
increased from time to time and once increased may not be decreased. Mr.
Santilli's base salary is automatically adjusted each year based upon the
increase in the cost of living as determined by the Consumer Price Index.
Pursuant to the terms of his employment agreement, Mr. Santilli's salary
increases above the cost of living increase require full Board approval. On an
annual basis, the Compensation Committee reviews and approves the compensation
of Mr. Santilli which is submitted to the Board of Directors for its approval.
For fiscal 2000, Mr. Santilli's base salary was $548,438. During fiscal 2000,
Mr. Santilli also received a cash bonus of $575,000 under his employment
agreement. The Compensation Committee believes that Mr. Santilli's compensation
is consistent with the compensation paid to Chief Executive Officers of
comparable, publicly-held finance companies, and other companies comparable to
the Company. In addition, Mr. Santilli is the largest stockholder of the
Company, and to the extent his performance as Chairman, President and Chief
Executive Officer translates into an increase in the stockholder value, all
stockholders share the benefits, including Mr. Santilli.
The Compensation Committee approved the compensation of Mr. Santilli
and the executive officers for fiscal 2000, following the principles and
procedures outlined in this report.
Policy on Deductibility of Compensation in Excess of $1.0 Million.
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held company, such as the Company, for certain
compensation exceeding $1.0 million paid during the calendar year to the chief
executive officer and the four other highest paid executive officers.
Notwithstanding the foregoing, certain performance-based compensation that has
been approved by stockholders is excluded from the $1 million limit if, among
other requirements, the compensation is payable only upon attainment of
pre-established, objective performance goals and the board committee that
establishes such goals consists only of "outside directors" (as defined for
purposes of Section 162(m)). All of the members of the Compensation Committee
qualify as "outside directors." As a result, the Company believes compensation
resulting from the exercise of options under the 1993 Stock Option Plan and the
1999 Stock Option Plan will be deductible. Any future employee incentive plan or
other form of performance based compensation subject to this rule which is
considered for adoption will be evaluated prior to any such adoption to
25
<PAGE>
determine the plan's anticipated compliance with the Section 162(m) limitation
and this policy.
The Compensation Committee.
Leonard Becker
Michael DeLuca
Richard Kaufman
Harold E. Sussman
Stock Performance Graph
The following graph shows a comparison of the cumulative total return
for the Company's Common Stock, the NASDAQ Stock Market and the New Peer Group
Index (defined below), assuming an investment of $100 in each on February 14,
1997, the date the Company's Common Stock began trading on the NASDAQ Stock
Market, and the reinvestment of all dividends. The data points used for the
performance graph are listed below.
The New Peer Group Index reflects the performance of the following
publicly traded companies in industries similar to that of the Company: Aames
Financial Corp., Advanta Corp., AMRESCO, Delta Financial Corp., Homegold
Financial, IMC Mortgage Co., New Century Financial Corp., OCWEN Financial Corp.
The Company revised the peer group utilized for purposes of this comparison
because it believes that the New Peer Group is more representative than the Old
Peer Group used in the prior year. In addition, some companies in the Old Peer
Group are no longer in existence.
26
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[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
------------------------------------- ----------- ---------- ----------- ---------- ----------
Performance Graph Data Points 2/14/97 6/30/97 6/30/98 6/30/99 6/30/00
------------------------------------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ABFS $ 100.00 $ 100.16 $ 110.46 $ 62.39 $ 62.64
------------------------------------- ----------- ---------- ----------- ---------- ----------
NASDAQ Stock Market $ 100.00 $ 105.79 $ 139.25 $ 200.30 $ 295.96
------------------------------------- ----------- ---------- ----------- ---------- ----------
New Peer Group Index $ 100.00 $ 85.28 $ 89.99 $ 28.83 $ 13.12
------------------------------------- ----------- ---------- ----------- --------- ----------
Old Peer Group $ 100.00 $ 85.28 $ 82.44 $ 15.37 $ 2.87
------------------------------------- ----------- ---------- ----------- ---------- ----------
</TABLE>
27
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company does not have any formal policy concerning the direct or
indirect pecuniary interest of any of its officers, directors, security holders
or affiliates in any investment to be acquired or disposed of by the Company or
in any transaction to which the Company is a party or has an interest. The
Company will not enter into any such transactions unless approved by a majority
of the entire Board of Directors, not including any interested director.
On September 29, 1995, the Company made a loan in the amount of
$600,032 to Anthony J. Santilli, its President and Chief Executive Officer. The
proceeds of the loan were used to exercise options to purchase 225,012 shares of
Common Stock of the Company at a price of $2.67 per share. The loan bears
interest at the rate of 6.46% with interest due annually or at maturity and the
principal due September 2005. The loan is secured by the stock purchased with
the proceeds of the loan as well as additional shares of the Company's Common
Stock owned by Mr. Santilli such that the value of the collateral is equal to
twice the outstanding loan amount.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors, executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with, except for the late filing of a Form 4
by Leonard Becker.
STOCKHOLDER PROPOSALS
The deadline for providing the Company timely notice of any stockholder
proposal to be submitted outside of the Rule 14a-8 process for consideration at
the Company's 2001 Annual Meeting of Stockholders (the "2001 Meeting") will be
September 15, 2001. As to all such matters which the Company does not have
notice on or prior to September 15, 2001, discretionary authority shall be
granted to the persons designated in the Company's proxy related to the 2001
Meeting to vote on such proposal. In addition, the Rule 14a-8 requirements
applicable to inclusion of stockholder proposals in the Company's proxy
materials related to the 2001 Meeting require that a stockholder proposal
regarding the 2001 Meeting must be submitted to the Company at its office
located at Bala Pointe Office Centre, 111 Presidential Blvd., Bala Cynwyd,
Pennsylvania, 19004, by July 3, 2001 to receive consideration for inclusion in
the Company's 2001 proxy materials. Any such proposal must also comply with the
proxy rules under the Exchange Act, including Rule 14a-8.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, the Board of
Directors has selected BDO Seidman, LLP to be the Company's independent
certified public accountants for fiscal 2001.
A representative of BDO Seidman, LLP is expected to be present at the
Annual Meeting to have the opportunity to make a statement if he or she desires
to do so and to be available to respond to appropriate questions.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Stockholders for the year ended June 30, 2000 (the "Annual Report"). The Annual
Report contains the Company's audited financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2000 REQUIRED TO
BE FILED WITH THE SEC WITHOUT CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, BY
SENDING A WRITTEN REQUEST THEREFOR TO:
Jeffrey M. Ruben
Executive Vice President and General Counsel
111 Presidential Blvd.
Bala Cynwyd, PA 19004
By Order of the Board of Directors,
/s/ Beverly Santilli
---------------------------
Beverly Santilli, Secretary
29
<PAGE>
REVOCABLE PROXY
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
Annual Meeting of Stockholders - December 19, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ABFS
The undersigned hereby constitutes and appoints Anthony J. Santilli and
Jeffrey M. Ruben and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution for and in the name, place and
stead of the undersigned to appear at the Annual Meeting of Stockholders (the
"Annual Meeting") of American Business Financial Services, Inc. ("ABFS"), to be
held on December 19, 2000, and at any postponement or adjournment thereof, and
to vote all of the shares of Common Stock of ABFS which the undersigned is
entitled to vote, with all the powers and authority the undersigned would
possess if personally present. The undersigned directs this proxy to vote as
indicated on the reverse side of this proxy card:
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAMED HEREIN INTEND TO
VOTE FOR THE ELECTION OF THE NOMINEES. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR, IF
ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE ABFS PROXY STATEMENT.
(Continued and to be signed on reverse side)
<PAGE>
Please mark your votes as in this example. X
-
The Board of Directors recommends a VOTE "FOR" the election of the
nominees listed below.
I. The election as directors of all of the following nominees for the term of
three years (except as marked to the contrary):
MICHAEL DELUCA HAROLD E. SUSSMAN
/ / FOR / / VOTE WITHHELD
To withhold authority to vote for an individual nominee, write that
nominee's name on the space provided below.
--------------------------------------------
II. In their discretion, the proxies are authorized to vote on any other
business as may properly come before the Annual Meeting or any postponement
or adjournment thereof.
Should the undersigned be present and choose to vote at the Annual
Meeting or at any adjournments or postponements thereof, and after notification
to the Secretary of ABFS at the Annual Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
terminated and shall have no force and effect. This proxy may also be revoked by
filing a written notice of revocation with the Secretary or by duly executing a
proxy bearing a later date.
The undersigned hereby acknowledges receipt of the ABFS 2000 Annual
Report to Shareholders, Notice of the ABFS Annual Meeting and the Proxy
Statement relating thereto.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
_______________________ _______________________ DATE:______________, 2000
Signature(s) (Please date this Proxy)
NOTE: It would be helpful if you signed your name exactly as it appears on
your stock certificate(s), indicating any official position or
representative capacity. If shares are registered in more than one
name, all owners should sign.
Please date, sign and mail your
proxy card back as soon as possible.
Annual Meeting of Stockholders
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
December 19, 2000
