SECOND AMENDMENT TO
 
WARRANT TO PURCHASE 1,500,000 SHARES
 
OF COMMON STOCK
 
(NO. LLCP-FMV 1)
 
THIS SECOND AMENDMENT TO WARRANT TO PURCHASE 1,500,000 SHARES OF COMMON STOCK is
dated as of July 17, 2009 (this "Amendment"), by and between CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Company"), and LEVINE LEICHTMAN
CAPITAL PARTNERS IV, L.P., a Delaware limited partnership (the "Holder" or
"Purchaser").
 
R E C I T A L S
 
A. The Company and the Holder are parties to that certain Securities Purchase
Agreement dated as of June 30, 2008, as amended by a First Amendment to
Securities Purchase Agreement dated as of July 10, 2008 (as so amended, and as
further amended from time to time, the "Securities Purchase Agreement"), by and
between the Company and the Holder.
 
B. At the Closing of the transactions contemplated by the Securities Purchase
Agreement, the Company issued the Securities to the Holder, including, among
others, a Warrant to Purchase 1,500,000 Shares of Common Stock (No. LLCP-FMV 1)
(the "Initial Purchaser Closing FMV Warrant"). The Initial Purchaser Closing FMV
Warrant was thereafter amended pursuant to that certain Amendment to Warrant to
Purchase 1,500,000 Shares of Common Stock dated as of September 24, 2008 (the
Initial Purchaser Closing FMV Warrant, as so amended, is referred to herein as
the "Purchaser Closing FMV Warrant"). Unless otherwise indicated, all
capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to them in the Securities Purchase Agreement or the Purchaser
Closing FMV Warrant, as applicable.
 
C. By letter dated July 25, 2008, the Company notified the Purchaser pursuant to
Section 3.8(d) of the Purchaser Closing FMV Warrant that the number of Warrant
Shares issuable upon exercise of the Purchaser Closing FMV Warrant is 1,564,324
and the Warrant Purchase Price is $2.4672.
 
D. This Amendment is being delivered by the Company pursuant to the terms of,
and in consideration for, that certain consent letter dated as of June 23, 2009
(the "Consent Letter") with respect to the Plan Amendments (as defined therein)
in order to address the dilution caused to Purchaser by the Plan Amendments.
 
A G R E E M E N T
 
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
 
 
 

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1. Amendment to Warrant Purchase Price. Pursuant to Section 4.7 of the Purchaser
Closing FMV Warrant, the Company and the Purchaser hereby agree that the Warrant
Purchase Price shall be amended to equal $1.44 (subject to further adjustment as
provided in the Purchaser Closing FMV Warrant).
 
2. Change of Address for Notice Purposes. Pursuant to Section 4.8 of the
Purchaser Closing FMV Warrant, the Company hereby notifies the Purchaser that
the address and related contact information of the Company shall be changed as
follows:
 
Consumer Portfolio Services, Inc.
19500 Jamboree Road, 6th Floor
Irvine, CA 92612
Attention: Charles E. Bradley, Jr., President (with a
copy to Mark Creatura, General Counsel)
Telephone: (949) 753-6800
Facsimile: (949) 753-6897

 
3. Release.
 
(a) In consideration for the consent provided in the Consent Letter, the
Company, for itself and on behalf of the Subsidiary Guarantors and its and their
respective successors, assigns, and present and future stockholders, officers,
directors, Affiliates, employees, agents and attorneys (collectively, the
"Releasing Parties"), hereby remises, releases and forever discharges the Holder
and its present and former Affiliates, officers, directors, partners (general
and limited), stockholders, members, managers, employees, agents, attorneys,
successors and assigns, from and against any and all claims, rights, actions,
causes of action, suits, liabilities, defenses, damages, losses, costs and
expenses (including attorneys' fees), of whatever nature, type or description,
that are based upon, relate to or arise out of any facts, acts, omissions,
events or circumstances existing or occurring on or prior to the date hereof,
whether arising out of or related to this Amendment, the Securities Purchase
Agreement, the Notes, the Guaranties, the Warrants, the Collateral Documents or
any other Investment Document, any of the transactions contemplated hereby or
thereby, the administration or enforcement of the Obligations or any act,
omission or event occurring in connection herewith or therewith, in each case
whether known or unknown, existing or potential or suspected or unsuspected.
 
(b) The Company, for itself and on behalf of the other Releasing Parties, waives
any and all claims, rights and benefits it may have under any law of any
jurisdiction that would render ineffective a release made by a creditor of
claims that the creditor does not know or suspect to exist in its favor at the
time of executing the release and that, if known by it, would have materially
affected its settlement with the applicable debtor. The Company, for itself and
on behalf of the other Releasing Parties, acknowledges that it is aware of the
following provisions of section 1542 of the California Civil Code:
 
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
 
 
 

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OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
 
(c) The Company, for itself and on behalf of the other Releasing Parties,
expressly and voluntarily waives each and all claims, rights, or benefits it has
or may have under section 1542 of the California Civil Code, or any other
similar law of any other jurisdiction, to the full extent that it may lawfully
waive such claims, rights and benefits in connection with this release. The
Company, for itself and on behalf of the other Releasing Parties, acknowledges
that (a) it has been represented by independent legal counsel of its own choice
throughout all of the negotiation that preceded the execution of this Amendment
and that it has executed this Amendment after receiving the advice of such
independent legal counsel, and (b) it and its respective counsel have had an
adequate opportunity to make whatever investigation or inquiry they deem
necessary or desirable in connection with the release contained in this Section
3.
 
(d) No claim shall be made by the Company or any other Releasing Party against
the Holder, or any Affiliates, officers, directors, partners (general and
limited), stockholders, members, managers, employees, agents, attorneys,
successors and assigns of the Holder, for any special, indirect, consequential
or punitive damages in respect of any claim for breach of contract or under any
other theory of liability arising out of or related to any of the matters being
released under this Section 3. The Company, for itself and on behalf of the
other Releasing Parties, hereby waives, releases and agrees not to sue upon any
claim for such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
 
4. Certain Representations and Warranties. The Company hereby represents and
warrants to the Holder that (a) this Amendment has been duly authorized,
executed and delivered by the Company and constitutes a legal, valid and binding
obligations of the Company, enforceable against it in accordance with its terms,
and (b) as of the date hereof: (i) the Purchaser Closing FMV Warrant is fully
exercisable, in whole or in part, (ii) the Warrant Shares issuable upon exercise
of the Purchaser Closing FMV Warrant have been duly authorized and, when issued,
delivered and paid for pursuant to the terms of the Purchaser Closing FMV
Warrant, shall be duly and validly issued, fully paid and nonassessable and
(iii) no Consent from any Person (including any Governmental Authority) is
required in connection with, and no restrictions are otherwise applicable to,
this Amendment, the transactions contemplated hereby (including the reduction in
the Warrant Purchase Price) or the issuance by the Company of any Warrant Shares
issuable upon exercise of the Purchaser Closing FMV Warrant.
 
5. Confirmation; Full Force and Effect. The amendment set forth in Section 1
amends the Purchaser Closing FMV Warrant on and as of the date hereof, and the
Purchaser Closing FMV Warrant shall remain in full force and effect, as amended
thereby, from and after the date hereof in accordance with its terms. The
Company hereby ratifies, approves and affirms in all respects each of the
Securities Purchase Agreement, the Notes, the Guaranties, the Warrants (as
amended), the Collateral Documents (including the Liens
 
 
 

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granted in favor of the Holder thereunder) and the other Investment Documents,
the terms and other provisions hereof and thereof and the Obligations hereunder
and thereunder.
 
6. Miscellaneous Provisions.
 
(a) Entire Agreement; Successors and Assigns. This Amendment constitutes the
entire understanding and agreement between the parties with respect to the
subject matter hereof, and supersedes any and all other prior oral and written,
and all contemporaneous oral, agreements, negotiations, discussions and
understandings with respect thereto. This Amendment shall inure to the benefit
of, and be binding upon, the parties and their respective successors and
permitted assigns.
 
(b) Counterparts. This Amendment may be executed in any number of counterparts
and by facsimile transmission, each of which shall be deemed an original and all
of which taken together shall constitute one and the same instrument.
 
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their duly authorized representatives as of the date first written
above.
 
COMPANY

CONSUMER PORTFOLIO SERVICES, INC.,
a California corporation

By: /s/ Charles E. Bradley, Jr.
Charles E. Bradley, Jr.
President and Chief Executive Officer
 
HOLDER

LEVINE LEICHTMAN CAPITAL PARTNERS,
INC., a California corporation

On behalf of LEVINE LEICHTMAN
CAPITAL PARTNERS IV, L.P., a
Delaware limited partnership

By: /s/ Steven E. Hartman
Steven E. Hartman
Vice President
 

 
 

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ACKNOWLEDGMENT AND CONSENT OF SUBSIDIARY GUARANTORS
 
Each of the undersigned hereby acknowledges that it has read the foregoing
Amendment and consents to its terms. Each of the undersigned further
acknowledges and agrees that the Purchaser Closing FMV Warrant, as amended by
the foregoing Amendment, constitutes a Guarantied Obligation and reaffirms its
obligations under the Subsidiary Guaranty and the other Investment Documents to
which it is a party, all of which remains in full force and effect.
 
Dated: July 17, 2009

CPS MARKETING, INC., a California corporation

By: /s/ Jeffrey P. Fritz
Jeffrey P. Fritz
Vice President and Chief Financial Officer

CPS LEASING, INC., a Delaware corporation

By: /s/ Jeffrey P. Fritz
Jeffrey P. Fritz
Vice President and Chief Financial Officer

MERCURY FINANCE COMPANY LLC,
a Delaware limited liability company

By: /s/ Jeffrey P. Fritz
Jeffrey P. Fritz
Vice President and Chief Financial Officer

TFC ENTERPRISES LLC, a Delaware limited liability
company

By: /s/ Jeffrey P. Fritz
Jeffrey P. Fritz
Vice President and Chief Financial Officer

 
 

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