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                               Asta Funding, Inc.
                                   Form 10-KSB
                               September 30, 2001
                                                                    Exhibit 10.9


                                                                  EXECUTION COPY
                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

                  THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement") is executed and entered into as of November 15, 2001 by and among
ASTA FUNDING ACQUISITION II, LLC, a Delaware limited liability company and
PALISADES COLLECTION, L.L.C., a Delaware limited liability company (together,
"Borrower"), ASTA FUNDING, INC., a Delaware corporation ("Asta Funding") and
ISRAEL DISCOUNT BANK OF NEW YORK, a New York banking corporation ("Lender").

                                    RECITALS

                  A. Asta II, Asta Funding and Lender are parties to a Loan and
Security Agreement dated as of January 18, 2001 (the "Original Agreement")
pursuant to which Lender established a $10,000,000 discretionary Line of Credit
(the "Original Line of Credit") for the purpose of financing the acquisition of
portfolios of consumer loans and/or receivables, which Original Line of Credit
was guaranteed by Asta Funding and secured by certain assets of the Borrower and
Asta Funding. As of the date of this Agreement the outstanding principal
obligations of the Borrower under the Original Line of Credit are $_____________
(the "Existing Debt").

                  B. The Borrower and Asta Funding have requested that Lender
amend and restate the Original Line of Credit so as to have available a
revolving line of credit on the terms and conditions set forth herein, in an
amount not to exceed $20,000,000 at any one time outstanding, but in no event
shall the outstanding Advances (including, any Advance then being requested)
exceed the then effective Borrowing Base and/or Advance Ratio (the "Line of
Credit"). This Agreement is an amendment and restatement of the terms and
conditions of the lending relationship between the parties as previously set
forth in the Original Agreement and any amendments or supplements thereto, and
is not a new loan agreement, and all of the terms and conditions of the Original
Agreement shall remain in full force and effect as though set forth herein at
length, to the extent not inconsistent with the terms of this Agreement. The
execution and delivery of this Agreement and the Loan Documents shall not in any
circumstances be deemed to have terminated, released, extinguished or discharged
any existing indebtedness of any Borrower under the Original Agreement, the
Obligations of any Guarantors or the Collateral therefor, all of which
indebtedness, Obligations and collateral shall continue under and be governed by
this Agreement and the Loan Documents. To the extent of any inconsistencies, the
terms of this Agreement shall control.

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                  C. Lender has agreed to establish the Line of Credit for the
purpose of making Advances for working capital and to permit the Borrower, Asta
Funding and any Affiliate to acquire Portfolios on the terms and conditions of
this Agreement, as amended from time to time.

                  D. These Recitals are incorporated and made a part of this
Agreement.

                  NOW THEREFORE, in consideration of Lender's financing of the
acquisition of Portfolios, and in further consideration of the inducement to
Lender to make payments to the Sellers, make Advances to, and to otherwise
extend credit to the Borrower, the parties hereto agree as follows:

Section 1. Definitions: For purposes of this Agreement, the following terms
           shall mean:

                  All terms used in this Agreement which are defined in Article
1 or Article 9 of the Uniform Commercial Code ("UCC"), as each is amended from
time to time, shall have the meanings given therein, unless otherwise defined in
this Agreement and all references to the plural herein shall also mean the
singular.

1.1.     "Accounts" means all present and future accounts, contract rights,
         general intangibles, payment intangibles, promissory notes, deposit
         accounts, supporting obligations, chattel paper, documents and
         instruments, as such terms are defined in the UCC, including, without
         limitation, all obligations for the payment of money arising out of any
         Consumer Loan.
1.2.     "Account Debtor" means each person, firm, or entity in any way
         obligated to make payment of any Account.
1.3.     "Advance" or "Advances" means individually a loan and collectively the
         loans made by Lender to Borrower pursuant to this Agreement.
1.4.     "Advance Ratio" means at the date of computation an amount equal to
         fifteen (15) times the average Collections for the immediately
         preceding three (3) complete calendar month period prior to the date of
         each computation.
1.5.     "Advance Request" means each written request by Borrower for an Advance
         submitted with the information and documents required by Section 2.3
         hereof.
1.6.     "Affiliate" means an entity that is wholly owned by Asta Funding and is
         engaged in the business of acquiring and/or managing Portfolios and
         executes and delivers to Lender an Affiliate Guaranty, an Affiliate
         Security Agreement and an Affiliate Confirmation.
1.7.     "Affiliate Confirmation" means the agreement executed by each Affiliate
         in form of Exhibit C annexed hereto.
1.8.     "Affiliate Guaranty" means a guaranty, in form acceptable to Lender,
         executed by an Affiliate of all of the Obligations.
1.9.     "Affiliate Security Agreement" means a security agreement, in form
         acceptable to Lender, executed by an Affiliate granting to Lender a
         security interest in and lien on each Portfolio acquired by such
         Affiliate pursuant to the terms of this Agreement.
1.10.    "Aging Report" means a report in detail satisfactory to Lender with
         respect to the outstanding Accounts as of the last day of each month,
         setting forth the name of each Account Debtor, the original amount and
         date of each Account and date and amount of each Payment with respect
         to each Account.

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1.11.    "Asta I" means Asta Funding Acquisition I, LLC.
1.12.    "Asta II" means Asta Funding Acquisition II, LLC.
1.13.    "Asta Funding" means Asta Funding, Inc.
1.14.    "Auto Contract" means any agreement or contract or other evidence of
         debt executed by a borrower and/or lessee in connection with an Auto
         Loan and any amendments thereto.
1.15.    "Auto Loan" means all automobile loans presently and hereafter owned,
         set forth in a written report or in computer discs, from time to time,
         delivered to Lender, which computer discs shall be in the current
         format or any other format acceptable to Lender, together with each
         Auto Contract, chattel paper, instrument, document, general intangible,
         guarantee and all collateral security held with respect to such loans.
1.16.    "Banking Day" means any day on which Lender is open for business.
1.17.    "Books and Records" means all records, in any format whatsoever and the
         computer software, programs and access codes, relating to each Consumer
         Loan and the Collateral.
1.18.    "Borrower" means Asta II and Palisades.
1.19.    "Borrowing Base" means at the date of each Advance Request and/or
         Borrowing Base Certificate, without duplication, an amount equal to the
         lesser of (i) the sum of (a)50% of then existing Eligible Accounts, and
         (b) 50% of the Accounts which are part of a particular (i) proposed
         Small Portfolio or (ii) Portfolio Proposal approved by Lender and which
         Accounts would be considered Eligible Accounts if said Accounts were
         owned by Borrower and upon which the Lender had been granted a first
         and prior perfected security interest by the Debtors, but in no event
         more than the Portfolio Acquisition Cost, and (ii) the Advance Ratio.
1.20.    "Borrowing Base Certificate" means the certificate in the form of
         Exhibit A annexed hereto, completed and signed by an officer of
         Borrower and delivered to Lender with each Advance Request and not
         later than fifteen (15) days after the last day of each month, with
         respect to the prior month.
1.21.    "Chattel Paper" shall have the meaning given such term in the UCC.
1.22.    "Closing Date" means the date on which all of the conditions precedent
         set forth in Section 11 hereof have been complied with to the sole
         satisfaction of Lender.
1.23.    "Collateral" means (a) each Debtor's (other than Asta Funding's)
         present and future Accounts, Chattel Paper, Payment Intangibles and
         Collections, together with all of each Debtor's respective right, title
         and interest in and to all (i) Consumer Loans, (ii) all rights, claims,
         action and/or causes of action under any of the Consumer Loans, (iii)
         all Books and Records, (iv) all lawsuits (including, commercial tort
         actions) and judgments relating to each Consumer Loan, (v) all Support
         Obligations, guarantees and security with respect to each Consumer
         Loan, and (vi) all cash and non-cash proceeds of all of the foregoing,
         including insurance proceeds and the funds, if any, in the Operating
         Account and the Lockbox Account; and (b) all of Asta Funding's Auto
         Loans, Auto Contracts and the Accounts, Collections rights, claims,
         actions and/or causes of action, Books and Records, lawsuits, judgments
         and Support Obligations relating thereto that have been granted to
         Lender pursuant to the Original Agreement. Notwithstanding the
         foregoing, Collateral shall exclude any accounts and all other of the
         above-described property and assets that relate to any Rejected
         Portfolio that any Debtor may purchase notwithstanding Lender's
         rejection of the related Portfolio Proposal.


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1.24.    "Collection Report" means a report in detail satisfactory to Lender as
         to all Collections received during each month and the Account or
         Consumer Loan to which it applies.
1.25.    "Collections" mean all Payments actually received and collected (a) by
         or on behalf of the Borrower or any Guarantor with respect to any
         Consumer Loan, which is included in the Collateral, or (b) by or on
         behalf of a Seller with respect to a Portfolio Loan, which is to be
         included in the Collateral.
1.26.    "Consumer Loans" means all Credit Card Receivables, Auto Loans and any
         other type of consumer loan acceptable to Lender now or hereafter owned
         or held by the Borrower or any Guarantor.
1.27.    "Credit Card Receivables" means each of the performing and
         non-performing credit card receivables and/or loans presently owned,
         and as, from time to time, fully set forth in a computer disc delivered
         to Lender, which shall be in a format acceptable to the Lender, whether
         such is deemed to consist of accounts or general intangibles under the
         UCC, together with any chattel paper, instrument, document, general
         intangible, guarantee and other collateral security held by Borrower
         with respect to such receivables and/or loans, together with the
         proceeds thereof.
1.28.    "Debtors" means all or any of Borrower and the Guarantors, but in no
         event a Non-Affiliate.
1.29.    "Deficiency Fee" means the sum of $50,000 in the event that there are
         no outstanding Advances in each consecutive twelve (12) month period
         commencing from the date of this Agreement, and in the event there are
         advances the Deficiency Fee shall equal $50,000, less ($50,000
         multiplied by the average monthly amount of outstanding Advances
         divided by $1,670,000) provided that in no event shall there be a
         credit to the Borrower. In the event this Agreement is terminated prior
         to the Termination Date, the average monthly amount of outstanding
         advances shall be deemed to be zero for the months following the
         termination of this Agreement, and the Deficiency Fee shall then be due
         upon termination of this Agreement.
1.30.    "E.R." means E.R. Receivables Corp., L.L.C.
1.31.    "Eligible Accounts" means Accounts arising out of Consumer Loans, as to
         which Lender has been granted a first and prior perfected security
         interest by the Debtors, with respect to which the Account Debtor has
         made a Payment within the last ninety (90) days and which is presently
         owned by any Debtor or is part of a Portfolio Proposal approved by
         Lender.
1.32.    "Events of Default" shall have the meaning set forth in Section 12
         hereof.
1.33.    "Examination Fee" means a field examination fee of Lender not to exceed
         $750.00 per each day of examination, provided that so long as no Event
         of Default is continuing, Borrower shall not be required to pay for
         more than one field examination in any calendar quarter.
1.34.    "Financial Statements" mean the financial statements to be furnished to
         Lender pursuant to Section 9(t).
1.35.    "GAAP" means generally accepted accounting principles then in effect
         and consistent with those applied in the preparation of the financial
         statements to be delivered pursuant to Section 9(t) hereof.

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1.36.    "Grid Note" means the note executed by Borrower in the form of Exhibit
         B annexed hereto, as amended, renewed or replaced from time to time.
1.37.    "Guarantees" means the guaranty of all of the Obligations executed by
         Asta Funding, Asta I and each Affiliate Guaranty, as each is amended
         from time to time.
1.38.    "Guarantors" mean Asta Funding, Asta I, E.R. and each Affiliate, if
         any, or any one or more of them, but in no event a Non-Affiliate.
1.39.    "Indemnified Party" means Lender and each of its officers, directors,
         representatives and employees.
1.40.    "Lender Fees" means all Line Fees, Deficiency Fees, Portfolio
         Examination Fees and Examination Fees from time to time payable to
         Lender under this Agreement.
1.41.    "Line Fee" means a fee equal to $50,000, which shall be deemed earned
         as of the date of this Agreement and shall be payable on the Closing
         Date.
1.42.    "Line of Credit" shall have the meaning given such term in Recital B
         above.
1.43.    "Loan Documents" means this Agreement, the Grid Note, the Guarantees,
         the Security Agreements and each of the other documents required to be
         executed and delivered pursuant to Section 11 hereof.
1.44.    "Lockbox Account" means the segregated account to be established by
         Debtors after the occurrence and during the continuance of an Event of
         Default, into which the Account Debtors shall be instructed to send
         Payments and as to which account none of the Debtors shall have any
         control.
1.45.    "Non-Affiliate" means an entity that is wholly owned by Asta Funding
         which is not required by the Lender to execute and deliver an Affiliate
         Guaranty, an Affiliate Security Agreement and an Affiliate Confirmation
         pursuant to Section 2.3(d) of this Agreement.
1.46.    "Obligations" means all Advances and any and all loans, indebtedness,
         liabilities and obligations of any kind owing by Borrower to Lender and
         any of Lender's divisions, subsidiaries or affiliates, however
         evidenced, whether as principal, guarantor or otherwise, arising under
         this Agreement, or any supplement hereto, or otherwise, whether now
         existing or hereafter arising, whether direct or indirect, absolute or
         contingent, joint or several, due or not due, primary or secondary,
         liquidated or unliquidated, secured or unsecured, original, renewed or
         extended, and whether arising directly or acquired from others
         (including, without limitation, Lender's participation or interests in
         Borrower's obligations to others) and including, without limitation,
         all Existing Debt, Lender Fees, charges, commissions, interest,
         expenses, costs and attorneys' fees chargeable to Borrower in
         connection with all of the foregoing and as to which Lender is entitled
         under any Loan Document.
1.47.    "Obligor" means any person, firm or entity, which has guaranteed or is
         liable for the repayment of any Account Debtor's obligation.
1.48.    "Operating Account" means the account currently maintained by Asta II
         and the account to be established by Palisades with Lender.
1.49.    "Palisades" means Palisades Collection, L.L.C.
1.50.    "Payment Intangibles" shall have the meaning given such term in the
         UCC.
1.51.    "Payments" means the payments of whatsoever nature made by each Account
         Debtor with respect to the Accounts relating to such Account Debtor
         and/or the payments made by any Obligor with respect to any Account.

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1.52.    "Permitted Debt" means(a) the indebtedness (a) for borrowed monies of
         Borrower and the Guarantors set forth in Schedule A annexed hereto, but
         not any increase thereof, and (b)any debt to finance a Rejected
         Portfolio, and (c) of one Debtor to another Debtor, including, the
         indebtedness of Palisades to Asta I, Asta II and E.R. in connection
         with the acquisition of the Portfolio Loans set forth in Schedule A-1
         annexed hereto, but not any increase thereof.
1.53.    "Permitted Liens" means the security interests of the Debtors in favor
         of the secured parties listed in Schedule B annexed hereto, including
         liens on a Rejected Portfolio financed by another lender.
1.54.    "Portfolio" means the Portfolio Loans to be acquired with the proceeds
         of an Advance made by Lender.
1.55.    "Portfolio Acquisition Cost" means the actual or final amount to be
         paid to the Seller of a Portfolio pursuant to the terms of the
         applicable Portfolio Acquisition Documents.
1.56.    "Portfolio Acquisition Documents" means the purchase and other
         agreements between a Debtor and the Seller of each Portfolio, as each
         may be amended.
1.57.    "Portfolio Bid" means the specific amount or the maximum of a range of
         amounts which are to be bid to acquire a Portfolio.
1.58.    "Portfolio Examination Fee" means a fee of $750 per each day as
         required in Lender's sole discretion to review, examine and report as
         to the legal and financial status of each Portfolio Proposal, together
         with Lender's actual out-of-pocket expenses, including travel, meals
         and hotel expenses.
1.59.    "Portfolio Loans" means the Consumer Loans, which comprise each
         Portfolio, as more specifically detailed in the applicable Portfolio
         Proposal.
1.60.    "Portfolio Proposal" means a written proposal presented by Borrower or
         any other Guarantor with respect to a Portfolio that such party intends
         to submit to a Seller for the purchase of such Portfolio, which shall
         set forth in sufficient detail the (a) Portfolio Bid and the terms of
         payment thereof, (b) nature of the Consumer Loans comprising the
         Portfolio, (c) a computer disc or written report containing a detailed
         description of the Consumer Loans, (d) name of the Seller, and (e)
         Portfolio Acquisition Documents, all of which shall be in form, scope
         and substance acceptable to Lender.
1.61.    "Prime Rate" shall have the meaning given such term in the Grid Note.
1.62.    "Rejected Portfolio" means the Consumer Loans and all rights and
         interests related thereto that are in a Portfolio Proposal that is
         rejected by Lender.
1.63.    "Reports" mean the Aging Reports and the Collection Reports, including
         the computer discs containing all of the information contained therein.
1.64.    "Seller" means the party which has agreed to sell Portfolio Loans to a
         Debtor.
1.65.    "Security Agreements" means the security agreement executed by
         Borrower, each Guarantor and each Affiliate Guaranty, granting Lender a
         security interest in the Collateral owned by each party executing same,
         as each is amended from time to time.
1.66.    "Small Portfolio" is defined in Section 2.2(d).
1.67.    "Subordinated Debt" means any indebtedness which is subordinated in
         right of payment to the Obligations, pursuant to the terms of an
         agreement in form and scope and on terms acceptable to the Lender, in
         its sole discretion.
1.68.    "Support Obligation" shall have the meaning given such term in the UCC.


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1.69.    "Tangible Net Worth" means, for any period, the assets of any Borrower
         or Debtor, all as determined by GAAP and as reported in the Financial
         Statements, which shall exclude each Borrower's and Debtor's goodwill,
         all intangible assets and all loans, advances, exchanges and other
         indebtedness (other than Subordinated Debt) owing to each Borrower or
         Debtor by any shareholder, officer, employee or a relative thereof or
         any Affiliate or Non-Affiliate, as the case may be, less Total
         Liabilities.
1.70.    "Termination Date" means September 30, 2002.
1.71.    "Total Liabilities" means, for any period, all liabilities of each
         Borrower and Debtor, as determined by GAAP and as reported in the
         Financial Statements, which liabilities shall include the Advances then
         outstanding.

Section 2.  Line of Credit and Advances
2.1 (a) Lender shall from time to time upon Lender's receipt of an Advance
Request make an Advance to Borrower, provided, that (i) no Advance shall, if the
Advance is for the purpose of the acquisition of a Portfolio, exceed 100% of the
Portfolio Acquisition Cost set forth in the Advance Request made with respect to
such Advance; (ii) the outstanding Advances after giving effect to the Advance
requested in the Advance Request do not exceed the Borrowing Base, the Advance
Ratio and the Line of Credit, then in effect; and (iii) there exists no Event of
Default or an event which with the lapse of time and/or the giving of notice
would constitute an Event of Default.
                  (b) All Advances shall be payable on the earlier of (i) the
Termination Date, or (ii) the occurrence of an Event of Default.
                  (c) Borrower hereby irrevocably authorizes Lender to record on
the schedules annexed to the Grid Note and/or a loan account established on
Lender's computerized records the date and amount of each Advance under the Line
of Credit and each repayment thereof, which notations shall be conclusively
binding on Borrower absent manifest error.
                  (d) All Advances shall bear interest prior to an Event of
Default at the rate per annum equal to Lender's Prime Rate as from time to time
in effect and interest at the rate on and after an Event of Default as provided
for in the Grid Note, which interest shall be due and payable as provided for in
the Grid Note and be charged to the Operating Account.
                  (e) All monthly installments of principal, interest and Lender
Fees shall be charged to the Operating Account when due.
                  (f) Prior to the Termination Date the Borrower shall be
permitted to borrow, repay and reborrow under the Line of Credit provided there
is no existing Event of Default and Borrower is in compliance with Section
2.1(a) above.

2.2      Portfolio Proposal
                  (a) From time to time Borrower shall deliver by hand, email,
telecopier or overnight courier a Portfolio Proposal to Lender. Upon Lender's
request, in the event the Portfolio Bid is in excess of $3,000,000, Borrower
shall deliver to Lender all information and documents as Lender shall request
with respect to the Portfolio and the Portfolio Request and shall cause the
Seller to cooperate with Lender's examination of Seller's books and records, in
order to enable Lender to determine if it shall consider making an Advance.


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                  (b) In the event Lender in its sole discretion approves a
Portfolio Proposal it shall promptly notify Borrower by telecopier and Borrower
may request an Advance pursuant to Section 2.3(a) below.
                  (c) Lender shall not be required to advise Borrower the reason
for its failure to approve any Portfolio.
                  (d) Notwithstanding anything set forth in this Agreement
Lender shall not be required to approve the acquisition of any Portfolio which
has a Portfolio Acquisition Cost of $3,000,000, or less ("Small Portfolio"),
provided , that (i) Borrower shall comply with the provisions of Section 2.3
with respect to any such Portfolio, and (ii) after giving effect to such Advance
Borrower is in compliance with Section 2.1(a) hereof.
                  (e) Lender agrees to keep strictly confidential, subject to
disclosure under applicable law, all information relating to any Portfolio
Proposal or possible Portfolio Proposal, including, without limitation, the fact
that a Portfolio is for sale and the terms of the proposed bid.
                  (f) Within five (5) Banking Days of its receipt of a Portfolio
Proposal, Lender shall notify Borrower in writing of Lender's acceptance or
rejection of the Portfolio.

2.3 Notice of Advances
                  (a) Each Advance Request for the purchase of a Portfolio
(other than a Small Portfolio), if the Lender so requests, shall be accompanied
by a signed and completed Borrowing Base Certificate, to be delivered to Lender
prior to 1:00 p.m., New York City time of any Banking Day. Each Advance Request
shall be signed by any of the President, Chairman of the Board or Chief
Financial Officer of Borrower, and shall specify (i) the amount of the requested
Advance, (ii) the purpose of the Advance, (iii) if the Advance is for the
purchase of a Portfolio, the name of the Seller or Sellers of the Portfolio and
(iv) if applicable, the amount of the Portfolio Bid. Each Advance Request and
related documents shall be sent by telecopier to Lender at (212) 986-4786 or by
overnight courier, to the attention of Les Miller. Upon Lender's request
Borrower shall deliver to Lender all information and documents as Lender shall
request with respect to each Portfolio to be acquired, other than a Small
Portfolio.
                  (b) Within five (5) Banking Days after the actual receipt by
Lender of an Advance Request made for a Portfolio Proposal with a Portfolio Bid
in excess of $3,000,000, and within one (1) Banking Day after the actual receipt
by Lender of any other Advance request made pursuant to Section 2.3(a) herein;
and provided there is no Event of Default and after giving effect to any Advance
Request the Borrower is in compliance with the Borrowing Base and Advance Ratio,
Lender shall credit the amount of such Advance to the Borrower's Operating
Account or remit such amount by wire transfer in accordance with the Advance
Request.
                  (c) Each Advance Request shall constitute a representation by
Borrower that (i) the Advance shall only be used for working capital or the
purchase of the Portfolio described in the Advance Request; (ii) the statements
contained therein are true and correct; (iii) no Event of Default has occurred;
(iv) there has been no material adverse change in the business of any Debtor;
and (v) there has been no material change in the members and/or managers of Asta
Funding which have theretofore been certified to .Lender; and (vi) each Debtor
is controlled by Asta Funding or another Affiliate.

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                  (d) In the event any Advance Request relates to a Portfolio to
be acquired by an Affiliate, irrespective of the Portfolio Acquisition Cost of
such Portfolio, prior to Lender making such Advance, such Affiliate shall
execute and deliver its Affiliate Guaranty, Affiliate Security Agreement,
Affiliate Confirmation, UCC-1 Financing Statements and all such other documents
as Lender shall request, including, evidence of the good standing of such
Affiliate and UCC Searches, all in form acceptable to Lender. Notwithstanding
the prior sentence, an Affiliate that purchases a Rejected Portfolio is not
required to comply with this Section 3.2(d).


Section 3. Payments
3.1 (a) In addition to the payments required by this Agreement, the Borrower
shall within one (1) Banking Day pay to Lender the amount by which any
outstanding Advances exceed the Borrowing Base or Advance Ratio then in effect.
                  (b) Borrower shall be permitted from time to time to make
payment of the then outstanding Advances, in whole or in part, without payment
of any premium or penalty, provided, that all accrued and unpaid interest on the
amount then being paid is paid to Lender.

Section 4. Waiver of Right of Setoff
4.1 Borrower hereby acknowledges and agrees that the obligation of Borrower to
make the payments required to be made hereunder shall be absolute and
unconditional and shall not be subject to diminution or delay by setoff,
counterclaim, abatement or otherwise.


Section 5. Relationship of the Parties
5.1 Borrower acknowledges and agrees that the relationship between Borrower and
Lender created by this Agreement is that of debtor-creditor and not that of
joint venturers, that Lender is not a joint venturer of Borrower or any other
Debtor with respect to the acquisition of any Portfolio or otherwise, and that
Borrower will make no representations to others to the contrary.

Section 6. Grant of Security Interest
6.1 The Debtors also agree that to secure the payment by Borrower of the
Obligations, each Debtor pursuant to the terms of a Security Agreement to which
it is a party shall grant to Lender a first and prior security interest in the
Collateral, and the Collateral now or hereafter owned by each Debtor provided
for in each Debtor's Security Agreement.

6.2 Each Debtor will perform any and all steps reasonably requested by Lender to
create and maintain in Lender's favor a first and valid lien on, and security
interest in, the Collateral, including, without limitation, the execution,
delivery, filing and recording of financing statements and continuation
statements, supplemental security agreements, notes, filings with federal
government offices and any other documents necessary, in the opinion of Lender
or Lender's counsel, to protect its interest in the Collateral, which liens
shall be exclusive except for those liens expressly permitted elsewhere herein,
including, without limitation, any Permitted Liens. Lender and its designated
officers are each hereby appointed each of Debtor's attorney-in-fact to do all
acts and things which Lender may deem necessary to perfect and continue
perfected the security interests provided for in this Agreement, including, but
not limited to, executing financing statements on behalf of each Debtor.

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Section 7. Representations and Warranties of Debtors
                  To induce Lender to make Advances pursuant to this Agreement,
Borrower and Asta Funding on behalf of itself and as to each Debtor hereby
represent and warrant to Lender as follows:
                  (a) Each Debtor is a corporation duly incorporated or a
limited liability company duly organized and validly existing under the laws of
the State of Delaware and qualified to do business in the State of New Jersey.
Each Debtor has all requisite power and authority and legal right to own its
property, to carry on its business as it is now being conducted, to enter into
this Agreement and the other Loan Documents entered into by it and to perform
all of its obligations hereunder and thereunder.
                  (b) The execution and delivery by each Debtor of the Loan
Documents to which it is a party, and the performance of its obligations
thereunder, have been duly authorized by all necessary action, corporate or
otherwise, and do not and will not: (i) require any further action, consent or
approval on the part of its members or shareholders; (ii) violate any material
provision of law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect on any Debtor, or the articles of
organization or operating agreement of any Debtor; or (iii) result in any breach
of or constitute a default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which any Debtor is a party or by
which any Debtor or its properties may be bound or affected the violation of
which would have a material adverse effect on any Debtor, and none of the
Debtors is in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument, the violation of which would have a material
adverse effect on any Debtor.
                  (c) The Loan Documents to which any Debtor is a party have
been duly executed and delivered by such Debtor and are legal, valid and binding
obligations of that Debtor, enforceable against that Debtor in accordance with
their respective terms.
                  (d) The financing statements when filed with the Secretary of
State of Delaware and/or in such other jurisdiction as Lender shall direct will
constitute valid perfected first liens against the Collateral owned by each
Debtor in favor of the Lender.
                  (e) Except as previously disclosed to Lender, there is no
material action, suit, proceeding, inquiry or investigation, at law or in
equity, or before any court, governmental instrumentality, public board or
arbitrator pending or threatened against or affecting any Debtor or any of its
properties or rights, wherein an unfavorable decision, ruling or finding would
(i) result in any material adverse change in the financial condition, business,
properties or operations of such Debtor; (ii) materially or adversely affect the
transactions evidenced by the Loan Documents; (iii) materially impair the right
of any Debtor to carry on its business substantially as now conducted; or (iv)
adversely affect the validity or enforceability of the Loan Documents.
                  (f) To the best of each Debtor's knowledge, it is in
compliance with all laws applicable to such Debtor or its properties or assets
the violation of which would result in any material adverse change in the
financial condition, business, properties or operations of such Debtor.

                                       10
<PAGE>
                  (g) The proceeds of the Advances will be used for working
capital or the purpose of the purchase of Portfolios and none of the proceeds of
any Advance will be paid over or diverted to any member, manager, officer,
director or member of any Debtor or any other person except to effectuate the
purchase of Portfolios.
                  (h) Each Debtor other than Asta Funding is wholly owned by
Asta Funding, each Debtor has adequate capital to conduct its business, and each
Debtor other than Asta Funding has no subsidiaries and shall have no material
assets other than the Collateral and any Rejected Portfolio, any licenses and
permits, the loan(s) referred to in Section 10(b) below, and any Rejected
Portfolios purchased by such Debtor.
                  (i) The Collateral is free and clear of all mortgages,
pledges, liens, charges or other encumbrances, except in favor of Lender and the
Permitted Liens.
                  (j) Each Debtor has filed all federal, state and other income
or franchise tax returns which are required to be filed and have paid all taxes
due or which may become due pursuant to such returns or pursuant to any
assessment received by it.
                  (k) All timely authorizations, permits, approvals and consents
of governmental authorities which may be required in connection with the valid
execution and delivery of this Agreement and the other Loan Documents and the
carrying out or performance of any of the activities or transactions required or
contemplated hereunder or thereunder have been obtained (and remain in full
force and effect) where the failure to do so would have a material adverse
effect on any Debtor.
                  (l) All Financial Statements, Reports, information and other
financial data furnished by each Debtor to Lender in connection with this
Agreement (i) were true, correct and complete in all material respects, as of
the date thereof and (ii) present fairly the financial condition of such Debtor
at the respective dates thereof and the results of operations and changes in
financial position for the period to which they apply. Each Debtor represents
there have been no material adverse changes in the financial condition of each
Debtor since the delivery by each Debtor to Lender of its most recent financial
statements.
                  (m) Borrower's assets, at a fair valuation, exceed Borrower's
liabilities (including, without limitation, contingent liabilities). Borrower is
paying its debts as they become due and Borrower anticipates the continuing
ability to pay its debts as they become due. Borrower has assets sufficient to
carry on its business.
                  (n) Each Debtor is not in violation of or in default under
(nor on the Closing Date is there any waiver in effect which, if not in effect,
would result in a violation or default under) any provision of its respective
Certificate of Incorporation, Certificate of Formation or Operating Agreement,
or under any provision of any agreement, indenture, evidence of indebtedness,
loan or financing agreement, certificate, lease or other instrument to which it
is a party, or by which it is bound, or of any law, governmental order, rule or
regulation, in any such case under this subparagraph (n) so as to affect
adversely in any material manner its business, assets or financial conditions.
                  (o) All statements, representations and warranties made by
each Debtor in this Agreement, any other Loan Document and any other agreement,
document, certificate or instrument previously furnished or to be furnished to
Lender under this Agreement or in connection with the Advances; (i) are and
shall be true, correct and complete in all material respects at the time they
were made and, in the case of those made prior to the Closing Date, on and as of
the Closing Date, (ii) do not and shall not contain any untrue statement of a
material fact at the time made, and (iii) do not and shall not omit to state a
material fact at the time made necessary in order to make the information
contained herein or therein not misleading or incomplete. Debtors understand
that all such statements, representations and warranties shall be deemed to have
been relied upon by Lender as a material inducement to establish the Line of
Credit.

                                       11
<PAGE>

                  (p) No person is entitled to receive from Debtor or Lender any
brokerage commission, finder's fee or similar fee or payment in connection with
the consummation of the transactions contemplated by this Agreement other than
the acquisition of a Portfolio, which shall be fully disclosed in each Portfolio
Proposal.
                  (q) Each Debtor's address set forth below its signature, is
the location of such Debtor's chief executive office and is the only location
where such Debtor keeps its Books and Records concerning its Collateral.
                  (r) Borrower does not own any material trademarks, trade
names, patents or copyrights.
                  (s) Each Debtor warrants and represents that it has not and
will not violate any applicable federal or state law relating to unfair
collection practices in connection with any of the Consumer Loans and Accounts,
the violation of which will have a material adverse effect on any Debtor or the
Collateral. Each Debtor agrees to indemnify each Indemnified Party and to hold
each Indemnified Party harmless from and against any and all claims, demands,
losses, damages, penalties, fines, forfeitures, judgments, legal fees and other
costs, fees and expenses heretofore or hereafter incurred by each Indemnified
Party as a result of (i) any breach by a Debtor of the aforesaid warranty and
representation; or (ii) any acts and/or omissions by a Debtor resulting in any
claim, demand or assertion that Lender or any other Indemnified Party,
subsequent to the Closing Date, was in any way involved in, or had in any way
authorized, any unlawful collection practices in connection with any Consumer
Loans and Accounts. Each party agrees to notify the other within ten (10)
Banking Days of notice or knowledge of any such claim, demand or assertion.
                  (t) Each Debtor warrants, represents and agrees that it will
not institute any legal action in the name of Lender or continue to prosecute or
defend in the name of Lender any legal action; nor shall either Debtor
intentionally or unintentionally, through misrepresentation or nondisclosure,
mislead any person as to, or conceal from any person, the identity of each
Debtor as owner of the Consumer Loans and Accounts. NOR SHALL DEBTORS USE OR
REFER TO THE NAME ISRAEL DISCOUNT BANK OF NEW YORK OR ANY NAME DERIVED THEREFROM
OR CONFUSINGLY SIMILAR THEREWITH TO PROMOTE DEBTORS' MARKETING, ADVERTISING,
SALE OR TRANSFER OF ANY CONSUMER LOAN OR ACCOUNT OR THE COLLECTION OR MANAGEMENT
THEREOF.
                  (u) As of the date of this Agreement the outstanding amount of
the Consumer Loans of each Debtor is listed on Schedule C annexed hereto, and
the computer discs delivered to Lender with respect to same at the Closing Date
are each a true, correct and complete list thereof.

Section 8.  Survival of Representations and Warranties
                  The foregoing representations and warranties shall survive the
execution of this Agreement, the Closing Date and the repayment of the
Obligations.

Section 9.  Affirmative Covenants
                  To induce Lender to make the Advances pursuant to this
Agreement, the Borrower and Asta Funding on its own behalf and as to each other
Debtor hereby covenants and agrees that so long as any Obligations shall remain
outstanding hereunder, the Debtors shall comply with the following covenants:

                                       12
<PAGE>
                  (a) Debtors shall keep and maintain complete and accurate
Books and Records. Debtors shall permit access thereto and examination thereof
by Lender and any authorized representatives of Lender, at all reasonable times
and places during normal business hours (including the right to make copies
thereof at the cost and expense of Borrower) upon at least two (2) Banking Days
prior written notice and without notice at any time after and during the
continuance of an Event of Default.
                  (b) Debtors shall comply in all material respects with all
applicable federal, state, county and municipal laws, rules, regulations and
orders of any governmental authority having jurisdiction over Debtors, except to
the extent contested in good faith and by proper proceedings or where the
failure to so comply would not have a material adverse affect on Debtors.
                  (c) Debtors shall promptly notify Lender of the occurrence of
any Event of Default.
                  (d) Debtors shall, jointly and severally, indemnify, protect,
defend and save harmless each Indemnified Party from and against any and all
losses, damages, expenses or liabilities of any kind or nature and from any
suits, claims, or demands, by third parties including reasonable counsel fees
incurred in investigating or defending such claim, suffered by any of them and
caused by, relating to, arising out of, resulting from, or in any way connected
with this Agreement and the transactions contemplated herein, provided, however,
Debtors shall not be obligated to indemnify, protect, defend and save harmless
any Indemnified Party, if the loss, damage, expense or liability was caused by
or resulted from the gross negligence of willful misconduct of that Indemnified
Party. In case any action shall be brought against an Indemnified Party based
upon any of the above and in respect to which indemnity may be sought against
Debtors, the Indemnified Party against whom such action was brought, shall
promptly notify Borrower in writing, and Debtors shall assume the defense
thereof, including the employment of counsel selected by Debtors and reasonably
satisfactory to the Indemnified Party, the payment of all costs and expenses and
the right to negotiate and consent to settlement. Upon reasonable determination
made by the Indemnified Party, the Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof at the Indemnified Party's cost and expense. Debtors shall not be liable
for any settlement of any such action effected without its consent, but if
settled with Debtor's consent, or if there be a final judgment for the claimant
in any such action, Debtors agree to indemnify and save harmless said
Indemnified Party against whom such action was brought from and against any loss
or liability by reason of such settlement or judgment. The provisions of this
subparagraph (d) shall survive the termination of this Agreement and the final
repayment of the Obligations.
                  (e) After the occurrence of an Event of Default Debtors shall
establish and maintain a Lockbox Account, in accordance with Lender's
instructions, and after and during the continuance of an Event of Default (i)
Lender shall be authorized to send a notice directing all Account Debtors to
make all Payments to said Lockbox Account and (ii) each Debtor shall deposit all
Collections in the Lockbox Account. Any and all remittances received in said
Lockbox Account may be collected by Lender in its sole discretion, and shall be
applied to the Obligations of Borrower to Lender in accordance with
sub-paragraphs (g) and (q) hereof. Debtors shall bear all risk of loss of any
funds deposited in the Lockbox Account and pay all fees and charges related
thereto.

                                       13
<PAGE>
                  (f) If, notwithstanding the notices to Account Debtors to
remit Payments to the Lockbox Account, Debtors receive any Payments on the
Collateral, each Debtor agrees to immediately forward to Lender any and all
Payments and other remittances on the Collateral, including cash, checks,
drafts, notes, acceptances or other forms of payment in trust for Lender and to
deliver such Payments in the identical form in which they were received,
together with collection reports in form satisfactory to Lender.
                  (g) All Payments and Collections which are delivered to or
otherwise received by Lender for application to the Advances provided for
herein, shall be deemed received as of the date of actual receipt by Lender, and
shall be applied by Lender on account of the Obligations upon Lender's receipt
of same; provided, however, that no checks, drafts, or other instruments
received by Lender shall constitute payment to Lender unless and until such item
of payment has actually been collected by Lender. For the sole purpose of
calculation of interest due to Lender from Borrower, all Payments shall not be
considered applied on account of the Obligations until actual clearance of such
Payments.
                  (h) Debtors shall maintain accurate Books and Records of all
Collateral and all Collections.
                  (i) Each Debtor, as the case may be, shall, within fifteen
(15) days of the end of each month, deliver to Lender and Reports and related
computer discs with respect to the immediately preceding month, in such form as
may be reasonably acceptable to Lender, certified by the Chief Financial Officer
of each Debtor.
                  (j) Debtors will continue to hold all materially necessary
licenses and permits for the operations of its business.
                  (k) Lender (by any of its officers, employees and agents)
shall have the right, at reasonable times during each Debtor's usual business
hours (provided reasonable prior notice is given except if an Event of Default
has occurred and is continuing), to inspect the Collateral, all Books and
Records (and to make extracts from such Books and Records) and the premises upon
which any of the Collateral is located or administered, and to verify the
amount, quality, quantity, value and condition of, or any other matter relating
to, the Collateral.
                  (l) Lender shall have the right, after, and during the
continuance of, an Event of Default:
                           (i) to notify Account Debtors to make Payments to the
Lockbox Account established by Lender, to endorse all items of Payment which may
come into its hands payable to a Debtor, to take control of any cash or non-cash
proceeds of Accounts; to compromise, extend or renew any Account or deal with it
as it may deem advisable, and to make exchanges, substitutions or surrenders of
Collateral, to notify the postal authorities to deliver all mail, correspondence
or parcels addressed to any Debtor to Lender at such address as Lender may
choose; and
                           (ii) to endorse in Debtor's name on any checks,
notes, acceptances, drafts or any other instrument or document requiring said
endorsement and to sign either Debtor's name on any invoice relating to any
Account, or drafts against its customers, or schedules or confirmatory
assignment on Accounts, or notices of assignment, financing statements under the
UCC, and other public records, and in verification of Accounts and in notices to
Account Debtors. For the purposes set forth herein, each Debtor does hereby
appoint Lender or its designee as Attorney-in-Fact to sign in such Debtor's name
or to otherwise execute documents as set forth herein.

                                       14
<PAGE>
                  (m) Each Debtor will furnish Lender with at least ten (10)
days' prior written notice of any change in location of or addition to its chief
executive office or the office where it keeps its Books and Records concerning
its Accounts.
                  (n) Pay and discharge when due, all taxes, assessments or
other governmental charges imposed on its or any of its properties, unless the
same are currently being contested in good faith by appropriate proceedings and
adequate reserves are maintained therefor.
                  (o) Operate its properties or cause to be operated in
compliance with all material applicable orders, rules and regulations
promulgated by the jurisdictions and agencies thereof where such properties are
located and duly file or cause to be filed such reports and/or information
returns as may be required or appropriate under applicable orders, regulations
or law the violation of which would have a material adverse effect on any
Debtor.
                  (p) Permit the Lender's representatives and/or agents full and
complete access to any or all of Debtors' Books and Records and other financial
records, to make extracts from and/or audit such records and to examine and
discuss the Debtors' business, finances and affairs with the Debtors' officers
and if an Event of Default exists, outside accountants.
                  (q) After an Event of Default, Lender shall apply all Payments
and Collections deposited in the Lockbox Account, as follows:
                           First: to the payment of all unpaid costs and
expenses of Lender, including, its legal fees;
                           Second: to the payment of any unpaid Facility Fee,
Line Fees and Examination Fees then due;
                           Third: to the payment of all accrued and unpaid
interest under the Grid Note; and
                           Fourth: to the repayment of each of the then unpaid
Advances.
                  (r) Within twenty (20) days after the repayment of Asta I's
indebtedness as listed on Schedule A, Asta I shall deliver to Lender executed
UCC-3 Termination Statements executed by the secured party listed on Schedule B
relating thereto.
                  (s) Each Debtor agrees that it shall, from time to time
promptly execute and deliver all instruments and documents, and take all further
action, that may be necessary or appropriate, or that Lender may request, in
order to perfect against such Debtor and all third parties, and in order to
protect and continue the security interest granted or purported to be granted
hereby, or to enable Lender to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing each Debtor shall execute and deliver such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or appropriate, or as Lender may request, in order to perfect and
preserve the security interest in all of the Collateral granted or purported to
be granted hereby.
                  (t) So long as any of the Obligations shall remain outstanding
Debtors shall deliver to Lender, the following:
                           (i) within ninety (90) days after the end of the
respective fiscal years of Asta Funding, a balance sheet, income statement and
cash flow statement, prepared in accordance with GAAP, by an independent
certified public accountant acceptable to Lender, on a audited basis and without
material exception or qualification and in the case of the other Debtors, a
trial balance prepared by management and certified by the Chief Financial
Officer of each Debtor;

                                       15
<PAGE>
                           (ii) within fifteen (15) days after the end of each
month a Borrowing Base Certificate as of the last business day of the previous
month, prepared by and certified by the chief financial officer of each Debtor,
together with a payment in reduction of the Obligations of an amount equal to
the Advances, if any, in excess of the Borrowing Base and/or Advance Ratio in
such Borrowing Base Certificate; and
                           (iii) together with each Borrowing Base Certificate a
Report as to each Debtor as of the last business day of the previous month;
                  (u) Each Debtor certifies that any information concerning the
business organization or financial condition of such Debtor furnished to Lender
is and shall be true and correct and fairly presents and will present the
financial condition of such Debtor in accordance with GAAP.
                  (v) Each Debtor covenants to promptly give Lender notice in
writing of any (a) threatened or actual actions or suits and of all
investigations or proceedings by or before any court, arbitrator or any
governmental department, board, agency or other instrumentality, state or
federal, affecting either Debtor or their respective properties which involves
uninsured potential liability of any Debtor (other than Asta Funding) in excess
of $250,000 and $1,000,000 as to Asta Funding in any individual case; (b)
material adverse change in the condition (financial or otherwise) of any Debtor;
(c) notice of intent to seize, levy or assess or of any actual seizure, levy or
assessment upon or against any material property of any Debtor, and (d) change
in any Debtor's name and any change in its chief executive office or place(s) of
business or incorporation or formation.

Section 10.  Negative Covenants of Debtors
                  To induce Lender to make the Advances pursuant to this
Agreement, Borrower and Asta Funding on its own behalf and as to each Debtor,
hereby covenants and agrees that so long as any of the Obligations shall remain
outstanding, Debtors shall not:
                  (a) Except for the security interests in favor of Lender and
the Permitted Liens, at any time: (i) create, incur, assume or suffer to exist
any mortgage, deeds of trust, pledge, security interest, encumbrance, lien,
hypothecation, or charge of any nature upon or with respect to the Collateral;
or (ii) sign or file under the UCC of any jurisdiction a financing statement
which names a Debtor as a debtor or Guarantor as a debtor as to any Collateral;
or (iii) sign any security agreement authorizing any secured party thereunder to
file such financing statement. Debtors further covenant and agree not to grant
any similar negative pledge to any other lender.
                  (b) Permit the Debtors' Tangible Net Worth on a consolidated
or combined basis to be less than $15,000,000.00.
                  (c) Permit the Borrower's Tangible Net Worth on a consolidated
or combined basis to be less than $15,000,000.00.
                  (d) Permit Asta Funding to enter into an agreement for the
repurchase, redemption or retirement of its outstanding capital if after giving
effect to such repurchase (i) the Debtors shall not be incompliance with the
provisions of Section 10(b) and (c), or (ii) there shall exist an Event of
Default or a default with the giving of notice or the lapse of time shall result
in an Event of Default. At Lender's request Asta Funding shall render a report
as to any of the transactions covered by this Section 10(d).

                                       16
<PAGE>

                  (e) As to Borrower only, without the prior written consent of
Lender, make any advance, loan, extension of credit or capital contribution to,
or purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in any
other person, firm or entity, other than a loan to any other Debtor that is
acquiring a Portfolio with an Advance, provided, that any such Portfolio is
included in the Collateral.
                  (f) Without the prior written consent of Lender, (i) enter
into any merger or consolidation, except with another Debtor or if it is the
survivor, or (ii) liquidate or wind-up or dissolve itself (or suffer any
liquidation or dissolution), or (iii) convey, sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its property, business or
assets, except to another Debtor, or (iv) make any material change in its
present method of conducting business or permit any Guarantor who is not a
natural person to do any of the foregoing.
                  (g) Materially change, amend, alter or modify its Certificate
of Formation, Certificate of Incorporation, Operating Agreement, or other
governing documents of a Debtor to do any of the foregoing.
                  (h) As to Borrower only, enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any member or manager of Borrower, or with any
officer, director, shareholder or partner of Asta Funding or any of the
foregoing, except for arm's length transactions with Affiliates.
                  (i) As to Borrower only, declare or pay any dividends on,
distributions on or make any payment on account of, or set apart assets or a
sinking fund for the purchase, redemption, defeasance, retirement or other
acquisition of, any member interest, shares or any class of stock or any
warranty or option to purchase any such stock whether now or hereafter
outstanding or make any other distribution in respect thereof, directly or
indirectly whether in cash or property or obligations, other than payments to
Asta Funding in the ordinary course of business so long as no Event of Default
exists after giving effect thereto. At Lender's request Borrower shall render a
report as to the payments made to Asta Funding.
                  (j) Create, incur or suffer to exist any indebtedness, except
(i) indebtedness in respect of the Advances; and (ii) indebtedness for expenses
incurred in the ordinary course of business and (iii) Permitted Debt.
                  (k) Without prior written consent of Lender, remove any
material portion of the Collateral from its present location.
                  (l) Allow its existence to be other than in good standing and
will not, without the prior written consent of Lender, (i) reincorporate or
reorganize under the laws of any other State than Delaware, dissolve or
liquidate, or (ii) merge or consolidate with or acquire or affiliate with any
other business entity, unless a Debtor is the survivor or acquirer.
                  (m) Change its name without furnishing to Lender at least ten
(10) days' prior written notice thereof.
                  (n) Change in any material respect the nature of its business.
                  (o) Permit Asta Funding to sell, assign, transfer or dispose
of any majority controlling ownership interest in any Debtor, voluntarily or
involuntarily, by operation of law or otherwise, except to another Affiliate.

                                       17
<PAGE>

Section 11.  Conditions Precedent to Advances
                  As a condition to the execution and delivery of this Agreement
and the making of any Advance, the Debtors shall or cause the execution and
delivery of each of the Loan Documents listed in Exhibit D annexed hereto, all
in form, scope and substance satisfactory to Lender.

Section 12.       Events of Default
                  At Lender's option, the happening of any of the following
events or conditions shall, if not cured within any applicable cure period,
constitute an "Event of Default" under this Agreement and the Grid Note, whether
happening to any Debtor:
                  (a) Failure to pay any Obligation when due or when duly
demanded by Lender;
                  (b) Failure to perform or observe any non-monetary obligation
or agreement in this Agreement or any other Loan Document, which failure shall
continue for five (5) Banking Days after the giving of notice by Lender to
Borrower;
                  (c) Loss, theft, substantial damage or destruction of a
material portion of the Collateral taken as a whole except as herein permitted
or the making of any levy, seizure, garnishment, or attachment thereof or
thereon that is not discharged or bonded within ten (10) days;
                  (d) Any material representation and warranty contained in this
Agreement, any Loan Document, Borrowing Base Certificate, Report, Financial
Statement or in any Advance Request shall be or become false in any material
respect;
                  (e) The making of an assignment for the benefit of creditors,
filing a petition in bankruptcy, the petition to any tribunal for the
appointment of a custodian, receiver or trustee for it or a substantial part of
its assets, or the commencement of any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, or any
such petition is filed against any Debtor, or any such proceeding is commenced
against it, which is not dismissed within forty-five (45) days;
                  (f) The admission in writing of its inability, or it is
generally unable, to pay its debts as they become due, or any act or omission,
indicating its consent to, approval of or acquiescence in any petition,
application, proceeding or order for relief or the appointment of a custodian,
receiver or trustee for such Debtor or any substantial part of any of its
properties, or suffers any such custodianship, receivership or trusteeship;
                  (g) Any event or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, investigation or
proceeding), which in Lender's reasonable judgment has a material adverse effect
on the business, operations, revenues, financial condition, property, or
business prospects of the Debtors collectively, or the value of the Collateral,
or the ability of the Debtors collectively to timely pay or perform their
Obligations to Lender.
                  (h) Merger (unless, as to Asta Funding, if it is the
survivor), consolidation, change of voting control or transfer or sale of
substantially all the assets of any Debtor, without Lender's prior written
consent;
                  (i) There is a change in any Debtor's managerial control,
including a change resulting from a management contract or a change in any
Debtor's executive officers;

                                       18
<PAGE>
                  (j) Any final judgment(s) for the payment of money are
rendered against any Debtor (except Asta Funding) in excess of $100,000 in the
aggregate, or against Asta Funding in excess of $250,000 in the aggregate,
excluding judgments for claims covered by insurance, and the same shall remain
undischarged for a period of thirty (30) consecutive days during which execution
shall not be effectively stayed, or notice of intent to levy by any governmental
agency or body (whether local, state or federal) is issued to or against any
Debtor (except Asta Funding) or any of its properties for an amount in excess of
$100,000, or against Asta Funding or any of its properties for an amount in
excess of $250,000 and the same shall remain undischarged for a period of ten
(10) consecutive days during which execution shall not be effectively stayed;
                  (k) Any consent, approval, franchise, license or permit of any
governmental agency, which is necessary for the ownership of any Debtor's assets
or for the operation of its business, is cancelled, revoked or modified in a
manner which materially adversely affect any Debtor or its properties;
                  (l) The termination of any of the Guarantees; or
                  (m) Any Debtor shall default in the performance of any
agreement with any person other than Lender if the effect of such default is, or
with notice or the passage of time or both would be, to accelerate the maturity
of any indebtedness for borrowed money in excess of $250,000, or any Debtor
shall fail to pay any indebtedness for borrowed money at maturity in excess of
$250,000.

Section 13. Remedies
                  Upon the earlier of (i) the Borrower's failure to pay in full
the Obligations when duly demanded by Lender; or (ii) the occurrence of any
Event of Default or (iii) the Termination Date, the Line of Credit shall be
terminated and any obligation of Lender to make Advances to Borrower hereunder
shall be terminated. In the Event of a Default Lender shall have the right to
terminate this Agreement, without demand or notice, and in such event, all
Obligations secured hereby, shall immediately become due and payable without
demand or notice and Lender may take immediate possession of the Collateral
(including, without limitation the right to offset any funds in the Lockbox
Account, the Operating Account or any other account maintained by any Debtor
with Lender) without demand, notice or legal process; and for the purpose and in
furtherance thereof, Debtors shall, if Lender so requests, assemble the
Collateral and make it available to Lender at a reasonably convenient place
designated by Lender, and Lender shall have the right (and each Debtor hereby
authorizes and empowers Lender to do so) to notify Account Debtors and to
exercise all of its rights under the Loan Documents and the UCC. Lender may, in
its sole discretion, sell the Collateral by private or public sale for the
account of Debtors after giving reasonable notice of the time and place of sale
to each Debtor. Any notice from Lender placed in the U.S. Mail, postage prepaid,
addressed to a Debtor at its address shown on Lender's records at least ten (10)
days prior to any action or sale shall be reasonable notice under the UCC. Any
proceeds of the disposition of any Collateral may be applied by Lender toward
the reasonable expenses of retaking, holding, or toward preparing for sale and
selling the Collateral or toward Lender's reasonable attorneys' fees and legal
expenses incurred by Lender, or toward Obligations of Borrower to Lender in any
order Lender may elect. Each Debtor shall be liable for any deficiency and
Lender shall be entitled to interest thereon at the default rate provided in the
Grid Note. In the event of repossession of the Collateral by Lender, then the
rights and remedies applicable under the UCC in effect in the State of New York


                                       19
<PAGE>


shall apply, except as permitted to be modified by agreement and which were so
modified herein. In conjunction with or in lieu of any of the remedies provided
for in this paragraph, and at Lender's sole option, each Debtor shall allow
Lender or any agent or designee thereof to enter upon such Debtor's premises for
the purpose of taking possession of, holding, and controlling the disposition
of, in any manner deemed appropriate by Lender, all Collateral and the Books and
Records. Each Debtor hereby grants to Lender an irrevocable power of attorney,
which power of attorney shall be coupled with an interest in the Collateral, and
hereby appoints Lender or any of Lender's officers as such Debtor's
attorney-in-fact if an Event of Default exists to execute on Borrower's behalf
all documents, and to do any and all things in the name of and on behalf of such
Debtor, to enable Lender to fully exercise its rights in and to the Collateral
as provided in this Agreement and under applicable law, including, the
establishment of a Lockbox Account. In addition to the foregoing, Lender shall
be entitled to exercise all of its rights under the Loan Documents, which rights
may be exercised at any time and not in lieu of the rights herein provided.

Section 14. Miscellaneous
14.1  Notices
                  All notices and other communications to any party hereto
required or permitted under this Agreement or any other agreement or document
executed or delivered pursuant hereto or thereto shall be in writing and given
(unless otherwise provided herein) (a) by hand delivery; (b) certified mail,
return receipt requested, postage prepaid; (c) one (1) business day after being
entrusted to a reputable commercial overnight delivery service if by overnight
delivery service or (d) by telecopier with respect to Advance Requests and the
response of Lender thereto. All notices shall be sent to the addresses and
telecopier numbers indicated in the signature pages hereto. The Debtors each
hereby irrevocably designate and appoint Asta Funding as its agent for the
purpose of receiving notices under this Agreement.

14.2. Expenses
                  Debtors shall pay all expenses of every kind for the
enforcement of any of Lender's rights mentioned herein during the existence of
an Event of Default and reimburse Lender for any expenditures, including
expenses incurred in realizing on Collateral, court costs, other legal expenses
and reasonable attorneys' fees incurred in consultation or in judicial,
administrative or arbitration proceedings, both at trial and appellate levels,
and such expenses shall bear interest at the default rate provided for in the
Grid Note, until paid and shall be secured by the Collateral.

14.3. No Waiver
                  No waiver of any default or non-exercise of a right hereunder
shall waive any other default, or the same default on a future occasion, or
preclude exercising any other right or the same right on a future occasion.
Acceptance of any payment after its due date shall not be deemed a waiver of the
right to require prompt payment when due or all other sums, and acceptance of
any payment after Lender has declared its entire indebtedness due and payable
shall not cure any Event of Default or operate as a waiver of any right of
Lender hereunder.

                                       20
<PAGE>
14.4. Successors and Assigns
                  Lender's rights hereunder shall inure to the benefit of its
successors and assigns, and Lender may without notice to or the consent of
either Debtor sell one or more participations in the Obligations and Collateral.
Each Debtor's obligations hereunder shall bind its successors and assigns.

14.5. Severability
                  If any provision of this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect under applicable
law, the same shall not affect any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.

14.6. Entire Agreement; Amendments
                  This Agreement and any other agreement or document executed or
delivered pursuant hereto, or in connection or arising with the Advances or
transactions contemplated by this Agreement, embody the entire agreement and
understanding between the parties hereto, supersede all prior agreements and
understandings relating to the subject matter hereof, and may not be modified or
varied except in a writing signed by Lender and each Debtor.

14.7. Conflicts
                  In the event any conflict arises between the terms of this
Agreement and the terms of any Advance Request or any other document or
agreement between Lender and any Debtor, the terms of this Agreement shall
govern.

14.8. Counterpart Copies
                  This Agreement may be executed in counterpart copies all of
which shall constitute one instrument and manually signed counterpart copies may
be sent by telecopier to the other parties.

14.9. Cumulative Remedies
                  No provision of this Agreement or any other agreement, shall
limit the right of Lender (a) to foreclose against the Collateral by the
exercise of a power of sale under this Agreement or applicable law; (b) to
exercise self-help remedies including, without limitation, setoff and
repossession; (c) to obtain provisional or ancillary remedies such as injunctive
relief, attachment, or the appointment or a receiver from a court having
jurisdiction before, during, or after the pendency of any arbitration
proceeding; or (d) to otherwise exercise its rights in and to the Collateral or
its remedies as a secured party under Article 9 of the UCC.

14.10.   Waiver of Jury Trial; Consent to Jurisdiction
                  EACH DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF
OR IN CONNECTION WITH (1) THIS AGREEMENT, THE GRID NOTE OR ANY OTHER LOAN
DOCUMENT; (2) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES; (3)
ANY TRANSACTION CONTEMPLATED HEREBY, AND ALL PAST, PRESENT, AND FUTURE
TRANSACTIONS INVOLVING THE PARTIES; AND (4) ANY ASPECT OF THE PAST, PRESENT, OR
FUTURE RELATIONSHIPS OF THE PARTIES. THIS WAIVER OF TRIAL BY JURY PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT AND TO MAKE ADVANCES
TO BORROWER.

                                       21
<PAGE>
                  EACH DEBTOR AND LENDER AGREE THAT ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, THE GRID NOTE, OR ANY
OTHER LOAN DOCUMENT RELATING TO THE LINE OF CREDIT, MAY BE INITIATED AND
PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW
YORK COUNTY, NEW YORK.

14.11.   Governing Law
                  This Agreement shall be governed by and construed and enforced
under the internal laws of the State of New York without regard to any conflict
of laws of principles.

14.12.  Special Covenants of Asta Funding
                  In order to induce Lender to enter into this Agreement
increasing the Original Line of Credit and reducing the rate of interest with
respect to Advances, Asta Funding hereby agrees that (a) it and the Borrowers
shall each maintain its Operating Accounts with Lender, (b) in the event it (in
a borrowing capacity) or any other Debtor, with the written consent of Lender,
enters into a financing arrangement with another lender (other than with respect
to the financing of a Rejected Portfolio) on terms providing for interest and/or
fees payable to such lender in excess of the Lender Fees and/or interest payable
to Lender hereunder, the Debtors shall enter into an amendment hereto to grant
Lender the same terms, and (c) it shall cause each Affiliate and/or Debtor to
execute and deliver each document required in this Agreement and to observe each
covenant provided hereunder.

14.13.   Releases for Rejected Portfolios
                  Lender will provide releases requested by any other lender
with respect to Lender's liens in any Rejected Portfolio and the proceeds and
other rights related thereto.

                  IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed under its hand and seal by its duly authorized
representative as of the date and year first written above.

                                      ISRAEL DISCOUNT BANK OF NEW YORK


                                      By:      ___________________________
                                               Name:
                                               Title:

                                      By:      ___________________________
                                               Name:
                                               Title:

                                      Address: 511 Fifth Avenue
                                               New York, New York 10017
                                               Attention: Les Miller
                                      Telecopier No: _____________________

                                       22
<PAGE>

                                    ASTA FUNDING ACQUISITION II, LLC


                                    By:  ___________________________
                                         Name: Gary Stern, Manager

                                    By: ___________________________
                                        Mitchell Herman, Manager

                                    Address: 210 Sylvan Avenue
                                             Englewood Cliffs, New Jersey 07632
                                             Attention: Gary Stern
                                    Telecopier No: ______________________


                                    PALISADES COLLECTION, L.L.C.


                                    By:  ___________________________
                                         Gary Stern, Manager

                                    By: ___________________________
                                        Mitchell Herman, Manager

                                    Address: 210 Sylvan Avenue
                                             Englewood Cliffs, New Jersey 07632
                                             Attention:
                                    Telecopier No: ______________________


                                       23
<PAGE>

                                    ASTA FUNDING, INC.


                                    By:  ___________________________
                                             Gary Stern
                                             Title:

                                    By: ___________________________
                                             Mitchell Herman
                                             Title:

                                    Address: 210 Sylvan Avenue
                                             Englewood Cliffs, New Jersey 07632
                                             Attention:
                                    Telecopier No: ______________________

Agreed:

ASTA FUNDING ACQUISITION I, LLC


By:  ___________________________
         Gary Stern, Manager

By: ___________________________
         Mitchell Herman, Manager


         Address:          210 Sylvan Avenue
                           Englewood Cliffs, New Jersey 07632
                           Attention:
         Telecopier No: ______________________


E.R. RECEIVABLES CORP., L.L.C.


By:  ___________________________
         Gary Stern, Manager

By: ___________________________
         Mitchell Herman, Manager


         Address:          210 Sylvan Avenue
                           Englewood Cliffs, New Jersey 07632
                           Attention:
         Telecopier No: ______________________



                                       24
<PAGE>





                             EXHIBITS AND SCHEDULES


                  EXHIBIT A         -         Borrowing Base Certificate

                  EXHIBIT B         -         Grid Note

                  EXHIBIT C         -         Confirmation of Affiliate

                  EXHIBIT D         -         Loan Documents


                  SCHEDULE A        -         Permitted Debt

                  SCHEDULE A-1      -         Acquired Portfolio Debt

                  SCHEDULE B        -         Permitted Liens

                  SCHEDULE C        -         Consumer Loans




                                       25
<PAGE>

                                    EXHIBIT A

                           BORROWING BASE CERTIFICATE


BORROWER:                  ASTA FUNDING ACQUISITION II, LLC
                           and PALISADES COLLECTION, L.L.C.


                                      Date:

                        Certificate No. ________________

In order to induce ISRAEL DISCOUNT BANK OF NEW YORK ("Lender") in its sole
discretion, to make Advances to Borrower pursuant to the Agreement (as
hereinafter defined). The undersigned, an authorized signatory of Borrower, does
hereby certify, represent, warrant and covenant to Lender that the information
set forth herein is true, correct and complete as of the date hereof. All
capitalized terms used herein shall have the same meaning as in the Amended and
Restated Loan and Security Agreement dated November 14, 2001, as amended from
time to time ("Agreement") between Lender, Asta Funding, Asta II and Palisades.
The Eligible Accounts aging attached hereto evidences undisputed balances due on
bona fide indebtedness incurred by Account Debtors, without dispute, offset,
counterclaim or rights of recoupment.

As of the date hereof: each of the representations and warranties set forth in
the Agreement and in any other Loan Documents executed and delivered to Lender
by Borrower and the other Debtors is true, correct and complete in all material
respects; each Debtor is in compliance with all of the terms, covenants and
conditions of the Agreement and the Loan Documents; there exists no default or
Event of Default under the Agreement or the Loan Documents; and there has been
no material adverse change in the business or financial condition any Debtor.



                                           -----------------------------
                                           Name:
                                           Title:


<PAGE>



                           Borrowing Base Certificate
                                 No.: _________

                                                        Dated __________________
<TABLE>
<CAPTION>
<S>          <C>                                            <C>                        <C>
A.       Total Existing Eligible Accounts

                  Asta II                            $_________________
                  Palisades                          $_________________
                  E.R.                               $_________________
                  [Name of Debtor]                   $_________________

                                                     TOTAL (A)                  $_________________

B.       Proposed Small Portfolios
                                            (1)                                 (2)
         Name of                    Portfolio Acquisition                       Total
         Acquirer                           Cost                           Eligible Accounts
         --------                   ---------------------                  ------------------

--------------------                $                                  $
--------------------                $                                  $
--------------------                $                                  $


Lesser of (1) and (2)                                TOTAL (B)                  $_________________


C.       Proposed Portfolio Acquisition

                                            (1)                                 (2)
         Name of                    Portfolio Acquisition                      Total
         Acquirer                          Cost                           Eligible Accounts
         --------                   ---------------------                 -----------------

--------------------                $                                  $
--------------------                $                                  $
--------------------                $                                  $


Lesser of (1) and (2)                                TOTAL (C)         $_________________

D.       Total Eligible Accounts

         A + B + C  X  50% =                         TOTAL (D)         $_________________
</TABLE>


                                       27
<PAGE>
E.       Advance Ratio

         Average Collections for:

            month ended             _____________             $_________________
            month ended             _____________             $_________________
            month ended             _____________             $_________________

                                            X        15

                                    Total Advance Ratio (E)   $_________________


F.       Total Outstanding Advances                           $_________________
         --------------------------


G.       Line of Credit                                       $20,000,000.00
         --------------


H.       Borrowing Base

         An amount equal to the lesser of:

         (D)      $________________
                           plus
(H)               $________________
                           and
         (E)      $________________                  (H)      $_________________


I hereby certify that the information contained in the within Certificate is
true and accurate.


                                     ------------------------
                                     Name:
                                     Title:

                                       28
<PAGE>



                                    EXHIBIT B

                                    GRID NOTE

$20,000,000.00                   New York, New York           November __, 2001

             FOR VALUE RECEIVED, the undersigned promises to pay to the order of
ISRAEL DISCOUNT BANK OF NEW YORK, (hereinafter the "Bank") at its principal
office, located at 511 Fifth Avenue, New York, NY 10017, or at another location
if notified in writing, the principal amount of $20,000,000.00 or, if less, the
aggregate unpaid principal amount of all loans (each an "Advance" and
collectively the "Advances") made by the Bank to the undersigned from time to
time, as and when provided in accordance with the Amended and Restated Loan and
Security Agreement between the Bank, the undersigned and Asta Funding, Inc., of
even date herewith, as the same may be amended from time to time (the
"Agreement"), and to pay interest on the unpaid balance of the principal amount
of each Advance from and including the date of each Advance (as shown by the
schedules annexed hereto) at the rate per annum equal to the Prime Rate of the
Bank from time to time in effect, calculated on the basis of a 360-day year and
actual number of days elapsed (but in no event in excess of the maximum rate
permitted by applicable law), such interest to be payable monthly on the first
day of each month beginning with the month immediately following the date of the
Advance as set forth in the schedule annexed hereto and continuing on the same
day of each month thereafter and until this Note is paid in full. Any change in
such rate of interest shall be effective on the date a change in the prime loan
rate of the Bank occurs, without notice to the undersigned. The prime loan rate
of the Bank in effect on the date of this Note is ____% per annum.

             On and after the date of any Event of Default (as defined in the
Agreement), interest shall be at a rate per annum equal to 5% above the rate
charged hereunder on the date of such demand or if such rate shall not be lawful
with respect to the undersigned, at the highest lawful rate then in effect.

             This Note shall be paid and prepaid in accordance with the terms of
the Agreement.

             All payments hereunder shall be made in lawful money of the United
States and in immediately available funds. Any extension of time for the payment
of the principal of this Note resulting from the due date falling on a Saturday,
Sunday or legal holiday shall be included in the computation of interest.

             The undersigned hereby expressly authorizes the Bank to record on a
separate schedule annexed hereto the amount and date of each Advance, and the
date and amount of each payment of principal and interest. In the event of any
discrepancy between any such notation by the Bank and in any records of the
undersigned, the records of the Bank shall be controlling and conclusive. In no
event shall the Bank be obligated to make any Advances to the undersigned
hereunder, except as provided for in the Agreement.

                                       29
<PAGE>

             The undersigned shall give the Bank notice of each Advance Request
pursuant to the terms of the Agreement. The Bank shall be entitled to rely upon
any such Advance Request and the undersigned hereby agrees to indemnify the Bank
against any claims, liabilities, losses and expenses ensuing from such reliance.

             This Note is the Grid Note referred to in the Agreement, and the
holder hereof is entitled to all of the benefits of the Agreement, which terms
and conditions are incorporated herein, and this Note shall be secured by the
Collateral. Notwithstanding any provision of this Note, all payments due under
the Note become due and payable as set forth in the Agreement. The Agreement
also contains provisions with respect to Collateral to secure this Note and for
Events of Default under this Note. Terms used herein that are defined in the
Agreement are used herein with the same meaning there ascribed to them therein.

             This Note replaces the note issued by ASTA ACQUISITION II, LLC to
the Bank, dated January 18, 2001 (the "Original Note") pursuant to the Original
Agreement (as defined in the Agreement) and all Advances outstanding under the
Original Note, as of the date of this Note, shall be deemed outstanding under
this Note as of the date hereof and shall be secured by the Collateral (as
defined in the Agreement).

             The undersigned shall be jointly and severally liable under this
Note and in the event of an Event of Default, the undersigned shall be jointly
and severally liable for all costs of enforcement and collection of this Note
incurred by Bank or any other holder of this Note.

             The undersigned in any litigation (whether or not arising out of or
relating to this Note or any other obligations or liability of the undersigned
to the Bank) in which the Bank and the undersigned shall be adverse parties, (i)
consent to the jurisdiction of the Federal and State courts located in New York
County, New York, as provided in the Agreement, and (ii) waive trial by jury and
the right to interpose any defense, set-off or counterclaim of any nature or
description.

             The undersigned agrees to pay on demand all of the Bank's
reasonable out of pocket costs and expenses, including reasonable counsel fees,
in connection with collection of any amounts due to the Bank and enforcement of
its rights under this Note.

             This Note and the provisions hereof are to be binding upon the
assigns or successors of the undersigned; and they are to be construed according
to and governed by the internal laws of the State of New York.

                         ASTA ACQUISITION II, LLC


                         By: ___________________________
                               Gary Stern, Manager

                         By: ___________________________
                              Mitchell Herman, Manager


                         PALISADES COLLECTION, L.L.C.


                         By: ___________________________
                              Gary Stern, Manager

                         By: ___________________________
                              Mitchell Herman, Manager




                                       30


<PAGE>

                              ADVANCES AND PAYMENTS
                                  OF PRINCIPAL


<TABLE>
<CAPTION>
                Amount of      Amount       Amount of      Unpaid          Notation
     Date       Advance      of Advance    Principal      Principal        Made By
                                Paid        Balance
<S>               <C>            <C>          <C>             <C>            <C>

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

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

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

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

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

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

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

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

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

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

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

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

</TABLE>

                                       31
<PAGE>


                                    EXHIBIT C
                            CONFIRMATION OF AFFILIATE

         Reference is made to the Amended and Restated Loan and Security
Agreement dated November 14, 2001 (as the same may be amended and in effect on
the date hereof, the "Agreement") between ASTA FUNDING ACQUISITION II, LLC and
PALISADES COLLECTION, L.L.C. (together, the "Borrower"), ASTA FUNDING, INC.
("Asta Funding") and ISRAEL DISCOUNT BANK OF NEW YORK (the "Lender") with
respect to a Line of Credit pursuant to which the Borrower, Asta Funding or
Affiliates may obtain Advances with which to acquire Portfolios, which advances
are evidenced by the Borrower's Grid Note in the amount of $20,000,000.00 dated
November 14, 2001.

         Pursuant to this Confirmation, effective immediately, the undersigned
(the "Affiliate") hereby agrees to be a party to, to be bound by, and to be in
compliance with, all the terms, conditions and covenants of the Agreement, the
Grid Note and any other Loan Documents, and also agrees to execute an Affiliate
Guaranty, an Affiliate Security Agreement, and such other documents as Lender
may deem necessary, all in form acceptable to Lender.

         The Affiliate hereby acknowledges receipt of a copy of the Agreement
and the Grid Note and acknowledges that it has not relied on any representation
or warranty, of any nature whatsoever, made by Lender, other than such
representations or warranties which have been given to Affiliate in writing.

         This Confirmation shall be governed by and be construed in accordance
with the internal laws of the State of New York, and may be executed in
counterpart copies all of which shall constitute one instrument.

         The Affiliate hereby (a) consents to the (i) non-exclusive jurisdiction
of the federal and state courts located in the County, City and State of New
York, in the event of any proceeding instituted in connection herewith and (ii)
service of process in accordance with the laws of the State of New York and the
United States of America and (b) waives trial by jury in any such proceeding.

         Each capitalized term not defined herein shall have the meaning
ascribed to it in the Agreement.

                          AFFILIATE:

                          [Name of Affiliate]


                          By: _________________________
                               Name:
                               Title:

                                       32

<PAGE>



                                    EXHIBIT D

                        ASTA FUNDING ACQUISITION II, LLC

                                 LOAN DOCUMENTS

Lender:           Israel Discount Bank of New York

Asta Funding:     Asta Funding, Inc.

Asta I:           Asta Funding Acquisition I, LLC

Asta II:          Asta Funding Acquisition II, LLC

E.R.:             E.R. Receivables Corp., L.L.C.

Palisades:        Palisades Collection, L.L.C.
------------------------------------------------------------------------


1.       Demand Grid Note of Asta II and Palisades

2.       Amended and Restated Loan and Security Agreement of Asta II, Palisades,
         Asta Funding and Lender

3.       Security Agreement of Asta Funding

4.       Security Agreement of Asta I

5.       Security Agreement of Asta II

6.       Security Agreement of E.R.

7.       Security Agreement of Palisades

8.       UCC-1 Financing Statement(s) of Asta Funding for filing in Delaware

9.       UCC-1 Financing Statement(s) of Asta I for filing in Delaware

10.      UCC-1 Financing Statement(s) of Asta II for filing in Delaware

11.      UCC-1 Financing Statement(s) of E.R. for filing in Delaware.

12.      UCC-1 Financing Statement(s) of Palisades for filing in Delaware


                                       33
<PAGE>

13.      Guaranty of Asta Funding
         a. Certificate of Resolutions of Asta Funding

14.      Guaranty of Asta I
         a. Certificate of Resolutions of Asta I

15.      Guaranty of E.R.
         a. Certificate of Resolutions of E.R.

16.      UCC/Judgment Searches in Delaware and New Jersey, and Delaware Good
         Standing Certificate and New Jersey Certificate of Authority for Asta
         Funding

17.      UCC/Judgment Searches in Delaware and New Jersey, and Delaware Good
         Standing Certificate and New Jersey Certificate of Authority for Asta I

18.      UCC/Judgment Searches in Delaware and New Jersey, and Delaware Good
         Standing Certificate and New Jersey Certificate of Authority for Asta
         II

19.      UCC/Judgment Searches in Delaware and New Jersey , and Delaware Good
         Standing Certificate and New Jersey Certificate of Authority for E.R.

20.      UCC/Judgment Searches in Delaware and New Jersey, and Delaware Good
         Standing Certificate and New Jersey Certificate of Authority for
         Palisades

21.      Operating Agreement of Asta I, certified by an officer of Asta I

22.      Operating Agreement of Asta II, certified by an officer of Asta II

23.      Operating Agreement of E.R., certified by an officer of E.R.

24.      Operating Agreement of Palisades, certified by an officer of Palisades

25.      Certificate of Resolutions authorizing the Loan Agreement and Loan
         Documents of (a) Asta I, (b) Asta II , (c) E.R. and (d) Palisades

26.      Opinion of Lowenstein Sandler PC, counsel to Asta Funding, Asta I, Asta
         II, E.R. and Palisades with respect to such matters as Lender may
         reasonably request

27.      Advance Request, if any, of Asta II and/or Palisades and the documents
         therein required

28.      Letter of Asta II and Palisades authorizing Lender to (a) make payment,
         if any, for the Portfolio as directed by the Seller of the Portfolio,
         (b) charge the Operating Account for the Lender Fees then due, and (c)
         charge the Operating Account for attorneys' fees and expenses of Lender
         in connection with this transaction

29.      Post Closing Agreement of Asta II and Palisades

30.      Such other agreements, certificates or other documents as Lender may
         reasonably request

                                       34
<PAGE>



                                   SCHEDULE A

                                 Permitted Debt




                           [TO BE PROVIDED BY BORROWER
                                PRIOR TO CLOSING]
















                                       35
<PAGE>
                                  SCHEDULE A-1

                               Acquired Portfolio
                                 Permitted Debt



                          [TO BE PROVIDED BY BORROWER]


                                       36

<PAGE>



                                   SCHEDULE B

                                 Permitted Liens


Permitted liens are to be those liens reflected in Report 531025, dated June 29,
2001and in Report 531033 dated November 9, 2001, each as provided by Bridge
Service Corp, excluding those liens which are to be released or terminated
pursuant to a Post-Closing Agreement of even date herewith between Asta Funding
Acquisition II, LLC, Palisades Collection, L.L.C. and Israel Discount Bank Of
New York.


                                       37
<PAGE>



SCHEDULE C

                                 Consumer Loans


                           [TO BE PROVIDED BY BORROWER
                         IN HARD COPY AND COMPUTER DISC
                                PRIOR TO CLOSING]

                                       38