<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1996
ASTA FUNDING, INC.
(Exact name of Registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-26906 22-3388607
(Commission File Number) (IRS Employer Identification No.)
210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-567-5648
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>2
Item 2. Acquisition or Disposition of Assets.
On September 30, 1996, Asta Funding, Inc. (the "Registrant")
and its wholly-owned subsidiary, Asta Auto Receivables Company ("Asta")
consummated a securitization of automobile loan receivables. The transaction
involved the private placement by Asta of pass-through certificates evidencing
ownership interests in a trust. The assets of the trust are primarily comprised
of motor vehicle retail installment sale contracts having an aggregate principal
balance of $23,967,605 as of September 1, 1996. The contracts were transferred
by the Registrant to Asta which subsequently transferred such assets to the
trust. The Registrant received net proceeds of $22,627,030 from the sale of the
contracts to Asta. The difference between the sale price of the contracts and
the amount of net proceeds was deemed a contribution of capital by the
Registrant to Asta.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibits
1. Pooling and Servicing Agreement dated as of
September 1, 1996 among Asta Auto Receivables Company, the Registrant and
Harris Trust and Savings Bank.
2. Certificate Purchase Agreement dated
September 30, 1996 between Greenwich Capital Markets, Inc. and Asta Auto
Receivables Company.
3. Purchase Agreement dated as of September 1,
1996 between Asta Auto Receivables Company and the Registrant.
<PAGE>3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ASTA FUNDING, INC.
Dated: October 15, 1996 By: /s/ Gary Stern
--------------
Gary Stern
President
<PAGE>1
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
by and among
ASTA AUTO RECEIVABLES COMPANY
as Seller
ASTA FUNDING, INC.
as Servicer
and
HARRIS TRUST AND SAVINGS BANK
as Trustee, Custodian and Backup Servicer
$23,967,605
ASTA AUTO TRUST 1996-1
Automobile Receivable Pass-Through Certificates
<PAGE>2
TABLE OF CONTENTS
Page
ARTICLE I
CREATION OF THE TRUST
Section 1.1 Creation of the Trust . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS
Section 2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Usage of Terms . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.3 References . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
THE RECEIVABLES
Section 3.1 Conveyance of Receivables . . . . . . . . . . . . . . . . 16
Section 3.2 Transfer Intended as Sale; Precautionary Security
Interest . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.3 Acceptance by Trustee . . . . . . . . . . . . . . . . . . 17
Section 3.4 Representations and Warranties of Seller . . . . . . . . . 18
Section 3.5 Repurchase Upon Breach . . . . . . . . . . . . . . . . . . 23
Section 3.6 Custody of Receivable Files. . . . . . . . . . . . . . . . 23
Section 3.7 Duties of Custodian. . . . . . . . . . . . . . . . . . . . 26
Section 3.8 Instructions; Authority to Act . . . . . . . . . . . . . . 26
Section 3.9 Custodian's Indemnification . . . . . . . . . . . . . . . 26
Section 3.10 Effective Period and Termination . . . . . . . . . . . . . 27
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.1 Duties of Servicer . . . . . . . . . . . . . . . . . . . . 27
Section 4.2 Collection and Allocation of Receivable Payments . . . . . 27
Section 4.3 Realization Upon Receivables . . . . . . . . . . . . . . . 28
Section 4.4 Physical Damage Insurance; Other Insurance . . . . . . . . 29
Section 4.5 Maintenance of Security Interests in Financed Vehicles . . 29
Section 4.6 Covenants of Servicer . . . . . . . . . . . . . . . . . . 29
Section 4.7 Purchase of Receivables Upon Breach . . . . . . . . . . . 29
Section 4.8 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.9 Servicer's Certificate . . . . . . . . . . . . . . . . . . 30
Section 4.10 Annual Statement as to Compliance; Notice of Default . . . 30
<PAGE>3
Section 4.11 Annual Independent Certified Public Accountant's
Report . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.12 Servicer Expenses . . . . . . . . . . . . . . . . . . . . 32
Section 4.13 Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . . . . 32
Section 4.14 Preparation and Verification of Servicer's Certificate . 32
Section 4.15 Errors and Omissions . . . . . . . . . . . . . . . . . . 33
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 5.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.2 Collections . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.3 Application of Collections . . . . . . . . . . . . . . . . 34
Section 5.4 Additional Deposits . . . . . . . . . . . . . . . . . . . 34
Section 5.5 Distributions . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.6 Reserve Account, Priority of Distributions . . . . . . . . 36
Section 5.7 Simple Interest Differential Account . . . . . . . . . . . 37
Section 5.8 Statements to Certificateholders; Tax Returns . . . . . . 38
Section 5.9 Reliance on Information from the Servicer . . . . . . . . 40
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates . . . . . . . . . . . . . . . . . . . . . 41
Section 6.2 Appointment of Paying Agent . . . . . . . . . . . . . . . 41
Section 6.3 Authenticating Agent . . . . . . . . . . . . . . . . . . . 42
Section 6.4 Authentication of Certificates . . . . . . . . . . . . . . 43
Section 6.5 Registration of Transfer and Exchange of Certificates . . 43
Section 6.6 Mutilated, Destroyed, Lost, or Stolen Certificates . . . . 45
Section 6.7 Persons Deemed Owners . . . . . . . . . . . . . . . . . . 46
Section 6.8 Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.9 Maintenance of Office or Agency . . . . . . . . . . . . . 46
ARTICLE VII
THE SELLER
Section 7.1 Representations of Seller . . . . . . . . . . . . . . . . 46
Section 7.2 Liability of Seller; Indemnities . . . . . . . . . . . . . 49
Section 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . . . 50
<PAGE>4
Section 7.4 Limitation on Liability of Seller and Others . . . . . . . 51
Section 7.5 Seller May Own Certificates . . . . . . . . . . . . . . . 51
Section 7.6 Covenants of the Seller . . . . . . . . . . . . . . . . . 51
Section 7.7 Enforcement by Trustee . . . . . . . . . . . . . . . . . . 52
Section 7.8 No Bankruptcy Petition . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII
THE SERVICER
Section 8.1 Representations of Servicer . . . . . . . . . . . . . . . 54
Section 8.2 Indemnities of Servicer . . . . . . . . . . . . . . . . . 56
Section 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Backup Servicer. . . . . . . 57
Section 8.4 Limitation on Liability of Servicer and Others. . . . . . 58
Section 8.5 Servicer and Backup Servicer Not to Resign . . . . . . . . 58
ARTICLE IX
DEFAULT
Section 9.1 Events of Default. . . . . . . . . . . . . . . . . . . . . 58
Section 9.2 Appointment of Successor. . . . . . . . . . . . . . . . . 61
Section 9.3 Notification to Certificateholders. . . . . . . . . . . . 62
Section 9.4 Action Upon Certain Failures of the Servicer . . . . . . . 62
Section 9.5 Waiver of Past Defaults . . . . . . . . . . . . . . . . . 62
ARTICLE X
THE TRUSTEE
Section 10.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . 62
Section 10.2 Trustee's Certificate . . . . . . . . . . . . . . . . . . 64
Section 10.3 Certain Matters Affecting Trustee . . . . . . . . . . . . 64
Section 10.4 Trustee Not Liable for Certificates or Receivables . . . 66
Section 10.5 Trustee May Own Certificates . . . . . . . . . . . . . . 67
Section 10.6 Indemnity of Trustee . . . . . . . . . . . . . . . . . . 67
Section 10.7 Eligibility Requirements for Trustee . . . . . . . . . . 67
Section 10.8 Resignation or Removal of Trustee . . . . . . . . . . . . 68
Section 10.9 Successor Trustee . . . . . . . . . . . . . . . . . . . . 68
Section 10.10 Merger or Consolidation of Trustee . . . . . . . . . . . 69
Section 10.11 Appointment of Co-Trustee or Separate Trustee . . . . . 69
Section 10.12 Representations and Warranties of Trustee . . . . . . . 70
Section 10.13 No Bankruptcy Petition . . . . . . . . . . . . . . . . . 70
<PAGE>5
Section 10.14 Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.15 Trustee Not Liable for Losses . . . . . . . . . . . . . 71
Section 10.16 Application of Article X . . . . . . . . . . . . . . . . 71
ARTICLE XI
TERMINATION
Section 11.1 Termination of the Trust . . . . . . . . . . . . . . . . 71
Section 11.2 Optional Purchase of all Receivables . . . . . . . . . . 72
Section 11.3 Rights upon the Occurrence of Certain Events . . . . . . 72
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 12.2 Protection of Title to Trust . . . . . . . . . . . . . . 74
Section 12.3 Limitation on Rights of Certificateholders . . . . . . . 77
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.6 Severability of Provisions . . . . . . . . . . . . . . . 78
Section 12.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.8 Certificates Nonassessable and Fully Paid . . . . . . . . 78
Section 12.9 Nonpetition Covenant . . . . . . . . . . . . . . . . . . 78
Section 12.10 Third Party Beneficiaries . . . . . . . . . . . . . . . 79
Section 12.11 Agent for Service . . . . . . . . . . . . . . . . . . . 79
Section 12.12 Tax Treatment . . . . . . . . . . . . . . . . . . . . . 79
Section 12.13 Seller's Partnership Interest . . . . . . . . . . . . . 79
Section 12.14 Liabilities . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.15 Withholding . . . . . . . . . . . . . . . . . . . . . . 80
<PAGE>6
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Class C Certificate
Exhibit D-1 Form of Trustee's Certificate (Seller)
Exhibit D-2 Form of Trustee's Certificate (Servicer)
Exhibit E Form of Servicer's Certificate
Exhibit F List of Lock-Boxes, Lock-Box Accounts and Lock-Box Banks
Exhibit G Form of Investor Representation Letter
Exhibit H Underwriting Guidelines
Exhibit I VSI Insurance Policy
Exhibit J Form of Request for Release of Documents
Exhibit K Form of Certificate of Non-Foreign Status
SCHEDULES
Schedule 1 Schedule of Receivables
Schedule 2 Location of Receivable Files
Schedule 3 Fees of Trustee, Custodian and Backup Servicer
Schedule 4 Schedule of Incomplete File Loans
<PAGE>7
This POOLING AND SERVICING AGREEMENT, dated as of September 1, 1996,
is made with respect to the formation of the ASTA AUTO TRUST 1996-1 among ASTA
AUTO RECEIVABLES COMPANY, a Delaware corporation, as Seller (in such capacity,
the "Seller"), ASTA FUNDING, INC., a Delaware corporation, as Servicer (in
such capacity, the "Servicer"), and HARRIS TRUST AND SAVINGS BANK, an Illinois
banking corporation, as Trustee, Custodian and Backup Servicer (in such
capacities, the "Trustee," "Custodian" and "Backup Servicer," respectively).
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF THE TRUST
Section 1.1 Creation of the Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the Asta Auto
Trust 1996-1.
ARTICLE II
DEFINITIONS
Section 2.1 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Actuarial Receivable" means any Receivable that provides for the
amortization of the amount financed under the Receivable over a series of
fixed, level monthly payments. Each monthly payment, including the monthly
installment representing the final payment on the Receivable, consists of an
amount of interest equal to 1/12th of the stated APR multiplied by the unpaid
principal balance of the loan, and an amount of principal equal to the
remainder of such monthly payment.
"Affiliate" of any Person means any Person who directly or
indirectly controls, is controlled by or is under common control with such
person. For purposes of this definition of "Affiliate," the term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
<PAGE>8
"Agreement" means this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Amount Financed" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
rate of finance charges stated in the Receivable.
"Asta Funding" means Asta Funding, Inc., a Delaware corporation, and
its successors and assigns.
"Assumption Date" shall have the meaning specified in Section
9.2(a).
"Authenticating Agent" has the meaning assigned to such term in
Section 6.3.
"Available Interest Distribution Amount" means, for any Distribution
Date, the sum (without duplication) of the following amounts received with
respect to the preceding Collection Period: (i) that portion of all
collections on Receivables attributable to interest, (ii) Liquidation Proceeds
attributable to interest with respect to the Receivables that became
Liquidated Receivables during the Collection Period in accordance with the
Servicer's customary servicing procedures; (iii) proceeds attributable to
interest from recoveries with respect to Liquidated Receivables that became
Liquidated Receivables during prior Collection Periods; and (iv) the Purchase
Amount of each Receivable that became a Purchased Receivable during the
related Collection Period to the extent attributable to accrued interest on
such Receivable; provided, however, that in calculating the Available Interest
Distribution Amount, all payments and proceeds (including Liquidation
Proceeds) of any Purchased Receivables the principal portion of the Purchase
Amount of which has been included in the Available Principal Distribution
Amount in a prior Collection Period will be excluded.
"Available Principal Distribution Amount" means, for any
Distribution Date, the sum (without duplication) of the following amounts
received with respect to the preceding Collection Period: (i) that portion of
all collections on Receivables allocable to principal; (ii) Liquidation
Proceeds attributable to principal with respect to Receivables that became
Liquidated Receivables during the Collection Period in accordance with the
Servicer's customary servicing procedures; (iii) proceeds attributable to
principal from recoveries with respect to Liquidated Receivables that became
Liquidated Receivables during prior Collection Periods; (iv) the amount, if
any, to be withdrawn from the Simple Interest Differential Account with
<PAGE>9
respect to such Distribution Date; and (v) to the extent attributable to
principal, the Purchase Amount of each Receivable that became a Purchased
Receivable during the related Collection Period; provided, however, that, in
calculating the Available Principal Distribution Amount, all payments and
proceeds (including Liquidation Proceeds) of any Purchased Receivables the
principal portion of the Purchase Amount of which has been included in the
Available Principal Distribution Amount in a prior Collection Period that are
allocable to principal will be excluded.
"Backup Servicer" means Harris Trust and Savings Bank in its
capacity as Backup Servicer pursuant to the terms of the Servicing Assumption
Agreement.
"Backup Servicing Fee" means the monthly fee payable to the Backup
Servicer for services rendered during the respective Collection Period in the
amount specified in Schedule 3 hereto.
"Backup Servicing Officer" means any person whose name appears on a
list of Backup Servicing Officers delivered to the Trustee, as the same may be
amended from time to time.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, the State in which
the Corporate Trust Office is located or the State in which the executive
offices of the Servicer are located shall be authorized or obligated by law,
executive order or governmental decree to be closed.
"Certificate Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Certificate
registered in the name of the Seller or the Servicer, or any Affiliate of
either of them, shall not be taken into account in determining whether the
requisite percentage necessary to effect any such consent, waiver, request, or
demand shall have been obtained.
"Certificate Register" and "Certificate Registrar" mean,
respectively, the register maintained, and the Certificate Registrar
appointed, pursuant to Section 6.5.
"Certificates" means, collectively, the Class A Certificates, the
Class B Certificates and the Class C Certificates.
<PAGE>10
"Class" means all Certificates having the same order of priority and
bearing the same alphabetical designation ("A", "B" or "C").
"Class A Certificate" means any one of the Certificates executed by
the Trust and authenticated by the Trustee in substantially the form set forth
in Exhibit A hereto.
"Class A Certificate Balance" shall initially equal the Class A
Original Class Certificate Balance and thereafter shall equal the Class A
Original Class Certificate Balance, reduced by all amounts previously
distributed to Class A Certificateholders and allocable to principal.
"Class A Distributable Amount" means, with respect to each
Distribution Date, the sum of the Class A Interest Distributable Amount and
the Class A Interest Carryover Shortfall for the prior Distribution Date and
the Class A Principal Distributable Amount and the Class A Principal Carryover
Shortfall for the prior Distribution Date.
"Class A Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Interest Distributable Amount for
such Distribution Date and any outstanding Class A Interest Carryover
Shortfall from the preceding Distribution Date plus interest on such
outstanding Class A Interest Carryover Shortfall, to the extent permitted by
law, at the Class A Rate from such preceding Distribution Date through the
current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over the amount of interest that the
Holders of the Class A Certificates actually received on such current
Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution
Date, 30 days of interest at the Class A Rate on the Class A Certificate
Balance as of the close of business on the last day of the related Collection
Period (calculated on the basis of a 360-day year consisting of twelve 30-day
months).
"Class A Percentage" shall be 92%.
"Class A Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Class A Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date over the amount of principal that the Holders of
the Class A Certificates actually received on such current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the Class A Percentage of the Principal Distributable
Amount.
<PAGE>11
"Class A Rate" means 7.60% of interest per annum.
"Class B Certificate" means any one of the Certificates executed by
the Trust and authenticated by the Trustee in substantially the form set forth
in Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Original Class Certificate Balance and, thereafter, shall equal the Class B
Original Class Certificate Balance, reduced by all amounts previously
distributed to Class B Certificateholders and allocable to principal.
"Class B Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Interest Distributable Amount and
the Class B Interest Carryover Shortfall for the prior Distribution Date and
the Class A Principal Distributable Amount and the Class A Principal Carryover
Shortfall for the prior Distribution Date.
"Class B Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Interest Distributable Amount for
such Distribution Date and any outstanding Class B Interest Carryover
Shortfall from the preceding Distribution Date plus interest on such
outstanding Class B Interest Carryover Shortfall, to the extent permitted by
law, at the Class B Rate from such preceding Distribution Date through the
current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over the amount of interest that the
Holders of the Class B Certificates actually received on such current
Distribution Date.
"Class B Interest Distributable Amount" means, for any Distribution
Date, 30 days of interest at the Class B Rate on the Class B Certificate
Balance as of the close of business on the last day of the related Collection
Period (calculated on the basis of a 360-day year consisting of twelve 30-day
months).
"Class B Percentage" shall be 4%.
"Class B Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Class B Principal Distributable
Amount and any outstanding Class B Principal Carryover Shortfall on the
preceding Distribution Date over the amount of principal that the Holders of
the Class B Certificates actually received on such current Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the Class B Percentage of the Principal Distributable
Amount.
"Class B Rate" means 8.60% of interest per annum.
<PAGE>12
"Class Certificate Balance" means, with respect to the applicable
Class of Certificates, the Class A Certificate Balance, the Class B
Certificate Balance or the Class C Certificate Balance.
"Class C Certificate" means any one of the Certificates executed by
the Trust and authenticated by the Trustee in substantially the form set forth
in Exhibit C hereto.
"Class C Certificate Balance" shall equal, initially, the Class C
Original Class Certificate Balance and thereafter shall equal the Class C
Original Class Certificate Balance, reduced by all amounts previously
distributed to Class C Certificateholders and allocable to principal.
"Class C Distributable Amount" means, with respect to each
Distribution Date, the sum of the Class C Interest Distributable Amount and
the Class C Interest Carryover Shortfall for the prior Distribution Date and
the Class C Principal Distributable Amount and the Class C Principal Carryover
Shortfall for the prior Distribution Date.
"Class C Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class C Interest Distributable Amount for
such Distribution Date and any outstanding Class C Interest Carryover
Shortfall from the preceding Distribution Date plus interest on such
outstanding Class C Interest Carryover Shortfall, to the extent permitted by
law, at the Class C Rate from such preceding Distribution Date through the
current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over the amount of interest that the
Holders of the Class C Certificates actually received on such current
Distribution Date.
"Class C Interest Distributable Amount" means, for any Distribution
Date, 30 days of interest at the Class C Rate on the Class C Certificate
Balance as of the close of business on the last day of the related Collection
Period (calculated on the basis of a 360-day year consisting of twelve 30-day
months).
"Class C Percentage" shall be 4%.
"Class C Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Class C Principal Distributable
Amount and any outstanding Class C Principal Carryover Shortfall from the
preceding Distribution Date over the amount of principal that the Holders of
the Class C Certificates actually received on such current Distribution Date.
<PAGE>13
"Class C Principal Distributable Amount" means, with respect to any
Distribution Date, the Class C Percentage of the Principal Distributable
Amount.
"Class C Rate" means 12.70% of interest per annum.
"Class Factor" as of the close of business on the last day of the
Collection Period, means with respect to each Class of Certificates, a seven-
digit decimal figure equal to the Class Certificate Balance of such Class as
of such date divided by the Original Class Certificate Balance thereof. The
Class Factor will be 1.0000000 as of the Cutoff Date; thereafter, the Class
Factor will decline to reflect reductions in the Class Certificate Balance.
"Closing Date" means September 30, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Collection Period" means a calendar month. Any amount stated "as
of the close of business on the last day of a Collection Period" shall give
effect to the following calculations as determined at the end of the day on
such last day: (a) all applications of collections, and (b) all
distributions. A Collection Period with respect to a Distribution Date will
be the calendar month preceding the month in which such Distribution Date
occurs.
"Corporate Trust Office" at the date hereof is located at:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust Administration
Telecopy No.: (312) 461-3525
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount
equal to the difference between the Principal Balance of such Receivable
immediately prior to the issuance of such order and the Principal Balance of
such Receivable as so reduced or the net present value (using as the discount
rate, the lower of the contract rate or the rate of interest specified by the
court in such order) of the
<PAGE>14
Scheduled Payments as so modified or restructured by such order. A Cram Down
Loss shall be deemed to have occurred on the date of issuance of such order.
"Cross-Acceleration Amount" shall have the meaning specified in
Section 9.1(e).
"Custodian" means the Person acting as custodian of the Trust
pursuant to Section 3.6 of this Agreement, the successor in interest and any
successor Custodian.
"Custodian Fees" means the monthly fee payable on each Distribution
Date to the Custodian for services rendered during the respective Collection
Period, in the amount specified in Schedule 3 hereto.
"Cutoff Date" shall be the opening of business on September 1, 1996,
unless the applicable Receivable was purchased by Asta Funding on or after
September 1, 1996 and prior to the close of business on September 10, 1996, in
which case the Cutoff Date for such Receivable shall be its origination date;
provided, however, that the Cutoff Date for Qualified Substitute Loans shall
be the date of substitution.
"Dealer" means the dealer who financed and sold a Financed Vehicle
and with respect to which Asta Funding purchased the respective Receivable and
sold it to the Seller.
"Determination Date" means the earlier of (i) the ninth Business Day
of each calendar month and (ii) the fourth Business Day preceding the related
Distribution Date.
"Distribution Date" means, for each Collection Period, the 20th of
the following month, or if the 20th is not a Business Day, the next following
Business Day, commencing on October 21, 1996.
"Eligible Account" means (a) a segregated account or accounts
maintained with a depository institution or trust company whose long-term
unsecured debt obligations are rated at least A by the Rating Agency at the
time of any deposit therein, or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution subject to
regulations regarding fiduciary funds on deposit substantially similar to 12
C.F.R. Section 9.10(b).
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
<PAGE>15
(i) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have a short-
term credit rating from the Rating Agency in the highest investment category
granted thereby;
(iii) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from the Rating Agency in
the highest investment category granted thereby;
(iv) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(v) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment
by, the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described in clause (b) or
(ii) a depository institution or trust company whose commercial paper or other
short term unsecured debt obligations are rated not less than the highest
investment category granted by the Rating Agency;
(vi) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a short-term rating, at the time of
such investment, from both Standard & Poor's and Moody's in the highest
investment category granted thereby; and
(vii) any other investment that is approved in writing by the
Rating Agency.
Any Eligible Investments may be purchased by or through the Trustee
or any of its Affiliates.
<PAGE>16
"ERISA" shall have the meaning specified in Section 6.5(c)(iv).
"Escrow Account" means the account designated as such, established
and maintained pursuant to Section 3.6.
"Event of Default" means an event set forth in Section 9.1.
"Excess Interest" means the amount payable to the Seller on each
Distribution Date pursuant to Section 5.5(c)(ix).
"Final Scheduled Distribution Date" shall be the April 20, 2002
Distribution Date.
"Financed Vehicle" means a new or used automobile, van or light-duty
truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Incomplete File Loans" shall have the meaning set forth in Section
3.6 hereof.
"Insurance Policy" means, with respect to a Receivable, any
comprehensive, collision, fire and theft insurance policy required to be
maintained by the Obligor with respect to the Financed Vehicle, the VSI
Insurance Policy and any credit life, credit accident and credit disability
insurance policies or certificates of insurance maintained by the Obligor or
the Seller relating to the Financed Vehicles or the Obligors.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
which attach to the respective Receivable by operation of law or unpaid
storage or repair charges that may arise after the Closing Date.
"Liquidated Receivable" means any Receivable (i) that has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) as
to which all or any part of a Scheduled Payment in an amount of more than five
percent (5%) of such Scheduled Payment is 120 days or more delinquent as of
the end of a Collection Period or (iii) with respect to which proceeds have
been received that, in the Servicer's good faith judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Liquidation Proceeds" means the monies collected from whatever
source on a Liquidated Receivable during the respective Collection Period in
which such Receivable became a Liquidated Receivable, net of the reasonable
costs of liquidation and any amounts required by law to be remitted to the
Obligor.
<PAGE>17
"Lock-Box" means the post office box or other mailing location in
the name of the Trustee identified in Exhibit F hereto maintained by the Lock-
Box Bank for the purpose of receiving payments by Obligors for subsequent
deposit into a Lock-Box Account.
"Lock-Box Account" means the account, which shall be an Eligible
Account established and maintained pursuant to Section 5.1 hereof.
"Lock-Box Bank" means, as of any date, the bank set forth in Exhibit
F hereto (including its successors) and any other bank that becomes a Lock-Box
Bank pursuant to Section 5.1 and that holds, or may in the future hold, the
Lock-Box Account for depositing payments made by Obligors.
"Majority Certificateholders" means the Holders of Certificates
evidencing not less than 51% of the Voting Interests thereof.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net Losses" means, with respect to a Collection Period, the sum of
(a) the sum of the Principal Balances of Receivables that became Liquidated
Receivables during such Collection Period minus Liquidation Proceeds and (b)
Cram Down Losses incurred during such Collection Period minus (c) recoveries
received during such Collection Period on Liquidated Receivables of prior
Collection Periods minus (d) recoveries, if any, received during such
Collection Period on Cram Down Losses incurred during such Collection Period
and during prior Collection Periods.
"Obligor" on a Receivable means the purchaser or co-purchasers of
the Financed Vehicle or any other Person who owes payments under the
Receivable.
"Officer's Certificate" means a certificate signed by the chief
executive officer, chief financial officer, the president, any vice president,
the treasurer, the controller of Asta Funding, the Seller, or the Servicer, as
appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or Servicer, which counsel shall be
reasonably acceptable to the Trustee and which opinion shall be acceptable to
the Trustee in form and substance. Such Opinion of Counsel may rely with
respect to matters of fact on an Officer's Certificate or certificates of
public officials.
"Optional Purchase Percentage" shall be 10% or less.
<PAGE>18
"Original Pool Balance" means the Pool Balance as of the Cutoff
Date, which is $23,967,605.26.
"Original Class Certificate Balance" means, with respect to the
Class A Certificates, $22,050,197; with respect to the Class B Certificates,
$958,704; and, with respect to the Class C Certificates, $958,704.
"Paying Agent" shall have the meaning set forth in Section 6.2.
"Person" means any individual, corporation, limited liability
company, estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"Pool Balance" as of the close of business on the last day of a
Collection Period, the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"Pool Factor" as of the close of business on the last day of a
Collection Period, means a seven-digit decimal figure equal to the Pool
Balance on such day divided by the Original Pool Balance. The Pool Factor
will be 1.0000000 as of the Cutoff Date; thereafter, the Pool Factor will
decline to reflect reductions in the Pool Balance.
"Principal Balance" of a Receivable, as of the close of business on
the last day of a Collection Period, means the Amount Financed minus the sum
of (i) that portion of all Scheduled Payments made by or on behalf of the
Obligor on or prior to such day allocable to principal using the Simple
Interest Method; (ii) any refunded portion of any Insurance Policy premiums or
other amounts included in the Amount Financed; (iii) any payment of the
Purchase Amount with respect to the Receivable allocable to principal; (iv)
any prepayment applied to reduce the Principal Balance of the Receivable; and
(v) any Cram Down Loss or Simple Interest Differential Adjustment in respect
of such Receivable (without duplication of amounts included above).
"Principal Distributable Amount" means, (i) the amount of all
Scheduled Payments collected during the related Collection Period and
allocated to principal under the Simple Interest Method; (ii) the principal
portion of all prepayments (whether in whole or in part) on Receivables
(without duplication of amounts included in clause (i) above and clause (iv)
below) received during the related Collection Period including refunded
portions of Insurance Policy premiums or other amounts included in the Amount
Financed; (iii) the Principal Balance of each Receivable
<PAGE>19
that became a Purchased Receivable during the related Collection Period
(without duplication of amounts referred to in clauses (i) and (ii) above or
clause (iv) below); (iv) the Principal Balance of each Receivable that became
a Liquidated Receivable during the related Collection Period (without
duplication of the amounts included in clause (i) and (ii) above); (v) the
aggregate amount of Cram Down Losses that shall have occurred during the
related Collection Period (without duplication of amounts included above); and
(vi) the aggregate amount of Simple Interest Differential Adjustments that
shall have occurred during the related Collection Period; provided, however,
that, in calculating the Principal Distributable Amount, all payments and
proceeds of any Purchased Receivable the Purchase Amount of which has been
included in the Principal Distributable Amount in a prior Collection Period
shall be excluded.
"Program" shall have the meaning set forth in Section 4.11.
"Purchase Agreement" means the agreement dated as of September 1,
1996 relating to the purchase of the Receivables by the Seller from Asta
Funding.
"Purchase Amount" equals, as of any date of determination, the
Principal Balance plus interest thereon at the respective APR to the last day
of the month of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close
of business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 or by Asta Funding pursuant to Section 3.5.
"Qualified Substitute Receivable" means a Receivable substituted by
Asta Funding for an Incomplete File Loan, which such Qualified Substitute
Receivable must, on the date of substitution, as confirmed in an Officers'
Certificate delivered to the Trustee, (i) have a current Principal Balance not
in excess of the current Principal Balance of such Incomplete File Loan (the
amount of any shortfall in Principal Balance to be deposited by the Trustee
from the Escrow Account into the Collection Account in the month of such
substitution as a collection of principal of such Receivable); (ii) have an
APR not more than 1% per annum lower than the weighted average APR of the
Receivables in the Trust as of the Closing Date; (iii) have a scheduled
maturity which, together with all prior substituted Receivables, does not
cause the weighted average remaining term of the Receivables, to be more than
one month longer or one month shorter than that of the Receivables in the
Trust as of the Closing Date; (iv) not have an Obligor in a State that will
cause the geographic concentration of Obligors in such State with respect to
all Receivables, including all prior substituted
<PAGE>20
Receivables, to be 2% greater than the concentration of Obligors in such State
with respect to the Receivables in the Trust on the Closing Date and (v)
comply with each representation and warranty set forth in Section 3.4 hereof.
"Rating Agency" means Duff & Phelps Credit Rating Co., or its
successor, as the statistical credit rating agency that rated the Certificates
at the request of the Seller at the time of the initial issuance of the
Certificates. If such organization or successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization or other comparable Person designated by the Seller, notice of
which designation shall be given to the Trustee.
"Realized Losses" means the excess of the Principal Balance of any
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal received in the Collection Period in which the Receivable became a
Liquidated Receivable.
"Receivable" means any retail installment sale contract set forth on
Schedule 1 hereto (which Schedule 1 may be in the form of microfiche), each of
which shall be Actuarial Receivables; provided, however, that the portion of a
payment allocable to interest and the portion allocable to principal with
respect to each Receivable shall be determined herein according to the Simple
Interest Method.
"Receivable Files" means the documents specified in Section 3.6(a).
"Record Date" means, with respect to each Distribution Date, the
last Business Day of the immediately preceding calendar month, except that the
Record Date with respect to the first Distribution Date will be the Closing
Date.
"Repossession Inventory Rate" means, with respect to a Collection
Period, the fraction, expressed as a percentage, equal to the sum of the
aggregate outstanding Principal Balance of Receivables as to which the related
Financed Vehicles have been repossessed but not yet liquidated by the Servicer
as of the end of such Collection Period divided by the Pool Balance as of the
end of such Collection Period.
"Required Deposit Rating" shall be a rating of an institution which
has a short term deposit rating of at least D-1+ by the Rating Agency and a
long term deposit rating of at least AA by the Rating Agency or in the event
such institution is not rated by the Rating Agency, an equivalent rating from
each of Standard & Poor's and Moody's.
<PAGE>21
"Reserve Account" means the account, which shall be an Eligible
Account, established and maintained pursuant to Section 5.6 hereof.
"Reserve Account Balance" means the amount on deposit in the Reserve
Account as of any date of determination.
"Reserve Account Draw" shall have the meaning set forth in Section
5.6(f).
"Reserve Account Initial Deposit" means $958,704.21, an amount equal
to 4% of the Original Pool Balance as of the Cutoff Date, which amount shall
be deposited in the Reserve Account on the Closing Date pursuant to Section
5.6(b) hereof.
"Reserve Account Property" shall have the meaning set forth in
Section 5.6(d).
"Reserve Requirement" means, as of any Distribution Date, after
giving effect to distributions of principal on such date, an amount equal to
the greatest of the following provisions that are applicable as of such date:
(i) eight percent (8%) of the Pool Balance;
(ii) twelve percent (12%) of the Pool Balance if, as of the end of
any Collection Period, the 60 Day + Delinquency Rate is
greater than 2.25% of the Pool Balance, in which event the
Reserve Requirement shall remain at 12% of the Pool Balance
until such time as the 60 Day + Delinquency Rate equals or
drops below 2.25% for three (3) consecutive subsequent
Collection Periods at which point the Reserve Requirement will
be reduced to eight percent (8%) (the Reserve Requirement may
be reduced only one time under this provision);
(iii) twelve percent (12%) of the Pool Balance if the Repossession
Inventory Rate is greater than 4.50% of the Pool Balance, in
which event the Reserve Requirement shall remain at 12% of
the Pool Balance until such time as the Repossession
Inventory Rate equals or drops below 4.50% for three (3)
consecutive subsequent Collection Periods at which point the
Reserve Requirement will be reduced to eight percent (8%)
(the Reserve Requirement may be reduced only one time under
this provision);
<PAGE>22
(iv) twelve percent (12%) of the Pool Balance if the cumulative Net
Losses exceed seven percent (7%) of the Original Pool Balance;
provided, however, that if the cumulative Net Losses exceed
ten percent (10%) of the Original Pool Balance, the Reserve
Account Requirement shall equal the Pool Balance; or
(v) the lesser of 2% of the Original Pool Balance and the then
current Pool Balance.
"Scheduled Payment" on a Receivable means that payment required to
be made by the Obligor during the respective Collection Period which, together
with all other scheduled payments thereon, will be sufficient to amortize the
Principal Balance under the actuarial method set forth in the related Contract
over the term of the Receivable and to provide interest at the APR.
"Securities Act" shall have the meaning set forth in Section 6.5(b).
"Seller" means Asta Auto Receivables Company as the seller of the
Receivables hereunder, and each successor to the Seller (in the same capacity)
pursuant to Section 7.3.
"Seller Partnership Interest" means at any time of measurement,
ownership of (i) Certificates representing at least 1% of the outstanding
Principal Balance of each Class of the Certificates, (ii) the Excess Interest,
(iii) the Seller's interest in the Reserve Account and (iv) the Simple
Interest Differential Account.
"Servicer" means Asta Funding as the servicer of the Receivables
that were purchased by the Seller, and each successor to Asta Funding (in the
same capacity) pursuant to Section 8.3(a) or 9.2.
"Servicer's Certificate" means a certificate completed and executed
by a Servicing Officer or Backup Servicing Officer pursuant to Section 4.9,
substantially in the form of Exhibit E hereto.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of September 1, 1996, among Asta Funding, the Backup
Servicer and the Trustee, as the same may be amended or supplemented in
accordance with its terms.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.8.
<PAGE>23
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered to the Trustee, as the same may be amended from
time to time.
"Servicing Rate" shall be 3.00% per annum.
"Simple Interest Differential Account" means the account, which
shall be an Eligible Account, established and maintained pursuant to Section
5.7 hereof.
"Simple Interest Differential Adjustment" shall have the meaning
specified in Section 5.7.
"Simple Interest Method" means the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by a fraction the
numerator of which is the number of days elapsed since the preceding payment
was made and the denominator of which is 365.
"60 Day + Delinquency Rate" means, with respect to any Collection
Period, the fraction, expressed as a percentage, equal to the sum of the
aggregate outstanding Principal Balance of Receivables (other than the
aggregate Principal Balance of Liquidated Receivables and repossessed
vehicles) as to which Obligors are more than 60 days past due in making
Scheduled Payments as of the end of such Collection Period divided by the Pool
Balance as of the end of such Collection Period. For purposes of the
foregoing definition only, a Scheduled Payment shall be considered to be made
if 95% or more of such Scheduled Payment is made.
"Standard & Poor's" means Standard & Poor's Ratings Services or its
successor.
"State" means any state of the United States of America, or the
District of Columbia.
"Successor Bank" shall have the meaning set forth in Section 5.1.
"Total Available Distribution Amount" shall mean, for each
Distribution Date, the sum of the Available Interest Distribution Amount and
the Available Principal Distribution Amount.
"Trust" means the Asta Auto Trust 1996-1 created by this Agreement,
the estate of which shall consist of the Trust Property.
<PAGE>24
"Trust Property" shall have the meaning set forth in Section 3.2.
"Trustee" means the Person acting as Trustee hereunder, its
successor in interest, and any successor Trustee appointed pursuant to Section
10.8.
"Trustee Fee" means the monthly fee payable on each Distribution
Date to the Trustee for services rendered during the respective Collection
Period, in the amount specified in Schedule 3 hereto.
"Trustee Officer" means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust
officer, or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"Trustee's Certificate" means a certificate completed and executed
by the Trustee by a Trustee Officer pursuant to Section 10.2, substantially in
the form of, in the case of assignment to Asta Funding, Exhibit D-1 hereto and
in the case of an assignment to the Servicer, Exhibit D-2 hereto.
"UCC" means the Uniform Commercial Code, as amended from time to
time, as in effect in the States of New Jersey and Illinois and in any other
State where the filing of a financing statement is required to perfect an
interest in the Receivables and the proceeds thereof or in any other specified
jurisdiction.
"Underwriting Guidelines" means the Underwriting guidelines of Asta
Funding with respect to each of its programs, copies of which are attached
hereto as Exhibit H.
"Voting Interests" means the portion of the voting interests of all
the Certificates that is allocated to any Certificate for purposes of the
voting provisions of this Agreement. Voting Interests shall be allocated to
the Class A, Class B and Class C Certificates, respectively, in proportion to
their respective Class Certificate Balances. Voting Interests allocated to
each Class of Certificates shall be allocated among the Certificates within
each such Class in proportion to their respective Certificate Balances. Where
the Voting Interests are relevant in determining whether the vote of the
requisite percentage of the Certificateholders necessary to effect any
consent, waiver, request or demand shall have been obtained, the Voting
Interests shall be deemed to be reduced by the amount equal to the Voting
Interests (without giving effect to this
<PAGE>25
provision) represented by the interests evidenced by any Certificate
registered in the name of the Servicer, Asta Funding, the Seller or any Person
known to a Trustee Officer to be an Affiliate of any such foregoing entities,
unless such entity owns all affected Certificates.
"VSI Insurance Policy" means the Vendor's Single Interest Physical
Damage Insurance Policy attached hereto as Exhibit I issued by the VSI
Insurer, including all endorsements thereto or any replacement policy under
Section 4.4.
"VSI Insurer" means certain underwriters at Lloyd's, London,
England, or any issuer of a replacement VSI Insurance Policy under Section
4.4.
Section 2.2 Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing"
include printing, typing, lithography, and other means of reproducing words in
a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
term "including" means "including without limitation."
Section 2.3 References. Unless otherwise noted herein, all
section references shall be to Sections in this Agreement.
ARTICLE III
THE RECEIVABLES
Section 3.1 Conveyance of Receivables. In consideration of the
Trustee's delivery of Certificates to, or upon the written order of, the
Seller in an aggregate principal amount equal to the Original Pool Balance,
the Seller does hereby sell, transfer, assign, set over and otherwise convey
to the Trustee on behalf of the Trust, in trust for the benefit of the
Certificateholders, without recourse and (subject to the obligations contained
herein):
(1) all right, title and interest of the Seller in and to the
Receivables listed in Schedule 1 hereto and all monies received thereon
on or after the Cutoff Date and all Liquidation Proceeds received with
respect to such Receivables;
<PAGE>26
(2) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant
to the Receivables and any other interest of the Seller in the Financed
Vehicles, including, without limitation, the certificates of title with
respect to Financed Vehicles;
(3) all, right, title and interest of the Seller in and to any
proceeds from claims on any Insurance Policies covering the Receivables,
the Financed Vehicles or the Obligors;
(4) all right, title and interest of the Seller in and to the
Purchase Agreement, including a direct right to cause Asta Funding to
purchase Receivables from the Trust under certain circumstances;
(5) all right, title and interest of the Seller in and to refunds
of unearned premiums with respect to any Insurance Policies covering the
Receivable, an Obligor or the Financed Vehicle or his or her obligations
with respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(6) the Receivables File related to each Receivable;
(7) the Reserve Account, the Simple Interest Differential Account,
the Collection Account, the Lock-Box Account, the Certificate Account and
all monies on deposit therein; and
(8) the proceeds of any and all of the foregoing.
The Trustee, on behalf of the Trust and the Certificateholders,
acknowledges and agrees that the Seller and any successor is the holder of the
Excess Interest, that such Excess Interest is not Trust Property and, subject
to the terms and provisions of this Agreement, that the Seller or any
successor shall be entitled to receive all distributions of amounts in respect
thereof pursuant to Section 5.5(d), subject to the limitation therein.
Section 3.2 Transfer Intended as Sale; Precautionary Security
Interest. The conveyance to the Trust of the property set forth in
Section 3.1 (collectively, the "Trust Property") is intended as a sale free
and clear of all Liens. In the event, however, that notwithstanding the
intent of Asta Funding, the Seller and the Trustee, the transfer hereunder is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property described in Section 3.1 to the Trustee on behalf of
the Trust for the benefit of the Certificateholders.
<PAGE>27
Section 3.3 Acceptance by Trustee. The Trustee on behalf of the
Trust does hereby accept all consideration conveyed by the Seller pursuant to
Section 3.1, and declares that the Trustee on behalf of the Trust shall hold
such consideration upon the trusts herein set forth for the benefit of all
present and future Certificateholders, subject to the terms and provisions of
this Agreement.
Section 3.4 Representations and Warranties of Seller. The Seller
makes the following representations and warranties as to the Receivables to
the Trustee, on which the Trustee, on behalf of itself and the
Certificateholders, relies in accepting the items specified in Section 3.1 in
trust and executing and authenticating the Certificates. Such representations
and warranties speak as of the execution and delivery of this Agreement, but
shall survive the sale, transfer and assignment of the Receivables to the
Trustee.
(i) Characteristics of Receivables. Each Receivable (A) has been
originated in the United States of America by a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of such Dealer's
business, has been fully and properly executed by the parties thereto,
and has been purchased by Asta Funding in connection with the sale of a
Financed Vehicle by the Dealer or has been financed for such Dealer under
an existing agreement with Asta Funding, (B) has created a valid,
subsisting and enforceable first priority security interest in favor of
Asta Funding in the Financed Vehicle, which security interest has been
assigned by Asta Funding to the Seller, which in turn has assigned such
security interest to the Trustee, (C) contains customary and enforceable
provisions such that the rights and remedies of the holder or assignee
thereof shall be adequate for realization against the collateral of the
benefits of the security, (D) provides for level monthly payments that
fully amortize (based upon the actuarial basis set forth in such
Receivable) the Amount Financed by maturity and yield interest at the
Annual Percentage Rate, (E) is an Actuarial Receivable and has an Annual
Percentage Rate of not less than 16.99%, (F) no Receivable has a payment
that is more than 30 days past due and no Financed Vehicle with respect
to a Receivable has been subject to any repossession activity, (G) each
Receivable has a final scheduled payment due no later than September 3,
2001, and (H) provides for, in the event that such contract is prepaid, a
prepayment that fully pays the principal balance and interest accrued to
the date of prepayment, computed at the Annual Percentage Rate and based
upon the actuarial method.
<PAGE>28
(ii) Schedule of Receivables. The information with respect to the
Receivables set forth in Schedule 1 hereto is true and correct in all
material respects as of the opening of business on the Cutoff Date, and
no selection procedures adverse to the Certificateholders have been
utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any Insurance Policy and any service
contracts (A) complied at the time the related Receivable was originated
or made and at the execution of this Agreement complies in all material
respects with all requirements of applicable federal, State and local
laws, and regulations thereunder including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, the New Jersey Consumer
Credit Code and State adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws and (B) does not contravene any
contracts to which Asta Funding is a party.
(iv) No Government Obligor. None of the Receivables are due from
the United States of America or any State or local government or from any
agency, department, or instrumentality of the United States of America or
any State or local government.
(v) Security Interest in Financed Vehicle. Immediately prior to
the sale, assignment and transfer thereof, each Receivable shall be
secured by a validly perfected first security interest in the Financed
Vehicle in favor of Asta Funding as secured party, and such security
interest is prior to all other Liens upon and security interests in such
Financed Vehicle that now exist or may hereafter arise or be created
(except, as to priority, for (A) any lien for unpaid storage or repair
charges which may arise after the Closing Date or (B) any liens for
municipal or other local taxes). The Seller has caused each certificate
of title (or copy of an application for title), or such other document
delivered by the State title registration agency evidencing the security
interest in each Financed Vehicle, to be delivered to the Custodian
pursuant to Section 3.6 hereof, together with a power of attorney, duly
executed by Asta Funding in favor of the Trustee, which powers of
attorney are sufficient to change the lien holder on the certificate of
title with respect to a Financed Vehicle.
<PAGE>29
(vi) Receivables in Force. No Receivable has been satisfied in
full, subordinated or rescinded, nor has any Financed Vehicle been
released from the lien granted by the related Receivable in whole or in
part.
(vii) No Waiver. Other than with respect to the amendments set
forth in clause (viii) below, no provision of a Receivable has been
waived, impaired, altered or modified in any respect.
(viii) No Amendments. No Receivable has been amended, except as
such Receivable may have been amended to grant one extension of not more
than 15 days as a matter of convenience to each Obligor.
(ix) No Defenses. No right of rescission, setoff, counterclaim or
defense exists or has been asserted or, to the Seller's knowledge,
threatened with respect to any Receivable. The operation of the terms of
any Receivable or the exercise of any right thereunder will not render
such Receivable unenforceable in whole or in part or subject to any such
right of rescission, setoff, counterclaim, or defense.
(x) No Liens. There are, to the Seller's knowledge, no Liens or
claims existing or that have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be Liens prior to, or
equal or coordinate with, the security interest in the Financed Vehicle
granted by the Receivable.
(xi) No Default. Except for payment delinquencies continuing for
a period of not more than 30 days as of the Cutoff Date (provided that
repossession of the related Financed Vehicle has not been initiated prior
to the Cutoff Date due to such payment delinquency), no default, breach,
violation or event permitting acceleration under the terms of any
Receivable has occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has arisen; and
the Seller shall not waive and has not waived any of the foregoing. To
the best of Seller's knowledge, no Obligor is the subject of any pending
bankruptcy, insolvency or similar proceeding or no other fact exists
regarding any Receivable that would indicate that such Receivable would
not be paid in full.
(xii) Insurance. As of the Closing Date and throughout the shorter
of the term of the Trust or the term of the Receivable, each Receivable
is and shall be covered under the VSI Insurance Policy, and such
insurance policy is
<PAGE>30
valid and remains in full force and effect. Asta Funding, in accordance
with its customary procedures, has determined that (A) each Obligor has
obtained insurance covering the Financed Vehicle as of the execution of
the Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such insurance naming Asta Funding and its successors
and assigns as an additional insured and permits Asta Funding to obtain
such insurance at the expense of the Obligor if the Obligor fails to do so
and (B) each Receivable, if any, that finances the cost of premiums for
any Insurance Policy is covered by an Insurance Policy, naming the
respective Dealer or Asta Funding as policyholder (creditor) or creditor's
assignee, respectively, under each such Insurance Policy.
(xiii) Title. No Receivable has been sold, transferred,
assigned, or pledged by the Seller to any Person other than the Trustee
or any such pledge has been released. Immediately prior to the transfer
and assignment herein contemplated, the Seller had good and marketable
title to each Receivable, and was the sole owner thereof, free and clear
of all liens, claims, encumbrances, security interests and rights of
others and, immediately upon the transfer thereof, the Trustee for the
benefit of the Certificateholders shall have good and marketable title to
each such Receivable, and will be the sole owner thereof, free and clear
of all liens, encumbrances, security interests and rights of others, and
the transfer has been validly perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in, or
is subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable hereunder or pursuant to
transfers of the Certificates shall be unlawful, void or voidable.
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee a first priority perfected ownership interest in the Receivables
have been made.
(xvi) Receivable File; One Original. The Seller has delivered to
the Custodian a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC and is the legal, valid and
<PAGE>31
binding obligation of the Obligor thereunder in accordance with the terms
thereof.
(xviii) Title Documents. (A) If the related Financed Vehicle was
originated in a State in which notation of security interest on the title
document is required or permitted to perfect such security interest, the
title document for such Financed Vehicle shows, or if a new or
replacement title document is being applied for with respect to such
Financed Vehicle the title document will be received within 180 days from
the date of application and will show, Asta Funding named as the original
secured party under the related Receivable as the Holder of a first
priority security interest in such Financed Vehicle, and (B) if the
related Financed Vehicle was originated in a State in which the filing of
a financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show Asta Funding named as the original secured party under the
related Receivable, and in either case, the Trustee, upon the conveyance
of the Seller's interests in such security interests to the Trustee, has
the same rights as such secured party has or would have (if such secured
party were still the owner of the Receivable) against all parties
claiming an interest in such Financed Vehicle. With respect to each
Receivable for which the title document has not yet been returned from
the Registrar of Titles, Asta Funding has received written evidence from
the related Dealer that such title document showing Asta Funding as first
lienholder has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable is
the legal, valid and binding obligation of the Obligor thereunder and is
enforceable in accordance with its terms, except only as such enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally, all parties to such contract
had full legal capacity to execute and deliver such contract and all
other documents related thereto and to grant the security interest
purported to be granted thereby and no party to such contract is in
violation of any applicable law, rule or regulation that is material to
the Receivable or the sale of the Financed Vehicle; the terms of such
Receivable have not been waived or modified in any respect (other than
with respect to amendments permitted by clause (viii) above).
(xx) Tax Liens. As of the Cutoff Date, to the Seller's knowledge,
there is no Lien against the related Financed Vehicle for delinquent
taxes.
<PAGE>32
(xxi) Maturity of Receivables. Each Receivable has an original
maturity of not more than 60 months; the weighted average original
maturity of the Receivables is approximately 43 months as of the Cutoff
Date; the remaining maturity of each Receivable was 60 months or less as
of the Cutoff Date; the weighted average remaining maturity of the
Receivables was 39 months as of the Cutoff Date.
(xxii) Scheduled Payments. Each Receivable shall have an
outstanding principal balance as of the Cutoff Date of not more than
$30,361 and a first Scheduled Payment due on or prior to October 31,
1996.
(xxiii) Characteristics of Obligors. As of the Cutoff Date, no
Obligor on any Receivable was noted in the related records of Asta
Funding or in the Receivable Files (A) as having been unemployed or (B)
as having no verifiable address during the year immediately preceding the
origination of the related Receivable.
(xxiv) Location of Receivable Files. A complete Receivable File
with respect to each Receivable is in the possession of the Custodian at
the location listed in Schedule 2.
(xxv) At the time of origination, each Receivable was originated in
one of the following States, which are the only States in which the
Receivables were originated:
New York
New Jersey
Delaware
Connecticut
(xxvi) No Future Advances. The full principal amount of each
Receivable has been advanced to each Obligor or advanced in accordance
with the directions of each such Obligor, and there is no requirement for
future advances thereunder. The Obligor with respect to the Receivable
does not have any options under such Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
(xxvii) Underwriting Guidelines. Each Receivable has been
originated in accordance with the applicable Underwriting Guidelines of
Asta Funding in effect at the time of origination.
(xxviii) Financed Vehicle in Good Repair. To the best of the
Seller's knowledge, each Financed Vehicle is in good repair and in
working order.
<PAGE>33
(xxix) Principal Balance. No Receivable has a Principal Balance
which includes capitalized interest, physical damage insurance or late
charges.
(xxx) Servicing. At the applicable Cutoff Date, each Receivable
was being serviced by the Servicer.
(xxxi) Original Principal Amount. The original principal amount
of each Receivable does not exceed $33,085.
(xxxii) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Seller,
threatened before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
its respective properties: (A) asserting the invalidity of any of the
Receivables; (B) seeking to prevent the enforcement of any of the
Receivables; or (C) seeking any determination or ruling that might
materially and adversely affect the payment on or enforceability of any
Receivable.
(xxxiii) Certain New Jersey Receivables. No Receivables
originated in New Jersey where cash price of the vehicle as shown on the
Receivable is $10,000 or less shall require the payment by the Obligor of
a premium with respect to the VSI Insurance Policy.
Section 3.5 Repurchase Upon Breach. The Seller, the Servicer,
the Backup Servicer or the Trustee, as the case may be, shall inform the other
parties hereto promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.4 (without
regard to any limitation therein as to the Seller's knowledge). Unless the
breach shall have been cured by the last day of the second Collection Period
following the Collection Period in which the discovery thereof was made by a
Trustee Officer of the Trustee or the Trustee received written notice from the
Seller, the Backup Servicer or the Servicer of such breach, Asta Funding shall
purchase any Receivable materially and adversely affected, or where the
Trustee's interest therein has been adversely affected, by the breach as of
the last day of such second Collection Period (or, at Asta Funding's option,
the last day of the first Collection Period following the Collection Period in
which the discovery was made). In consideration of the purchase of the
Receivable, Asta Funding shall remit the Purchase Amount, in the manner
specified in Section 5.4. For the purposes of this Section 3.5, the Purchase
Amount of a Receivable that is not consistent with the warranty pursuant to
Section 3.4(i)(D) shall include such additional amount as shall be necessary
to provide the full amount of interest as contemplated therein. The sole
remedy of the Trustee, the Trust or the Certificateholders with
<PAGE>34
respect to a breach of representations and warranties pursuant to Section 3.4
shall be to enforce Asta Funding's obligation to purchase such Receivables
pursuant to the Purchase Agreement; provided, however, that Asta Funding shall
indemnify the Trustee and the Backup Servicer, including officers, directors,
employees and agents of either entity, the Trust and the Certificateholders
against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted
against or incurred by any of them as a result of third party claims arising
out of the events or facts giving rise to such breach. Upon receipt of the
Purchase Amount and written instructions from the Servicer, the Trustee shall
execute and deliver all reasonable instruments of transfer or assignment,
without representation, warranty or recourse, as are prepared by the Seller
and delivered to the Trustee and necessary to vest in Asta Funding or such
designee title to the Receivable, the related Receivable File and the other
related documents and instruments referred to in Section 3.6(a).
Section 3.6 Custody of Receivable Files.
(a) To assure uniform quality in servicing the Receivables, to
reduce administrative costs and to perfect the security interest, the Trustee,
upon the execution and delivery of this Agreement, is hereby appointed as
Custodian and the Trustee hereby accepts such appointment, to act as Custodian
of the following documents or instruments which are hereby delivered to the
Trustee with respect to each Receivable:
(i) the fully executed original of the Receivable and any
amendments thereto;
(ii) the original certificate of title or, if the applicable State
title registration agency does not issue certificates of title to
lienholders, such other documents under the applicable State's laws
evidencing the security interest of Asta Funding in the Financed Vehicle,
or a guarantee of title or an application for title if a certificate of
title or other document evidencing the security interest in the Financed
Vehicle has not yet been issued; and
(iii) a copy of the VSI Insurance Policy (including all
endorsements thereto), including endorsements confirming insurance
thereunder (as reflected on master lists of insured Receivables annexed
to such endorsements) regarding each Receivable covered thereby and an
endorsement naming the Trustee as an additional insured thereunder.
<PAGE>35
As evidence of its acknowledgment of such receipt of such
Receivables, the Custodian shall execute and deliver an acknowledgment of such
receipt.
The following documents shall be delivered to the Custodian within
30 days of the Closing Date:
(iv) file-stamped copies of the UCC-1 from among statements filed
pursuant to this Agreement.
Items (a)(i), (ii) and (iii) shall be referred to collectively as
the "Receivable Files."
The Custodian shall review the Receivable Files within 30 days after
the Closing Date, to verify that an original retail installment sale contract
and certificate of title are present for each Receivable and to verify that
the name of the Obligor, the Amount Financed, the account number and the APR
are as stated on Schedule 1 for such Receivable and that the Obligor's
signature is an original signature and that no Receivable evidenced by a New
Jersey form of contract shows a vehicle cash price of $10,000 or less and
requires a payment by the Obligor of a premium under the VSI Insurance Policy.
The Custodian shall immediately deliver written notice by certified mail to
the Seller and Asta Funding if any such document is missing or has not been
delivered to the Custodian by the time required as set forth in this
Agreement. The Custodian shall deliver written notice to the Rating Agency
and the Certificateholders if any original certificate of title or other
document evidencing the security interest of Asta Funding in the Financed
Vehicle has not been delivered to the Custodian within 180 days after the
Closing Date. Such notice shall confirm whether or not a guaranty of title or
an application for title has been delivered to the Custodian with respect to
the related Receivable.
With respect to Receivables for which the original retail
installment sale contract and, with respect to any Receivables File that does
not contain an original certificate of title, a copy of the application for a
certificate of title have not been delivered to the Custodian in accordance
with this Section 3.6(a), the Seller shall cause Asta Funding to deliver the
missing documents within seven (7) Business Days of receipt of such notice or
repurchase such Receivables pursuant to Section 3.5 hereof. With respect to
Receivables for which original certificates of title or other documents
evidencing the security interest of Asta Funding in the Financed Vehicle have
not been delivered to the Custodian within 180 days of the Closing Date, the
Seller shall cause Asta Funding to deliver such documents within such period
of time as determined by the Rating Agency (after receipt of notice as
described in the preceding paragraph) or repurchase the Receivables pursuant
to Section 3.5 hereof.
<PAGE>36
Other than the reviews set forth in this paragraph, the Custodian shall have
no duty or obligation to review any of the Receivable Files.
With respect to the Receivables set forth on Schedule 4 hereto (the
"Incomplete File Loans"), the Seller shall cause Asta Funding to deliver the
missing documents in accordance with the immediately preceding paragraph or
repurchase such Receivables pursuant to Section 3.5 hereof using funds on
deposit in the Escrow Account; provided that Asta Funding shall have the
option to substitute a Qualified Substitute Receivable for any Incomplete File
Loan if such substitution occurs within 90 days following the Closing Date.
Asta Funding shall establish the Escrow Account in the name of the Trustee for
the benefit of the Certificateholders, such account to be an Eligible Account,
and shall deposit therein on the Closing Date $2,000,000 with respect to the
Incomplete File Loans. The Escrow Account shall be a segregated trust account
initially established with the Trustee and maintained with the Trustee. The
amount on deposit in the Escrow Account shall be invested in Eligible
Investments in accordance with written instructions from the Servicer. To the
extent that Asta Funding has (i) delivered the missing documents with respect
to any Incomplete File Loan or (ii) has transferred to the Trust a Qualified
Substitute Receivable, an amount equal to the principal balance of the
Incomplete File Loan cured in such manner shall be released from the Escrow
Account and paid to the Seller. In the event of a repurchase of an Incomplete
File Loan pursuant to Section 4.7 (which repurchase shall occur immediately
upon any attempted but unsuccessful repossession of the related Financed
Vehicle caused by the Incomplete File Loan), the Purchase Amount of such
Incomplete File Loan shall be paid from the Escrow Account to the extent of
funds remaining therein, and after such amount is exhausted shall be paid by
the Servicer as provided herein.
(b) The Custodian agrees to maintain the Receivable Files at the
Corporate Trust Office or such other offices as shall from time to time be
identified to the Trustee, the Seller and Asta Funding by written notice.
Subject to the foregoing, the Custodian may temporarily move individual
Receivable Files or any portion thereof without notice as necessary to enable
the Servicer to conduct collection and other servicing activities in
accordance with its customary practices and procedures.
The Custodian shall have and perform the following powers and
duties:
(i) hold the Receivable Files for the benefit of all present and
future Certificateholders, maintain accurate records pertaining to each
Receivable to enable it to comply
<PAGE>37
with the terms and conditions of this Agreement and maintain a current
inventory thereof;
(ii) carry out such policies and procedures in accordance with its
customary actions with respect to the handling and custody of the
Receivable Files so that the integrity and physical possession of the
Receivable Files will be maintained; and
(iii) promptly release the original certificate of title to the
Servicer upon receipt of a written request for release of documents
certified by an officer of the Servicer, substantially in the form of
Exhibit J hereto, with respect to the matters therein.
Section 3.7 Duties of Custodian.
(a) Safekeeping. The Trustee, in its capacity as Custodian, shall
hold the Receivable Files for the benefit of the Certificateholders and
maintain accurate and complete accounts, records, and computer systems
pertaining to each Receivable File. In performing its duties, the Custodian
shall act with reasonable care, using that degree of skill and attention that
the Custodian exercises with respect to the receivable files relating to all
comparable automotive receivables held by the Custodian. The Custodian makes
no representations as to (i) the validity, legality, enforceability,
sufficiency, due authorization or genuineness of any of the documents
contained in each Receivables File or of any of the Receivables or (ii) the
collectibility, effectiveness, insurability or suitability of any Receivable.
(b) Maintenance of and Access to Records. Subject to Section
3.6(b), the Custodian shall maintain each Receivable File at the Corporate
Trust Office. The original of each Receivable and the original of each
certificate of title or application therefor shall be stored in a fireproof
vault. The Custodian shall make available to the Servicer and the
Certificateholders or their duly authorized representatives, attorneys, or
auditors a list of locations of the Receivable Files, the Receivable Files and
the related accounts, records and computer systems maintained by the Custodian
at such times as the Servicer, the Trustee or the Majority Certificateholders
shall instruct following reasonable notice to the Custodian and during
business hours.
(c) Release of Documents. In addition to releasing certificates of
title pursuant to Section 3.6(b)(iii), upon instruction from the Servicer, in
the form of Exhibit J hereto, the Custodian shall release as soon as
practicable any document in a Receivable File to the Servicer, the Servicer's
agent or designee, as the case may be, at such place or places as the
<PAGE>38
Servicer may designate following reasonable notice to the Custodian and during
business hours.
Section 3.8 Instructions; Authority to Act. The Custodian shall
be deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions from the Servicer in the form
of Exhibit J hereto.
Section 3.9 Custodian's Indemnification. The Servicer shall
indemnify the Custodian, including its officers, directors, employees and
agents, for any and all liabilities, obligations, losses, compensatory
damages, payments, costs, or expenses of any kind whatsoever that may be
imposed on, incurred, or asserted against the Trust or the Custodian as the
result of any improper act or omission by the Servicer in any way relating to
the maintenance and custody by the Custodian of the Receivable Files;
provided, however, that the Servicer shall not be liable for any portion of
any such amount resulting from the willful misfeasance, bad faith, or
negligence of the Custodian or its representatives, attorneys or auditors.
Section 3.10 Effective Period and Termination. The Trustee's
appointment as Custodian shall become effective as of the Closing Date and
shall continue in full force and effect until the Trustee resigns or is
removed pursuant to Section 10.8. As soon as practicable after any
termination of such appointment, the Custodian shall, at the Servicer's
expense if the Custodian is not then the Servicer, deliver the Receivable
Files to the successor Custodian or its agent at such place or places as the
successor Custodian may designate in writing to the Trustee, Asta Funding and
the Seller.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.1 Duties of Servicer. The Servicer, as agent for the
Trust and the Certificateholders (to the extent provided herein), shall
manage, service, administer, make collections on the Receivables (other than
Purchased Receivables) and administer and enforce the Insurance Policies, with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it
services for itself or others and that is consistent with prudent industry
standards. The Servicer's duties shall include collection and posting of all
payments, administering and enforcing the Insurance Policies, responding to
inquiries of Obligors on such Receivables, investigating delinquencies,
sending monthly invoices to Obligors, accounting for collections and
furnishing monthly and annual statements to
<PAGE>39
the Trustee with respect to distributions. The Servicer shall follow its
currently employed standards, policies and procedures or such more exacting
standards, policies and procedures as the Servicer employs in the future, in
performing its duties as Servicer. Without limiting the generality of the
foregoing, and subject to the servicing standards set forth in this Agreement,
the Servicer is authorized and empowered by the Trustee to execute and
deliver, on behalf of itself, the Trust and the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect
to such Receivables or to the Financed Vehicles securing such Receivables
and/or the certificates of title with respect to such Financed Vehicles. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Trustee (in the case of a Receivable other than a Purchased Receivable) shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
Holder entitled to enforce such Receivable, the Trustee shall, at the
Servicer's expense and direction, take reasonable steps to enforce such
Receivable, including bringing suit in its name or the name of the
Certificateholders. The Servicer may delegate any of its duties set forth
herein to the Backup Servicer to the extent the Backup Servicer has agreed to
perform such duties in the Servicing Assumption Agreement. The Servicer shall
prepare and furnish and the Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Section 4.2 Collection and Allocation of Receivable Payments.
The Servicer shall use its best efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable automotive receivables that it services for itself
or others and that are consistent with prudent industry standards; provided,
however, that the Servicer shall notify each Obligor to make all payments with
respect to the Receivables to a Lock-Box. The Servicer, for so long as Asta
Funding is the Servicer, may grant extensions on a Receivable; provided,
however, that no extension shall for the purpose of this Agreement modify the
Scheduled Payment due in respect of any Collection Period; provided further,
however, that the Servicer may grant only one extension not in excess of 15
days with respect to a Receivable (including for purposes of the foregoing,
any extension granted prior to the Cutoff Date); and provided, further, that
if the Servicer extends the date for
<PAGE>40
final payment by the Obligor of any Receivable beyond the last day of the
Collection Period preceding the Final Scheduled Distribution Date, it shall
promptly purchase the Receivable from the Trust in accordance with the terms
of Section 4.7 hereof (and for purposes thereof, the Receivable shall be
deemed to be materially and adversely affected by such breach).
Notwithstanding the foregoing, the Servicer shall not extend or modify the
Scheduled Payments of a Receivable unless such Receivable is in default,
default thereunder is imminent or a modification is required by law. The
Servicer may, in its discretion, waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing a Receivable.
The Servicer shall not consensually agree to any alteration of the interest
rate on any Receivable or of the amount of any Scheduled Payment on
Receivables.
Section 4.3 Realization Upon Receivables. On behalf of the Trust
and the Certificateholders, the Servicer shall use its best efforts,
consistent with its customary servicing procedures, to repossess or otherwise
convert the ownership of the Financed Vehicle securing any Receivable as to
which the Servicer shall have determined eventual payment in full is unlikely.
The Servicer shall commence efforts to repossess or otherwise convert the
ownership of a Financed Vehicle on or prior to the date that all or a portion
of a Scheduled Payment thereon in excess of five percent (5%) of such
Scheduled Payment is 120 days or more delinquent; provided, however, that the
Servicer may elect not to commence such efforts within such time period if in
its good faith judgment it determines either that it would be impracticable to
do so or that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables and that are consistent
with prudent industry standards, which may include its best efforts to realize
upon any recourse to Dealers and selling the Financed Vehicle at public or
private sale. The foregoing shall be subject to the provision that, in any
case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of
such Financed Vehicle unless it shall determine in its discretion that such
repair or repossession will increase the proceeds ultimately recoverable with
respect to such Receivable by an amount greater than the amount of such
expenses. The Servicer shall dispose of any Financed Vehicle acquired by the
Trust as soon as practicable. The Trust shall not accept any consideration
for any acquired Financed Vehicle other than cash.
<PAGE>41
Section 4.4 Physical Damage Insurance; Other Insurance.
(a) The Servicer, in accordance with its customary servicing
procedures, shall require (i) that each Obligor shall maintain insurance
covering the Financed Vehicle insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage naming Asta Funding and its successors
and assigns as an additional insured and permits the Holder of such Receivable
to obtain physical damage insurance at the expense of the Obligor if the
Obligor fails to do so, (ii) maintain the VSI Insurance Policy in full force
and effect with respect to all Receivables for the life of the Trust, or, at
the Seller's option, replace such insurance with a policy from another insurer
having a claims paying rating not lower than the then current claims paying
rating of the then current VSI insurer with substantially similar loss
coverage and covering all Receivables and (iii) each Receivable that finances
the cost of premiums for any Insurance Policy is covered by an Insurance
Policy naming the respective Dealer or Asta Funding as policyholder (creditor)
or creditor's assignee, respectively.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 4.4(a) which, but for the actions of the Servicer,
would have been covered thereunder. The Servicer, on behalf of the Trustee,
shall take such reasonable action as shall be necessary to permit recovery
under any of the foregoing insurance policies. Any amounts collected by the
Servicer under any of the foregoing insurance policies shall be deposited in
the Collection Account pursuant to Section 5.2. The Servicer shall cause to
be maintained and enforced in respect of each Financed Vehicle the insurance
referred to in Section 4.4(a)(i) above; provided, that the Servicer shall not
be required to maintain and enforce such insurance in respect to any Financed
Vehicle having an unpaid Principal Balance of less than $2,000.
Section 4.5 Maintenance of Security Interests in Financed
Vehicles. The Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle including but not limited to obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-registering
and refiling of all security agreements, financing statements and continuation
statements or instruments as are necessary to maintain the security interest
granted by Obligors under the respective Receivables. The Trustee hereby
authorizes the Servicer to take such steps as are necessary to re-perfect or
continue the perfection of such security interest on behalf of
<PAGE>42
the Trust in the event of the relocation of a Financed Vehicle or for any
other reason.
Section 4.6 Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security
interest granted by such Receivable in whole or in part except in the event of
payment in full by the Obligor thereunder or foreclosure thereunder, nor shall
the Servicer impair the rights of the Certificateholders in such Receivables,
nor shall the Servicer amend a Receivable, except that extensions may be
granted in accordance with Section 4.2.
Section 4.7 Purchase of Receivables Upon Breach. The Servicer or
the Trustee shall inform the other party promptly, in writing, upon the
discovery of any breach pursuant to Sections 4.2, 4.4, 4.5 or 4.6. Unless the
breach shall have been cured by the last day of the second Collection Period
following the month in which such discovery was made (or, at the Servicer's
election, the last day of the first following Collection Period), the Servicer
shall purchase any Receivable materially and adversely affected by such
breach. On each Determination Date, the Servicer will inform the Trustee as
to the Receivables, if any, with respect to which the first Scheduled Payment
has not been made within the earlier of (a) forty-five days after the
contractual due date of such payment or (b) the date on which the related
Financed Vehicle is assigned for repossession. All such Receivables shall be
repurchased by the Servicer on the next Distribution Date. In consideration
of the purchase of any such Receivable, the Servicer shall remit the Purchase
Amount in the manner specified in Section 5.4. The sole remedy of the
Trustee, the Trust or the Certificateholders with respect to a breach pursuant
to Section 4.2, 4.4, 4.5 or 4.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 4.7. The Trustee shall be under no duty
or obligation to inquire or investigate as to the Servicer's compliance with
Sections 4.2, 4.4, 4.5 or 4.6.
Section 4.8 Servicing Fee. The Servicing Fee for the initial
Distribution Date shall equal the product of one-twelfth times the Servicing
Rate times the Original Pool Balance. Thereafter, the Servicing Fee for a
Distribution Date shall equal the product of one twelfth times the Servicing
Rate times the Pool Balance as of the close of business on the last day of the
second Collection Period immediately preceding the related Distribution Date.
The Servicer shall also be entitled to collect and retain, and the Servicing
Fee shall also include (i) all other administrative fees or similar charges
allowed by applicable law with respect to Receivables, collected (from
whatever source) on the Receivables and (ii) any interest or investment income
earned on funds deposited in the Collection Account.
<PAGE>43
Section 4.9 Servicer's Certificate. By 12:00 noon, New York City
time, on each Determination Date, the Servicer shall deliver or cause the
Backup Servicer to deliver to the Trustee, the Rating Agency, Greenwich
Capital Markets, Inc. and the Seller, a Servicer's Certificate containing all
information necessary to make the distributions pursuant to Section 5.5
(including, if required, the computation of the Reserve Account Draw and the
amount of any Simple Interest Adjustment) for the Collection Period preceding
the date of such Servicer's Certificate and all information necessary for the
Trustee to send statements to Certificateholders pursuant to Section 5.8.
Receivables to be purchased by the Servicer or to be purchased by Asta Funding
shall be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule 1). Notwithstanding the foregoing, it is
understood and agreed that the Backup Servicer has agreed to act as the
Servicer's agent for the purpose of preparing and delivering the Servicer's
Certificate, and so long as the Backup Servicer timely prepares and delivers
the Servicer's Certificate, the Servicer shall not be required to do so.
Section 4.10 Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Trustee, on or before January
31 of each year beginning January 31, 1998, an Officer's Certificate, dated as
of September 30 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or in the
case of the first such certificate, the period from the Closing Date to
September 30, 1997) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year (or period, as
applicable), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. The Trustee shall send a copy of such certificate and the
report referred to in Section 4.11 to the Rating Agency and Greenwich Capital
Markets, Inc. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder by a request in writing
to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee, Greenwich Capital
Markets, Inc. and the Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become an Event of Default under
clause (a), (b) or, so long as Asta Funding is
<PAGE>44
Servicer, clause (d) or (e) of Section 9.1. The Seller shall deliver to the
Trustee, Greenwich Capital Markets, Inc. and the Rating Agency, promptly after
having obtained knowledge thereof, but in no event later than five (5)
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become
an Event of Default under clause (b) of Section 9.1.
Section 4.11 Annual Independent Certified Public Accountant's
Report. The Servicer shall cause a nationally recognized firm of independent
certified public accountants, who may also render other services to the
Servicer or to the Seller, to deliver to the Trustee and the Rating Agency on
or before January 31 of each year beginning January 31, 1998, a report
addressed to the Board of Directors of the Servicer, to the effect that such
firm has examined the financial statements of the Servicer and issued its
report thereof and that such examination (a) was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances; (b) included tests relating to auto
loans serviced for others in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers (the "Program"), to the extent the
procedures in such Program are applicable to the servicing obligations set
forth in this Agreement; (c) included an examination of the delinquency and
loss statistics relating to the Servicer's portfolio of automobile, van and
light truck installment sales contracts; and (d) except as described in the
report, disclosed no exceptions or errors in the records relating to
automobile, van and light truck loans serviced for others that, in the firm's
opinion, paragraph four (4) of such Program requires such firm to report. The
accountant's report shall further state that (i) a review in accordance with
agreed upon procedures acceptable to the Rating Agency was made of three (3)
randomly selected Servicer's Certificates; (ii) except as disclosed in the
report, no exceptions or errors in the Servicer's Certificates were found; and
(iii) the delinquencies and loss information relating to the Receivables
contained in the Servicer's Certificates were found to be accurate.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
Section 4.12 Servicer Expenses. The Servicer shall be required to
pay out of its Servicing Fee all expenses incurred by it in connection with
its activities hereunder (other than the reasonable costs of liquidation of
Receivables), including fees and disbursements of independent accountants, the
cost of
<PAGE>45
maintaining the rating on the Certificates, taxes imposed on the Servicer, and
expenses incurred in connection with distributions and reports to
Certificateholders. In the event that the Backup Servicer becomes Servicer,
the cost of maintaining the rating on the Certificates shall be paid by the
Seller.
Section 4.13 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Trustee reasonable access to documentation and computer systems and
information regarding the Receivables. The Servicer shall provide such access
to any Certificateholder only in such cases where the Servicer is required by
applicable statutes or regulations (whether applicable to the Servicer or to
such Certificateholder) to permit such Certificateholder to review such
materials. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in
this Section 4.13 shall derogate from the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access as provided in
this Section 4.13 as a result of such obligation shall not constitute a breach
of this Section 4.13.
Section 4.14 Preparation and Verification of Servicer's
Certificate. On or before the seventh Business Day of each month, the
Servicer will deliver to the Trustee and the Backup Servicer a magnetic tape
or diskette in a format acceptable to the Trustee and the Backup Servicer
containing information with respect to the Receivables as of the close of
business on the last day of the preceding Collection Period containing the
information necessary for preparation of the Servicer's Certificate. Unless
the Backup Servicer has prepared the Servicer's Certificate on behalf of the
Servicer, the Backup Servicer shall use such to verify the Servicer's
Certificate delivered by the Servicer, and the Backup Servicer shall notify
the Servicer of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Backup Servicer
reports any discrepancies, the Servicer and the Backup Servicer shall attempt
to reconcile such discrepancies prior to the third Business Day prior to the
related Distribution Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
distributions with respect to the related Distribution Date. In the event
that the Backup Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, the Servicer shall cause a firm of independent certified
public accountants, at the Servicer's expense, to audit the Servicer's
Certificate and, prior to the fifth calendar day of the following month,
reconcile the discrepancies. The effect, if any, of such reconciliation shall
be reflected in the Servicer's Certificate for such next
<PAGE>46
succeeding Determination Date. Other than the duties specifically set forth
in this Agreement, the Backup Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. The Backup Servicer shall have no liability for
any actions taken or omitted by the Servicer. The duties and obligations of
the Backup Servicer shall be determined solely by the express provisions of
this Agreement and no implied covenants or obligations shall be read into this
Agreement against the Backup Servicer.
Section 4.15 Errors and Omissions Insurance. The Servicer, at its
own expense, shall procure within 30 days of the Closing Date and shall
thereafter maintain an errors and omissions insurance policy, with $500,000
coverage with responsible companies on all officers, employees or other
persons acting on behalf of the Servicer in any capacity with regard to the
Receivables to handle funds, money, documents and papers relating to the
Receivables. Any such errors and omissions insurance shall protect and insure
the Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such persons and shall be
maintained in a form that would meet the requirements of prudent institutional
sub-prime automobile loan servicers. No provision of this Section 4.15
requiring such errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. The
Servicer shall be deemed to have complied with this provision if one of its
respective Affiliates has such errors and omissions policy coverage and, by
the terms of such errors and omission policy, the coverage afforded thereunder
extends to the Servicer. Upon request of the Trustee, the Servicer shall
cause to be delivered to the Trustee a certification evidencing coverage under
such insurance policy. Any such errors and omissions insurance policy shall
not be cancelled or modified in a materially adverse manner without ten days'
prior written notice to the Trustee and the Rating Agency.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 5.1 Accounts. Exhibit F hereto sets forth the Lock-Box
and the Lock-Box Account. The Lock-Box shall be a post office box in the name
of the Trustee. Neither the Seller or the Servicer shall have access to or
any control over such Lock-Box. The Servicer may, at the Servicer's expense,
cause the Trustee to terminate and substitute the Lock-Box Bank for another
bank, but only (a) upon written notice from the Servicer to the Trustee and
the Seller, and (b) so long as no Event of Default
<PAGE>47
shall have occurred and be continuing. The Servicer shall give ten (10) days
prior written notice (if practicable) to the Trustee of the name and address
of the proposed new Lock-Box Bank, which notice shall identify the related
Lock-Box Account.
The Servicer shall establish the Lock-Box Account, the Collection
Account and the Certificate Account in the name of the Trustee for the benefit
of the Certificateholders, such accounts to be Eligible Accounts. The
Collection Account and the Certificate Account shall be segregated trust
accounts initially established with the Trustee and maintained with the
Trustee so long as the Trustee has the Required Deposit Rating; provided,
however, if the deposits of the Trustee no longer have the Required Deposit
Rating, the Servicer shall within 30 days, with the Trustee's assistance as
necessary, cause such accounts to be moved to a bank or trust company with the
Required Deposit Rating (each such bank or trust company, a "Successor Bank").
Should the deposits of any Successor Bank no longer have the Required Deposit
Rating, the Servicer within 30 days shall, with the Successor Bank's
assistance as necessary, cause such accounts to be moved to a bank or trust
company, the deposits of which shall have the Required Deposit Rating.
All amounts held in the Collection Account shall be invested by the
Trustee at the written direction of the Servicer in Eligible Investments in
the name of the Trustee as trustee of the Trust and shall mature no later than
the Business Day immediately preceding the Distribution Date next succeeding
the date of such investment (or in the case of money market fund investments,
on such Distribution Date). Such written direction shall certify that any
such investment is authorized by this Section. No investment may be sold
prior to its maturity. Amounts in the Lock-Box Account and the Certificate
Account shall not be invested. The Certificate Account shall be a non-
interest-bearing account. Earnings on investments of funds in the Collection
Account shall be paid to the Servicer as additional servicing compensation
pursuant to Section 4.8 hereof.
Section 5.2 Collections. The Servicer shall remit all payments
made by or on behalf of the Obligors that are received by the Servicer with
respect to the Receivables (other than Purchased Receivables) and all
Liquidation Proceeds to the Lock-Box Account no later than the Business Day
following receipt. No later than the Business Day after deposit in the Lock-
Box Account, the Trustee shall cause the Lock-Box Bank to transfer all
available funds from the Lock-Box Account to the Collection Account.
Section 5.3 Application of Collections. All collections for the
Collection Period shall be applied by the Servicer as follows:
<PAGE>48
with respect to each Receivable (other than a
Purchased Receivable), payments by or on behalf of
the Obligor shall be applied first to interest on the
Receivable and any excess remaining thereafter shall
be applied to principal of the Receivable.
Section 5.4 Additional Deposits. The Servicer or Asta Funding,
as the case may be, shall deposit or cause to be deposited in the Collection
Account the aggregate Purchase Amount with respect to Purchased Receivables
and the Servicer shall deposit therein all amounts to be paid under Section
11.2. All such deposits shall be made, in immediately available funds, on the
Business Day preceding the Distribution Date.
Section 5.5 Distributions.
(a) On each Distribution Date, the Trustee shall cause to be
transferred from the Collection Account, to the extent of the Total Available
Distribution Amount, to the Certificate Account, in immediately available
funds, those funds that were deposited in the Collection Account for the
Collection Period related to such Distribution Date, based solely on the
amounts set forth in the Servicer's Certificate for the related Distribution
Date.
(b) Prior to each Distribution Date, the Backup Servicer on behalf
of the Servicer shall on the related Determination Date calculate the Total
Available Distribution Amount, the Available Interest Distribution Amount, the
Available Principal Distribution Amount, the Class A Distributable Amount, the
Class B Distributable Amount, the Class C Distributable Amount, the Reserve
Account Balance, the Simple Interest Differential Account Balance and, based
on the Total Available Distribution Amount and the other distributions to be
made on such Distribution Date, determine the amount distributable to
Certificateholders of each Class and the other distributions to be made on
such Distribution Date.
(c) The rights of the Class B Certificateholders to receive
distributions with respect to the Class B Certificateholders shall be and
hereby are subordinated to the rights of the Class A Certificateholders to
receive distributions in respect of the Class A Certificates to the extent
provided in this Section. The rights of the Class C Certificateholders to
receive distributions in respect of the Class C Certificates shall be and
hereby are subordinated to the rights of the Class A Certificateholders and
the Class B Certificateholders to receive their respective distributions to
the extent provided in this Section. On each Distribution Date, the Trustee
(based on the
<PAGE>49
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) shall, subject to Section 5.5(e),
make the following distributions from the funds then on deposit in the
Certificate Account (including funds transferred from the Reserve Account when
necessary pursuant to Section 5.6) in the following order of priority:
(i) to the Backup Servicer, the Backup Servicer Fee and expenses
and all unpaid Backup Servicer Fees and unreimbursed expenses from prior
Collection Periods; to the Servicer, the Servicing Fees and liquidation
expenses (including reasonable attorney fees and expenses) to the extent
such liquidation expenses are not required to be covered by the Servicing
Fee or to the extent not previously recovered from Liquidation Proceeds,
and all unpaid Servicing Fees and unreimbursed liquidation expenses
(including reasonable attorney fees and expenses) to the extent such
liquidation expenses are not required to be covered by the Servicing Fee
or to the extent not previously recovered from Liquidation Proceeds, from
prior Collection Periods; to the Trustee and the Custodian, the Trustee
and Custodian Fees and all unpaid Trustee and Custodian Fees from prior
Collection Periods and, to the extent not previously paid by the
predecessor Servicer pursuant to Section 9.1, to the successor to the
Servicer, any reasonable transition costs incurred by such successor
Servicer in acting as successor Servicer;
(ii) to the Class A Certificateholders, an amount equal to the sum
of the Class A Interest Distributable Amount and any Class A Interest
Carryover Shortfall from the prior Distribution Date;
(iii) to the Class B Certificateholders, an amount equal to the sum
of the Class B Interest Distributable Amount and any Class B Interest
Carryover Shortfall from the prior Distribution Date;
(iv) to the Class C Certificateholders, an amount equal to the sum
of the Class C Interest Distributable Amount and any Class C Interest
Carryover Shortfall from the prior Distribution Date;
(v) to the Class A Certificateholders, an amount equal to the sum
of the Class A Principal Distributable Amount and any Class A Principal
Carryover Shortfall from the prior Distribution Date;
(vi) to the Class B Certificateholders, an amount equal to the sum
of the Class B Principal Distributable
<PAGE>50
Amount and any Class B Principal Carryover Shortfall from the prior
Distribution Date;
(vii) to the Class C Certificateholders, an amount equal to the sum
of the Class C Principal Distributable Amount and any Class C Principal
Carryover Shortfall from the prior Distribution Date;
(viii) to the Reserve Account, the amount, if any, required to
cause the balance therein to equal to the Reserve Requirement; and
(ix) to the Seller, an amount equal to any remaining amounts in
the Certificate Account after the distributions described in clauses (i)
through (viii) above, if any.
(d) Subject to Section 11.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of any Class of
record on the preceding Record Date either by wire transfer, in immediately
available funds to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Trustee appropriate written instructions prior to the Record Date for
such Distribution Date and such Holder's Certificates of such Class in the
aggregate evidence a denomination of not less than $1,000,000, or if not, by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register, the amounts to be distributed to such
Certificateholder pursuant to Section 5.5(c) in proportion to its Certificate
Balance.
Section 5.6 Reserve Account, Priority of Distributions.
(a) In order to assure that sufficient amounts to make required
payments to the Certificateholders specified therein will be available, there
shall be established and maintained with the Trustee, other than in its
capacity as Trustee of the Trust, the following Eligible Account: the "Reserve
Account Asta Auto Trust 1996-1" (the "Reserve Account"), which will include
the money and other property deposited and held therein pursuant to Section
5.5(c) and this Section 5.6.
(b) The Reserve Account shall be initially funded on the Closing
Date by the Seller in the amount of the Reserve Account Initial Deposit.
(c) Amounts held in the Reserve Account shall be invested in
Eligible Investments, in accordance with written instructions from the Seller
(or its successors) or its designee,
<PAGE>51
and such investments shall not be sold or disposed of prior to their maturity
but shall mature no later than one (1) Business Day before the Distribution
Date next succeeding the date of investment (or in the case of money market
fund investments, on such Distribution Date). All such investments shall be
made in the name of the Trustee as Trustee for the benefit of the
Certificateholders. Any loss on investment of amounts held in the Reserve
Account and all income and gain on the Reserve Account shall be credited to
such account.
(d) If on any Distribution Date the Total Available Distribution
Amount is insufficient to distribute the full amount described in clauses (i)
through (vii) of Section 5.5(c), the Trustee shall withdraw an amount equal to
such insufficiency from the Reserve Account (any such amount, the "Reserve
Account Draw") and apply such amount (in the order of priority provided by
Section 5.5(c)) in respect of such insufficiencies. If on any Distribution
Date amounts on deposit in the Reserve Account are in excess of the Reserve
Requirement for such date (after giving effect to Reserve Account Draws on
such date, if applicable), the Trustee shall release such excess to the Seller
as owner of the funds on deposit in the Reserve Account. Any amounts released
from the Reserve Account on any Distribution Date shall not be available for
Reserve Account Draws on following Distribution Dates. Upon termination of
this Agreement, any amounts on deposit in the Reserve Account, after payment
of all amounts due the Backup Servicer, the Trustee, the Custodian, the
Servicer and the Certificateholders, shall be paid to the Seller.
Section 5.7 Simple Interest Differential Account.
(a) In order to cover certain potential shortfalls due to use of
the Simple Interest Method, there shall be established and maintained with the
Trustee the following Eligible Account: the "Simple Interest Differential
Account Asta Auto Trust 1996-1" (the "Simple Interest Differential Account"),
which will include the money and other property deposited and held therein
pursuant to this Section 5.7.
(b) The Simple Interest Differential Account shall be initially
funded on the Closing Date by the Seller in the amount of $360,000.
(c) Amounts held in the Simple Interest Differential Account shall
be invested in Eligible Investments, in accordance with written instructions
from the Seller (or its successors) or its designee, and such investments
shall not be sold or disposed of prior to their maturity but shall mature no
later than one (1) Business Day before the Distribution Date next succeeding
the date of investment (or in the case of money market fund investments, on
such Distribution Date). All such investments
<PAGE>52
shall be made in the name of the Trustee as Trustee for the benefit of the
Certificateholders. Any loss on investment of amounts held in the Simple
Interest Differential Account and all income and gain on the Simple Interest
Differential Account shall be credited to such account.
(d) On each Distribution Date, the Trustee shall withdraw from the
Simple Interest Differential Account an amount, calculated by the Servicer and
transmitted to the Trustee in writing on or before the related Determination
Date, equal to the sum of the amounts for each Receivable that was the subject
of a prepayment or final Scheduled Payment during the preceding Collection
Period, or that became a Liquidated Receivable during such Collection Period,
in an amount (the "Simple Interest Differential Adjustment") equal to the
excess, if any, of the principal balance of the Receivable computed pursuant
to the Simple Interest Method over the principal balance of such Receivable
computed pursuant to the actuarial method set forth in the Receivable as of
the date of the last payment made by the Obligor on the Receivable, and shall
transfer such sum to the Collection Account for application pursuant to
Section 5.5(c); provided, however, the amount on deposit in the Simple
Interest Differential Account will not exceed $360,000. Upon termination of
this Agreement, any amounts on deposit in the Simple Interest Differential
Account, after payment of all amounts due the Backup Servicer, the Trustee,
the Custodian, the Servicer and the Certificateholders, shall be paid to the
Seller.
Section 5.8 Statements to Certificateholders; Tax Returns. With
each distribution from the Certificate Account to the Certificateholders made
on a Distribution Date, the Servicer shall provide, or shall cause the Backup
Servicer to provide, to the Trustee for the Trustee to forward to each
Certificateholder of record, Greenwich Capital Markets, Inc. and the Rating
Agency a statement substantially in the form of Exhibit E hereto setting forth
at a minimum the following information as to each Class of Certificates to the
extent applicable:
(a) Servicer Collections:
(i) the Available Interest Distribution Amount;
(ii) the Available Principal Distribution Amount; and
(iii) the Total Available Distribution Amount.
(b) Distribution:
(i) the amount of such distribution allocable to principal in
respect of each Class of Certificates;
<PAGE>53
(ii) the amount of such distribution allocable to interest in
respect of each Class of Certificates;
(iii) the Pool Balance, the Pool Factor, the Class Factor, the
weighted average coupon, the weighted average maturity (in months) and
the remaining number of Receivables as of the close of business on the
first and the last day of the related Collection Period, after giving
effect to payments allocated to principal reported under clause (b)(i)
above;
(iv) the aggregate Certificate Balance of each Class as of the
close of business on the last day of the preceding Collection Period,
after giving effect to payments allocated to principal reported under
clause (b)(i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and the amount of any unpaid
Servicing Fees and the change in such amount from that of the prior
Distribution Date;
(vi) the amount of the Principal Carryover Shortfalls and
Interest Carryover Shortfalls with respect to each Class, if any, on such
Distribution Date and the change, if any, in each such amount from the
preceding Distribution Date;
(vii) the amount of the aggregate Realized Losses, if any on
such Distribution Date and the change in such amount from that of the
prior Distribution Date and the amount of Cram Down Losses with respect
to the preceding Collection Period;
(viii) the amount on deposit in the Reserve Account on such
Distribution Date, after giving effect to amounts on deposit in the
Reserve Account and Reserve Account Draws, if any, on such dates; the
amount of net investment earnings with respect to the Reserve Account
earned during the related Collection Period; and the amounts, if any,
released from the Reserve Account to the Seller as owner of the funds
held therein;
(ix) the amount on deposit in the Simple Interest Differential
Account on such Distribution Date, after giving effect to all withdrawals
on such date, the aggregate amount of Simple Interest Differential
Account withdrawals to cover Simple Interest Differential Adjustments to
any Class on such Distribution Date and the aggregate amount of any
Simple Interest Differential Adjustments with respect to such
Distribution Date;
<PAGE>54
(x) the aggregate amount of Reserve Account Draws, if any,
and the application of such draws to cover any payment shortfalls to the
Class A, B or C Certificateholders, made on such Distribution Date;
(xi) the amount of Receivables (other than Liquidated
Receivables) as to which the related Obligors are: (i) 31 to 60 days
past due; (ii) 61-90 days past due; and (iii) 91 days or more past due in
making Scheduled Payments;
(xii) the 60 Day + Delinquency Rate, the aggregate amount of
Net Losses with respect to such Collection Period and its percentage of
the Original Principal Balance, the Repossession Inventory Rate and the
Reserve Requirement;
(xiii) the number and the aggregate Purchase Amount of
Receivables that became Purchased Receivables during the related
Collection Period;
(xiv) the number and principal balance of Receivables as to
which the Servicer has repossessed the Financed Vehicle during the
current period and the total number of repossessed Financed Vehicles from
prior periods that have yet to be liquidated;
(xv) the amount of Liquidation Proceeds, the amount of rebates
received from the Servicer as a result of cancelled warranty or extended
service contracts and the amount of claims paid under any Insurance
Policy (other than the VSI Insurance Policy) during the related
Collection Period and on a cumulative basis;
(xvi) the number of Receivables as to which a claim was filed
under the VSI Insurance Policy, the amount of such claims, the number of
claims rejected and the principal balance of related Receivables rejected
for the related Collection Period and on a cumulative basis;
(xvii) the amount of reinvestment income on funds held in
the Collection Account; and
(xviii) any other information regarding each distribution
which any Certificateholder reasonably requests in writing 30 days prior
to such distribution and which the Trustee can provide without undue
expense or effort.
(c) Within 30 days after the end of each calendar year, the Trustee
shall, provided it has received the necessary information from the Servicer or
the Backup Servicer, furnish to each Person who at any time during such
calendar year was a
<PAGE>55
Certificateholder of record and received any payment thereon (i) a report as
to the aggregate of amounts reported pursuant to clauses (a)(i), (ii) and (v)
of this Section 5.8 for such calendar year or applicable portion thereof
during which such person was a Certificateholder, and (ii) such information as
may be reasonably requested by the Certificateholders or required by the Code
and regulations thereunder, to enable such Holders to prepare their federal
and State income tax returns. Within 30 days after the end of each calendar
year, the Trustee shall furnish or shall cause to be furnished to the Seller
or its successors a statement containing such of the information provided
pursuant to this Section 5.8 as relates to distributions to the Seller, as
holder of the Excess Interest and owner of the funds on deposit in the Reserve
Account, aggregated for such calendar year, as well as information respecting
the amounts that were transferred from the Reserve Account to make payments to
Certificateholders and amounts otherwise distributable to the Seller which
were placed in the Reserve Account. The obligation of the Trustee set forth
in this paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided pursuant to any
requirements of the Code.
(d) The Servicer, at its own expense, shall prepare or cause a firm
of nationally recognized accountants to prepare any tax returns required to be
filed by the Trust, and the Trustee shall, at the Servicer's expense, execute
and file such returns if requested to do so by the Servicer unless applicable
law requires a different signatory to such return, in which case the Seller or
the holder of the Seller Partnership Interest in the Trust shall, where
permitted by law, sign such return. The Trustee, upon request, will furnish
the Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of
the Trust. The Seller or the holder of the Seller Partnership Interest in the
Trust shall serve as the "Tax Matters Partner" for purposes of the Code.
Section 5.9 Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article V and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer or the Backup
Servicer, as applicable, in writing, whether by way of a Servicer's
Certificate or otherwise.
<PAGE>56
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Class A, B and C Certificates
shall be substantially in the forms of Exhibit A, Exhibit B and Exhibit C,
respectively. The Certificates shall be issued in fully registered,
definitive form in minimum denominations of $250,000 and integral multiples of
$1,000 in excess thereof. The Certificates shall be executed on behalf of the
Trust by manual signature of a Trustee Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Trustee, shall be valid and binding obligations of the Trust, notwithstanding
that such individuals or any of them shall have ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such offices at the date of such Certificates.
Section 6.2 Appointment of Paying Agent. The Trustee may act as
or appoint one or more paying agents (each, a "Paying Agent"). Any such
Paying Agent must be rated no less than investment grade by the Rating Agency.
The Paying Agent shall make distributions to Certificateholders from amounts
delivered by the Trustee to the Paying Agent from amounts on deposit in the
Certificate Account pursuant to Article V. The Trustee may remove the Paying
Agent if the Trustee determines in its sole discretion that the Paying Agent
shall have failed to perform its obligations under this Agreement in any
material respect. The Paying Agent shall initially be the Trustee. A co-
paying agent may be chosen by the Trustee. Any co-paying agent or any
successor Paying Agent shall be permitted to resign as Paying Agent, co-paying
agent or successor Paying Agent, as the case may be, upon 30 days prior
written notice to the Trustee and the Seller. In the event that the Trustee,
any co-paying agent or any successor Paying Agent shall no longer be the
Paying Agent, co-paying agent or successor Paying Agent, as the case may be,
the Trustee shall appoint a successor to act as Paying Agent or co-paying
agent. The Trustee shall cause each Paying Agent and each successor Paying
Agent or any co-Paying Agent appointed by the Trustee (other than the Trustee,
which hereby agrees) to execute and deliver to the Trustee an instrument in
which such Paying Agent, successor Paying Agent or additional co-Paying Agent
shall agree with the Trustee that, as Paying Agent, such Paying Agent,
successor Paying Agent or additional co-Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto in a segregated trust account with
the corporate trust department of a depositary institution or trust company
having corporate trust powers and acting as trustee with respect to such funds
or with an institution having
<PAGE>57
the Required Deposit Rating (which may be such Paying Agent) until such sums
shall be paid to such Certificateholders and shall promptly notify the Trustee
of any default in making such payment. The Paying Agent shall return all
unclaimed funds to the Trustee and upon removal of a Paying Agent shall also
return all funds in its possession to the Trustee. The provisions of Sections
10.1, 10.4 and 10.5 shall apply to each Paying Agent in its role as Paying
Agent. The fees of any Paying Agent or co-paying agent shall be paid by the
Trustee. Each Paying Agent and co-paying agent must be acceptable to the
Seller.
Section 6.3 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents
(each, an "Authenticating Agent") with respect to the Certificates which shall
be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Whenever reference is
made in this Agreement to the authentication of Certificates by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
The Trustee is hereby appointed as the initial Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of
an Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Seller. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
notice of termination to such Authenticating Agent and to the Seller. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time an Authenticating Agent shall cease to be acceptable to the
Trustee or the Seller, the Trustee may appoint a successor Authenticating
Agent. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Seller.
(d) The Trustee agrees to pay to each Authenticating Agent from its
own funds from time to time reasonable compensation for its services under
this Section 6.3.
<PAGE>58
(e) The provisions of Sections 10.1, 10.4 and 10.5 shall be
applicable to any Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.3, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in substantially
the following form:
This is one of the Certificates described in the Pooling and
Servicing Agreement.
___________________________
as Authenticating Agent
for the Trustee,
By:________________________
Authorized Signatory
Section 6.4 Authentication of Certificates. The Trustee shall
cause the Certificates to be executed on behalf of the Trust, authenticated,
and delivered to or upon the written order of the Seller, pursuant to this
Agreement. No Certificate shall entitle its Holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on
such Certificate a certificate of authentication substantially in the form set
forth in Exhibit A, Exhibit B or Exhibit C hereto, as the case may be,
executed by the Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates issued on the Closing
Date shall be dated the Closing Date. All Certificates issued upon transfer
or exchange thereafter shall be dated the date of their authentication.
Section 6.5 Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall be the Trustee and any co-
registrar chosen by the Servicer and acceptable to the Trustee. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 6.9, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
<PAGE>59
(b) No transfer of a Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied with,
(ii) such transfer is exempt from the registration requirements under said
Securities Act and applicable state securities laws or (iii) such Certificate
is transferred to a Person who the transferor reasonably believes is a
"qualified institutional buyer" (as defined in Rule 144A of the Securities
Act) that is purchasing such Certificate for its own account or the account of
a qualified institutional buyer to whom notice is given that the transfer is
being made in reliance on said Rule 144A and such transfer complies with any
applicable State securities laws. In the event that a transfer is to be made
in reliance upon clause (ii) above, the Certificateholder desiring to effect
such transfer and such Certificateholder's prospective transferee must each
(A) provide a letter to the Seller and the Trustee regarding the facts
surrounding such transfer in a form substantially similar to that attached
hereto as Exhibit G and (B) provide the Trustee with a written Opinion of
Counsel in form and substance satisfactory to the Seller and the Trustee that
such transfer may be made pursuant to an exemption from the Securities Act or
State securities laws, which Opinion of Counsel shall not be an expense of the
Seller or the Trustee. Neither the Seller nor the Trustee is under an
obligation to register the Certificates under said Securities Act or any other
securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its
sole discretion.
(c) Certificateholders, by virtue of the acquisition and holding
thereof, will be deemed to have represented and agreed as follows:
(i) it is a qualified institutional buyer as defined in Rule 144A
or an accredited investor as defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D promulgated under the Securities Act and is acquiring the
Certificates for its own institutional account or for the account of a
qualified institutional buyer or an institutional accredited investor;
(ii) it understands that the Certificates have been offered in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to resell, pledge
or otherwise transfer any Certificates, such Certificates may be resold,
pledged or transferred only (A) to a person whom the Seller reasonably
believes is a qualified institutional buyer (as defined in Rule 144A
under the Securities Act) that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on
<PAGE>60
Rule 144A, (B) pursuant to an effective registration statement under the
Securities Act or (C) in reliance on another exemption under the Securities
Act and, in each case, in compliance with any applicable State securities
laws;
(iii) it understands that the Certificates will bear a legend
substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (3) IN
RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE AND THE SELLER
OF A CERTIFICATION OF THE TRANSFEROR AND THE TRANSFEREE AND AN OPINION OF
COUNSEL (EACH IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
SELLER) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. ANY TRANSFER OF THIS SECURITY
MUST COMPLY WITH ANY ADDITIONAL TRANSFER RESTRICTIONS IN SECTION 6.5 OF
THE POOLING AND SERVICING AGREEMENT; and
(iv) [Applicable to Class A Certificates only] if such Holder is
an employee benefit plan or other retirement arrangement subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
the Code (a "Plan") , such Holder is an accredited investor as defined in
Regulation D promulgated under the Securities Act.
(v) [Applicable to Class B Certificates and the Class C
Certificates] such Holder represents that it is neither a Plan nor
purchasing the Certificates with "plan assets" of any Plan.
(d) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office, the Trust shall execute, and the Trustee shall
authenticate and deliver, in the
<PAGE>61
name of the designated transferee or transferees, one or more new Certificates
of like Class in authorized denominations of a like aggregate amount dated the
date of authentication. At the option of a Holder, Certificates may be
exchanged for other Certificates of like Class of authorized denominations of
a like aggregate amount upon surrender of the Certificates to be exchanged at
the Corporate Trust Office.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer and exchange shall be
canceled and subsequently disposed of by the Trustee in accordance with its
customary practices.
(f) No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
Section 6.6 Mutilated, Destroyed, Lost, or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar, the Trustee and the
Servicer such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Trustee on behalf of the Trust
shall execute and the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and denomination. In connection with the issuance
of any new Certificate under this Section 6.6, the Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section 6.6 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen, or destroyed Certificate shall be found at
any time.
Section 6.7 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.5(c) and for all other purposes
whatsoever,
<PAGE>62
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
Section 6.8 Access to List of Certificateholders' Names and
Addresses. The Trustee shall furnish or cause to be furnished to the
Servicer, at the expense of the Trust, within 15 days after receipt by the
Trustee of a request therefor from the Servicer, in writing, a list of the
names and addresses of the Certificateholders as of the most recent Record
Date. If three (3) or more Certificateholders, or one (1) or more
Certificateholders evidencing not less than 25% of the Voting Interests
thereof apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such
application shall be accompanied by a copy of the communication that such
applicants propose to transmit, then the Trustee shall, within five (5)
Business Days after the receipt for such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Holder, by receiving and holding a Certificate, shall be deemed to have
agreed to hold neither of the Servicer or the Trustee accountable by reason of
the disclosure of its name and address, regardless of the source from which
such information was derived.
Section 6.9 Maintenance of Office or Agency. The Trustee shall
maintain in the Borough of Manhattan, the City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served.
The Trustee initially designates 77 Water Street, 4th Floor, New York, New
York 10005 as its office for such purposes. The Trustee shall give prompt
written notice to the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
ARTICLE VII
THE SELLER
Section 7.1 Representations of Seller. The Seller makes the
following representations to the Trustee, on which the Trustee on behalf of
itself and the Certificateholders relied in accepting the Receivables in trust
and executing and authenticating the Certificates. The representations speak
as of the execution and delivery of this Agreement and shall survive the sale
of the Receivables to the Trustee in trust for the benefit of the
Certificateholders.
<PAGE>63
(i) Due Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority and legal right to
acquire and own the Receivables.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(iii) Power and Authority. The Seller has the power and authority
to execute and deliver this Agreement and to carry out its terms; the
Seller has full power and authority to sell and assign the property sold
and assigned to and deposited with the Trustee as part of the Trust and
has duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all necessary
corporate action.
(iv) Valid and Binding Obligation. This Agreement shall constitute
a legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights in general and by general
equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law), or by public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from liabilities under
applicable securities laws.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the certificate of incorporation or by-laws of the Seller,
or any indenture, loan agreement, mortgage or other agreement, or other
instrument to which the Seller is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its
properties
<PAGE>64
pursuant to the terms of any such indenture, loan agreement, mortgage or other
agreement or other instrument (other than this Agreement); nor violate any law
or, to the best of the Seller's knowledge, any order, rule or regulation
applicable to the Seller of any court or of any federal or State regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the best of the Seller's knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(A) asserting the invalidity of this Agreement or the Certificates; (B)
seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement, (C) seeking
any determination or ruling that might materially and adversely affect
the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or the Certificates, or (D) relating
to the Seller and which might adversely affect the federal or State
income tax attributes of the Certificates.
(vii) No Approvals. No approval, consent, authorization or other
action by, or filing with, any governmental authority of the United
States of America or any of the States is required or necessary to
consummate the transactions contemplated hereby, except as such as have
been duly obtained or made by the Closing Date. The Seller complies in
all material respects with all applicable laws, rules and orders with
respect to itself, its business and properties and the Receivables; and
Seller maintains all applicable permits and certifications.
(viii) Taxes. The Seller has filed all federal, State, county,
local and foreign income, franchise and other tax returns required to be
filed by it through the date hereof, and has paid all taxes reflected as
due thereon. There is no pending dispute with any taxing authority that,
if determined adversely to the Seller, would result in the assertion by
any taxing authority of any material tax deficiency, and the Seller has
no knowledge of a proposed liability for any tax to be imposed upon the
Seller's properties or assets for which there is not an adequate reserve
reflected in the Seller's current financial statements.
<PAGE>65
(ix) Adequate Provisions for Taxes. The provisions for taxes on
the Seller's books are in accordance with generally accepted accounting
principles.
(x) Pension/Profit Sharing Plans. No contribution failure has
occurred with respect to any pension or profit sharing plan, and all such
plans have been fully funded as of the date of this Agreement
(xi) Trade Names. "Asta Auto Receivables Company" is the only
trade name under which the Seller is currently operating its business and
under which the Seller operated its business for the period of time
during which the Seller was in existence preceding the Closing Date.
(xii) Ability to Perform. There has been no material impairment in
the ability of the Seller to perform its obligations under this
Agreement.
(xiii) Chief Executive Office. Since its inception, the Seller
has maintained its chief executive office in the State of New Jersey and
there have been no other locations of the Seller's chief executive office
preceding the Closing Date. The Seller shall give written notice to the
Trustee and the Certificateholders at least 30 days prior to relocating
its chief executive office and shall make, or cause the appropriate
Person to make, such filings under the UCC as shall be necessary to
maintain the perfected, first priority security interest in the
Receivables granted hereunder in favor of the Trust.
(xiv) Adverse Orders. There is no injunction, writ, restraining
order or other order of any nature binding upon the Seller that adversely
affects the Seller's performance of this Agreement and the transactions
contemplated thereby.
(xv) Solvent. The Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated hereunder; the
Seller is paying its debts as they become due; Seller, after giving
effect to the contemplated transactions, will have adequate capital to
conduct its business.
(xvi) Lock-Box Account. Each Obligor of a Receivable has been
directed and is required to remit payments to the Lock-Box.
(xvii) Consolidation. The Seller has operated and will operate
its business such that its assets and liabilities will not be
substantively consolidated with the assets and liabilities of Asta
Funding and its separate
<PAGE>66
existence will not be disregarded in any State or federal court proceeding.
(xviii) Business Purpose. The Seller will acquire and sell,
transfer, assign and otherwise convey (for State law, tax and financial
accounting purposes) the Receivables for a bona fide business purpose.
(xix) [Reserved].
(xx) Valid Transfer. The Purchase Agreement constitutes a valid
transfer to the Seller of all of Asta Funding's right, title and interest
in the Receivables transferred to the Seller pursuant to such Purchase
Agreement.
(xxi) Seller's Obligations. The Seller has submitted all necessary
documentation for payment of the Receivables to the Obligors and has
fulfilled all of its applicable obligations hereunder required to be
fulfilled as of the Closing Date.
(xxii) 1940 Act. The Seller is not, and is not controlled by,
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
Section 7.2 Liability of Seller; Indemnities. The Seller shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller hereunder and the representations and
warranties made by the Seller in this Agreement and as provided in Section
12.14.
(a) The Seller shall indemnify, defend and hold harmless the
Trustee, the Backup Servicer and the Custodian, including the officers,
directors, employees and agents of each such entity, and each
Certificateholder from and against any taxes, other than income and franchise
taxes, that may at any time be asserted against the Trustee, the Trust, the
Backup Servicer, the Custodian or the Certificateholders with respect to, and
as of the date of, the transfer of the Receivables to the Trust or the
issuance and original sale of the Certificates, including any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the
Trustee, the Trust, the Backup Servicer, the Custodian and each
Certificateholder from and against any loss, liability or expense incurred by
reason of (a) the Seller's willful misfeasance, bad faith, or negligence in
the performance
<PAGE>67
of its duties hereunder, or by reason of reckless disregard of its obligations
and duties hereunder or (b) the Seller's violation of federal or State
securities laws in connection with the sale of the Certificates.
Indemnification under this Section 7.2 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Seller shall have made any indemnity payments to the
Trustee pursuant to this Section and the Trustee thereafter shall collect any
of such amounts from others, the Trustee shall repay such amounts to the
Seller, without interest.
Section 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party, or (c) which may succeed to the properties and
assets of the Seller substantially as a whole (excluding, however, any
transaction involving the sale of Receivables in a securitization), which
Person in any of the foregoing cases executes an agreement or assumption to
perform every obligation of the Seller hereunder, shall be the successor to
the Seller hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that
(i) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.4 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would
become an Event of Default shall have happened and be continuing, (ii) the
Seller shall have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement or assumption comply with this Section 7.3 and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with and (iii) the Seller shall have delivered
to the Trustee an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables (other
than any notations or filings with respect to the title documents for the
Financed Vehicles), and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this Section 7.3 to the Rating
Agency and shall have received confirmation from the Rating Agency that the
then current rating of the Certificates will not be downgraded as a result of
such merger, consolidation or succession. Notwithstanding anything herein to
the contrary,
<PAGE>68
the execution of the foregoing agreement or assumption and compliance with
clauses (i), (ii) or (iii) above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c) above.
Section 7.4 Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations hereunder, and that in its opinion may involve it in any expense
or liability.
Section 7.5 Seller May Own Certificates. The Seller and any
Person controlling, controlled by or under common control with the Seller may
in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Seller
or an Affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" specified in Section 2.1. Certificates so owned by or
pledged to the Seller or such controlling or commonly controlled Person shall
have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the
Certificates except as otherwise provided herein or by the definition of
Certificateholder.
Section 7.6 Covenants of the Seller. The Seller shall:
(i) not impair the rights of the Certificateholders or the Trustee
in the Receivables;
(ii) except for the sale and assignment effected under this
Agreement and prior to the termination of the Trust, not sell, pledge,
assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Receivable sold to the Trustee or any
interest therein;
(iii) immediately notify the Trustee of the existence of any Lien
on any Receivable;
(iv) defend the right, title and interest of the Trustee in, to and
under the Receivables transferred to the Trustee, against all claims of
third parties claiming through or under the Seller, Asta Funding or the
Servicer;
(v) comply in all respects with the terms and conditions of the
Purchase Agreement and not amend, modify,
<PAGE>69
or waive any provision of the Purchase Agreement in any manner relating to the
obligation of Asta Funding to repurchase Receivables or in any manner that
would have a materially adverse effect on the interests of the
Certificateholders;
(vi) promptly notify the Trustee and the Certificateholders of the
occurrence of any Event of Default and any breach by the Seller, the
Servicer or the Backup Servicer of any of its respective covenants or
representations and warranties contained in this Agreement or, with
respect to the Seller, in the Purchase Agreement;
(vii) make at its sole cost and expense any filings, reports,
notices or applications and seek any consents or authorizations from any
and all government agencies, tribunals or authorities in accordance with
the UCC and any State vehicle license or registration authority on behalf
of the Trust as may be necessary or advisable or reasonably requested by
the Trustee to create, maintain and protect a security interest of the
Trust in, to and on the Financed Vehicles and a first priority perfected
ownership interest of the Trust in, to and on the Receivables transferred
to it; and
(viii) upon request of any Certificateholder, furnish the
information required by paragraph (d)(4) of Rule 144A promulgated under
the Securities Act.
Section 7.7 Enforcement by Trustee. The Seller hereby
acknowledges and agrees that the following covenants and agreements of the
Seller shall be enforceable by the Trustee at all times until the Trust is
terminated:
(a) the Seller shall not engage in any business or activity other
than as currently set forth in its Certificate of Incorporation;
(b) the Seller shall not consolidate or merge with or into any
other entity or convey or transfer its properties and assets
substantially as an entirety to any entity unless (A) the entity (if
other than the Seller) formed or surviving such consolidation or merger,
or that acquires by conveyance or transfer the properties and assets of
the Seller substantially as an entirety, shall be organized and existing
under the laws of the United States of America or any State thereof, and
shall expressly assume in form satisfactory to the Rating Agency and the
Majority Certificateholders, the performance of every covenant on the
part of the Seller to be performed or observed pursuant to this Agreement
and the Purchase Agreement, (B) immediately
<PAGE>70
after giving effect to such transaction, no default or event of default
under this Agreement shall have occurred and be continuing and (C) the
Seller shall have delivered to the Rating Agency, each Certificateholder
and the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance or transfer comply
with this Agreement;
(c) the Seller shall not dissolve or liquidate, in whole or in
part, except (A) as permitted in paragraph (ii) above or (B) with the
prior written consent of the Trustee and prior written confirmation from
the Rating Agency (a copy of which shall be provided to the Trustee and
each Certificateholder by the Seller) that such dissolution or
liquidation will have no adverse effect on the rating assigned to the
Certificates;
(d) the funds and other assets of the Seller shall not be
commingled with those of any other corporation, entity or Person,
including, but not limited to, the parent or Affiliates of the Seller;
(e) the Seller shall not hold itself out as being liable for the
debts of any other party, including, but not limited to, the debts of the
parent or Affiliates of the Seller;
(f) the Seller shall not form, or cause to be formed, or otherwise
have, any subsidiaries;
(g) the Seller shall act solely in its corporate name and through
the duly authorized officers or agents in the conduct of its business,
and shall conduct its business so as not to mislead others as to the
identity of the entity with which they are concerned;
(h) at all times, except in the case of a temporary vacancy, which
shall promptly be filled, the Seller shall have on its board of directors
at least one director who qualifies as an "Independent Director" as such
term is defined in the Seller's Certificate of Incorporation as
originally filed with the Delaware Secretary of State's office;
(i) the Seller shall maintain records and books of account of the
Seller and shall not commingle such records and books of account with the
records and books of account of any Person. The books of the Seller may
be kept (subject to any provision contained in the statutes) inside or
outside the State of New Jersey at such place or places as
<PAGE>71
may be designated from time to time by the board of directors of the
Seller;
(j) the board of directors of the Seller shall hold appropriate
meetings to authorize all of its corporate actions. Regular meetings of
the board of directors of the Seller shall be held not less frequently
than one (1) time per annum;
(k) meetings of the shareholders of the Seller shall be held not
less frequently than one time per annum;
(l) the Seller shall not, without the affirmative unanimous vote
of the whole board of directors of the Seller (including at least one
director referred to in clause (h) above), institute any proceedings to
adjudicate the Seller a bankrupt or insolvent, consent to the institution
of bankruptcy or insolvency proceedings against the Seller, file a
petition seeking or consenting to reorganization or relief under any
applicable federal or State law relating to bankruptcy, consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Seller or a substantial part of its
property or admit its inability to pay its debts generally as they become
due or authorize any of the foregoing to be done or taken on behalf of
the Seller;
(m) the Seller is not and shall not be involved in the day-to-day
or other management of its parent or any of its Affiliates;
(n) other than the purchase and sale or pledge of assets as
provided in this Agreement and related agreements with respect to this
transaction and other transactions relating to the purchase of auto loan
receivables and the issuance of rated debt or rated certificates of
participation, the Seller shall engage in no other transactions with any
of its Affiliates;
(o) the Seller shall maintain a separate business office and
telephone number from any of its Affiliates;
(p) the Seller's financial statements shall reflect its separate
legal existence from any of its Affiliates;
(q) the Seller shall use separate invoices, stationery and checks
from any of its Affiliates;
(r) the Seller shall not suffer or permit the credit or assets of
Asta Funding or any of its Affiliates to be held out as available for the
obligations of the Seller;
<PAGE>72
(s) the Seller shall enter into transactions with Asta Funding or
its affiliates only on commercially reasonable terms;
(t) the Seller shall not incur any indebtedness other than trade
payables and expense accruals incurred in its ordinary course of business
and any indebtedness contemplated by this Agreement; and
(u) the Seller shall not issue any Securities or incur or issue
any Obligations under any other pooling and servicing agreement, purchase
agreement or otherwise, unless such agreement contains an express
provision limiting recourse to the Seller to the assets involved in the
transaction to which such agreement relates.
Section 7.8 No Bankruptcy Petition. The Seller covenants and
agrees that prior to the date which is one year and one day after the payment
in full of all securities issued by the Seller or by a trust for which the
Seller was the depositor, which securities were rated by any nationally
recognized statistical rating organization, it will not institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or State bankruptcy or
similar law.
ARTICLE VIII
THE SERVICER
Section 8.1 Representations of Servicer. The Servicer makes the
following representations to the Trustee on which the Trustee on behalf of
itself and the Certificateholders relies in accepting the Receivables in trust
and executing and authenticating the Certificates. The representations speak
as of the execution and delivery of this Agreement and shall survive the sale
of the Receivables to the Trustee in trust for the benefit of the
Certificateholders.
(a) Due Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority and legal right to acquire, own and service
the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good
<PAGE>73
standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of
its business (including the servicing of the Receivables as required by this
Agreement) shall require such qualifications, except where failure to qualify
will not have a material adverse effect on the Receivables or the business,
prospects or financial condition of the Servicer.
(c) Power and Authority. The Servicer has the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Servicer by all necessary corporate action.
(d) Valid and Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights in general and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law), or by public policy considerations underlying the
securities laws, to the extent that such public policy considerations limit
the enforceability of the provisions of this Agreement which purport to
provide indemnification from liabilities under applicable securities laws.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Servicer, or any indenture,
loan agreement, mortgage or other agreement or other instrument to which the
Servicer is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
indenture, loan agreement, mortgage or other agreement or other instrument
(other than this Agreement); nor violate any law or, to the best of the
Servicer's knowledge, any order, rule or regulation applicable to the Servicer
of any court or of any federal or State regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best of the Servicer's knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement or the Certificates,
<PAGE>74
(ii) seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates, or (iv) relating to the
Servicer and which might adversely affect the federal income tax attributes of
the Certificates.
Section 8.2 Indemnities of Servicer.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer
hereunder and the representations made by the Servicer herein.
(i) the Servicer shall defend, indemnify and hold harmless the
Trustee, the Custodian, the Backup Servicer and the Seller, including
officers, directors, employees and agents of each such entity, and the
Trust and the Certificateholders from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership, or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle;
(ii) The Seller shall indemnify, defend and hold harmless the
Trustee, the Custodian, the Backup Servicer, and the Seller, including
officers, directors, employees and agents of each such entity, and the
Trust from and against any taxes that may at any time be asserted against
the Trustee, the Custodian, the Backup Servicer, the Trust or the Seller
with respect to the Trust including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes and costs and expenses in defending against the same;
(iii) the Servicer shall indemnify, defend and hold harmless the
Trustee, the Backup Servicer and the Seller, including officers,
directors, employees and agents of each such entity, and the Trust and
the Certificateholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost,
expense, loss, claim, damage or liability arose out of, or was imposed
upon the Trustee, the Backup Servicer, the Seller, the Trust or the
Certificateholders through, the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties hereunder or by
reason of reckless disregard of its obligations and duties hereunder; and
<PAGE>75
(iv) the Servicer shall indemnify, defend and hold harmless the
Trustee, the Backup Servicer and the Custodian, including their officers,
directors, employees and agents, from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained, contained in the Servicing Assumption Agreement or
contained in the documents contemplated hereby or thereby, if any, except
to the extent that such cost, expense, loss, claim, damage or liability:
(A) shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Trustee; (B) relates to any tax
other than the taxes with respect to which the Servicer shall be required
to indemnify the Trustee, the Backup Servicer or the Custodian; or (C)
shall arise from the Trustee's, the Backup Servicer's or the Custodian's
breach of any of its representations or warranties set forth in Section
10.12.
(b) For purposes of this Section, in the event of the termination
of the rights and obligations of a Servicer (or any successor thereto pursuant
to Section 8.3) as Servicer pursuant to Section 9.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the Servicer provided by
Section 8.2(a).
(c) Indemnification under this Section 8.2 shall survive the
termination of this Agreement and the resignation or removal of the Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer,
without interest.
Section 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Backup Servicer.
(a) Any Person (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger or consolidation to which
the Servicer shall be a party, or (iii) which may succeed to the properties
and assets of the Servicer substantially as a whole, shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
and whether or not such assumption agreement is executed, shall be the
successor to the Servicer hereunder without further act on the part of any of
the parties hereto; provided, however, that (A) immediately after giving
effect to such transaction, no Event
<PAGE>76
of Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default shall have happened and be continuing, (B) the
Servicer shall have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 8.3 and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (C) the Servicer shall have delivered to
the Trustee an Opinion of Counsel either (1) stating that, in the opinion of
such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables (other
than any notations or filings with respect to the title documents for the
Financed Vehicles) and reciting the details of such filings, or (2) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest and (D) nothing herein shall be deemed to
release the Servicer from any obligation. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement or assumption and
compliance with clauses (A), (B) or (C) above shall be conditions to the
consummation of the transactions referred to in clause (i), (ii) or (iii)
above.
(b) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) which may result from any merger or consolidation to which
the Backup Servicer shall be a party, or (iii) which may succeed to the
properties and assets of the Backup Servicer substantially as a whole, shall
execute an agreement of assumption to perform every obligation of the Backup
Servicer hereunder, and whether or not such assumption agreement is executed,
shall be the successor to the Backup Servicer hereunder without further act on
the part of any of the parties hereto; provided, however, that nothing herein
shall be deemed to release the Backup Servicer from any obligation.
Section 8.4 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided hereunder, for any action taken or for
refraining from the taking of any action pursuant hereto; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith or negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. The Servicer and any director or officer or employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
<PAGE>77
Except as specifically provided in this Agreement, the Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its duties to service the Receivables
in accordance with this Agreement, and that in its opinion may involve it in
any expense or liability.
Section 8.5 Servicer and Backup Servicer Not to Resign. Subject
to the provisions of Section 8.3 hereof, neither the Servicer nor the Backup
Servicer may resign from the obligations and duties hereby imposed on it as
Servicer or Backup Servicer, as the case may be, under this Agreement except
upon determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in
violation of such legal requirements in a manner which would result in a
material adverse effect on the Servicer or the Backup Servicer, as the case
may be. Notice of any such determination permitting the resignation of the
Servicer or the Backup Servicer, as the case may be, shall be communicated to
the Trustee at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination shall be evidenced by an Opinion of Counsel
to such effect delivered to and satisfactory to the Trustee concurrently with
or promptly after such notice. No such resignation of the Servicer shall
become effective until a successor servicer shall have assumed the
responsibilities and obligations of Asta Funding in accordance with Section
9.2 hereof and the Servicing Assumption Agreement, if applicable. No such
resignation of the Backup Servicer shall become effective until an entity
acceptable to the Trustee shall have assumed the responsibilities and
obligations of the Backup Servicer; provided, however, that if no such entity
shall have assumed such responsibilities and obligations of the Backup
Servicer within 30 days of the resignation of the Backup Servicer, the Backup
Servicer may petition a court of competent jurisdiction for the appointment of
a successor to the Backup Servicer.
ARTICLE IX
DEFAULT
Section 9.1 Events of Default. If any one of the following
events ("Events of Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit under this Agreement that shall continue unremedied for a period of
three (3) Business Days; or the certificate required by Section 4.9, the
statement required by
<PAGE>78
Section 4.10, or the report required by Section 4.11 shall not have been
delivered within ten (10) days after the date such certificates or statements
or reports, as the case may be, are required to be delivered; or
(b) failure on the part of the Servicer, or the Seller, as the
case may be, duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or the Seller (as the case may be) set
forth in the Certificates or in this Agreement, which failure shall continue
unremedied for a period of 30 days after the date on which written notice of
such failure requiring the same to be remedied, shall have been given (i) to
the Servicer or the Seller as the case may be, by the Trustee, or (ii) to the
Servicer or the Seller, as the case may be, and to the Trustee by the Majority
Certificateholders; or
(c) the filing of a petition against the Seller or Servicer in any
court or agency or supervisory authority having jurisdiction in the premises
for (i) the appointment of a conservator, receiver or liquidator for the
Servicer or the Seller (or, so long as Asta Funding is Servicer, Asta Funding
or any of its subsidiaries) in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for (ii) the
winding up or liquidation of its affairs, and the continuance of any such
petition unstayed and in effect for a period of 60 consecutive days; or
(d) the consent by the Servicer or the Seller (or, so long as Asta
Funding is Servicer, Asta Funding or any of its subsidiaries) to the
appointment of a conservator, trustee, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or the Seller (or, so long
as Asta Funding is Servicer, Asta Funding or any of its subsidiaries) of or
relating to substantially all of its property; or the Servicer or the Seller
(or, so long as Asta Funding is Servicer, Asta Funding or any of its
subsidiaries) shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations; or
(e) So long as Asta Funding is Servicer, (i)(A) the occurrence or
existence of an event or condition in respect of Asta Funding under one or
more agreements or instruments relating to any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise) in
respect of borrowed money in an aggregate amount of not less than $500,000
(the "Cross-Acceleration Amount") which has resulted in such obligation
becoming due and payable under such agreements or
<PAGE>79
instruments, before it would otherwise have been due and payable or (B) the
failure by Asta Funding to make one or more payments at maturity in an
aggregate amount of not less than the Cross-Acceleration Amount under such
agreements or instruments; or (ii) one or more judgments are entered against
Asta Funding within any twelve month period involving in the aggregate a
liability (to the extent not paid or fully covered by insurance) of $100,000
or more at any one time and either (A) enforcement proceedings have been
commenced and are continuing by any party entitled to enforce such judgment or
(B) there is a period of ten (10) consecutive days during which a stay of
enforcement of such judgment or judgments are not bonded or discharged or such
judgment or judgments are not in effect; or
(f) the cumulative Net Losses in the current and all prior
Collection Periods exceeds 15.00% of the Original Pool Balance; or
(g) the occurrence of a 60 Day + Delinquency Rate in any
Collection Period exceeding 6.00% of the Pool Balance during such Collection
Period;
then, and in each and every case, so long as an Event of Default shall not
have been remedied, then either the Trustee or the Majority
Certificateholders, by notice then given in writing to the Servicer and the
Trustee may terminate all of the rights and obligations of the Servicer
hereunder. The Servicer shall be entitled to its pro rata share of the
Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer hereunder,
whether with respect to the Certificates or the Receivables or otherwise,
shall, without further action, pass to and be vested in (i) the Backup
Servicer or (ii) such successor Servicer as may be appointed under Section
9.2; provided, however, that the successor Servicer shall have no liability
with respect to any obligation which was required to be performed by the
predecessor Servicer prior to the date the successor Servicer becomes the
Servicer or any claim of a third party based on any alleged action or inaction
of the predecessor Servicer; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related
documents, or otherwise.
The predecessor Servicer shall cooperate with the successor Servicer
and the Trustee in effecting the termination
<PAGE>80
of the responsibilities and rights of the predecessor Servicer hereunder,
including the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held or should have been held by
the predecessor Servicer for deposit, or shall thereafter be received with
respect to a Receivable and the delivery to the successor Servicer of all
files and records concerning the Receivables and a computer tape or diskette
in readable form containing all information necessary to enable the successor
Servicer to service the Receivables and the other property of the Trust. All
reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Receivable Files to the successor Servicer
and amending this Agreement to reflect such succession as Servicer pursuant to
this Section 9.1 shall be paid by the predecessor Servicer (unless such
predecessor Servicer was previously a Backup Servicer) upon presentation of
reasonable documentation of such costs and expenses. In addition, any
successor Servicer shall be entitled to payment from the immediate predecessor
Servicer for reasonable transition expenses incurred in connection with acting
as successor Servicer, and to the extent not so paid, such payment shall be
made pursuant to Section 5.5(c)(i) hereof. Upon receipt of notice of the
occurrence of an Event of Default, the Trustee shall give notice thereof to
the Rating Agency. The predecessor Servicer shall grant the Trustee and the
Backup Servicer reasonable access to the predecessor Servicer's premises at
the predecessor Servicer's expense. If requested by the Backup Servicer or
successor Servicer, the predecessor Servicer shall terminate any arrangements
relating to the Lock-Box and the Lock-Box Account with the Lock-Box Bank and
direct the Obligors to make all payments under the Receivables directly to the
Successor Servicer at the predecessor Servicer's expense (in which event the
successor Servicer shall process such payments directly or through a Lock-Box
and a Lock-Box Account with a Lock-Box Bank).
Section 9.2 Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination pursuant
to Section 9.1 or the Servicer's resignation in accordance with the terms
hereof, the predecessor Servicer shall continue to perform its functions as
Servicer hereunder, in the case of termination, only until the date specified
in such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of expiration and
non-renewal of the term of the Servicer upon the expiration of such term, and
in the case of resignation, until the later of (A) the date 45 days from the
delivery to the Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement
and (B) the date upon which the predecessor Servicer shall become unable to
act as Servicer, as specified in the
<PAGE>81
notice of resignation and accompanying Opinion of Counsel. In the event of
termination of the Servicer, Harris Trust and Savings Bank, as Backup
Servicer, shall assume the obligations of Servicer hereunder on the date
specified in such written notice (the "Assumption Date") pursuant to the
Servicing Assumption Agreement. Notwithstanding the Backup Servicer's
assumption of, and its agreement to perform and observe all duties,
responsibilities and obligations of Asta Funding as Servicer under this
Agreement arising on and after the Assumption Date, the Backup Servicer shall
not be deemed to have assumed or to become liable for, or otherwise have any
liability for, any duties, responsibilities, obligations or liabilities of
Asta Funding or any predecessor Servicer arising on or before the Assumption
Date, whether provided for by the terms of this Agreement, arising by
operation of law or otherwise, including, without limitation, any liability
for any duties, responsibilities, obligations or liabilities of Asta Funding
or any predecessor Servicer arising on or before the Assumption Date under
Section 4.7 or 8.2 of this Agreement, regardless of when the liability, duty,
responsibility or obligation of Asta Funding or any predecessor Servicer
arose, whether provided by the terms of this Agreement, arising by operation
of law or otherwise. In addition, if the Backup Servicer shall be legally
unable to act as Servicer and an Event of Default shall have occurred and be
continuing, the Backup Servicer, the Trustee or the Majority
Certificateholders may petition a court of competent jurisdiction to appoint
any successor to the Servicer. Pending appointment pursuant to the preceding
sentence, the Backup Servicer shall act as successor Servicer unless it is
legally unable to do so, in which event the predecessor Servicer shall
continue to act as Servicer until a successor has been appointed and accepted
such appointment. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section 9.2, then the Trustee shall appoint,
or petition a court of competent jurisdiction to appoint, any established
institution having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables, as the
successor to the Servicer hereunder.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and, except with respect
to the limitations of the Backup Servicer's obligations under Section 9.2(a),
shall be subject to all the responsibilities, duties and liabilities arising
thereafter relating thereto placed on the predecessor Servicer, and shall be
entitled to the Servicing Fee and all of the rights granted to the predecessor
Servicer by the terms and provisions of this Agreement.
<PAGE>82
Section 9.3 Notification to Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to
this Article IX, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agency.
Section 9.4 Action Upon Certain Failures of the Servicer. In the
event that the Trustee shall have knowledge of any failure of the Servicer
specified in Section 9.1 that would give rise to a right of termination under
such Section upon the Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Servicer, the Certificateholders and
the Rating Agency. For all purposes of this Agreement, in the absence of
actual knowledge by a Trustee Officer, the Trustee shall not be deemed to have
knowledge of any failure of the Servicer as specified in Section 9.1 unless
notified thereof in writing by the Servicer or by a Certificateholder. The
Trustee shall be under no duty or obligation to investigate or inquire as to
any potential default of the Servicer specified in Section 9.1.
Section 9.5 Waiver of Past Defaults. The Majority
Certificateholders (or, in the case of a default referred to in Section
9.1(a), the Holders of Certificates evidencing 100% of the Voting Interests
thereof) may, on behalf of all Holders of Certificates, waive any default by
the Servicer or the Seller in their performance of their respective
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
ARTICLE X
THE TRUSTEE
Section 10.1 Duties of Trustee. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have
been cured or waived, shall undertake to perform such duties and only such
duties as are specifically set forth in this Agreement. Notwithstanding any
other provision of this Agreement, if an Event of Default shall have occurred
and shall not have been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it hereby and shall use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. The
Trustee shall provide written notice to the Rating Agency immediately upon the
<PAGE>83
occurrence of any Event of Default, or event which at the expiration of a
grace period will become an Event of Default, in either case, solely to the
extent that a Trustee Officer has actual knowledge of such event (there being
no duty of investigation regarding the existence of such events). In
addition, on each Determination Date the Trustee shall send the Rating Agency
a letter stating that no Trustee Officer has any actual knowledge (without
investigation) of any such events.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the schedule of
Receivables included as Schedule 1 hereto and shall retain copies of all
Servicer's Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as shall be
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be liable for an error of judgment made
in good faith by a Trustee Officer, unless it shall be proved that the
Trustee shall have been negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Holders of Certificates
evidencing not less than 50% of the Voting Interests thereof relating to
the time, method and place of conducting any proceeding for any remedy
<PAGE>84
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement;
(iv) the Trustee shall not be charged with knowledge of any Event
of Default, unless a Trustee Officer assigned to the Trustee's Corporate
Trust Office receives written notice of such Event of Default from the
Servicer or the Seller, as the case may be, or the Holders of
Certificates evidencing not less than 10% of the Voting Interests thereof
(such notice shall constitute actual knowledge of an Event of Default by
the Trustee);
(v) without limiting the generality of this Section 10.1 or
Section 10.3, the Trustee shall have no duty (A) to see to any recording,
filing, or depositing of this Agreement or any agreement referred to
therein or any financing statement or continuation statement evidencing a
security interest in the Receivables or the Financed Vehicles, or to see
to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to enforce
any Insurance Policy or to effect or maintain any such insurance, (C) to
see to the payment or discharge of any tax, assessment, or other
governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, (D)
(except in its role as Backup Servicer) to confirm or verify the contents
of any reports or certificates of the Servicer delivered to the Trustee
pursuant hereto believed by the Trustee to be genuine, to conform to the
requirements hereof as to form and to have been signed or presented by
the proper party or parties or (E) to inspect the Financed Vehicles at
any time or ascertain or inquire as to the performance or observance of
any of the Seller's or the Servicer's representations warranties or
covenants or the Servicer's duties and obligations as Servicer; and
(vi) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall
be reasonable ground for believing that the repayment of such funds or
indemnity reasonably satisfactory to it against such risk or liability shall
not be reasonably assured to it, and none of the provisions contained herein
shall in any event require the Trustee to
<PAGE>85
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer hereunder.
Section 10.2 Trustee's Certificate. On or as soon as practicable
after each Distribution Date on which Receivables shall be assigned to Asta
Funding or the Servicer, as applicable, pursuant to this Agreement, notices
received pursuant to this Agreement and the information contained in the
Servicer's Certificate for the related Collection Period, identifying the
Receivables purchased by Asta Funding pursuant to Section 3.5 or purchased by
the Servicer pursuant to Section 4.7 or 11.2, the Trustee shall execute a
Trustee's Certificate (in the form of Exhibit D-1 or Exhibit D-2 attached
hereto, as applicable), and shall deliver such Trustee's Certificate,
accompanied by a copy of the Servicer's Certificate for such Collection Period
to Asta Funding or the Servicer, as the case may be. The Trustee's
Certificate submitted with respect to such Distribution Date shall operate, as
of such Distribution Date, as an assignment, without recourse, representation
or warranty, to Asta Funding or the Servicer, as the case may be, of all the
Trustee's right, title and interest in and to such repurchased Receivable, and
all security and documents relating thereto, such assignment being an
assignment outright and not for security.
Section 10.3 Certain Matters Affecting Trustee. Except as
otherwise provided in Section 10.1:
(a) The Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties.
(b) The Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith and
in accordance with such advice or Opinion of Counsel.
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or in relation to this
Agreement, at the request, order or direction of any of the Certificateholders
pursuant to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses, and liabilities that may be
incurred therein or
<PAGE>86
thereby; nothing contained in this Agreement, however, shall relieve the
Trustee of the obligations, upon the occurrence of an Event of Default (that
shall not have been cured or waived), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(d) Prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts of matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, or other paper or document,
unless requested in writing to do so by the Holders of Certificates evidencing
not less than 25% of the Voting Interests thereof; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses, or
liabilities likely to be incurred by it in the making of such investigation
shall be, in the opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Agreement, the Trustee may
require indemnity reasonably satisfactory to it against such cost, expense, or
liability as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Person making such request or, if paid
by the Trustee, shall be reimbursed by the Person making such request upon
demand. Nothing in this clause (b) shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors.
(e) The Trustee may execute any of the trusts or powers hereunder
or perform any duties under this Agreement either directly or by or through
agents or attorneys or a custodian. The Trustee shall not be responsible for
any misconduct or negligence of any such agent or custodian appointed with due
care by it hereunder or of the Servicer in its capacity as Servicer.
(f) Except as may be required by Section 10.1, subsequent to the
sale of the Receivables by the Seller to the Trust, the Trustee shall have no
duty of independent inquiry and the Trustee may rely upon the representations
and warranties and covenants of the Seller and the Servicer contained in this
Agreement with respect to the Receivables and the Receivable Files.
(g) The Trustee may conclusively rely, as to factual matters
relating to the Seller or the Servicer, on an Officer's Certificate of the
Seller or Servicer, respectively.
<PAGE>87
(h) The Trustee shall not be required to take any action or
refrain from taking any action under this Agreement, or any related documents
referred to herein, nor shall any provision of this Agreement, or any such
related document be deemed to impose a duty on the Trustee to take action, if
the Trustee shall have been advised by counsel that such action is contrary to
(i) the terms of this Agreement, (ii) any such related document or (iii) the
law.
Section 10.4 Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make
no representations as to the validity or sufficiency of this Agreement or of
the Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The Trustee shall at
no time have any responsibility or liability for or with respect to any
directions by the Servicer to the Lock-Box Bank, the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be
distributed to Certificateholders hereunder, including, without limitation:
the existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; the
existence, contents and completeness of any Receivable or any Receivable File
or any computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the performance or
enforcement of any Receivable; the compliance by the Seller or the Servicer
with any warranty or representation made hereunder or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; any investment of monies by or at the direction of the
Servicer or any loss resulting therefrom (it being understood that the Trustee
shall remain responsible for any Trust Property that it may hold); the acts or
omissions of the Seller, the Servicer, or any Obligor; any action of the
Servicer taken in the name of the Trustee; or any action by the Trustee taken
at the instruction of the Servicer; provided, however, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties
hereunder. Except with respect to a claim based on the failure of the Trustee
to perform its duties hereunder or based on the Trustee's negligence or
willful misconduct, no recourse shall be had for any claim based on any
provision of this Agreement, the Certificates, or any Receivable
<PAGE>88
or assignment thereof against the Trustee in its individual capacity, the
Trustee shall not have any personal obligation, liability, or duty whatsoever
to any Certificateholder or any other Person with respect to any such claim,
and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Trustee shall not be accountable for the use or application by the Seller of
any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Servicer in respect of the
Receivables. The Seller hereby certifies to the Trustee that the Rating
Agency rating the Certificates is Duff & Phelps Credit Rating Co. and that its
existing address is as set forth in Section 12.5. The Trustee may rely on the
accuracy of such certification until it receives from the Seller an Officer's
Certificate superseding such certification. It is expressly understood and
agreed by the parties hereto that (a) this Agreement and the Certificates are
executed and delivered by Harris Trust and Savings Bank, not individually or
personally but solely as Trustee of the Asta Auto Trust 1996-1, in the
exercise of the powers and authority conferred and vested in it, (b) the
representations, undertakings and agreements herein made on the part of the
Trust are made and intended not as personal representations, undertakings and
agreements by Harris Trust and Savings Bank, but are made and intended for the
purpose of binding only the Trust, and (c) under no circumstances shall Harris
Trust and Savings Bank be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure
of any obligation, representations, warranty or covenant made or undertaken by
the Trust under this Agreement and the Certificates.
Section 10.5 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Seller and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
Section 10.6 Indemnity of Trustee. The Servicer shall indemnify
the Trustee, including its officers, directors, employees and agents, for, and
hold it harmless against any loss, liability, or expense incurred without
willful misfeasance, negligence, or bad faith on its part, arising out of or
in connection with the acceptance or administration of the Trust, including
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. Additionally the Seller, pursuant to Section 7.2, shall indemnify
the Trustee with respect to certain matters, the Servicer, pursuant to Section
8.2, shall indemnify the Trustee with respect to certain matters, and
Certificateholders, pursuant to Section 10.3 shall, upon the
<PAGE>89
circumstances therein set forth, indemnify the Trustee under certain
circumstances. The provisions of this Section 10.6 shall survive the
termination of this Agreement and the resignation or removal of the Servicer.
Section 10.7 Eligibility Requirements for Trustee. The Trustee or
its parent shall at all times be organized and doing business under the laws
of the United States of America or any State thereof; authorized under such
laws to exercise corporate trust powers; having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal
or State authorities; and having a rating, both with respect to long-term and
short-term unsecured obligations, of not less than investment grade by the
Rating Agency. If such corporation shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 10.7,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.7, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 10.8.
Section 10.8 Resignation or Removal of Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Seller and each Certificateholder.
Upon receiving such notice of resignation, with the prior written consent of
the Rating Agency and the Majority Certificateholders the Servicer shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.7 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Servicer may remove the Trustee. If the Servicer shall remove the Trustee
under the authority of the immediately preceding sentence, the Servicer shall
promptly
<PAGE>90
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Trustee so removed and one
copy to the successor Trustee, and pay all fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.8 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 10.9 and payment of all fees and expenses owed to the
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to the Rating Agency then rating the Certificates.
Section 10.9 Successor Trustee. Any successor Trustee appointed
pursuant to Section 10.8 shall execute, acknowledge and deliver to the
Servicer, the Backup Servicer and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee. The predecessor Trustee
shall upon payment of its fees and expenses deliver to the successor Trustee
all documents and statements and monies held by it hereunder; and the Servicer
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers,
duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 10.9 unless at the time of such acceptance such successor Trustee
shall be eligible pursuant to Section 10.7.
Upon acceptance of appointment by a successor Trustee pursuant to
this Section 10.9, the Servicer shall mail notice of the successor of such
Trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register and to the Rating Agency. If the Servicer shall
fail to mail such notice within ten (10) days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Servicer.
Section 10.10 Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or
<PAGE>91
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be
eligible pursuant to Section 10.7, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided further, that the
Trustee shall notify the Rating Agency of such merger or consolidation.
Section 10.11 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Financed Vehicle may at the time be located, the
Servicer, and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity and for the benefit of the Certificateholders,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 10.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in the case an Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power
to make such appointment. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee pursuant
to Section 10.7, except as to the rating requirements set forth therein, and
no notice of a successor trustee pursuant to Section 10.9 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.9.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or performed by
the Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts are to
be performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
<PAGE>92
separate trustee or co-trustee, but solely at the direction of the Trustee;
(b) No trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(c) The Servicer and the Trustee acting jointly may, at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the other then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article X. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 10.12 Representations and Warranties of Trustee. The
Trustee shall make the following representations and warranties on which the
Seller and Certificateholders shall rely:
(a) The Trustee is an Illinois banking corporation duly organized,
validly existing and in good standing under the laws of its place of
incorporation.
(b) The Trustee has full corporate power, authority and legal
right to execute, deliver and perform this Agreement and shall have taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement.
<PAGE>93
(c) This Agreement shall have been duly executed and delivered by
the Trustee and shall be enforceable against the Trustee in accordance with
its terms.
Section 10.13 No Bankruptcy Petition. The Trustee covenants and
agrees that prior to the date which is one year and one day after the payment
in full of all securities issued by the Seller or by a trust for which the
Seller was the depositor it will not institute against, or join any other
Person in instituting against, the Seller or the Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or State bankruptcy or similar law.
Section 10.14 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment
has been obtained.
Section 10.15 Trustee Not Liable for Losses. The Trustee shall not
be liable for the selection of, or for losses incurred in respect, of Eligible
Investments provided that the Trustee complies with the written instructions
provided by the Servicer pursuant to Section 5.1.
Section 10.16 Application of Article X. In the event that the
entity serving as Trustee hereunder is also serving as Backup Servicer or
Custodian hereunder, the rights and protection afforded to the Trustee
pursuant to this Article X shall also be afforded to such Backup Servicer and
Custodian.
ARTICLE XI
TERMINATION
Section 11.1 Termination of the Trust. The respective obligations
and responsibilities of the Seller, the Servicer, the Trustee and the Trust
created hereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to this Agreement and the
disposition of all property held as part of the Trust; provided, however, that
in no event shall the trust created hereby continue
<PAGE>94
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States of
America to the Court of St. James, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 11.1.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders mailed not earlier
than the 15th day and not later than the 25th day of the month next preceding
the specified Distribution Date stating (A) the Distribution Date upon which
final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(B) the amount of any such final payment, and (C) if applicable, that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates
at the office of the Trustee therein specified. The Trustee shall give such
notice to the Certificate Registrar (if other than the Trustee) at the time
such notice is given to Certificateholders. Upon presentation and surrender
of the Certificates, the Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.5.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six (6) months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one (1) year after the second notice all the Certificates
shall not have been surrendered for cancellation, the Trustee shall take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement or if none from Asta
Funding. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed by the Trustee to the Seller.
Section 11.2 Optional Purchase of all Receivables. On the last
day of any Collection Period as of which the Pool Balance as a percentage of
the Original Pool Balance shall be less than or equal to the Optional Purchase
Percentage, the Servicer shall have the option to repurchase the Receivables.
To effect such purchase the Servicer shall (a) give written notice
<PAGE>95
to the Trustee and the Certificateholders no later than 30 days prior to the
Distribution Date on which such purchase is to be effected and (b) on or
before such Distribution Date, deposit into the Collection Account pursuant to
Section 5.4 an amount equal to the sum of (i) the aggregate Purchase Amount
for the Receivables plus (ii) the market value of any other property held by
the Trust. After payment of the amount specified in this Section 11.2, the
Seller shall succeed to all interests in and to the Trust.
Section 11.3 Rights upon the Occurrence of Certain Events. (a) If
the Seller shall consent to the appointment of a bankruptcy trustee or
conservator, receiver or liquidator in any bankruptcy proceeding or other
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to such Seller or relating to all or
substantially all of such entity's property, or a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of such entity's
affairs, shall have been entered against the Seller Interest; or the Seller
shall admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable bankruptcy insolvency
or reorganization, receivership or conservatorship statute, make an assignment
for the benefit of its respective creditors or voluntarily suspend payment of
its obligations (any such act or occurrence being an "Insolvency Event"), then
the Seller shall on the day any such Insolvency Event occurs (the "Appointment
Date"), immediately give notice to the Trustee thereof. Upon the Appointment
Date, this Agreement and the Trust shall dissolve and be terminated, subject
to the liquidation, winding-up, and dissolution procedures described below.
Within 15 days of the Appointment Date, the Trustee shall at the expense of
the Trust (i) publish a notice in an authorized newspaper that an Insolvency
Event has occurred, that the Trust has terminated and that the Trustee intends
to sell, dispose of or otherwise liquidate the Trust Property on commercially
reasonable terms and in a commercially reasonable manner and (ii) give notice
to Certificateholders describing the provisions of this Section and requesting
instructions from such Holders. Unless the Trustee shall have received
written instructions within 60 days from the date notice pursuant to clause
(i) above is first published from Holders of Certificates evidencing more than
50% of the aggregate unpaid principal amount of each Class (other than the
Seller), to the effect that such Persons disapprove of the liquidation of the
Trust Property and wish to reconstitute the Trust pursuant to the terms of
this Agreement (as amended in connection with such
<PAGE>96
reconstitution), the Trustee shall promptly sell, dispose of or otherwise
liquidate the Trust Property in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids and shall sell the Trust Property at the highest bid
solicited. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator of the Seller that the terms and manner of
any proposed sale, disposition or liquidation are commercially reasonable.
(b) The proceeds from the sale, disposition or liquidation of the
Trust Property pursuant to paragraph (a) ("Insolvency Proceeds") shall be
immediately deposited in the Collection Account. The Insolvency Proceeds
shall be allocated and distributed to Certificateholders or the Seller in
accordance with the terms of Article V hereof.
(c) This Section 11.3 shall cease to be applicable with respect to
this Agreement upon the effective date of final Income Tax Regulations
promulgated under Section 7701 of the Code that would have the effect of
causing the Trust to qualify as a partnership for federal income tax purposes
and for New Jersey and Illinois income and franchise tax purposes in the
absence hereof. The Trustee shall recognize any such change in the operative
status of this provision only upon delivery to it of an Opinion of Counsel to
the effect that the condition set forth in the preceding sentence has been
satisfied, and that the Trust will be treated as a partnership in the absence
of this Section 11.3.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment. This Agreement may be amended by the
Seller, the Servicer and the Trustee without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or to add any other provisions with respect to
matters or questions arising hereunder which shall not be inconsistent with
the provisions hereof; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Servicer and the Trustee with the consent of the Holders of each Class of
Certificates materially affected thereby (which consent of any Holder of a
Certificate given pursuant to this Section or pursuant to any other provision
of this Agreement
<PAGE>97
shall be conclusive and binding on such Holder and on all future Holders of
such Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Certificate) evidencing not less than 51% of the Voting
Interests of all the affected Certificates for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement, or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made on any Certificate without the consent of each Certificateholder
affected thereby, (b) reduce the aforesaid percentage of the Voting Interests
of the Certificates required to consent to any such amendment, without the
consent of the Holders of all Certificates of the applicable Class then
outstanding or (c) result in a downgrade or withdrawal of the then-current
rating of any Class of Certificates by the Rating Agency without the consent
of the Holders of all Certificates of the applicable Class then outstanding.
This Agreement may, upon the Backup Servicer becoming Servicer, also be
amended from time to time by the Seller, the Servicer and the Trustee with the
unanimous consent of the Holders of each Class of Certificates to provide for
an increase in the Servicing Fee.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder and the Rating Agency.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 12.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement and the Opinion of Counsel referred to in Section 12.2(i)(i).
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities hereunder or
otherwise.
<PAGE>98
Section 12.2 Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Certificateholders and the Trustee in
the Receivables and in the proceeds thereof (other than any notations or
filings with respect to the title documents for the Financed Vehicles). The
Seller shall deliver (or cause to be delivered) to the Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Seller nor Asta Funding shall change its name,
identity, or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of 9-402(7)
of the UCC, unless it shall have given the Trustee at least five (5) days
prior written notice thereof, shall have promptly filed appropriate amendments
to all previously filed financing statements or continuation statements and
shall have delivered an Opinion of Counsel (i) stating that, in the opinion of
such counsel, all amendments to all previously filed financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Trustee in the Receivables, and
reciting the details of such filings, or (ii) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest.
(c) Each of the Seller and Asta Funding shall have an obligation
to give the Trustee at least 30 days prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new
financing statement, shall promptly file any such amendment and shall deliver
an Opinion of Counsel (i) stating that, in the opinion of such counsel, all
amendments to all previously filed financing statements and continuation
statements have been executed and filed that are necessary fully to preserve
and protect the interest of the Trustee in the Receivables, and reciting the
details of such filings, or (ii) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such interest. The
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
<PAGE>99
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale hereunder of the Receivables to the Trust, the
Servicer's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly the interest of the particular grantor
trust or agent as the case may be, in such Receivable and that such Receivable
is owned by the Trust. Indication of the Trust's ownership of a Receivable
shall be deleted from or modified on the Servicer's computer systems when, and
only when, such Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender, or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs (including any restored
from back-up archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been sold and
is owned by the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any
time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request the Servicer shall furnish to the Trustee, within
(5) five Business Days, a list of all Receivables (by contract number and name
of Obligor) then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust.
(i) The Servicer shall deliver to the Trustee:
(i) promptly after the execution and delivery of this Agreement
and of each amendment thereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust in
<PAGE>100
the Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three (3)
months after the Cutoff Date, an Opinion of Counsel, dated as of a date
during such 90-day period either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trust in the Receivables (other than any notations or
filings with respect to the title documents for the Financed Vehicles),
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in clause (i)(i) or (i)(ii)
above shall specify any action necessary (as of the date of such opinion) to
be taken in the following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute
but one and the same instrument.
(k) In the event any of the events described in Section 9.1(iii)
or (iv) shall have occurred, or in the event Asta Funding shall have been
removed or replaced as Servicer for any reason, then Asta Funding or the
Servicer shall immediately cause each certificate of title for a Financed
Vehicle to be marked to reflect the security interest of the Trust in the
Financed Vehicle, and Asta Funding hereby appoints the Trustee its attorney-
in-fact to effect such marking, and the Trustee hereby accepts such
appointment. The appointment of the Trustee hereunder shall not operate to
relieve Asta Funding and/or the Servicer of its obligations to mark each
Certificate of Title under this Section 12.2(k). Asta Funding shall be liable
for all costs, fees and expenses incurred under this Section 12.2(k).
Section 12.3 Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement
<PAGE>101
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Trust, nor otherwise affect
the rights, obligations and liabilities of the parties to this Agreement or
any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein, including in Section 12.1) or in any manner
otherwise control the operation and management of the Trust, or the
obligations of the parties to this Agreement, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken pursuant
to any provision of this Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, and unless also the
Holders of Certificates evidencing not less than 25% of the Voting Interests
thereof shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such indemnity as it may reasonably require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee, for 30 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding and during such 30-day period no request or waiver inconsistent
with such written request has been given to the Trustee pursuant to this
Section 12.3 or Section 9.4; no one or more Holders of Certificates shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb or prejudice the rights
of any other such Holder of Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided herein and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 12.3, each Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or
in equity.
Section 12.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
<PAGE>102
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.5 Notices. All demands, notices, and communications
upon or to the Seller, the Servicer, the Trustee or the Rating Agency
hereunder shall be in writing, and delivered (a) personally, (b) by certified
mail, return receipt requested, (c) by Federal Express or similar overnight
courier service or (d) by telecopy, and shall be deemed to have been duly
given upon receipt (a) in the case of the Seller, to the agent for service as
specified herein, at the following address: Asta Auto Receivables Company,
210 Sylvan Avenue, Englewood Cliffs, New Jersey 06830 (Telecopy: (201) ___-
____), or at such other address as shall be designated by the Seller in a
written notice to the Trustee, (b) in the case of the Servicer, to the
Secretary, Asta Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey
06830 (Telecopy: (201) 569-6198), (c) in the case of the Trustee, at 311 West
Monroe Street, Chicago, Illinois 60606 (Telecopy: (312) 461-3525), (d) in the
case of the Rating Agency at the following address: Duff & Phelps Credit
Rating Co., 55 East Monroe Street, Chicago, Illinois 60603, Attention: Asset-
Backed Surveillance and (e) in the case of Greenwich Capital Markets, Inc., at
the following address: 600 Steamboat Road, Greenwich, Connecticut 06830,
Attention: Structured Finance Department. Any notice required or permitted to
be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
Section 12.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or of
the Certificates or the rights of the Holders thereof.
Section 12.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.3 and 8.3 and as provided
in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of the Trustee and the Holders of
Certificates evidencing not less than 66% of the Voting Interests thereof.
<PAGE>103
Section 12.8 Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the
Trust. The interests represented by the Certificates shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever.
Section 12.9 Nonpetition Covenant.
(a) Neither the Seller nor the Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Trust or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Trust.
(b) The Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of commencing or sustaining a case against the
Seller under any federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Seller or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Seller.
Section 12.10 Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to Certificateholders, the parties
to this Agreement hereby manifest their intent that no third party shall be
deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement.
Section 12.11 Agent for Service. The agent for service for the
Seller shall be The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801.
Section 12.12 Tax Treatment. The Seller and the Trustee on behalf
of the Trust, by entering into this Agreement, and the Holders, by acquiring
any Certificate, express their intention that (i) the Trust be treated as a
partnership for federal income tax purposes, State and local income and
franchise tax purposes and for purposes of any other taxes that are imposed
upon, measured by or based upon gross or net income, and (ii) the Certificates
and the Excess Interest be treated as the interests in such partnership. For
such purposes and unless otherwise required by appropriate taxing authorities,
the Seller, the Trustee and the Holders hereby agree: (i) to treat the
Certificates and the Excess Interest as the interests in such partnership and
to treat any distributions with respect thereto
<PAGE>104
from the Trust as partnership distributions, (ii) that the Holders of the
Certificates will be treated as limited partners of such partnership and that
the Seller, as the holder of the Excess Interest, will be treated as the
general partner, (iii) with respect to each Holder and the Seller, to include
in income its respective share of income, gain, loss and deduction generated
by the Trust Property and related property as determined under partnership tax
accounting rules, and (iv) that the net income allocated to the Holders of the
Certificates will be equal to the interest rate on their respective
Certificates and that all other net income of the Trust will be allocated to
the Seller as holder of the Excess Interest. The Parties agree that the Trust
shall file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as a partnership
and the characterization of the Certificates as partnership interests therein
for such tax purposes.
Section 12.13 Seller's Partnership Interest. The Seller shall at
all times retain its Seller Partnership Interest and may not transfer, assign,
pledge, participate, alienate or hypothecate any interest in the same at any
time. Any attempted transfer, assignment, pledge, participation, alienation
or hypothecation of any interest in the Seller Partnership Interest by the
Seller shall be void. Any Certificate issued to the Seller shall contain a
legend to such effect. In addition, the Seller shall at all times remain a
party to this Agreement and shall not withdraw from or terminate this
Agreement.
Section 12.14 Liabilities. (a) Notwithstanding any provision of
this Agreement, by entering into this Agreement, the Seller agrees to be
liable, directly to the injured party, for the entire amount of any losses,
claims, damages or liabilities (other than those incurred by a
Certificateholder in the capacity of an investor in the Certificates) arising
out of or based on each of the arrangements created by this Agreement (to the
extent Trust Property remaining after the Certificateholders have been paid in
full are insufficient to pay such losses, claims, damages or liabilities) and
the actions of the Servicer taken pursuant thereto as though this Agreement
created a partnership under the New York Uniform Partnership Act in which the
Seller and each holder of an interest in the Seller Partnership Interest was a
general partner.
(b) The Seller hereby represents that it has, and warrants that it
shall maintain, assets sufficient to constitute "substantial assets" (other
than the Seller Partnership Interest) for purposes of Section 301.7701-2(d)(2)
of the Income Tax Regulations promulgated under the Code.
<PAGE>105
(c) This Section 12.14 shall cease to be applicable with respect to
this Agreement upon the effective date of final Income Tax Regulations
promulgated under Section 7701 of the Code that would have the effect of
causing the trust to qualify as a partnership for federal income tax purposes
and for New Jersey and Illinois income and franchise tax purposes in the
absence hereof. The Trustee shall recognize any such change in the operative
status of this provision only upon delivery to it of an Opinion of Counsel to
the effect that the condition set forth in the preceding sentence has been
satisfied, and that the Trust will be treated as a partnership in the absence
of this Section 12.14.
Section 12.15 Withholding. The Trustee on behalf of the Trust
shall comply with all requirements of the Code and the Treasury regulations
and applicable state and local law with respect to the withholding from any
distributions made by it to any Holder of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith. In that regard, the Trustee shall withhold from amounts
otherwise distributable to a Certificateholder at the highest potentially
applicable rate if such Certificateholder fails to provide a duly executed
Certificate of Non-Foreign Status in the form attached hereto as Exhibit K,
which withholding shall be computed on the basis of such Certificateholder's
allocable net income or, if it produces a larger withholding amount, its gross
income, and such withheld amounts shall be deemed paid to the affected
Certificateholder for all purposes of this Agreement.
Section 12.16 Right to Direct. The Majority Certificateholders
shall have the right to direct and manage the trust, including the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, the Servicer or the Backup Servicer, or exercising
any trust or power conferred on the Trustee, the Servicer or the Backup
Servicer; provided, however, that the Trustee, the Servicer and the Backup
Servicer shall have the right to decline to follow any such direction if (i)
the Trustee, the Servicer or the Backup Servicer, as advised by counsel,
determines that the action so directed may not lawfully be taken, (ii) if in
good faith shall, by a Trustee Officer, Servicing Officer or Backup Servicer,
determine that the proceedings so directed would be illegal, involve it in
personal liability, unduly prejudicial to the rights of Certificateholders not
parties to such direction or would not be possible to be performed by such
entity without undue burden or expense; and provided further that nothing in
this Agreement shall impair the right to take any action deemed proper by the
Trustee, the Servicer or the Backup Servicer and which is not inconsistent
with such management and direction by the Majority Certificateholders.
<PAGE>106
IN WITNESS WHEREOF, the Seller, the Servicer, the Trustee, the
Custodian and the Backup Servicer have caused this Pooling and Servicing
Agreement to be duly executed by their authorized officers as of the date
first above written.
ASTA AUTO RECEIVABLES COMPANY,
as the Seller,
By:/s/ Gary Stern
Name: Gary Stern
Title: President
ASTA FUNDING, INC.,
as the Servicer
By:/s/ Gary Stern
Name: Gary Stern
Title: President
HARRIS TRUST AND SAVINGS BANK,
as the Trustee, Custodian and
Backup Servicer
By:/s/ E. Kay Liederman
Name: E. Kay Liederman
Title: Vice President
<PAGE>1
EXECUTION COPY
ASTA AUTO RECEIVABLES COMPANY
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES,
SERIES 1996-1
CERTIFICATE PURCHASE AGREEMENT
September 30, 1996
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Dear Sir or Madam:
Asta Auto Receivables Company, a Delaware corporation (the "Company") and
a wholly-owned subsidiary of Asta Funding, Inc., a Delaware corporation ("Asta
Funding") (each of the Company and Asta Funding are sometimes hereinafter
referred to as an "Asta Entity"), proposes to sell to you its Asta Auto Trust
1996-1 Automobile Receivable Pass-Through Certificates in the classes, in the
respective original principal amounts and with the designations set forth in
Schedule I hereto (the "Designated Certificates"). Only the Designated
Certificates are being purchased by you hereunder. The Designated
Certificates (collectively, the "Certificates"), will be issued by the Company
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1996, among the Company, as seller,
Harris Trust and Savings Bank, as back-up servicer (the "Back-up Servicer"),
and Harris Trust and Savings Bank, as trustee (the "Trustee") and Harris Trust
and Savings Bank, as custodian (the "Custodian"). Each Certificate will
evidence the holder's fractional undivided interest in a trust (the "Trust"),
created pursuant to the Pooling and Servicing Agreement, and consisting
primarily of a pool (the "Pool") of retail installment sale contracts for new
or used automobiles, vans and light-duty trucks between dealers and retail
purchasers (the "Contracts" or the "Receivables") and certain monies received
thereunder on and after the Cut-off Date. Upon your request, the Company will
furnish to you, on or before such date as you shall specify, a private
placement memorandum, dated October 4, 1996, which will more fully describe
the Designated Certificates and the Class C Certificates. Such private
placement memorandum, in the form so furnished, including the documents
incorporated by reference thereto or attached as exhibits thereto, is herein
referred to as the "Memorandum".
<PAGE>2
1. Representations and Warranties of the Asta Entities. Each Asta
Entity represents and warrants to, and agrees with, you and each person who
purchases a Designated Certificate directly from you that:
(a) Such Asta Entity has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has full power and authority (corporate and other) necessary to
own or hold its properties and to conduct its business as now conducted
by it and to enter into and perform its obligations under this Agreement,
the Pooling and Servicing Agreement and the Purchase Agreement dated as
of September 1, 1996 (the "Purchase Agreement"), between the Company and
Asta Funding.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and Asta Funding.
(c) The Pooling and Servicing Agreement, when executed and
delivered as contemplated hereby and thereby, will have been duly
authorized, executed and delivered by the Company, and when so executed
and delivered, will constitute a legal, valid, binding and enforceable
agreement of the Company, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a proceeding in equity or
at law.
(d) The Purchase Agreement, when executed and delivered as
contemplated hereby and thereby, will have been duly authorized, executed
and delivered by the Company and Asta Funding, and when so executed and
delivered, will constitute a legal, valid, binding and enforceable
agreement of each of the Company and Asta Funding, except insofar as any
indemnification provisions therein may be limited by applicable law.
(e) The Memorandum and any amendment or supplement thereto, as of
the date thereof, and as of the date hereof, will not contain an untrue
statement of any material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) As of the Closing Date, the Designated Certificates and the
Pooling and Servicing Agreement will conform in all material respects to
the respective descriptions thereof contained in the Memorandum. As of
the Closing Date, the Designated Certificates will be duly and validly
authorized and, when duly and validly executed, authenticated and
delivered in accordance with the Pooling and Servicing Agreement and
delivered to you against payment therefor as provided herein, will be
duly and validly issued and outstanding and entitled to the benefits of
the Pooling and Servicing Agreement.
<PAGE>3
(g) On the Closing Date, the representations and warranties of the
Company and Asta Funding with respect to the Contracts contained in the
Pooling and Servicing Agreement and the Purchase Agreement, respectively,
will be true and correct.
(h) Neither Asta Entity is in violation of its certificate of
incorporation or by-laws or in default under any agreement, indenture or
instrument which violation or default would have a material adverse
affect on such Asta Entity. Neither the issuance and sale of the
Designated Certificates, nor the execution and delivery by either Asta
Entity of this Agreement, the Pooling and Servicing Agreement or the
Purchase Agreement, nor the consummation by either Asta Entity of any of
the transactions herein or therein contemplated, nor compliance by either
Asta Entity with the provisions hereof or thereof, does or will conflict
with or result in a breach of any term or provision of the certificate of
incorporation or by-laws of such Asta Entity or conflict with, result in
a breach, violation or acceleration of, or constitute a default under,
the terms of any indenture or other agreement or instrument to which such
Asta Entity is a party or by which it is bound, or any statute
(including, without limitation, any local registration or licensing
requirements), order or regulation applicable to such Asta Entity of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over such Asta Entity. Neither Asta Entity is a party to,
bound by or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it that materially and
adversely affects, or may in the future materially and adversely affect,
(i) the ability of such Asta Entity to perform its obligations under this
Agreement, the Pooling and Servicing Agreement or the Purchase Agreement
or (ii) the business, operations, financial conditions, properties or
assets of such Asta Entity.
(i) There are no actions or proceedings against, or investigations
of, either Asta Entity pending, or, to the knowledge of such Asta Entity,
threatened, before any court, arbitrator, administrative agency or other
tribunal (i) asserting the invalidity of this Agreement, the Pooling and
Servicing Agreement, the Purchase Agreement or the Certificates, (ii)
seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement, the Pooling
and Servicing Agreement or the Purchase Agreement, (iii) that are
reasonably likely to be adversely determined and that might materially
and adversely affect the performance by such Asta Entity of its
obligations under, or the validity or enforceability of, this Agreement,
the Pooling and Servicing Agreement, the Purchase Agreement or the
Certificates or (iv) seeking to affect adversely the federal income tax
attributes of the Certificates as described in the Memorandum.
(j) Any taxes, fees and other governmental charges in connection
with the execution and delivery of this Agreement, the Pooling and
Servicing Agreement and
<PAGE>4
the Purchase Agreement or the execution, delivery and sale of the
Certificates have been or will be paid on or prior to the Closing Date.
(k) Immediately prior to the assignment of the Contracts to the
Trustee as contemplated by the Pooling and Servicing Agreement, the
Company (i) had good title to, and was the sole owner of, each Contract
free and clear of any pledge, mortgage, lien, security interest or other
encumbrance (collectively, "Liens"), (ii) had not assigned to any person
any of its right, title or interest in such Contracts or in the Pooling
and Servicing Agreement and (iii) will have the power and authority to
sell such Contracts to the Trustee, and upon the execution and delivery
of the Pooling and Servicing Agreement by the Trustee, the Trustee will
have acquired all of the Company's right, title and interest in and to
the Contracts.
(l) There are no contracts, agreements or understandings between
either Asta Entity and any person granting such person the right to
require the Company to file a registration statement under the Securities
Act of 1933, as amended (the "1933 Act"), with respect to any Designated
Certificates owned or to be owned by such person.
(m) The sale of the Designated Certificates pursuant to this
Agreement is exempt from the registration and prospectus delivery
requirements of the 1933 Act. In the case of each offer or sale of the
Designated Certificates, no form of general solicitation or general
advertising was used by the Company or its representatives, including,
but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. Neither the Company nor any person acting on its behalf has
offered or sold, nor will the Company or any person acting on its behalf
offer or sell directly or indirectly, any Designated Certificate or any
other security in any manner that, assuming the accuracy of the
representations and warranties and the performance of the covenants given
by you, would render the issuance and sale of any of the Designated
Certificates as contemplated hereby a violation of Section 5 of the 1933
Act or the registration or qualification requirements of any state
securities laws, nor has the Company authorized, nor will it authorize,
any person to act in such manner.
(n) Neither the Company nor the Trust is, and neither the issuance
and sale of the Certificates nor the activities of the Trust pursuant to
the Pooling and Servicing Agreement will cause the Company or the Trust
to be, an "investment company" or under the control of an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act").
(o) Each Asta Entity is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in
<PAGE>5
all jurisdictions in which the ownership or lease of its properties or the
conduct of its business shall require such qualifications.
2. Representations, Warranties and Covenants of the Purchaser. You
represent and warrant to, and agree with, the Company that:
(a) You are purchasing the Designated Certificates, in the Original
Class Certificate Principal Balances for each Class set forth on Schedule
I, solely for your own account as principal and not as nominee or agent
for any other person, and not with a view to, or for offer or sale in
connection with, any distribution (within the meaning of the 1933 Act) or
fractionalization thereof, subject, nevertheless, to the understanding
that the disposition of your property shall at all times be and remain
within your control. It is understood that you intend to reoffer or
resell the Designated Certificates from time to time in one or more
privately negotiated transactions.
(b) You are an "accredited investor" as defined in Rule 501(a)(1),
(2) or (3) of Regulation D under the 1933 Act or a "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
(c) You will not offer the Designated Certificates or any part
thereof or any similar security for issue or sale to, or solicit any
offer to acquire any of the same from, anyone so as to bring the offer
and sale of the Designated Certificates to you and by you within the
provisions of Section 5 of the 1933 Act.
3. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Company
agrees to sell the Designated Certificates to you, and you agree to purchase
the Designated Certificates from the Company, for the purchase price of
$ (including accrued interest from and including the Cut-off Date
to, but not including, the Closing Date).
4. Delivery and Payment. Delivery of and payment for the Designated
Certificates shall be made at the offices of Orrick, Herrington & Sutcliffe
LLP, 666 Fifth Avenue, New York, New York 10103-0001, on the date specified in
Schedule I hereto, which date and time may be changed by mutual agreement
between you and the Company (such date and time of delivery and payment for
the Designated Certificates being herein called the "Closing Date"). Delivery
of the Designated Certificates shall be made to you against payment by you of
the purchase price therefor in immediately available funds wired to such bank
as may be designated by the Company, or such other manner of payment as may be
agreed upon by the Company and you. The Designated Certificates to be so
delivered shall be in definitive, fully registered form, in such denominations
and registered in such names as you may have requested in writing not less
than two full business days in advance of the Closing Date.
<PAGE>6
The Company agrees to have the Designated Certificates available for
inspection, checking and packaging by you in New York, New York on the
business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees with you
that:
(a) On the date hereof or such other date as you may specify (the
"Memorandum Delivery Date"), the Company will prepare and furnish to you
the Memorandum, appropriately completed, with such changes therein as are
satisfactory to you and your counsel.
(b) If, at any time prior to 90 days after the Memorandum Delivery
Date or such later date as you shall have resold all of the Designated
Certificates, any event occurs as a result of which the Memorandum (as
then amended or supplemented) would include an untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the Company will promptly prepare and furnish to
you an amendment or supplement to the Memorandum reasonably satisfactory
to you and your counsel that will correct such statement or omission.
(c) During the period referred to in Section 5(b), the Company will
furnish to you, without charge, copies of the Memorandum (including all
documents incorporated by reference therein and all amendments or
supplements to such documents) in each case as soon as available and in
such reasonable quantities as you request.
(d) During the period referred to in Section 5(b), the Company
will, at your request, furnish through you to any prospective purchaser
of Designated Certificates from you such information as is reasonably
requested and is reasonably available concerning matters reasonably
relevant to such prospective purchaser's decision to purchase the
Designated Certificates and the Company represents and warrants that such
information will be accurate and not misleading.
(e) The Company authorizes you to deliver to investors copies of
the Memorandum, as then amended or supplemented as contemplated by
Section 5(b) hereof, and any information provided under Section 5(d)
hereof in connection with any reoffer or resale of the Designated
Certificates by you in accordance herewith.
(f) The Company agrees to use its best efforts to furnish (or cause
to be furnished) such information and to execute such documents or
instruments as you may reasonably request to satisfy any condition to the
availability of an exemption under the state securities or "blue sky"
laws of any state for any sale of Designated
<PAGE>7
Certificates by you (provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Certificates, in any jurisdiction where it is not now so subject).
(g) The Company will pay all reasonable costs and expenses in
connection with the transactions herein contemplated, including, but not
limited to, the reasonable fees and disbursements of its counsel and your
counsel; the costs and expenses of printing (or otherwise reproducing)
and delivering the Memorandum, the Pooling and Servicing Agreement and
the Certificates; the fees, costs and expenses of the Trustee (to the
extent permitted under the Pooling and Servicing Agreement, and except to
the extent that another party is obligated to pay such amounts
thereunder) and the fees and disbursements of accountants for the Company
(including those fees and disbursements arising in connection with any
comfort letter issued by such accountants that addresses the information
contained in the Memorandum).
(h) The Company will enter into the Pooling and Servicing Agreement
and Purchase Agreement on or prior to the Closing Date.
(i) The Company agrees to take such action as you shall reasonably
request following the Closing Date in connection with any subsequent
transfer of the Designated Certificates by you.
6. Conditions to the Purchase of the Designated Certificates. Your
obligation hereunder to purchase the Designated Certificates shall be subject
to the accuracy of the representations and warranties on the part of the Asta
Entities contained herein as of the date hereof and as of the Closing Date, to
the accuracy of the statements of the Asta Entities made in any certificates
delivered pursuant to the provisions hereof, to the performance by each Asta
Entity of its obligations hereunder and to the following additional
conditions:
(a) Each Asta Entity shall have delivered to you a certificate of
such Asta Entity, signed by the President or a vice president of such
Asta Entity and dated the Closing Date, to the effect that the signer of
such certificate has carefully examined this Agreement and that to the
best of such signer's knowledge: (i) the representations and warranties
of such Asta Entity in this Agreement are true and correct in all
material respects at and as of the Closing Date with the same effect as
if made on the Closing Date and (ii) such Asta Entity has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date.
(b) You shall have received from Orrick, Herrington & Sutcliffe
LLP, special counsel for the Purchaser, such opinions as you may
reasonably require, and
<PAGE>8
the Company shall have furnished to such counsel such documents as you may
reasonably request for the purposes of enabling them to render such
opinions.
(c) You shall have received from Willkie Farr & Gallagher, special
counsel for the Asta Entities, a favorable opinion, dated the Closing
Date, substantially to the effect that:
(i) This Agreement has been duly authorized, executed and
delivered by the Company and Asta Funding, and when so executed and
delivered, constitutes a legal, valid, binding and enforceable
agreement of each Asta Entity, enforceable according to its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and to
general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law;
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Company, and when so
executed and delivered, constitutes a legal, valid, binding and
enforceable agreement of the Company, enforceable according to its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and to
general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law;
(iii) The Purchase Agreement has been duly authorized,
executed and delivered by the Company and Asta Funding constitutes a
legal, valid, binding and enforceable agreement of each of the
Company and Asta Funding, except insofar as the indemnification
provisions therein may be limited by applicable law;
(iv) The issuance of the Certificates has been duly and validly
authorized by all required corporate action by the Company and when
executed and countersigned in the manner contemplated in the Pooling
and Servicing Agreement will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement;
(v) The offer and sale of the Designated Certificates to you
in the manner contemplated in this Agreement and the Pooling and
Servicing Agreement is not, assuming the accuracy of your
representations and warranties and the performance of your covenants
contained herein, a transaction requiring the registration of the
Designated Certificates under the 1933 Act;
(vi) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and
neither the
<PAGE>9
Company nor the Trust is required to be registered under the
Investment Company Act;
(vii) The Trust as described in the Memorandum will be
treated as a partnership for federal income tax purposes and will
not be treated as an association or publicly traded partnership
taxable as a corporation;
(viii) The Certificates, the Pooling and Servicing Agreement,
the Servicing Assumption Agreement and the Purchase Agreement will
conform in all material respects to the descriptions thereof
contained in the Memorandum; and
(ix) Such counsel has no reason to believe that the Memorandum,
as of its date, and as amended or supplemented, if applicable, as of
the Memorandum Delivery Date, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading; it being understood that such counsel
need express no opinion as to the financial and statistical
statements or other financial data contained or incorporated by
reference in the Memorandum.
(d) You shall have received from Willkie Farr & Gallagher, special
counsel for the Asta Entities, a favorable opinion, dated the Closing
Date, to the effect that:
(i) Each Asta Entity has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has full corporate power and authority
necessary to execute, deliver and perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Purchase
Agreement;
(ii) To their knowledge there are no actions, proceedings or
investigations pending or threatened against or affecting either
Asta Entity before or by any court, arbitrator, administrative
agency or other governmental authority reasonably likely to be
adversely determined that would materially and adversely affect the
ability of such Asta Entity to carry out the transactions
contemplated in this Agreement, the Pooling and Servicing Agreement
or the Purchase Agreement;
(iii) No consent, approval, authorization or order of, or
filing or registration with, any state or federal court or
governmental agency or body is required for the consummation by
either Asta Entity of the transactions contemplated herein, except
such as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of the
<PAGE>10
Designated Certificates and except any recordation of the assignments
of the Contracts to the Trustee pursuant to the Pooling and Servicing
Agreement that have not yet been completed; and
(iv) To their knowledge, neither Asta Entity is in violation of
its certificate of incorporation or by-laws or in default under any
agreement, indenture or instrument the effect of which violation or
default would be material to such Asta Entity, and neither the
issuance and sale of the Designated Certificates, nor the execution
or delivery of or performance under this Agreement, the Pooling and
Servicing Agreement or the Purchase Agreement, nor the consummation
of any other of the transactions contemplated herein or therein will
conflict with or result in a breach or violation of any term or
provision of, or constitute a default (or an event which with the
passing of time or notification, or both, would constitute a
default) under, the certificate of incorporation or by-laws of
either Asta Entity, or, to the knowledge of such counsel, any
indenture or other agreement or instrument to which either Asta
Entity or any of its affiliates is a party or by which it or any of
them is bound, or any New York or federal statute or regulation
applicable to either Asta Entity or any of its affiliates or, to the
knowledge of such counsel, any order of any New York or federal
court, regulatory body, administrative agency or governmental body
having jurisdiction over either Asta Entity or any of its
affiliates.
With respect to the opinions in paragraphs (c) and (d) above, such
counsel may: (1) express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other
documents furnished by officers of, the parties to this Agreement, the
Pooling and Servicing Agreement and the Purchase Agreement; (2) assume
the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than an Asta
Entity; and (3) qualify such opinion only as to the federal laws of the
United States of America, the laws of the State of New York and the
general corporation law of the State of Delaware. You shall also receive
(as an additional addressee) all opinions of such counsel submitted to
the rating agency rating the Designated Certificates, such opinions to be
dated the Closing Date, which opinions shall include, among other things,
an opinion regarding the "true sale" nature of the transfer of the
Receivables under the Purchase Agreement and the non-consolidation of the
Asta Entities, in each case for purposes of federal laws relating to
bankruptcy, and an opinion as to the perfection of the Trust's security
interest in the Receivables and the Trust's security interest in the
Financed Vehicles under the law of the State of New York (subject to the
rights of third parties without notice).
(e) The Class A Certificates, the Class B Certificates and the
Class C Certificates shall have been rated no lower than "A", "BBB" and
"BB", respectively, by Duff & Phelps Credit Rating Co.
<PAGE>11
(f) You shall have received a letter from Richard A. Eisner &
Company, LLP regarding the Memorandum in form and substance satisfactory
to you and your counsel.
(g) You shall have received from counsel for the Trustee a
favorable opinion, dated the Closing Date, in form and substance
satisfactory to you and your counsel, to the effect that the Pooling and
Servicing Agreement has been duly authorized, executed and delivered by
the Trustee and constitutes the legal, valid, binding and enforceable
agreement of the Trustee, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights in general and by general principles of equity
regardless of whether enforcement is considered in a proceeding in equity
or at law, and as to such other matters as may be agreed upon by you and
the Trustee.
(h) You shall have received from counsel for the Back-up Servicer a
favorable opinion, dated the Closing Date, in form and substance
satisfactory to you and your counsel.
(i) On the Memorandum Delivery Date, each Asta Entity shall furnish
to you a certificate signed by the president or a senior vice president,
dated the Memorandum Delivery Date, to the effect that such officer has
no reason to believe and does not believe that the Memorandum, as of its
date, and as amended or supplemented, if applicable, as of the Memorandum
Delivery Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading and that the descriptions in the Memorandum of the Designated
Certificates and the Pooling and Servicing Agreement are accurate in all
material respects.
(j) You shall have received from LeBoeuf, Lamb, Greene & MacRae,
Newark, New Jersey, a favorable opinion regarding perfection of the
Trust's security interest in the Receivables, the Trust's security
interest in the Financed Vehicles and certain New Jersey tax matters, all
in form and substance reasonably satisfactory to you and your counsel.
(k) You shall have received from Chapman and Cutler, Chicago,
Illinois, a favorable opinion regarding perfection of the Trust's
security interest in the Receivables and the Trust's security interest in
the Financed Vehicles and certain Illinois tax matters, all in form and
substance satisfactory to you and your counsel.
(l) You shall have received such further information, certificates,
documents and opinions as you may reasonably have requested not later
than the Closing Date.
<PAGE>12
(m) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to you and your counsel, and you and
your counsel shall have received such information, certificates and
documents as you or they may have reasonably requested.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as approved in this Agreement, if
the Company is in material breach of any covenants or agreements contained
herein or if any of the opinions and certificates referred to above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to you and your counsel, this Agreement and
all your obligations hereunder may be cancelled by you at, or at any time
prior to, the Closing. Notice of such cancellation shall be given to the
Company in writing, or by telephone or facsimile transmission confirmed in
writing.
7. Conditions of the Company's Obligations. The obligation of the
Company to sell the Designated Certificates to you shall be subject to: (i)
the accuracy of your representations and warranties herein contained at and as
of the Closing Date and (ii) your performance of all of your obligations
hereunder to be performed at or prior to the Closing Date.
8. Information Provided by the Purchaser. It is understood and agreed
that the information contained in the first sentence of the last paragraph on
the cover page of the Memorandum and under the heading "Method of
Distribution" in the Memorandum is the only information furnished by the
Purchaser to the Company for inclusion in the Memorandum.
9. Indemnification and Contribution. The Company and Asta Funding
agree with you that:
(a) The Company and Asta Funding, jointly and severally, will
indemnify and hold harmless you and each person who controls you within
the meaning of either the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 Act") against any and all losses, claims,
damages or liabilities, joint or several, to which you or any of them may
become subject under the 1933 Act, the 1934 Act, or other federal or
state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
(x) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances in which
they were made, not misleading, or (y) arise out of or are based upon any
material inaccuracy contained in any statistical information provided by
the Company to you in writing or by electronic transmission prior to the
date hereof or in the Preliminary
<PAGE>13
Term Sheet, dated September 16, 1996 and the written presentations to each
proposed rating agency, dated August, 1996, and agrees to reimburse each
such indemnified party for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability or action including, without limitation, any such legal
or other expenses incurred in connection with any action or proceeding
between the indemnified party and any third party; provided, however, that
neither the Company nor Asta Funding will be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company as herein
stated by you specifically for use in connection with the preparation
thereof. This indemnity will be in addition to any liability that the
Company may otherwise have.
(b) You will indemnify and hold harmless the Company, Asta Funding
and each of their respective directors and officers and each person, if
any, who controls the Company within the meaning of either the 1933 Act or
the 1934 Act, to the same extent as the foregoing indemnity from the
Company and Asta Funding to you, but only with reference to written
information furnished to the Company as herein stated by you specifically
for use in connection with the preparation of the documents referred to in
the foregoing indemnity, such information being only the information
described in Section 8 hereof. This indemnity will be in addition to any
liability that you may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under this Section 9. In
case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have
reasonably concluded that there may be legal defenses available to it or
them and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to elect separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election to so assume the defense of such action and
<PAGE>14
approval by the indemnified party of counsel, the indemnifying party will
not be liable for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate counsel in connection
with the assertion of legal defenses in accordance with the proviso to the
next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by you in the case of paragraph (a) of this
Section 9, representing the indemnified parties under such paragraph (a)
who are parties to such action), (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized
in writing the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall only be in respect of the counsel
referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to an indemnified party under this Section 9,
then you and the Asta Entities shall contribute to the amount paid or
payable by such indemnified party as a result of the aggregate losses,
claims, damages and liabilities referred to in paragraph (a) or (b) above,
in such proportion so that (i) you are responsible for the lesser of (1)
1.25% thereof and (2) 1.25% of the original principal balance of the
Designated Receivables (as set forth on Schedule I hereto) and (ii) the
Asta Entities are, jointly and severally, responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any,
who controls you within the meaning of either the 1933 Act or the 1934 Act
shall have the same rights to contribution as do you and each person, if
any, who controls the Company or Asta Funding within the meaning of either
the 1933 Act or the 1934 Act shall have the same rights to contribution as
does the Company and Asta Funding. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under
this paragraph (d).
10. Termination. (a) This Agreement shall be subject to termination in
your absolute discretion by notice given to the Company prior to delivery of
and payment for the Designated Certificates, if prior to such time, (i)
trading of securities generally on the New York Stock Exchange or the American
Stock Exchange shall have been suspended or materially limited; (ii) a general
moratorium on commercial banking activities in New York
<PAGE>15
shall have been declared by either federal or New York State authorities; or
(iii) there shall have occurred any material outbreak or declaration of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in your reasonable
judgment, impracticable to market the Designated Certificates on the terms
specified herein.
(b) If the sale of the Designated Certificates shall not be consummated
because any condition to your obligations set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of your default, the Company shall reimburse you for the
reasonable fees and expenses of your counsel and for such other out-of-pocket
expenses as shall have been incurred by you in connection with this Agreement
and the proposed purchase of the Designated Certificates, and upon demand the
Company shall pay the full amount thereof to you.
(c) This Agreement will survive delivery of and payment for the
Designated Certificates. The provisions of Section 9 and this Section 10(c)
shall survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to you, will be mailed, delivered or
transmitted by facsimile and confirmed to you at 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: President; or, if sent to the
Company, will be mailed, delivered or transmitted by facsimile and confirmed
to it at 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 9 and
their successors and assigns, and no other person will have any right or
obligation hereunder.
13. Applicable Law; Counterparts. This Agreement will be governed by
and construed in accordance with the laws of the State of New York. This
Agreement may be executed in any number of counterparts, each of which shall
for all purposes be deemed to be an original and all of which shall together
constitute but one and the same instrument.
<PAGE>16
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and Asta Funding on the one hand and you on the other.
Very truly yours,
ASTA AUTO RECEIVABLES COMPANY
By:________________________________
Name:
Title: President
ASTA FUNDING, INC.
By:________________________________
Name: Gary Stern
Title: President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written:
GREENWICH CAPITAL MARKETS, INC.
By:________________________________
Name:
Title:
<PAGE>17
SCHEDULE I
Certificate Purchase Agreement dated September 30, 1996
Closing Date: September 30, 1996
Title, Purchase Price and Description of Designated Certificates:
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES, SERIES 1996-1, CLASS A
and CLASS B
Aggregate Initial Certificate Balance: $23,967,605
Cut-off Date: September 1, 1996
(Date of purchase by Asta Funding for Contracts
originated after opening of business
on September 1, 1996 and prior to
close of business on September 10, 1996)
Original Amount Designated
Designated Certificate Retained Certificates
Certificates Balance by Seller Amount
Class A $22,050,197 $220,502 $21,829,695
Class B $ 958,704 $ 9,588 $ 949,116
<PAGE>1
EXECUTION COPY
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this 1st day of September 1996, by
and between ASTA FUNDING, INC., a Delaware corporation (the "Seller"), having
its principal executive office at 210 Sylvan Avenue, Englewood Cliffs, New
Jersey 07632 and ASTA AUTO RECEIVABLES COMPANY, a Delaware corporation (the
"Purchaser"), having its principal executive office at 210 Sylvan Avenue,
Englewood Cliffs, New Jersey 07632.
RECITALS
1. In the regular course of its business, Seller purchases from motor
vehicle dealers and services certain motor vehicle retail installment loan
contracts and promissory notes secured by new and used automobiles and light
duty trucks.
2. The Seller desires to sell, and the Purchaser desires to purchase,
Receivables (as hereinafter defined) pursuant to the terms and conditions of
this Agreement.
3. The Receivables to be sold subsequently hereunder will be sold by
the Purchaser pursuant to the Pooling and Servicing Agreement (as hereinafter
defined) to the Asta Auto Trust 1996-1 to be created thereunder, in
consideration of certificates issued by the Trust which represent beneficial
ownership interests in the Trust (the "Certificates").
4. The Purchaser will sell to Greenwich Capital Markets, Inc. for cash
99% of the principal amount of the Class A Certificates and Class B
Certificates.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, and the mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth in
the Pooling and Servicing Agreement. As used in this Agreement, the following
terms shall, unless the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms of the terms defined):
<PAGE>2
"Agreement" shall mean this Purchase Agreement and all amendments hereof
and supplements hereto.
"Certificate" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Certificate Purchase Agreement" shall mean the Certificate Purchase
Agreement by and between Greenwich Capital Markets, Inc., the Purchaser and
the Seller, dated as of September 30, 1996.
"Closing Date" shall mean September 30, 1996.
"Cutoff Date" shall mean the opening of business on September 1, 1996 or,
in the case of Receivables purchased by the Seller on or after September 1,
1996 and prior to the close of business on September 10, 1996, the respective
dates of origination of such Receivables.
"Distribution Date" shall mean, for each Collection Period, the 20th day
of the following month or, if the 20th day is not a Business Day, the next
succeeding Business Day.
"Final Memorandum" shall have the meaning assigned to such term in the
Certificate Purchase Agreement.
"Obligor" shall have the meaning specified in the Pooling and Servicing
Agreement.
"Other Conveyed Property" means (i) all monies at any time paid on the
Receivables or in respect thereof on or after the applicable Cut-Off Date,
including all Liquidation Proceeds to be received with respect to such
Receivables; (ii) all right, title and interest of the Seller in and the
security interests to the Financed Vehicles and any other interest of the
Seller in the Financed Vehicles, including, without limitation, the
certificates of title with respect to Financed Vehicles; (iii) all right,
title and interest of the Seller with respect to the Receivables in and to any
proceeds from any claims on any Insurance Policies covering the Obligors, the
Financed Vehicles or the Receivables; (iv) all right, title and interest of
the Seller in and to refunds of unearned premiums with respect to any
Insurance Policies covering the Receivables, the Obligors or the Financed
Vehicles or their obligations with respect to the Financed Vehicles and any
recourse to Dealers for any of the foregoing and (v) all items contained in
the Receivable Files, any and all other documents or electronic records that
the Seller keeps on file in accordance with its customary procedures relating
to the Receivables, the Obligors or the Financed Vehicles, property (including
the right to receive future Liquidation Proceeds) that secures a Receivable
and that has been
<PAGE>3
acquired by or on behalf of the Seller pursuant to liquidation of such
Receivable, all present and future claims, demands, causes and choses in
action in respect of the Receivables and any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of the Receivables and any and all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, accounts receivables, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property
that at any time constitute all or part of or are included in the proceeds of
the Receivables and any of the foregoing.
"Person" shall have the meaning specified in the Pooling and Servicing
Agreement.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement by and among Asta Auto Receivables Company, as seller, Asta Funding,
Inc., as servicer, and Harris Trust and Savings Bank, as Trustee, Custodian
and Backup Servicer, dated as of September 1, 1996.
"Preliminary Memorandum" shall have the meaning assigned to such term in
the Certificate Purchase Agreement.
"Purchase Price" shall have the meaning specified in Section 2.1(a)
hereof.
"Purchaser" shall mean Asta Auto Receivables Company, a Delaware
corporation, its successors and assigns.
"Rating Agency" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Receivable" shall mean any retail installment sale contract or
promissory note (and related security agreement) on a new or used automobile
or light duty truck (and all accessories thereto) that are included in the
Schedule of Receivables.
"Receivable Files" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Repurchase Event" shall mean the occurrence of a breach of any of the
Seller's representations and warranties contained in Section 3.2 hereof
(without regard to any limitations regarding Seller's knowledge) that
materially and adversely affects the interests of the Purchaser in any
Receivable (including any Liquidated Receivable) or the failure of an Obligor
to make its
<PAGE>4
first Scheduled Payment causing a repurchase obligation under Section 4.7 of
the Pooling and Servicing Agreement.
"Schedule of Receivables" shall mean the schedule of all motor vehicle
retail installment sale contracts and promissory notes sold and transferred
pursuant to this Agreement which schedule is attached hereto as Schedule A.
"Seller" shall mean Asta Funding, Inc., a Delaware corporation, in its
capacity as seller of the Receivables and the Other Conveyed Property relating
thereto, its successors and assigns.
"Servicer" shall mean Asta Funding, Inc. , a Delaware corporation, in its
capacity as Servicer of the Receivables, its successors and assigns.
"Servicing Fee" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Trust" shall mean the Asta Auto Trust 1996-1.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the relevant jurisdictions.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
2.1 Purchase Price. In consideration of the conveyance of Receivables
and the related Other Conveyed Property by Seller to Purchaser, Purchaser
shall pay or cause to be paid to Seller the Purchase Price. The Purchase
Price shall be an amount equal to the product of (w) the outstanding Principal
Balance of such Receivables and (x) 100% (the "Purchase Price"). Such
Purchase Price shall be payable in cash and in the form of a capital
contribution to the Seller in consideration of the Purchaser's ownership
interest in the Seller.
2.2 Conveyance of Receivables
(a) Subject to the conditions set forth in paragraph (b) below, the
Seller, pursuant to the mutually agreed upon terms contained herein, shall
sell, transfer, assign and otherwise convey to the Purchaser without recourse
(but without limitation of their obligations in this Agreement or the Pooling
and Servicing Agreement), all of the right, title and interest of the Seller,
whether then existing or thereafter acquired, in and to all accounts, contract
rights, general intangibles, chattel paper, instruments, documents, money,
deposit accounts,
<PAGE>5
certificates of deposit, goods, letters of credit, advices of credit and
uncertificated securities consisting of, arising from or relating to the
Receivables transferred by the Seller listed on the Schedule of Receivables
and the Other Conveyed Property related thereto. It is the intention of the
Seller and the Purchaser that the transfers and assignments contemplated by
this Agreement shall constitute a sale of the Receivables and the Other
Conveyed Property from the Seller to the Purchaser conveying good title
thereto free and clear of any Liens, and the Receivables and Other Conveyed
Property shall not be a part of the Seller's estate in the event of the filing
of a bankruptcy petition by or against the Seller under any bankruptcy or
similar law.
(b) The Seller shall transfer to the Purchaser the Receivables and
Other Conveyed Property as described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to the Closing
Date:
(i) The Seller shall not have been insolvent nor shall the Seller
have been rendered insolvent by the sale and assignment contemplated
hereby, nor shall the Seller be aware of any pending insolvency;
(ii) The Seller shall have taken any action necessary or advisable
to maintain the perfected ownership interest of the Purchaser in the
Receivables and Other Conveyed Property; and
(iv) No selection procedures adverse to the interests of the
Purchaser or the Trust shall have been utilized by the Seller or the
Purchaser in selecting the related Receivables.
2.3 Delivery of Receivable Files. The Seller shall deliver to the
Purchaser on the Closing Date the following documents:
(i) The fully executed original of each Receivable and any
amendments thereto;
(ii) a copy of the VSI Insurance Policy meeting the requirements of
Section 3.6(a)(iii) of the Pooling and Servicing Agreement; and
(iii) The original certificate of title or other evidence of
title as specified in Section 3.6(a)(ii) of the Pooling and Servicing
Agreement.
2.4 The Closing. The sale by the Seller and purchase by the Purchaser
of the Receivables being purchased directly from
<PAGE>6
the Seller shall take place at a closing (the "Closing") at the offices of
Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, 18th Floor, New York,
New York 10103 on the Closing Date, simultaneously with the closings under:
(a) the Pooling and Servicing Agreement pursuant to which (i) the Purchaser
will assign all of its right, title and interests in and to the Receivables
and the related Other Conveyed Property to the Trustee for the benefit of the
Certificateholders, (ii) the Purchaser shall have deposited $968,621.19 in the
Reserve Account, $360,000 in the Simple Interest Differential Account and
$2,000,000 in the Escrow Account and (iii) the Trust will issue and deliver to
the Purchaser in exchange for the Receivables and the Other Conveyed Property
the Certificates; and (b) the Certificate Purchase Agreement pursuant to which
the Purchaser will sell a portion of the Certificates to Greenwich Capital
Markets, Inc.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller as of the date hereof and as of
the Closing Date:
(a) Organization and Good Standing. The Purchaser has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned and
such business is presently conducted, and had at all relevant times, and shall
have, power, authority and legal right to acquire and own the Receivables and
the Other Conveyed Property, and to transfer the Receivables and the Other
Conveyed Property to the Trust pursuant to the Pooling and Servicing
Agreement.
(b) Due Qualification. The Purchaser is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do
so would materially and adversely affect the Purchaser's ability to acquire
the Receivables and the Other Conveyed Property or the validity or
enforceability of the Receivables and the Other Conveyed Property or to
perform the Purchaser's obligations hereunder.
(c) Power and Authority. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Receivables and the Other Conveyed Property
hereunder and the execution, delivery and performance of this Agreement and
all of
<PAGE>7
the documents required pursuant hereto have been duly authorized by the
Purchaser by all necessary action.
(d) No Consent Required. The Purchaser is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery or performance of
this Agreement, except for such as have been obtained, effected or made.
(e) Binding Obligation. This Agreement constitutes the legal,
valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms against the Purchaser, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to
general equitable principles.
(f) No Violation. The execution, delivery and performance by the
Purchaser of this Agreement, the consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement do not
and will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the certificate of incorporation or bylaws of the Purchaser,
or, after giving effect to the transactions contemplated hereby and by the
Pooling and Servicing Agreement and any consents that have been obtained and
are in full force and effect, conflict with or breach any of the terms or
provisions of, or constitute (with or without notice or lapse of time) a
default under, any indenture, agreement, mortgage, deed of trust or other
instrument to which the Purchaser is a party or by which the Purchaser is
bound or to which any of its properties are subject, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than the Pooling and Servicing Agreement), or violate any law, order,
rule or regulation, applicable to the Purchaser or its properties, of any
federal or state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over the Purchaser or any of
its properties.
(g) No Proceeding. There are no proceedings or investigations
pending, or, to the best knowledge of the Purchaser, threatened against the
Purchaser, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality having jurisdiction over the
Purchaser or its properties: (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummating of any
<PAGE>8
of the transactions contemplated by this Agreement, or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates.
In the event of any breach of a representation and warranty made by the
Purchaser hereunder, the Seller covenants and agrees that it will not take any
action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all the
Certificates or other similar securities issued by the Trust have been paid in
full. The Seller agrees that damages will not be an adequate remedy for such
breach and that this covenant may be specifically enforced by the Purchaser or
by the Trust.
3.2 Representations and Warranties of the Seller. (a) The Seller
hereby represents and warrants to the Purchaser as of the date hereof and as
of the Closing Date:
(i) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted and had at all
relevant times, and shall have, power, authority and legal right to
acquire, own and service the Receivables and the Other Conveyed Property
transferred by it to the Purchaser.
(ii) Due Qualification. The Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification, except where the failure to qualify or maintain such
licenses or approvals would not have a material adverse effect on the
Seller.
(iii) Power and Authority. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out the
terms of this Agreement; the Seller has full corporate power and
authority to sell and assign the Receivables and the Other Conveyed
Property to be sold and assigned to the Purchaser hereunder and has duly
authorized such sale and assignment to the Purchaser by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by it by all necessary corporate
action; and the execution,
<PAGE>9
delivery and performance of this Agreement has been duly authorized by it by
all necessary corporate action.
(iv) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered and shall effect a valid sale, transfer and
assignment of the Receivables and the Other Conveyed Property transferred
by it, enforceable against the Seller and any creditors of and purchasers
from the Seller; and this Agreement constitutes the legal, valid and
binding obligation of the Seller enforceable in accordance with its terms
against the Seller, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at
law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement by the Seller and the fulfillment of the
terms of this Agreement by the Seller do not and shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under, the
certificate of incorporation or bylaws of the Seller, or, after giving
effect to the transactions contemplated hereby and by the Pooling and
Servicing Agreement and any consents that have been obtained and are in
full force and effect, any indenture, agreement, mortgage, deed of trust
or other instrument to which the Seller is a party or by which it or any
of its properties are bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement, or violate any law, order, rule or regulation
applicable to it of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the best of the Seller's knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or their respective properties (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement, or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by it of obligations
<PAGE>10
under, or the validity or enforceability of, this Agreement or the
Certificates.
(vii) Chief Executive Office. The chief executive offices of
the Seller are located at 210 Sylvan Avenue, Englewood Cliffs, New Jersey
07632 and there have been no other such locations during the past four
months.
(viii) Taxes. The Seller has filed all federal, State, county,
local and foreign income, franchise and other tax returns required to be
filed by it through the date hereof, and has paid all taxes reflected as
due thereon. There is no pending dispute with any taxing authority that,
if determined adversely to the Seller, would result in the assertion by
any taxing authority of any material tax deficiency, and the Seller has
no knowledge of a proposed liability for any tax to be imposed upon the
Seller's properties or assets for which there is not an adequate reserve
reflected in the Seller's current financial statements.
(ix) Pension/Profit Sharing Plans. No contribution failure has
occurred with respect to any pension or profit sharing plan, and all such
plans have been fully funded as of the date of this Agreement.
(x) Trade Names. "Asta Funding, Inc." and "Asta Holding, Inc." are
the only trade names under which the Seller is currently operating its
business and under which the Seller operated its business for the period
of time during which the Seller was in existence preceding the Closing
Date.
(xi) Lock-Box Account. Each Obligor of a Receivable has been
directed and is required to remit payments to the Lock-Boxes.
(xii) Consolidation. The Seller has operated and will operate
its business such that its assets and liabilities will not be
substantively consolidated with the assets and liabilities of the
Purchaser and its separate existence will not be disregarded in any State
or federal court proceeding.
(xiii) Business Purpose. The Seller will acquire and sell,
transfer, assign and otherwise convey (for State law, tax and financial
accounting purposes) the Receivables for a bona fide business purpose.
(xiv) Federal Income Tax Purposes. The Seller intends to treat
the transactions contemplated under this
<PAGE>11
Agreement as a sale of the Receivables to the Purchaser for federal income tax
purposes. The Purchaser and the Trustee intend to cause to be filed all
returns or reports in a manner consistent with such treatment.
(b) The Seller hereby makes all representations and warranties in
Section 3.4 of the Pooling and Servicing Agreement as if it were the Seller
under the Pooling and Servicing Agreement. Such representations and
warranties are true and correct as of the Closing Date with respect to the
Receivables, but shall survive the sale, transfer, and assignment of the
Receivables and the Other Conveyed Property relating thereto to the Purchaser
and the subsequent assignment and transfer pursuant to the Pooling and
Servicing Agreement.
ARTICLE IV
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows, provided, however, that
to the extent that any provision of this ARTICLE IV conflicts with any
provision of the Pooling and Servicing Agreement, the Pooling and Servicing
Agreement shall govern:
4.1 Protection of Title of Purchaser and the Trust.
(a) At the Closing Date, the Seller shall have filed or caused to
be filed a UCC-I financing statement, executed by it as seller or debtor,
naming the Purchaser as purchaser or secured party and describing the
Receivables and the Other Conveyed Property to be sold by it to the Purchaser
on such date as collateral, with the office of the Secretary of State of the
State of New Jersey and in such other locations as the Purchaser shall have
required. From time to time thereafter the Seller shall execute and file such
financing statements, all in such manner and in such places as may be required
by law fully to preserve, maintain and protect the interest of the Purchaser
under this Agreement and of the Trust under the Pooling and Servicing
Agreement in the Receivables and the Other Conveyed Property and in the
proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Purchaser and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as practicably available following
such filing. In the event that the Seller fails to perform its obligations
under this subsection, the Purchaser or the Trustee may do so, at the expense
of the Seller.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing
statement or continuation statement filed by the Seller (or by the Purchaser
or the Trustee on behalf of the
<PAGE>12
Seller) in accordance with paragraph (a) above seriously misleading within the
meaning of 9-402(7) of the UCC, unless it shall have given the Purchaser and
the Trustee at least 30 days' prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing statements and
continuation statements,
(c) The Seller shall give the Purchaser and the Trustee at least 30
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The Seller shall at
all times maintain each office from which it services its respective
Receivables and its principal executive office within the United States of
America.
(d) The Seller shall maintain its computer systems so that, from
and after the time of the sale hereunder of the Receivables to the Purchaser
and the conveyance under the Pooling and Servicing Agreement of such
Receivables by the Purchaser to the Trust, each of the Seller's master
computer records (including archives) that refers to a Receivable shall
indicate clearly that such Receivable has been sold to the Purchaser and has
been conveyed by the Purchaser to the Trust. Indication of the Trust's
ownership of a Receivable shall be deleted from or modified on each of the
Seller's computer systems when, and only when, such Receivable shall have been
paid in full or shall have been repurchased by any of the Seller or the
Purchaser.
(e) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in motor vehicle
receivables to any prospective purchaser, lender or other transferee, the
Seller shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from archives)
that, if they shall refer in any manner whatsoever to any of the Receivables,
shall indicate clearly that such Receivables have been sold to the Purchaser
and are owned by the Trust pursuant to the Pooling and Servicing Agreement.
4.2 Other Lien or Interests. The Seller will not sell, pledge, assign
or transfer to any other Person, or grant, create, incur, assume or suffer to
exist any Lien on the Receivables or the Other Conveyed Property transferred
hereunder by it or any interest therein, and the Seller shall defend the
right, title, and interest of the Purchaser in and to the Receivables and the
Other Conveyed Property against all claims of third parties claiming through
or under the Seller; provided that the Seller's obligation under this Section
4.2 shall terminate upon
<PAGE>13
termination of the Trust pursuant to the Pooling and Servicing Agreement.
4.3 Indemnification.
(a) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages,
claims, and liabilities arising out of or resulting from any breach of any of
Seller's representations and warranties contained herein (except for any
representation or warranty contained in this Agreement, the Pooling and
Servicing Agreement or other related documents or instruments with respect to
a Receivable, the remedy for the breach of which is the repurchase of such
Receivable), to the extent all losses, liabilities, damages, costs or
expenses, including without limitation, all fees and expenses of attorneys,
consultants and auditors and the reasonable cost of investigations, with
respect thereof are not satisfied in full by payment of the purchase price of
such Receivable in accordance with the terms of the Pooling and Servicing
Agreement.
(b) The Seller agrees to pay, and shall defend, indemnify and hold
harmless the Purchaser, from and against any taxes that may at any time be
asserted against the Purchaser with respect to this Agreement, including,
without limitation, any sales, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of any date of, the sale, transfer and assignment of any
Receivables and Other Conveyed Property to the Seller and of the sale,
transfer and assignment of such Receivables and Other Conveyed Property to the
Trust or the issuance and sale of any Certificates, or asserted with respect
to ownership of the Receivables and Other Conveyed Property or federal, state
or other income taxes, franchise taxes or taxes on gross receipts or capital)
and costs and expenses in defending against the same, arising by reason of the
acts to be performed by the Seller under this Agreement or imposed against the
Purchaser.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such costs, expenses, losses,
claims, damages, or liabilities arose out of, or were imposed upon the
Purchaser, through the negligence, willful misfeasance, or bad faith of the
Seller, in the performance of its duties under this Agreement or by reason of
the Seller's reckless disregard of its obligations and duties under this
Agreement.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser, from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or
<PAGE>14
incurred in connection with the acceptance or performance of the Seller's
duties as Servicer under the Pooling and Servicing Agreement.
Indemnification under this Section 4.3 shall include reasonable fees and
expenses of counsel and expenses of litigation and shall survive the maturity
of the Certificates. The indemnity obligations hereunder shall be in addition
to any obligation that the Seller may otherwise have. The Backup Servicer,
the Custodian and the Trustee on behalf of the Certificateholders shall be
third party beneficiaries of the indemnities provided in this Section.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Obligations of Seller. The obligations of the Seller under this
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
5.2 Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trustee and the
Certificateholders, that upon occurrence of a Repurchase Event, the Seller
shall, unless the related breach shall have been cured in all material
respects, repurchase the affected Receivables hereunder, at the Purchase
Amount from the Trust. The provisions of this Section 5.2 are intended to
grant the Trustee a direct right against the Seller to demand performance
hereunder and in connection therewith the Seller waives any requirement of
prior demand against the Purchaser and waives any defaults it would have
against the Purchaser with respect to such repurchase obligation. Any such
purchase shall take place in the manner specified in Section 3.5 of the
Pooling and Servicing Agreement. The sole remedy of the Certificateholders,
the Trust, the Trustee, or the Purchaser against the Seller with respect to
any Repurchase Event shall be to enforce the Seller's obligation to purchase
such Receivables pursuant to this Agreement; provided, however, that the
Seller shall indemnify the Trustee, including its officers, directors,
employees and agents, and the Trust and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them, as a result of third party claims arising out of the events or facts
giving rise to such breach. Upon receipt of the Purchase Amount, the
Purchaser shall cause the Trustee to release the related Receivable File to
the Seller and to execute and deliver all instruments of transfer or
assignment, without recourse, as are necessary to vest in the Seller title to
the Receivable.
<PAGE>15
5.3 Seller's Assignment of Purchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the
Purchaser shall assign, without recourse (except as provided herein),
representation or warranty, to the Seller all of the Purchaser's right, title
and interest in and to such Receivables, and all security and documents and
all Other Conveyed Property conveyed to the Purchaser directly relating
thereto, without recourse, representation or warranty, except as to the
absence of liens, charges or encumbrances created by or arising as a result of
actions of the Purchaser or the Trust. Such assignment shall be a sale and
assignment outright, and not for security. If, following the reassignment of
a Purchased Receivable in any enforcement suit or legal proceeding, it is held
that the Seller may not enforce any such Receivable on the ground that it
shall not be a real party in interest or a holder entitled to enforce the
Receivable, the Purchaser shall, at the expense of the Seller, take such steps
as the Seller deems reasonably necessary to enforce the Receivable, including
bringing suit in the Purchaser's or in the name of the Trustee on behalf of
the Certificateholders.
5.4 Waivers. No failure or delay on the part of Purchaser or the
Trustee as assignee of the Purchaser in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy preclude any other or
future exercise thereof or the exercise of any other power, right or remedy.
5.5 Limitation on Liability of the Seller and Others. Each of the
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement, the Pooling and Servicing Agreement or other related
documents or instruments and that in its opinion may involve it in any expense
or liability.
5.6 Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser;
provided, however, that any such amendment that would materially adversely
affect the rights of the Certificateholders of any Class under the Pooling and
Servicing Agreement must be consented to by Certificateholders representing at
least 51% of the then-outstanding Certificate Balance of each Class or such
other Person adversely affected. Certificates held by the Purchaser or the
Seller, or any Affiliate thereof, shall be deemed not outstanding for purposes
of the preceding sentence.
<PAGE>16
5.7 Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or facsimile and addressed or
delivered to it at its address (or in case of facsimile, at its facsimile
number at such address) shown in the opening portion of this Agreement or at
such other address as may be designated by it by notice to the other party
and, if mailed or sent by telegraph or facsimile, shall be deemed given when
mailed, communicated to the telegraph office or transmitted by facsimile.
5.8 Severability of Provisions. If any one or more of the covenants,
provisions or terms of this Agreement is invalid, for any reason whatsoever,
then such covenants, provisions of terms shall be deemed severable from the
remaining covenants, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this
Agreement.
5.9 Intention of the Parties, The execution and delivery of this
Agreement shall constitute an acknowledgement by the Seller and the Purchaser
that they intend that the assignments and transfers contemplated herein
constitute a sale and assignment outright, and not for security, of the
Receivables and the Other Conveyed Property, conveying good title thereto free
and clear of any Liens, from the Seller to the Purchaser, and that the
Receivables and the Other Conveyed Property shall not be a part of the
Seller's estate in the event of the bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, or the occurrence of another similar event,
of or with respect to, the Seller. In the event that such conveyance is
determined to be made as security for a loan made by the Purchaser or the
Trust or the Trustee on behalf of the Certificateholders to the Seller, the
parties intend that the Seller shall have granted to the Purchaser a security
interest in all of its right, title and interest in and to the Receivables and
the Other Conveyed Property conveyed by it pursuant to this Agreement, and
that this Agreement shall constitute a security agreement under applicable
law.
5.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS RIGHTS AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE IN ACCORDANCE WITH SUCH LAWS.
5.11 Counterparts. For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an
<PAGE>17
original, and all of which counterparts shall constitute but one and the same
instrument.
5.12 Conveyance of the Receivables and the Other Conveyed Property to the
Trustee on Behalf of the Trust. The Seller acknowledges that the Purchaser
intends, pursuant to the Pooling and Servicing Agreement, to convey the
Receivables and Other Conveyed Property, together with its rights under this
Agreement, to the Trustee on the date hereof. The Seller acknowledges and
consents to such conveyance and waives any further notice thereof and
covenants and agrees that the representations and warranties of the Seller
contained in this Agreement and the rights of the Purchaser hereunder are
intended to benefit the Trustee on behalf of the Certificateholders. In
furtherance of the foregoing, the Seller covenants and agrees to perform its
duties and obligations hereunder, in accordance with the terms hereof for the
benefit of the Trustee on behalf of the Certificateholders and that,
notwithstanding anything to the contrary in this Agreement, the Seller shall
be directly liable to the Trust (notwithstanding any failure by the Servicer,
the Backup Servicer or the Purchaser to perform its duties and obligations
hereunder or under the Pooling and Servicing Agreement) and that the Trustee
may enforce the duties and obligations of the Seller, under this Agreement
against the Seller, respectively, for the benefit of the Trustee on behalf of
the Certificateholders.
5.13 Nonpetition Covenant. The Seller shall not petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Purchaser under any federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Purchaser or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Purchaser.
5.14 No Recourse. Without limiting the obligations of the Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any affiliate, employee, incorporator, stockholder,
officer or director, as such, of the Seller, or any affiliate, employee,
incorporator, stockholder, officer or director, as such, of any predecessor or
successor of the Seller.
5.15 Third Party Beneficiaries. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Each of the Backup Servicer, the Custodian
and the Trustee on its own behalf and on behalf of the Certificateholders
shall be a third-party beneficiary to the provisions of this Agreement, and
shall be entitled to rely upon and to enforce directly such provisions.
<PAGE>18
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be executed by their respective officers there unto duly authorized as of the
date and year first above written.
ASTA AUTO RECEIVABLES COMPANY
By:
Name:
Title:
ASTA FUNDING, INC.
By:
Name:
Title:
<PAGE>19
SCHEDULE A
SCHEDULE OF RECEIVABLES
