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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):
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"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
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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
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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,
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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.
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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.
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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
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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.
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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:
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SCHEDULE A
SCHEDULE OF RECEIVABLES