ASTA FUNDING, INC. (NASDAQ:ASFI) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01Entry into a Material Definitive
Agreement.

Settlement Agreement

On January 6, 2017, Asta Funding, Inc. (Asta or the
Company) entered into a settlement agreement (the
Settlement Agreement) with The Mangrove Partners Master
Fund Ltd. and its affiliates (collectively, Mangrove) and,
for limited purposes stated therein, Gary Stern, Ricky Stern,
Emily Stern, Arthur Stern, Asta Group, Incorporated and GMS
Family Investors LLC (collectively, the Stern Family).

The Settlement Agreement provides that, within ten business days
following the date of the Settlement Agreement, the Company will
commence a self-tender offer (Tender Offer) to repurchase
for cash 5,314,009 shares of its common stock at a purchase price
of $10.35 per share. The Tender Offer will expire no later than
February 28, 2017. to the Settlement Agreement, Mangrove will
tender its 4,005,701 shares for purchase by the Company. The
Stern Family has agreed not to tender any of their shares in the
Tender Offer. In addition, to a securities purchase agreement
dated January 6, 2017 between Mangrove and Gary Stern, Gary Stern
will purchase any remaining shares owned by Mangrove eleven
business days following the closing of the Tender Offer for
$10.35 per share.

The Settlement Agreement includes customary standstill and
related provisions. Mangrove and the Company also agreed on a
mutual release of claims.

The Settlement Agreement is terminable by either the Company or
Mangrove by written notice at any time after the close of
business on the second anniversary of the Settlement Agreement.
The Settlement Agreement will also terminate if the Tender Offer
does not close on or before February 28, 2017 or the Company
amends the terms of the Tender Offer in a manner adverse to
Mangrove.

The above summary of the Settlement Agreement is not intended to
be complete and is qualified in its entirety by reference to the
full text of the Settlement Agreement, a copy of which is
attached hereto as Exhibit 10.1 and incorporated herein by
reference.

Voting Agreement

In connection with the Settlement Agreement, the Company also
entered into a Voting Agreement dated January 6, 2017 (the
Voting Agreement) with Gary Stern, Ricky Stern, Emily
Stern, Asta Group, Incorporated and GMS Family Investors LLC
(collectively, the Stern Stockholders). The Voting
Agreement provides that the Stern Stockholders will not have the
right to vote more than 49% of the Companys total outstanding
shares, and any additional shares held by the Stern Stockholders
will be voted in a manner proportionate to the votes of the
outstanding shares not held by the Stern Stockholders.

The above summary is not intended to be complete and is qualified
in its entirety by reference to the full text of the Voting
Agreement, a copy of which is attached hereto as Exhibit 10.2 and
incorporated herein by reference.

Item5.03Amendments to
Articles of Incorporation or Bylaws; Change in
Fiscal Year.

As contemplated by the Settlement Agreement, the board of
directors of the Company (the Board) unanimously approved
an amendment dated January 6, 2017 (Amendment) to the
Companys Amended and Restated By-laws. The Amendment provides
that at least half of the Board will consist of independent
directors and a lead independent director will be elected from
among the independent directors. The Amendment will terminate on
the earlier of January 6, 2019 or when the Company ceases to be a
publicly traded company or a reporting company subject to Section
13 or 15(d) of the Securities Exchange Act of 1934.

The foregoing description of the Amendment is not intended to be
complete and is qualified in its entirety by reference to the
full text of the Amendment, a copy of which is filed as Exhibit
3.1 and incorporated by reference herein.

Item8.01 Other Events.

On January 9, 2017, the Company issued a press release announcing
the entry into the Settlement Agreement. A copy of the press
release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.

Additional Information

This communication is for informational purposes only, and is
neither an offer to purchase nor a solicitation of an offer to
sell any shares of the capital stock of Asta or any other
securities. The Tender Offer described in this communication has
not yet commenced. At the time the Tender Offer is commenced,
Asta will file a tender offer statement on Schedule TO with the
United States Securities and Exchange Commission (the
SEC). The Tender Offer will be made only to an offer to
purchase, letter of transmittal and related materials that Asta
intends to distribute to its stockholder and file with the SEC.
STOCKHOLDERS AND INVESTORS SHOULD READ CAREFULLY THE OFFER TO
PURCHASE, LETTER OF TRANSMITTAL AND RELATED DOCUMENTS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE TENDER
OFFER. Investors and stockholders may obtain a free copy of these
materials (when available) and other documents that Asta intends
to file with the SEC at the website maintained by the SEC at
www.sec.gov or by calling the information agent (to be identified
at the time the offer is made) for the Tender Offer. Stockholders
are urged to carefully read these materials prior to making any
decision with respect to the Tender Offer.

(d)Exhibits

About ASTA FUNDING, INC. (NASDAQ:ASFI)

Asta Funding, Inc. is primarily engaged in the businesses of acquiring, managing, servicing and recovering on portfolios of consumer receivables. The Company operates through four segments: Consumer Receivables, Personal Injury Claims, Structured Settlements and GAR Disability Advocates. The Consumer receivables segment is engaged in purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, semi-performing receivables and performing receivables. The Personal injury claims segment includes the operations of its subsidiary, Pegasus Funding, LLC. The Structured settlements segment includes the operations of CBC Settlement Funding, LLC (CBC). The GAR Disability Advocates segment includes the operations of GAR Disability Advocates, LLC (GAR Disability Advocates). GAR Disability Advocates is a social security benefit and disability advocacy group.

ASTA FUNDING, INC. (NASDAQ:ASFI) Recent Trading Information

ASTA FUNDING, INC. (NASDAQ:ASFI) closed its last trading session down -0.05 at 10.00 with 1,538 shares trading hands.