Item 1.01. Entry Into a Material Definitive Agreement.






Agreement and Plan of Merger

On April 8, 2020, Asta Funding, Inc., a Delaware corporation ("Asta"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Asta Finance Acquisition Inc., a Delaware corporation ("Parent"), Asta Finance Acquisition Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub" and together with Parent, the "Parent Parties"), pursuant to which Merger Sub shall merge with and into Asta and its consolidated subsidiaries, with Asta surviving the Merger as a wholly-owned subsidiary of Parent (the "Merger").

The board of directors of Asta ("the Board"), acting upon the unanimous recommendation of a special committee independent of Asta's Board and formed for the purpose of evaluating the possible sale of Asta (the "Special Committee"), has unanimously approved the proposed Merger. The consummation of the Merger is subject to customary closing conditions, including the approval of the Merger Agreement by a majority of the outstanding shares of the common stock of Asta (the "Common Stock") entitled to vote thereon, other than the Parent, Gary Stern, Ricky Stern and certain related parties that have executed the Stern Group Commitment Letter, as described below (collectively, the "Stern Group") and any other officers and directors of Asta and any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary. The Merger is expected to close during Asta's third fiscal quarter of 2020.

Under the terms of the Merger Agreement, if the Merger is completed, holders of shares of Common Stock that are outstanding immediately prior to the time of the consummation of the Merger (the "Effective Time") shall be entitled to receive $11.47 in cash for each share of the Common Stock held by such stockholders (the "Merger Consideration"), and all such shares shall be automatically canceled and retired and shall cease to exist. Such Merger Consideration shall not apply to each share of the Common Stock that is owned immediately prior to the Effective Time by (i) Asta (whether held in treasury or otherwise) or any direct or indirect wholly-owned subsidiary of Asta or (ii) any of the Parent Parties, including the Rollover Shares (as defined below) (collectively, the "Excluded Shares"). The Excluded Shares shall be automatically canceled and cease to exist as of the Effective Time. The Merger Consideration shall also not apply to holders of Common Stock who successfully exercise and perfect their appraisal rights under the Delaware General Corporation Law (the "DGCL").

Except as otherwise agreed to in writing prior to the Effective Time of the Merger by Parent and a holder of any Asta stock options with respect to any of such holder's Asta stock options, each Asta stock option, whether vested or unvested and whether with an exercise price per share that is greater or less than, or equal to, $11.47, that is outstanding immediately prior to the Effective Time, will, as of the Effective Time, become fully vested and be canceled and converted into the right to receive an amount in cash from Asta as the surviving corporation equal to (a) the product of (i) the excess, if any, of $11.47 over the exercise price per share of the Common Stock subject to such Asta stock option multiplied by (ii) the total number of shares of the Common Stock subject to such Asta stock option, without interest, less (b) such amounts as are required to be withheld or deducted under applicable tax provisions.

The Merger Agreement contains customary representations and warranties of Asta and the Parent Parties and customary pre-closing covenants, including covenants requiring Asta (i) to use its commercially reasonable efforts to preserve in all material respects Asta's business organization and maintain in all material respects existing relations and goodwill, (ii) to conduct its business in the ordinary course, and (iii) to refrain from taking certain actions. The Merger Agreement also includes customary provisions prohibiting any solicitation or negotiations by Asta of other possible acquisition transactions or any adverse change to the Board's recommendation to approve the Merger.

The Merger Agreement contains customary termination rights and may be terminated by the mutual written consent of both Asta and the Parent prior to the Effective Time of the Merger, whether before or after stockholder approval has been obtained. In addition, the Merger Agreement may be terminated by Asta or Parent if: (i) the Merger has not been completed by on or before December 31, 2020 (the "Outside Date"); (ii) there is an injunction or similar order prohibiting the consummation of the merger (A) by a governmental entity having jurisdiction over the business of Asta and its subsidiaries (other than a de minimis portion of such business) or (B) that, if not abided by, would potentially result in criminal liability; or (iii) the Merger Agreement has been submitted to the stockholders of Asta for adoption at a duly convened stockholders meeting and the requisite vote shall not have been obtained at such meeting, provided, that Parent shall not have the right to terminate the Merger Agreement if the failure to obtain the requisite vote is due to the failure of the Stern Group to vote the shares of Common Stock beneficially owned or controlled by the Stern Group pursuant to the terms and conditions of the Voting Agreement (as defined below).


                                       2
--------------------------------------------------------------------------------

Parent may terminate the Merger Agreement if (i) there is a breach, in any material respect, of any representation, warranty, covenant or agreement on the part of Asta which would result in a failure of certain conditions relating to Asta's representations, warranties, covenants and agreements to be satisfied and which breach is incapable of being cured by the Outside Date, or is not cured within thirty days following delivery of written notice of such breach, so long as the Parent is not then in material breach of their representations, warranties, agreements or covenants contained in the Merger Agreement; (ii) the Board or the Special Committee does not include its recommendation to vote in favor of the proposal to adopt the Merger Agreement in the proxy statement or changes its recommendation; (iii) Asta enters into an alternative acquisition agreement; (iv) the Board or the Special Committee approves or recommends any alternative proposal or publicly proposes to take any of the previous actions; or (v) a tender or exchange offer constituting an alternative proposal has been commenced and Asta has not sent to its stockholders within ten business days a statement disclosing that the Board or the Special Committee recommends rejection of such tender or exchange offer; so long as Parent terminates the Merger Agreement within thirty calendar days of the occurrence listed in (ii) through (v) above.

Asta may terminate the Merger Agreement if (i) there is a breach, in any material respect, of any representation, warranty, covenant or agreement on the part of the Parent which would result in a failure of certain conditions relating to the Parent's representations, warranties, covenants and agreements to be satisfied and which breach is incapable of being cured by the Outside Date, or is not cured within thirty days following delivery of written notice of such breach, provided that Asta is not then in material breach of its representations, warranties, agreements or covenants contained in the merger agreement; (ii) prior to the approval of the proposal to adopt the Merger Agreement by Asta's stockholders, in order to enter into a definitive agreement with respect to a superior proposal, provided that substantially concurrently with such termination, Asta must enter into such definitive agreement and pay to Parent the termination fee as described below; or (iii) if all conditions to the Parent Parties' obligation to consummate the Merger have been satisfied or irrevocably waived in writing by Asta and Asta stands ready, willing and able to close and the Parent Parties fail to consummate the Merger within three business days following the required closing date and Asta stood ready, willing and able to close during such three business days.

Under specified circumstances, Asta will be required to pay Parent a termination fee of $400,000. Parent will be required to pay Asta a termination fee of $500,000 under certain circumstances. Asta will be required to pay Parent (or one or more of its designees) the documented out-of-pocket expenses incurred by the Parent and its respective affiliates in connection with the Merger Agreement and the financing and the transactions contemplated thereby, up to a maximum amount of $250,000, if Asta or Parent has terminated the Merger Agreement because the meeting of the Asta's stockholders has concluded and the approval of the proposal to adopt the Merger Agreement by the required vote of the stockholders has not been obtained. Any such amount will be credited against any Asta termination fee payable to the Parent.

Gary Stern is chairman, founding president and chief executive officer of Asta. As of his most recent Schedule 13D filed with the SEC on November 22, 2019, he beneficially owns 33.2% of the outstanding shares of Common Stock of the Company. Ricky Stern is senior vice president of Asta. As of his most recent Schedule 13D filed with the SEC on November 22, 2019, he beneficially owns 38.2% of the outstanding Common Stock of Company. . . .




Item 8.01. Other Events.

On April 8, 2020, Asta issued a press release announcing the execution of the Merger Agreement. The press release is attached as Exhibit 99.1 and is incorporated by reference herein.


                                       5
--------------------------------------------------------------------------------

Item 9.01. Financial Statements and Exhibits.






(d) Exhibits.



Exhibit No. Description

2.1*          Agreement and Plan of Merger, dated as of April 8, 2020, by and
            among Asta Finance Acquisition, Inc., Asta Finance Acquisition Sub
            Inc. and Asta Funding, Inc.
10.1          Form of Voting Agreement between the Stern Group and Asta Funding,
            Inc. dated April 8, 2020
10.2          The Stern Group Commitment Letter dated April 8, 2020.
10.3          Form of Limited Guarantee dated April 8, 2020.

99.1          Press Release issued by Asta Funding, Inc. dated April 8, 2020.
*           The schedules and exhibits to the Agreement and Plan of Merger have
            been omitted from this filing pursuant to
            Item 601(b)(2) of Regulation S-K. Asta will furnish copies of any
            such schedules or exhibits to the SEC upon request.




                                       6

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses