THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION OR QUALIFICATION THEREFROM.
 
WARRANT NO.
__                                                                                                                                                                                                                                                                                                                
  [date]
 
WARRANT TO PURCHASE
 
170,000 SHARES OF COMMON STOCK
 
--------------------------------
 
FOR VALUE RECEIVED, CONSUMER PORTFOLIO SERVICES, INC., a California corporation
(the “COMPANY”), hereby certifies that __________, or its assigns (the
“HOLDER”), is entitled to purchase, on the terms and subject to the conditions
contained herein, ONE HUNDRED SEVENTY THOUSAND AND NO/100 (170,000) shares (the
“WARRANT SHARES”) of the Company’s common stock, no par value per share (“COMMON
STOCK”), at the exercise price of $1.41 per Warrant Share (the “WARRANT PURCHASE
PRICE”) at any time and from time to time during the Exercise Period (as such
term is defined below). The number of Warrant Shares and the Warrant Purchase
Price shall be subject to adjustment as set forth in SECTION 3.
 
This Warrant (this “WARRANT”) is the “Warrant” referred to in, and is being
issued in connection with the consummation of the transactions contemplated by,
that certain Placement Agency Agreement dated as of February 11, 2010, by and
among the Company, Page Five Funding LLC and Cohen & Company Securities, LLC,
the initial holder of this Warrant (as amended or modified from time to time,
the “PLACEMENT AGENCY AGREEMENT”), and is subject to the following terms and
conditions:
 
1. DEFINITIONS.  Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Placement Agency Agreement or
the Sale and Servicing Agreement dated as of March 25, 2010, by and among Page
Five Funding LLC, the Company, as Seller and Servicer, and Wells Fargo Bank,
National Association, as Backup Servicer and Trustee (as the same may be amended
or supplemented from time to time, the “SALE AND SERVICING AGREEMENT”), as
applicable.  For the purposes of this Warrant, the following terms shall have
the respective meanings set forth below:
 
“APPLICABLE LAW” means all provisions of statutes, rules and regulations,
interpretations and orders of any Governmental Authority applicable to a Person,
and all orders and decrees of all courts and arbitrators in proceedings or
actions in which the Person in question is a party including applicable federal,
state and local laws and regulations thereunder.
 
“BUSINESS DAY” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or the State of California
or is a day on which banking institutions located in either such state are
authorized or required by law or other governmental action to close.
 
 
 

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“COMMON STOCK” has the meaning set forth in the preamble of this Warrant.
 
“COMPANY” has the meaning set forth in the preamble of this Warrant.
 
“CONVERTIBLE SECURITIES” means, with respect to any Person, any securities or
other obligations issued or issuable by such Person or any other Person that are
exercisable or exchangeable for, or convertible into, any Equity Interests of
the Company.
 
“CURRENT MARKET PRICE” per share of Common Stock means, as of any specified date
on which the Common Stock is publicly traded, the average of the daily market
prices of the Common Stock over the twenty (20) consecutive trading days
immediately preceding (and not including) such date. The ‘daily market price’
for each such trading day shall be (i) the closing sales price on such day on
the principal stock exchange on which the Common Stock is then listed or
admitted to trading or on Nasdaq, as applicable, (ii) if no sale takes place on
such day on any such exchange or system, the average of the closing bid and
asked prices, regular way, on such day for the Common Stock as officially quoted
on any such exchange or system, (iii) if the Common Stock is not then listed or
admitted to trading on any stock exchange or system, the last reported sale
price, regular way, on such day for the Common Stock, or if no sale takes place
on such day, the average of the closing bid and asked prices for the Common
Stock on such day, as reported by Nasdaq or the National Quotation Bureau, or
(iv) if the Common Stock is not then listed or admitted to trading on any
securities exchange and if no such reported sale price or bid and asked prices
are available, the average of the reported high bid and low asked prices on such
day, as reported by a reputable quotation service. If the daily market price
cannot be determined for the twenty (20) consecutive trading days immediately
preceding such date in the manner specified in the foregoing sentence, then the
Common Stock shall not be deemed to be publicly traded as of such date.
 
“DESIGNATED OFFICE” has the meaning set forth in SECTION 2.1.
 
“DILUTIVE ISSUANCE” has the meaning set forth in SECTION 3.9.
 
“DISTRIBUTION” has the meaning set forth in SECTION 3.3.
 
“DISTRIBUTION AMOUNT” has the meaning set forth in SECTION 3.3.
 
“DOJ” has the meaning set forth in SECTION 2.4.
 
“EQUITY INTERESTS” means, with respect to any Person, (i) if such Person is a
corporation, any and all shares of capital stock, participations in profits or
other equivalents (however designated) or other equity interests of such Person,
including any preferred stock of such Person, (ii) if such Person is a limited
liability company, any and all membership interests, or (iii) if such Person is
a partnership or other entity, any and all partnership or entity interests or
other units.
 
“EQUITY RIGHTS” means any warrants, options or other rights to subscribe for or
purchase, or obligations to issue, any Equity Interests of the Company, or any
Convertible Securities, or any stock appreciation rights, including any options
or similar rights issued or
 
 
2

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issuable under any employee stock option plan, pension plan or other employee
benefit plan of the Company.
 
“EXCLUDED SHARES” means (i) Common Stock, Equity Rights or Convertible
Securities issued in any of the transactions described in SECTIONS 3.1, 3.2, 3.3
or 3.5, (ii) shares of Common Stock issued after the Issuance Date upon
conversion, exercise or exchange of (A) Equity Rights or Convertible Securities
outstanding on the Issuance Date or (B) Equity Rights or Convertible Securities
issued after the Issuance Date in connection with any employee stock option
plan, pension plan or other employee benefit plan of the Company that is
approved by the Board of Directors of the Company, and (iii) this Warrant or any
securities issued upon exercise hereof.
 
“EXERCISE NOTICE” has the meaning set forth in SECTION 2.1.
 
“EXERCISE PERIOD” means the period commencing on the Issuance Date and ending on
(and including) the Expiration Date.
 
“EXPIRATION DATE” means March 24, 2020.
 
“FAIR MARKET VALUE” per share of Common Stock as of any specified date means (i)
if the Common Stock is publicly traded on such date, the Current Market Price
per share, or (ii) if the Common Stock is not publicly traded (or deemed not to
be publicly traded) on such date, the fair market value per share of Common
Stock as determined in good faith by the Board of Directors of the Company and
set forth in a written notice to the Holder, subject to the Holder’s right to
dispute such determination under SECTION 3.8(E).
 
“FTC” has the meaning set forth in SECTION 2.4.
 
“GOVERNMENTAL AUTHORITY” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
 
“HOLDER” has the meaning set forth in the preamble of this Warrant.
 
“HSR ACT” has the meaning set forth in SECTION 2.4.
 
“ISSUANCE DATE” means March 25, 2010.
 
“NASDAQ” means the Nasdaq Stock Market or any successor reporting system
thereof.
 
“OTHER PROPERTY” has the meaning set forth in SECTION 3.5.
 
“PERSON” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary
 
 
3

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thereto), unincorporated organization or government or any agency or political
subdivision thereof.
 
“REFERENCE PRICE” means, as of any time, the Fair Market Value per share of
Common Stock in effect at such time.
 
“SECURITIES ACT” means the Securities Act of 1933, as amended.
 
“WARRANT” means this Warrant, any amendment of this Warrant, and any warrants
issued upon transfer, division or combination of, or in substitution for, this
Warrant or any other such warrant. All such Warrants shall at all times be
identical as to terms and conditions and date, except as to the number of
Warrant Shares for which they may be exercised.
 
“WARRANT PURCHASE PRICE” has the meaning set forth in the preamble of this
Warrant (as adjusted in accordance with the terms of this Warrant).
 
“WARRANT SHARES” has the meaning set forth in the preamble of this Warrant.
 
2. EXERCISE.
 
2.1. EXERCISE; DELIVERY OF CERTIFICATES. Subject to the provisions of SECTION
2.4, the vested portion of this Warrant may be exercised, in whole or in part,
at the option of the Holder, at any time and from time to time during the
Exercise Period, by (a) delivering to the Company at its principal executive
office (the “DESIGNATED OFFICE”) (i) a notice of exercise, in substantially the
form attached hereto (the “EXERCISE NOTICE”), duly completed and signed by the
Holder, and (ii) this Warrant, and (b) paying the Warrant Purchase Price
pursuant to SECTION 2.2 for the number of Warrant Shares proposed to be
purchased in the Exercise Notice. Subject to the provisions of SECTION 2.4, the
Warrant Shares being purchased under this Warrant will be deemed to have been
issued to the Holder, as the record owner of such Warrant Shares, as of the
close of business on the date on which payment therefor is made by the Holder
pursuant to SECTION 2.2. Stock certificates representing the Warrant Shares so
purchased shall be delivered to the Holder within three (3) Business Days after
this Warrant has been exercised (or, if applicable, immediately after the
conditions set forth in SECTION 2.4 have been satisfied); PROVIDED, HOWEVER,
that in the case of a purchase of less than all of the Warrant Shares issuable
upon exercise of this Warrant, the Company shall cancel this Warrant and, within
three (3) Business Days after this Warrant has been surrendered, execute and
deliver to the Holder a new Warrant of like tenor for the number of unexercised
Warrant Shares. Each stock certificate representing the number of Warrant Shares
purchased pursuant to this Warrant shall be registered in the name of the Holder
or, subject to compliance with Applicable Laws, such other name as designated by
the Holder.  The rights of the Holder to exercise this Warrant shall be subject
to vesting as provided in SECTION 2.4.
 
2.2. PAYMENT OF WARRANT PRICE. Payment of the Warrant Purchase Price shall be
made, at the option of the Holder, by (i) check from the Holder, (ii) wire
transfer, (iii) instructing the Company to withhold and cancel a number of
Warrant Shares then issuable upon exercise of this Warrant with respect to which
the excess, if any, of the Fair Market Value over the Warrant Purchase Price for
such canceled Warrant Shares is at least equal to the
 
 
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Warrant Purchase Price for the Warrant Shares being purchased, (iv) surrendering
to the Company of shares of Common Stock previously acquired by the Holder with
a Fair Market Value equal to the Warrant Purchase Price for the Warrant Shares
then being purchased or (v) any combination of the foregoing.
 
2.3. NO FRACTIONAL SHARES. The Company shall not be required to issue fractional
shares of Common Stock upon the exercise of this Warrant. If any fraction of a
share of Common Stock would, except for the provisions of this paragraph, be
issuable on the exercise of this Warrant (or specified portion thereof), the
Company shall pay to the Holder an amount in cash calculated by it to be equal
to the then Fair Market Value per share of Common Stock multiplied by such
fraction computed to the nearest whole cent.
 
2.4. VESTING.  On the Closing Date and on each Subsequent Draw Date, this
Warrant shall vest in a percentage that is equal to the applicable Periodic Draw
Percentage for such date.  As used herein, the “Periodic Draw Percentage” for
the Closing Date and each Subsequent Draw Date shall equal the amount, expressed
as a percentage, obtained by dividing (x) the amount of the Draw that is funded
on such date pursuant to the terms of the Note Purchase Agreement and the Sale
and Servicing Agreement by (y) the Aggregate Committed Amount.  The Holder shall
be subject to divestment of the unvested portion of this Warrant as described in
Section 4.2.
 
3. ADJUSTMENTS TO THE NUMBER OF WARRANT SHARES AND TO THE WARRANT PURCHASE
PRICE. The number of Warrant Shares for which the vested portion of this Warrant
is exercisable and the Warrant Purchase Price shall be subject to adjustment
from time to time as set forth in this SECTION 3.
 
3.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the Company:
 
(a) pays a dividend or other distribution on its Common Stock in shares of
Common Stock or shares of any other class or series of Capital Stock;
 
(b) subdivides its outstanding shares of Common Stock (by stock split,
reclassification or otherwise) into a larger number of shares of Common Stock;
or
 
(c) combines (by reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
 
then the number of Warrant Shares purchasable upon exercise of the vested
portion of this Warrant immediately prior to the record date for such dividend
or distribution or the effective date of such subdivision or combination shall
be adjusted so that the Holder shall thereafter be entitled to receive upon
exercise of the vested portion of this Warrant the kind and number of shares of
Common Stock that the Holder would have owned or have been entitled to receive
immediately after such record date or effective date had the vested portion of
this Warrant been exercised immediately prior to such record date or effective
date. Any adjustment made pursuant to this SECTION 3.1 shall become effective
immediately after the effective date of such event, but be retroactive to the
record date, if any, for such event.
 
 
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Upon any adjustment of the number of Warrant Shares purchasable upon the
exercise of the vested portion of this Warrant as herein provided, the Warrant
Purchase Price per share shall be adjusted by multiplying the Warrant Purchase
Price immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Warrant Shares purchasable upon the exercise of the
vested portion of this Warrant immediately prior to such adjustment and the
denominator of which shall be the number of Warrant Shares so purchasable
immediately thereafter.
 
3.2. RIGHTS; OPTIONS; WARRANTS. If, at any time after the Issuance Date, the
Company issues (without payment of any consideration) to all holders of
outstanding Common Stock any rights, options or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for Common Stock, then the Company shall also distribute, at the same time as
the distribution to such holders, such rights, options, warrants or securities
to the Holder as if the vested portion of this Warrant had been exercised
immediately prior to the record date for such issuance.
 
3.3. DISTRIBUTION OF ASSETS OR SECURITIES. If at any time the Company makes a
distribution (other than a distribution covered by SECTION 3.1 or 3.2) to its
shareholders of any asset, including cash or securities (such distribution, a
“DISTRIBUTION”), then the Company shall provide the Holder with sufficient prior
notice of such Distribution so that the Holder may exercise the vested portion
of this Warrant.  Upon such exercise and payment of the applicable Warrant
Purchase Price, the Holder as a shareholder shall have the right to receive, and
the Company shall distribute to the Holder on the date of such Distribution,
such shareholder's pro rata portion of the Distribution.  The Company shall
notify Holder in writing of its intent to make any such Distribution not less
than ten (10) Business Days prior to any record date applicable thereto, or, if
no record date is applicable, not less than ten (10) Business Days prior to the
date of such Distribution.
 
3.4. ISSUANCE OF EQUITY SECURITIES AT LESS THAN FAIR MARKET VALUE.
 
(a) If, at any time after Issuance Date, the Company shall issue or sell (or, in
accordance with SECTION 3.4(b), shall be deemed to have issued or sold) shares
of Common Stock, Equity Rights or Convertible Securities representing the right
to subscribe for or purchase shares of Common Stock (other than any Excluded
Shares) at a price per share of Common Stock that is lower than the Reference
Price in effect immediately prior to such sale and issuance, then the Warrant
Purchase Price shall be adjusted so that it shall equal the price determined by
multiplying the Warrant Purchase Price in effect immediately prior thereto by a
fraction, the numerator of which shall be an amount equal to the sum of (A) the
number of shares of Common Stock outstanding immediately prior to such sale and
issuance plus (B) the number of shares of Common Stock which the aggregate
consideration received by the Company (and in the case of adjustments triggered
in full or in part by the issuance of Equity Rights or Convertible Securities,
the aggregate consideration deemed received in respect of such issuance
determined as provided in SECTION 3.4(b) below) for such sale or issuance would
purchase at such Reference Price, and the denominator of which shall be the
total number of shares of Common Stock outstanding (and in the case of
adjustments triggered in full or in part by the issuance of Equity Rights or
Convertible Securities, the number of shares of Common Stock
 
 
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deemed to be outstanding as a result of such issuance determined as provided in
SECTION 3.4(b) below) immediately after such sale or issuance.
 
Adjustments shall be made successively whenever such an issuance is made. Upon
any adjustment in the Warrant Purchase Price as provided in this SECTION 3.4(a),
the number of shares of Common Stock purchasable upon the exercise of this
Warrant shall also be adjusted and shall be that number determined by
multiplying the number of Warrant Shares issuable upon exercise immediately
prior to such adjustment by a fraction, the numerator of which is the Warrant
Purchase Price in effect immediately prior to such adjustment and the
denominator of which is the Warrant Purchase Price as so adjusted.
 
(b) For the purpose of determining the adjusted Warrant Purchase Price under
SECTION 3.4(a), the following shall be applicable:
 
(i) If the Company in any manner issues or grants any Equity Rights (including
Equity Rights to acquire Convertible Securities), and the price per share for
which shares of Common Stock are issuable upon the exercise of such Equity
Rights or upon conversion or exchange of such Convertible Securities is less
than the Reference Price determined as of the date of such issuance or grant of
such Equity Rights, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Equity Rights (or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Equity Rights) shall be deemed to be outstanding and to have
been issued and sold by the Company for such lower price per share. For purposes
of this paragraph, the price per share for which shares of Common Stock are
issuable upon exercise of Equity Rights or upon conversion or exchange of
Convertible Securities issuable upon exercise of Equity Rights shall be
determined by dividing (A) the total amount, if any, received or receivable by
the Company as consideration for the issuing or granting of such Equity Rights,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Equity Rights, plus in the case of such
Equity Rights which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
exercise of such Equity Rights or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Equity Rights.
 
(ii) If the Company in any manner issues or grants any Convertible Securities
having an exercise or conversion or exchange price per Share which is less than
the Reference Price determined as of the date of issuance or sale, then the
maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Company for such lower price per share. For
purposes of this paragraph, the price per share for which shares of Common Stock
are issuable upon conversion or exchange of Convertible Securities is determined
by dividing (A) the total amount received by the Company as consideration for
the issuance or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities.
 
 
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(iii) If the purchase price provided for in any Equity Rights, the additional
consideration, if any, payable upon the issuance, conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for shares of Common Stock decreases at any
time, or if the number of shares of Common Stock issuable upon the exercise,
issuance, conversion or exchange of any Equity Rights or Convertible Securities
increases at any time, then the Warrant Purchase Price in effect at the time of
such decrease (or increase) shall be readjusted to the Warrant Purchase Price
which would have been in effect at such time had such Equity Rights or
Convertible Securities still outstanding provided for such decreased purchase
price, additional consideration, changed conversion rate or increased shares, as
the case may be, at the time initially granted, issued or sold and the number of
Warrant Shares shall be correspondingly readjusted, by taking the number of
Warrant Shares issuable upon the exercise of this Warrant immediately prior to
such adjustment multiplied by a fraction, the numerator of which is the Warrant
Purchase Price in effect immediately prior to such adjustment and the
denominator of which is the Warrant Purchase Price as so adjusted.
 
(iv) If at any time the Company sells and issues shares of Common Stock or
Equity Rights or Convertible Securities containing the right to subscribe for or
purchase shares of Common Stock for a consideration consisting, in whole or in
part, of property other than cash or its equivalent, then in determining the
“price per share of Common Stock” and the “consideration received by the
Company” for purposes of the preceding paragraphs of this SECTION 3.4, the Board
of Directors of the Company shall determine, in good faith, the fair market
value of property, subject to the Holder’s rights under SECTION 3.8(E).
 
(v) There shall be no adjustment of the Warrant Purchase Price in respect of the
Common Stock pursuant to this SECTION 3.4 if the amount of such adjustment is
less than $0.00001 per share of Common Stock;  PROVIDED, HOWEVER, that any
adjustments which by reason of this provision are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
 
3.5. CAPITAL REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.  If at
any time there shall be a capital reorganization (other than a combination or
subdivision of Common Stock otherwise provided for herein), a share exchange
(subject to and duly approved by the stockholders of the Company) or a merger or
consolidation of the Company with or into another corporation, or the sale of
the Company’s properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, share exchange, merger,
consolidation or sale, lawful provision shall be made so that Holder shall
thereafter be entitled to receive upon exercise of the vested portion of this
Warrant, during the Exercise Period and upon payment of the Warrant Purchase
Price, the number of shares of stock or other securities or property of the
Company or the successor corporation resulting from such reorganization, share,
exchange, merger, consolidation or sale, to which Holder would have been
entitled under the provisions of the agreement in such reorganization, share
exchange, merger, consolidation or sale if the vested portion of this Warrant
had been exercised immediately before that reorganization, share exchange,
merger, consolidation or sale.  In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions of this Warrant with respect to the rights
and interests of Holder after the reorganization, share
 
 
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exchange, merger, consolidation or sale to the end that the provisions of this
Warrant (including adjustment of the Warrant Purchase Price then in effect and
the number of the Warrant Shares) shall be applicable after that event, as near
as reasonably may be, in relation to any shares or other property deliverable
after that event upon exercise of the vested portion of this Warrant.
 
3.6. DISSOLUTION, TOTAL LIQUIDATION OR WINDING-UP. If at any time there is a
voluntary or involuntary dissolution, total liquidation or winding-up of the
Company, other than as contemplated by SECTION 3.5, then the Company shall cause
to be mailed (by registered or certified mail, return receipt requested, postage
prepaid) to the Holder at the Holder’s address as shown on the Warrant register,
at the earliest practicable time (and, in any event, not less than thirty (30)
calendar days before any date set for definitive action) written notice of the
date on which such dissolution, liquidation or winding-up shall take place, as
the case may be. Such notice shall also specify the date as of which the record
holders of shares of Common Stock shall be entitled to exchange their shares for
securities, money or other property deliverable upon such dissolution,
liquidation or winding-up, as the case may be. On such date, the Holder shall be
entitled to receive upon surrender of this Warrant the cash or other property,
less the Warrant Purchase Price for this Warrant then in effect, that the Holder
would have been entitled to receive had the vested portion of this Warrant been
exercised immediately prior to such dissolution, liquidation or winding-up. Upon
receipt of the cash or other property, any and all rights of the Holder to
exercise this Warrant shall terminate in their entirety. If the cash or other
property distributable in the dissolution, liquidation or winding-up has a fair
market value (as determined in good faith by the board of directors of the
Company and set forth in a written notice to the Holder, subject to the Holder’s
right to dispute such determination under SECTION 3.8(E)) which is less than the
Warrant Purchase Price for this Warrant then in effect, this Warrant shall
terminate and be of no further force or effect upon the dissolution, liquidation
or winding-up.
 
3.7. OTHER DILUTIVE EVENTS. If any event occurs as to which the other provisions
of this SECTION 3 are not strictly applicable but as to which the failure to
make any adjustment would not protect the purchase rights represented by this
Warrant in accordance with the intent and principles hereof then, in each such
case, the Holder (or if the Warrant has been divided up, the Holders of Warrants
exercisable for the purchase of more than fifty percent (50%) of the aggregate
number of Warrant Shares then issuable upon exercise of all of the then
exercisable Warrants) may appoint an independent investment bank or firm of
independent public accountants which shall give its opinion as to the
adjustment, if any, on a basis consistent with the intent and principles
established herein, necessary to preserve the purchase rights represented by
this Warrant (or such Warrants). Upon receipt of such opinion, the Company will
mail (by registered or certified mail, return receipt requested, postage
prepaid) a copy thereof to the Holder within three (3) Business Days and shall
make the adjustments described therein. The fees and expenses of such investment
bank or independent public accountants shall be borne by the Company.
 
3.8. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the adjustments provided for
pursuant to this SECTION 3:
 
 
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(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this SECTION 3
shall be made whenever and as often as any specified event requiring such an
adjustment shall occur. For the purpose of any such adjustment, any specified
event shall be deemed to have occurred at the close of business on the date of
its occurrence.
 
(b) RECORD DATE. If the Company fixes a record date of the holders of Common
Stock for the purpose of entitling them to (i) receive a dividend or other
distribution payable in shares of Common Stock or in shares of any other class
or series of capital stock or securities convertible into or exchangeable for
Common Stock or shares of any other class or series of capital stock or (ii)
subscribe for or purchase shares of Common Stock or such other shares or
securities, then all references in this SECTION 3 to the date of the issuance or
sale of such shares of Common Stock or such other shares or securities shall be
deemed to be references to that record date.
 
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company fixes a record date of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights to which the
provisions of SECTION 3.1 would apply, but shall, thereafter and before the
distribution to shareholders, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled.
 
(d) NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common Stock for
which this Warrant is exercisable or the Warrant Purchase Price shall be
adjusted or recalculated pursuant to this SECTION 3, the Company shall
immediately prepare a certificate to be executed by the chief financial officer
of the Company setting forth, in reasonable detail, the event requiring the
adjustment or recalculation and the method by which such adjustment or
recalculation was calculated, specifying the number of shares of Common Stock
for which this Warrant is exercisable and (if such adjustment was made pursuant
to SECTION 3.5) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any related change in
the Warrant Purchase Price, after giving effect to such adjustment,
recalculation or change. The Company shall mail (by registered or certified
mail, return receipt requested, postage prepaid) a signed copy of the
certificate to be delivered to the Holder within three (3) Business Days of the
event which caused the adjustment or recalculation. The Company shall keep at
the Designated Office copies of all such certificates and cause them to be
available for inspection at the Designated Office during normal business hours
by the Holder or any prospective transferee of this Warrant designated by the
Holder.
 
(e) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of Directors of
the Company is required to make a determination in good faith of the fair market
value of any item under this Warrant, or any item that may affect the value of
this Warrant, that determination may be challenged or disputed by the Holder (or
if the Warrant has been divided up, the Holders of Warrants exercisable for more
than fifty percent (50%) of the aggregate number of Warrant Shares then issuable
upon exercise of all of the then exercisable Warrants), and any such challenge
or dispute shall be resolved promptly, but in no event in more than thirty (30)
days, by an investment banking firm of recognized national standing or one of
the four (4) largest national accounting firms agreed upon by the Company
 
 
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and the Holders and whose decision shall be binding on the Company and the
Holders. If the Company and the Holders cannot agree on a mutually acceptable
investment bank or accounting firm, then the Holders, jointly, and the Company
shall within five (5) Business Days each choose one investment bank or
accounting firm and the respective chosen firms shall within five (5) Business
Days jointly select a third investment bank or accounting firm, which shall make
the determination promptly, but in no event in more than thirty (30) days, and
such determination shall be binding upon all parties thereto. The Company shall
bear all costs in connection with such determination, including without
limitation, fees of the investment bank(s) or accounting firm(s), unless the
change in Warrant Purchase Price determined pursuant to this paragraph is within
ten percent (10%) of the change in warrant purchase price as computed by the
Company, in which case the Holder or Holders challenging the determination shall
bear such costs pro rata.
 
3.9. INDEPENDENT APPLICATION.  Except as otherwise provided herein, all
subsections of this SECTION 3 are intended to operate independently of one
another (but without duplication). If an event occurs that requires the
application of more than one subsection, all applicable subsections shall be
given independent effect without duplication.
 
4. MISCELLANEOUS.
 
4.1. RESTRICTIVE LEGEND. This Warrant, any Warrant issued upon transfer of this
Warrant and, unless registered under the Securities Act, any Warrant Shares
issued upon exercise of this Warrant or any portion thereof shall be imprinted
with the following legend, in addition to any legend required under applicable
state securities laws:
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION OR QUALIFICATION THEREFROM.
 
The legend shall be appropriately modified upon issuance of certificates for
shares of Common Stock.
 
Upon request of the holder of a Common Stock certificate, the Company shall
issue to that holder a new certificate free of the foregoing legend, if, with
such request, such holder provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that the securities evidenced
by such certificate may be sold without restriction under Rule 144 (or any other
rule permitting resales of securities without restriction) promulgated under the
Securities Act.
 
4.2. HOLDER ENTITLED TO BENEFITS, SUBJECT TO DIVESTMENT. This Warrant is the
“Warrant” referred to in the Placement Agency Agreement. The Holder is entitled
to certain rights, benefits and privileges with respect to this Warrant and the
Warrant Shares pursuant to the terms of this Warrant.  In addition, the Holder
is subject to divestment of the unvested portion of this Warrant under the
circumstances specified in that certain Side Letter
 
 
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dated March 25, 2010 by and among the Company, Page Five Funding, LLC, Cohen &
Company Securities, LLC, Cohen & Company Funding, LLC and Angelo, Gordon & Co.
(the “SIDE LETTER”), a copy of which is attached hereto as Exhibit A.
 
4.3. REPRESENTATIONS AND WARRANTIES.  The Company makes the following
representations and warranties in respect of this Warrant and the Warrant Shares
to the Holder, which representations and warranties shall survive the Issuance
Date and the termination of this Warrant:
 
(i) this Warrant has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms;
 
(ii) upon issuance of this Warrant and purchase of the Warrant Shares by the
initial Holder, it is not necessary to register either this Warrant or the
Warrant Shares under the Securities Act;
 
(iii) the Warrant Shares, which are authorized on the date hereof, have been
duly authorized and reserved for issuance upon purchase pursuant to this Warrant
by all necessary corporate action; all Warrant Shares, when so issued and
delivered upon such sale pursuant to the terms of this Warrant, will be duly
authorized and validly issued, fully paid and nonassessable and free and clear
of all liens, encumbrances, equities or claims; and the issuance of the Warrant
Shares will not be subject to the preemptive or other similar rights of any
securityholder of the Company other than those of Levine Leichtman Capital
Partners IV, L.P. (“LLCP IV”), which have been waived by LLCP IV;
 
(iv) The execution, delivery and performance by the Company of this Warrant and
the issuance of the Warrant Shares and the consummation of the transactions
contemplated hereby and thereby will not (A) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, loan agreement or other agreement or instrument
to which the Company is a party or by which it is bound or to which any of the
properties or assets of the Company is subject, (B) result in a violation of the
articles of incorporation or bylaws of the Company or (C) result in any
violation of any statute or other order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets, and except as required by state securities laws, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of the Warrant by the Company and the issuance of the
Warrant Shares pursuant to this Warrant.
 
4.4. OTHER COVENANTS.  The Company covenants and agrees that, as long as this
Warrant remains outstanding or any Warrant Shares are issuable with respect to
this Warrant, the Company will perform all of the following covenants for the
express benefit of the Holder: (a) the Warrant Shares shall, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock; (b) the Holder shall, upon the exercise hereof in accordance with the
terms hereof, receive good and marketable title to the Warrant Shares, free and
clear of all voting and other trust arrangements to which the Company is a party
or by which
 
 
12

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it is bound, preemptive rights of any shareholder other than LLCP IV, liens,
encumbrances, equities and claims whatsoever, including, but not limited to, all
Taxes, Liens and other charges with respect to the issuance thereof; (c) at all
times prior to the Expiration Date, the Company shall have reserved for issuance
a sufficient number of authorized but unissued shares of Common Stock, or other
securities or property for which this Warrant may then be exercisable, to permit
this Warrant (or if this Warrant has been divided, all outstanding Warrants) to
be exercised in full; (d) the Company shall deliver to the Holder the
information and reports delivered to any other holder of the Company’s common
stock; and (e) the Company shall provide the Holder written notice of all
corporate actions, including, without limitation, prior written notice of any
dividends in the same manner and to the same extent as the shareholders of the
Company; provided, however, that, notwithstanding the foregoing, the Company
shall provide such written notice to the Holder sufficiently in advance of any
such corporate action so that the Holder may exercise its rights under this
Warrant prior to the taking of any such corporate action.
 
4.5. ISSUE TAX. The issuance of shares of Common Stock upon the exercise of this
Warrant shall be made without charge to the Holder for any stamp, documentary,
issue or similar tax in respect thereof.
 
4.6. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of this Warrant or of any Warrant Shares in any manner
which interferes with the timely exercise hereof.
 
4.7. NO VOTING RIGHTS; LIMITATION OF LIABILITY. Except as expressly set forth in
this Warrant, nothing contained in this Warrant shall be construed as conferring
upon the Holder (a) the right to vote or to consent as a shareholder in respect
of meetings of shareholders for the election of directors of the Company or any
other matter, or (b) the right to receive dividends except as set forth in
Section 3. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Warrant Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.
 
4.8. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement is sought.
 
4.9. NOTICES. All notices, requests, demands and other communications which are
required or may be given under this Warrant shall be in writing and shall be
deemed to have been duly given if transmitted by telecopier with receipt
acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon receipt, if mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
 
If to the Company:
Consumer Portfolio Services, Inc.

19500 Jamboree Road
Irvine, California  92612
 
 
 
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Attention: General Counsel
Telecopier No.: (___) ___-____
Telephone No.:  (___) ___-____

If to the initial Holder:
____________________________

____________________________
 
____________________________
 
____________________________
 
Facsimile No.:  (___) ___-____
 
Confirmation No.:  (___) ___-____
 

or at such other address or addresses as the Holder or the Company, as the case
may be, may specify by written notice given in accordance with this SECTION 4.8.
 
4.10. SUCCESSORS AND ASSIGNS. The Company may not assign any of its rights, or
delegate any of its obligations, under this Warrant without the prior written
consent of the Holder (which consent may be withheld for any reason or no reason
at all). The Holder may make an Assignment of this Warrant, in whole or in part,
at any time or from time to time, without the consent of the Company.  Each
Assignment of this Warrant, in whole or in part, shall be registered on the
books of the Company to be maintained for such purpose, upon surrender of this
Warrant at the Designated Office, together with appropriate instruments of
assignment, duly completed and executed. Upon such surrender, the Company shall,
at its own expense, within three (3) Business Days of surrender, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees
specified in such assignment and in the denominations specified therein and this
Warrant shall promptly be canceled. If any portion of this Warrant is not being
assigned, the Company shall, at its own expense, within three (3) Business Days
issue to the Holder a new Warrant evidencing the part not so assigned. If the
Holder makes an Assignment of this Warrant to one or more Persons, any decisions
that the Holder is entitled to make at any time hereunder shall be made by the
Holders holding more than fifty percent (50%) of the aggregate number of Warrant
Shares issuable upon exercise of all of the then exercisable Warrants.
 
In addition, the Holder may, without notice to or the consent of the Company,
grant or sell Participations to one or more participants in all or any part of
its right, title and interest in and to this Warrant.
 
This Warrant shall be binding upon and inure to the benefit of the Company, the
Holder and their respective successors and permitted assigns, and shall include,
with respect to the Company, any Person succeeding the Company by merger,
consolidation, combination or acquisition of all or substantially all of the
Company’s assets, and in such case, except as expressly provided herein, all of
the obligations of the Company hereunder shall survive such merger,
consolidation, combination or acquisition.
 
4.11. CONSTRUCTION AND INTERPRETATION. The headings of the paragraphs of this
Warrant are for convenience of reference only and do not constitute a part of
this Warrant and are not to be considered in construing or interpreting this
Warrant. No party, nor its counsel, shall be deemed the drafter of this Warrant
for purposes of construing the
 
 
14

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provisions of this Warrant, and all provisions of this Warrant shall be
construed in accordance with their fair meaning, and not strictly for or against
any party.
 
4.12. LOST WARRANT OR CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or of a stock certificate evidencing Warrant Shares and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company or, in the case of any such mutilation,
upon surrender and cancellation of the Warrant or stock certificate, the Company
shall make and deliver to the Holder, within three (3) Business Days of receipt
by the Company of such documentation, a new Warrant or stock certificate, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
 
4.13. NO IMPAIRMENT. The Company shall not by any action, including, without
limitation, amending its charter documents or regulations or through any
reorganization, reclassification, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value (if
any) of any shares of Common Stock receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (ii) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, free
and clear of all liens, encumbrances, equities and claims, and (iii) use its
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
 
4.14. NO IMPLIED WAIVER. Nothing in this Warrant, including any reference herein
to an act or transaction, shall be construed as, or imply, a waiver of any
provision of the Placement Agency Agreement, including any prohibition therein
against such an act or transaction.
 
4.15. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS WARRANT AND THE RIGHTS AND OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE (WITHOUT REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW
PROVISIONS THEREOF) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
 
4.16. CONSENT TO JURISDICTION AND VENUE. ANY SUIT, LEGAL ACTION OR SIMILAR
PROCEEDING WITH RESPECT TO THIS WARRANT SHALL BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA SITTING IN THE CITY OF LOS ANGELES, STATE OF CALIFORNIA OR
OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA SITTING IN THE CITY
OF LOS ANGELES,
 
 
15

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STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS WARRANT, EACH OF THE
COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH
OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS WARRANT. EACH OF THE COMPANY AND THE HOLDER (BY
ACCEPTANCE HEREOF) HEREBY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF THE
STATE OF THE NEW YORK.
 
4.17. REMEDIES. If the Company fails to perform, comply with or observe any
covenant or agreement to be performed, complied with or observed by it under
this Warrant, the Holder may proceed to protect and enforce its rights by suit
in equity or action at law, whether for specific performance of any term
contained in this Warrant or for an injunction against the breach of any such
term or in aid of the exercise of any power granted in this Warrant or to
enforce any other legal or equitable right, or to take any one or more of such
actions. The Company hereby agrees that the Holder shall not be required or
otherwise obligated to, and hereby waives any right to demand that the Holder,
post any performance or other bond in connection with the enforcement of its
rights and remedies hereunder. The Company agrees to pay all fees, costs, and
expenses, including, without limitation, fees and expenses of attorneys,
accountants and other experts retained by the Holder, and all fees, costs and
expenses of appeals, incurred or expended by the Holder in connection with the
enforcement of this Warrant or the collection of any sums due hereunder, whether
or not suit is commenced. None of the rights, powers or remedies conferred under
this Warrant shall be mutually exclusive, and each right, power or remedy shall
be cumulative and in addition to any other right, power or remedy whether
conferred by this Warrant or now or hereafter available at law, in equity, by
statute or otherwise.
 
4.18. ENTIRE AGREEMENT. This Warrant constitutes the full and entire agreement
and understanding between the Holder and the Company with respect to the subject
matter hereof and supersede all prior oral and written, and all contemporaneous
oral, agreements and understandings relating to the subject matter hereof.
 
4.19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS,
THE COMPANY HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS WARRANT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE COMPANY AND THE HOLDER WITH RESPECT TO THE WARRANT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND THE COMPANY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
 
 
16

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OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE COMPANY
OR ANY HOLDER MAY FILE AN ORIGINAL COPY OF THIS SECTION 4.18 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE COMPANY HERETO TO THE WAIVER OF ITS RIGHT
TO TRIAL BY JURY.
 

 
17

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and
issued by its duly authorized representative on the date first written above.
 

 
CONSUMER PORTFOLIO SERVICES, INC.,
a California corporation
 

 

 
By:           ______________________________
Charles E. Bradley, Jr.
President and Chief Executive Officer

 
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION OR QUALIFICATION THEREFROM.
 
WARRANT NO.
____                                                                                                                                                                   [date]
 
WARRANT TO PURCHASE
 
330,000 SHARES OF COMMON STOCK
 
--------------------------------
 
FOR VALUE RECEIVED, CONSUMER PORTFOLIO SERVICES, INC., a California corporation
(the “COMPANY”), hereby certifies that _______________ _____________
____________ or its assigns (the “HOLDER”), is entitled to purchase, on the
terms and subject to the conditions contained herein, THREE  HUNDRED THIRTY
THOUSAND (330,000) shares (the “WARRANT SHARES”) of the Company’s common stock,
no par value per share (“COMMON STOCK”), at the exercise price of $1.41 per
Warrant Share (the “WARRANT PURCHASE PRICE”) at any time and from time to time
during the Exercise Period (as such term is defined below). The number of
Warrant Shares and the Warrant Purchase Price shall be subject to adjustment as
set forth in SECTION 3.
 
This Warrant (this “WARRANT”) is the “Warrant” referred to in, and is being
issued in connection with the consummation of the transactions contemplated by,
that certain Placement Agency Agreement dated as of February 11, 2010, by and
among the Company, Page Five Funding LLC and Cohen & Company Securities, LLC,
the initial holder of this Warrant (as amended or modified from time to time,
the “PLACEMENT AGENCY AGREEMENT”), and is subject to the following terms and
conditions:
 
1. DEFINITIONS.  Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Placement Agency Agreement or
the Sale and Servicing Agreement dated as of March 25, 2010, by and among Page
Five Funding LLC, the Company, as Seller and Servicer, and Wells Fargo Bank,
National Association, as Backup Servicer and Trustee (as the same may be amended
or supplemented from time to time, the “SALE AND SERVICING AGREEMENT”), as
applicable.  For the purposes of this Warrant, the following terms shall have
the respective meanings set forth below:
 
“APPLICABLE LAW” means all provisions of statutes, rules and regulations,
interpretations and orders of any Governmental Authority applicable to a Person,
and all orders and decrees of all courts and arbitrators in proceedings or
actions in which the Person in question is a party including applicable federal,
state and local laws and regulations thereunder.
 
“BUSINESS DAY” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or the State of California
or is a day on which banking institutions located in either such state are
authorized or required by law or other governmental action to close.
 
 
 

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

 
“COMMON STOCK” has the meaning set forth in the preamble of this Warrant.
 
“COMPANY” has the meaning set forth in the preamble of this Warrant.
 
“CONVERTIBLE SECURITIES” means, with respect to any Person, any securities or
other obligations issued or issuable by such Person or any other Person that are
exercisable or exchangeable for, or convertible into, any Equity Interests of
the Company.
 
“CURRENT MARKET PRICE” per share of Common Stock means, as of any specified date
on which the Common Stock is publicly traded, the average of the daily market
prices of the Common Stock over the twenty (20) consecutive trading days
immediately preceding (and not including) such date. The ‘daily market price’
for each such trading day shall be (i) the closing sales price on such day on
the principal stock exchange on which the Common Stock is then listed or
admitted to trading or on Nasdaq, as applicable, (ii) if no sale takes place on
such day on any such exchange or system, the average of the closing bid and
asked prices, regular way, on such day for the Common Stock as officially quoted
on any such exchange or system, (iii) if the Common Stock is not then listed or
admitted to trading on any stock exchange or system, the last reported sale
price, regular way, on such day for the Common Stock, or if no sale takes place
on such day, the average of the closing bid and asked prices for the Common
Stock on such day, as reported by Nasdaq or the National Quotation Bureau, or
(iv) if the Common Stock is not then listed or admitted to trading on any
securities exchange and if no such reported sale price or bid and asked prices
are available, the average of the reported high bid and low asked prices on such
day, as reported by a reputable quotation service. If the daily market price
cannot be determined for the twenty (20) consecutive trading days immediately
preceding such date in the manner specified in the foregoing sentence, then the
Common Stock shall not be deemed to be publicly traded as of such date.
 
“DESIGNATED OFFICE” has the meaning set forth in SECTION 2.1.
 
“DILUTIVE ISSUANCE” has the meaning set forth in SECTION 3.9.
 
“DISTRIBUTION” has the meaning set forth in SECTION 3.3.
 
“DISTRIBUTION AMOUNT” has the meaning set forth in SECTION 3.3.
 
“DOJ” has the meaning set forth in SECTION 2.4.
 
“EQUITY INTERESTS” means, with respect to any Person, (i) if such Person is a
corporation, any and all shares of capital stock, participations in profits or
other equivalents (however designated) or other equity interests of such Person,
including any preferred stock of such Person, (ii) if such Person is a limited
liability company, any and all membership interests, or (iii) if such Person is
a partnership or other entity, any and all partnership or entity interests or
other units.
 
“EQUITY RIGHTS” means any warrants, options or other rights to subscribe for or
purchase, or obligations to issue, any Equity Interests of the Company, or any
Convertible Securities, or any stock appreciation rights, including any options
or similar rights issued or
 
 
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issuable under any employee stock option plan, pension plan or other employee
benefit plan of the Company.
 
“EXCLUDED SHARES” means (i) Common Stock, Equity Rights or Convertible
Securities issued in any of the transactions described in SECTIONS 3.1, 3.2, 3.3
or 3.5, (ii) shares of Common Stock issued after the Issuance Date upon
conversion, exercise or exchange of (A) Equity Rights or Convertible Securities
outstanding on the Issuance Date or (B) Equity Rights or Convertible Securities
issued after the Issuance Date in connection with any employee stock option
plan, pension plan or other employee benefit plan of the Company that is
approved by the Board of Directors of the Company, and (iii) this Warrant or any
securities issued upon exercise hereof.
 
“EXERCISE NOTICE” has the meaning set forth in SECTION 2.1.
 
“EXERCISE PERIOD” means the period commencing on the Issuance Date and ending on
(and including) the Expiration Date.
 
“EXPIRATION DATE” means March 24, 2020.
 
“FAIR MARKET VALUE” per share of Common Stock as of any specified date means (i)
if the Common Stock is publicly traded on such date, the Current Market Price
per share, or (ii) if the Common Stock is not publicly traded (or deemed not to
be publicly traded) on such date, the fair market value per share of Common
Stock as determined in good faith by the Board of Directors of the Company and
set forth in a written notice to the Holder, subject to the Holder’s right to
dispute such determination under SECTION 3.8(E).
 
“FTC” has the meaning set forth in SECTION 2.4.
 
“GOVERNMENTAL AUTHORITY” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
 
“HOLDER” has the meaning set forth in the preamble of this Warrant.
 
“HSR ACT” has the meaning set forth in SECTION 2.4.
 
“ISSUANCE DATE” means March 25, 2010.
 
“NASDAQ” means the Nasdaq Stock Market or any successor reporting system
thereof.
 
“OTHER PROPERTY” has the meaning set forth in SECTION 3.5.
 
“PERSON” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary
 
 
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thereto), unincorporated organization or government or any agency or political
subdivision thereof.
 
“REFERENCE PRICE” means, as of any time, the Fair Market Value per share of
Common Stock in effect at such time.
 
“SECURITIES ACT” means the Securities Act of 1933, as amended.
 
“WARRANT” means this Warrant, any amendment of this Warrant, and any warrants
issued upon transfer, division or combination of, or in substitution for, this
Warrant or any other such warrant. All such Warrants shall at all times be
identical as to terms and conditions and date, except as to the number of
Warrant Shares for which they may be exercised.
 
“WARRANT PURCHASE PRICE” has the meaning set forth in the preamble of this
Warrant (as adjusted in accordance with the terms of this Warrant).
 
“WARRANT SHARES” has the meaning set forth in the preamble of this Warrant.
 
2. EXERCISE.
 
2.1. EXERCISE; DELIVERY OF CERTIFICATES. Subject to the provisions of SECTION
2.4, this Warrant may be exercised, in whole or in part, at the option of the
Holder, at any time and from time to time during the Exercise Period, by (a)
delivering to the Company at its principal executive office (the “DESIGNATED
OFFICE”) (i) a notice of exercise, in substantially the form attached hereto
(the “EXERCISE NOTICE”), duly completed and signed by the Holder, and (ii) this
Warrant, and (b) paying the Warrant Purchase Price pursuant to SECTION 2.2 for
the number of Warrant Shares proposed to be purchased in the Exercise Notice.
Subject to the provisions of SECTION 2.4, the Warrant Shares being purchased
under this Warrant will be deemed to have been issued to the Holder, as the
record owner of such Warrant Shares, as of the close of business on the date on
which payment therefor is made by the Holder pursuant to SECTION 2.2. Stock
certificates representing the Warrant Shares so purchased shall be delivered to
the Holder within three (3) Business Days after this Warrant has been exercised
(or, if applicable, immediately after the conditions set forth in SECTION 2.4
have been satisfied); PROVIDED, HOWEVER, that in the case of a purchase of less
than all of the Warrant Shares issuable upon exercise of this Warrant, the
Company shall cancel this Warrant and, within three (3) Business Days after this
Warrant has been surrendered, execute and deliver to the Holder a new Warrant of
like tenor for the number of unexercised Warrant Shares. Each stock certificate
representing the number of Warrant Shares purchased pursuant to this Warrant
shall be registered in the name of the Holder or, subject to compliance with
Applicable Laws, such other name as designated by the Holder.
 
2.2. PAYMENT OF WARRANT PRICE. Payment of the Warrant Purchase Price shall be
made, at the option of the Holder, by (i) check from the Holder, (ii) wire
transfer, (iii) instructing the Company to withhold and cancel a number of
Warrant Shares then issuable upon exercise of this Warrant with respect to which
the excess, if any, of the Fair Market Value over the Warrant Purchase Price for
such canceled Warrant Shares is at least equal to the Warrant Purchase Price for
the Warrant Shares being purchased, (iv) surrendering to the
 
 
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Company of shares of Common Stock previously acquired by the Holder with a Fair
Market Value equal to the Warrant Purchase Price for the Warrant Shares then
being purchased or (v) any combination of the foregoing.
 
2.3. NO FRACTIONAL SHARES. The Company shall not be required to issue fractional
shares of Common Stock upon the exercise of this Warrant. If any fraction of a
share of Common Stock would, except for the provisions of this paragraph, be
issuable on the exercise of this Warrant (or specified portion thereof), the
Company shall pay to the Holder an amount in cash calculated by it to be equal
to the then Fair Market Value per share of Common Stock multiplied by such
fraction computed to the nearest whole cent.
 
2.4. VESTING.  This Warrant shall be fully vested upon issuance by the Company.
 
3. ADJUSTMENTS TO THE NUMBER OF WARRANT SHARES AND TO THE WARRANT PURCHASE
PRICE. The number of Warrant Shares for which this Warrant is exercisable and
the Warrant Purchase Price shall be subject to adjustment from time to time as
set forth in this SECTION 3.
 
3.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the Company:
 
(a) pays a dividend or other distribution on its Common Stock in shares of
Common Stock or shares of any other class or series of Capital Stock;
 
(b) subdivides its outstanding shares of Common Stock (by stock split,
reclassification or otherwise) into a larger number of shares of Common Stock;
or
 
(c) combines (by reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
 
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be adjusted so that the
Holder shall thereafter be entitled to receive upon exercise of this Warrant the
kind and number of shares of Common Stock that the Holder would have owned or
have been entitled to receive immediately after such record date or effective
date had this Warrant been exercised immediately prior to such record date or
effective date. Any adjustment made pursuant to this SECTION 3.1 shall become
effective immediately after the effective date of such event, but be retroactive
to the record date, if any, for such event.
 
Upon any adjustment of the number of Warrant Shares purchasable upon the
exercise of this Warrant as herein provided, the Warrant Purchase Price per
share shall be adjusted by multiplying the Warrant Purchase Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such adjustment and the denominator of which shall be the
number of Warrant Shares so purchasable immediately thereafter.
 
 
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3.2. RIGHTS; OPTIONS; WARRANTS. If, at any time after the Issuance Date, the
Company issues (without payment of any consideration) to all holders of
outstanding Common Stock any rights, options or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for Common Stock, then the Company shall also distribute, at the same time as
the distribution to such holders, such rights, options, warrants or securities
to the Holder as if this Warrant had been exercised immediately prior to the
record date for such issuance.
 
3.3. DISTRIBUTION OF ASSETS OR SECURITIES. If at any time the Company makes a
distribution (other than a distribution covered by SECTION 3.1 or 3.2) to its
shareholders of any asset, including cash or securities (such distribution, a
“DISTRIBUTION”), then the Company shall provide the Holder with sufficient prior
notice of such Distribution so that the Holder may exercise the vested portion
of this Warrant.  Upon such exercise and payment of the applicable Warrant
Purchase Price, the Holder as a shareholder shall have the right to receive, and
the Company shall distribute to the Holder on the date of such Distribution,
such shareholder's pro rata portion of the Distribution.  The Company shall
notify Holder in writing of its intent to make any such Distribution not less
than ten (10) Business Days prior to any record date applicable thereto, or, if
no record date is applicable, not less than ten (10) Business Days prior to the
date of such Distribution.
 
3.4. ISSUANCE OF EQUITY SECURITIES AT LESS THAN FAIR MARKET VALUE.
 
(a) If, at any time after Issuance Date, the Company shall issue or sell (or, in
accordance with SECTION 3.4(b), shall be deemed to have issued or sold) shares
of Common Stock, Equity Rights or Convertible Securities representing the right
to subscribe for or purchase shares of Common Stock (other than any Excluded
Shares) at a price per share of Common Stock that is lower than the Reference
Price in effect immediately prior to such sale and issuance, then the Warrant
Purchase Price shall be adjusted so that it shall equal the price determined by
multiplying the Warrant Purchase Price in effect immediately prior thereto by a
fraction, the numerator of which shall be an amount equal to the sum of (A) the
number of shares of Common Stock outstanding immediately prior to such sale and
issuance plus (B) the number of shares of Common Stock which the aggregate
consideration received by the Company (and in the case of adjustments triggered
in full or in part by the issuance of Equity Rights or Convertible Securities,
the aggregate consideration deemed received in respect of such issuance
determined as provided in SECTION 3.4(b) below) for such sale or issuance would
purchase at such Reference Price, and the denominator of which shall be the
total number of shares of Common Stock outstanding (and in the case of
adjustments triggered in full or in part by the issuance of Equity Rights or
Convertible Securities, the number of shares of Common Stock deemed to be
outstanding as a result of such issuance determined as provided in SECTION
3.4(b) below) immediately after such sale or issuance.
 
Adjustments shall be made successively whenever such an issuance is made. Upon
any adjustment in the Warrant Purchase Price as provided in this SECTION 3.4(a),
the number of shares of Common Stock purchasable upon the exercise of this
Warrant shall also be adjusted and shall be that number determined by
multiplying the number of Warrant Shares issuable upon exercise immediately
prior to such adjustment by a fraction, the numerator of
 
 
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which is the Warrant Purchase Price in effect immediately prior to such
adjustment and the denominator of which is the Warrant Purchase Price as so
adjusted.
 
(b) For the purpose of determining the adjusted Warrant Purchase Price under
SECTION 3.4(a), the following shall be applicable:
 
(i) If the Company in any manner issues or grants any Equity Rights (including
Equity Rights to acquire Convertible Securities), and the price per share for
which shares of Common Stock are issuable upon the exercise of such Equity
Rights or upon conversion or exchange of such Convertible Securities is less
than the Reference Price determined as of the date of such issuance or grant of
such Equity Rights, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Equity Rights (or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Equity Rights) shall be deemed to be outstanding and to have
been issued and sold by the Company for such lower price per share. For purposes
of this paragraph, the price per share for which shares of Common Stock are
issuable upon exercise of Equity Rights or upon conversion or exchange of
Convertible Securities issuable upon exercise of Equity Rights shall be
determined by dividing (A) the total amount, if any, received or receivable by
the Company as consideration for the issuing or granting of such Equity Rights,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Equity Rights, plus in the case of such
Equity Rights which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
exercise of such Equity Rights or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Equity Rights.
 
(ii) If the Company in any manner issues or grants any Convertible Securities
having an exercise or conversion or exchange price per Share which is less than
the Reference Price determined as of the date of issuance or sale, then the
maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Company for such lower price per share. For
purposes of this paragraph, the price per share for which shares of Common Stock
are issuable upon conversion or exchange of Convertible Securities is determined
by dividing (A) the total amount received by the Company as consideration for
the issuance or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities.
 
(iii) If the purchase price provided for in any Equity Rights, the additional
consideration, if any, payable upon the issuance, conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for shares of Common Stock decreases at any
time, or if the number of shares of Common Stock issuable upon the exercise,
issuance, conversion or exchange of any Equity Rights or Convertible Securities
increases at any time, then the Warrant Purchase Price in effect at the time of
such decrease (or increase) shall be readjusted to the Warrant Purchase Price
which
 
 
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would have been in effect at such time had such Equity Rights or Convertible
Securities still outstanding provided for such decreased purchase price,
additional consideration, changed conversion rate or increased shares, as the
case may be, at the time initially granted, issued or sold and the number of
Warrant Shares shall be correspondingly readjusted, by taking the number of
Warrant Shares issuable upon the exercise of this Warrant immediately prior to
such adjustment multiplied by a fraction, the numerator of which is the Warrant
Purchase Price in effect immediately prior to such adjustment and the
denominator of which is the Warrant Purchase Price as so adjusted.
 
(iv) If at any time the Company sells and issues shares of Common Stock or
Equity Rights or Convertible Securities containing the right to subscribe for or
purchase shares of Common Stock for a consideration consisting, in whole or in
part, of property other than cash or its equivalent, then in determining the
“price per share of Common Stock” and the “consideration received by the
Company” for purposes of the preceding paragraphs of this SECTION 3.4, the Board
of Directors of the Company shall determine, in good faith, the fair market
value of property, subject to the Holder’s rights under SECTION 3.8(E).
 
(v) There shall be no adjustment of the Warrant Purchase Price in respect of the
Common Stock pursuant to this SECTION 3.4 if the amount of such adjustment is
less than $0.00001 per share of Common Stock;  PROVIDED, HOWEVER, that any
adjustments which by reason of this provision are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
 
3.5. CAPITAL REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.  If at
any time there shall be a capital reorganization (other than a combination or
subdivision of Common Stock otherwise provided for herein), a share exchange
(subject to and duly approved by the stockholders of the Company) or a merger or
consolidation of the Company with or into another corporation, or the sale of
the Company’s properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, share exchange, merger,
consolidation or sale, lawful provision shall be made so that Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the
Exercise Period and upon payment of the Warrant Purchase Price, the number of
shares of stock or other securities or property of the Company or the successor
corporation resulting from such reorganization, share, exchange, merger,
consolidation or sale, to which Holder would have been entitled under the
provisions of the agreement in such reorganization, share exchange, merger,
consolidation or sale if this Warrant had been exercised immediately before that
reorganization, share exchange, merger, consolidation or sale.  In any such
case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of Holder after the
reorganization, share exchange, merger, consolidation or sale to the end that
the provisions of this Warrant (including adjustment of the Warrant Purchase
Price then in effect and the number of the Warrant Shares) shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
 
3.6. DISSOLUTION, TOTAL LIQUIDATION OR WINDING-UP. If at any time there is a
voluntary or involuntary dissolution, total liquidation or winding-up of the
 
 
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Company, other than as contemplated by SECTION 3.5, then the Company shall cause
to be mailed (by registered or certified mail, return receipt requested, postage
prepaid) to the Holder at the Holder’s address as shown on the Warrant register,
at the earliest practicable time (and, in any event, not less than thirty (30)
calendar days before any date set for definitive action) written notice of the
date on which such dissolution, liquidation or winding-up shall take place, as
the case may be. Such notice shall also specify the date as of which the record
holders of shares of Common Stock shall be entitled to exchange their shares for
securities, money or other property deliverable upon such dissolution,
liquidation or winding-up, as the case may be. On such date, the Holder shall be
entitled to receive upon surrender of this Warrant the cash or other property,
less the Warrant Purchase Price for this Warrant then in effect, that the Holder
would have been entitled to receive had this Warrant been exercised immediately
prior to such dissolution, liquidation or winding-up. Upon receipt of the cash
or other property, any and all rights of the Holder to exercise this Warrant
shall terminate in their entirety. If the cash or other property distributable
in the dissolution, liquidation or winding-up has a fair market value (as
determined in good faith by the board of directors of the Company and set forth
in a written notice to the Holder, subject to the Holder’s right to dispute such
determination under SECTION 3.8(E)) which is less than the Warrant Purchase
Price for this Warrant then in effect, this Warrant shall terminate and be of no
further force or effect upon the dissolution, liquidation or winding-up.
 
3.7. OTHER DILUTIVE EVENTS. If any event occurs as to which the other provisions
of this SECTION 3 are not strictly applicable but as to which the failure to
make any adjustment would not protect the purchase rights represented by this
Warrant in accordance with the intent and principles hereof then, in each such
case, the Holder (or if the Warrant has been divided up, the Holders of Warrants
exercisable for the purchase of more than fifty percent (50%) of the aggregate
number of Warrant Shares then issuable upon exercise of all of the then
exercisable Warrants) may appoint an independent investment bank or firm of
independent public accountants which shall give its opinion as to the
adjustment, if any, on a basis consistent with the intent and principles
established herein, necessary to preserve the purchase rights represented by
this Warrant (or such Warrants). Upon receipt of such opinion, the Company will
mail (by registered or certified mail, return receipt requested, postage
prepaid) a copy thereof to the Holder within three (3) Business Days and shall
make the adjustments described therein. The fees and expenses of such investment
bank or independent public accountants shall be borne by the Company.
 
3.8. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the adjustments provided for
pursuant to this SECTION 3:
 
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this SECTION 3
shall be made whenever and as often as any specified event requiring such an
adjustment shall occur. For the purpose of any such adjustment, any specified
event shall be deemed to have occurred at the close of business on the date of
its occurrence.
 
(b) RECORD DATE. If the Company fixes a record date of the holders of Common
Stock for the purpose of entitling them to (i) receive a dividend or other
distribution payable in shares of Common Stock or in shares of any other class
or series of capital stock or securities convertible into or exchangeable for
Common Stock or shares of any
 
 
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other class or series of capital stock or (ii) subscribe for or purchase shares
of Common Stock or such other shares or securities, then all references in this
SECTION 3 to the date of the issuance or sale of such shares of Common Stock or
such other shares or securities shall be deemed to be references to that record
date.
 
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company fixes a record date of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights to which the
provisions of SECTION 3.1 would apply, but shall, thereafter and before the
distribution to shareholders, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled.
 
(d) NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common Stock for
which this Warrant is exercisable or the Warrant Purchase Price shall be
adjusted or recalculated pursuant to this SECTION 3, the Company shall
immediately prepare a certificate to be executed by the chief financial officer
of the Company setting forth, in reasonable detail, the event requiring the
adjustment or recalculation and the method by which such adjustment or
recalculation was calculated, specifying the number of shares of Common Stock
for which this Warrant is exercisable and (if such adjustment was made pursuant
to SECTION 3.5) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any related change in
the Warrant Purchase Price, after giving effect to such adjustment,
recalculation or change. The Company shall mail (by registered or certified
mail, return receipt requested, postage prepaid) a signed copy of the
certificate to be delivered to the Holder within three (3) Business Days of the
event which caused the adjustment or recalculation. The Company shall keep at
the Designated Office copies of all such certificates and cause them to be
available for inspection at the Designated Office during normal business hours
by the Holder or any prospective transferee of this Warrant designated by the
Holder.
 
(e) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of Directors of
the Company is required to make a determination in good faith of the fair market
value of any item under this Warrant, or any item that may affect the value of
this Warrant, that determination may be challenged or disputed by the Holder (or
if the Warrant has been divided up, the Holders of Warrants exercisable for more
than fifty percent (50%) of the aggregate number of Warrant Shares then issuable
upon exercise of all of the then exercisable Warrants), and any such challenge
or dispute shall be resolved promptly, but in no event in more than thirty (30)
days, by an investment banking firm of recognized national standing or one of
the four (4) largest national accounting firms agreed upon by the Company and
the Holders and whose decision shall be binding on the Company and the Holders.
If the Company and the Holders cannot agree on a mutually acceptable investment
bank or accounting firm, then the Holders, jointly, and the Company shall within
five (5) Business Days each choose one investment bank or accounting firm and
the respective chosen firms shall within five (5) Business Days jointly select a
third investment bank or accounting firm, which shall make the determination
promptly, but in no event in more than thirty (30) days, and such determination
shall be binding upon all parties thereto. The Company shall bear all costs in
connection with such determination, including without limitation, fees of the
investment bank(s) or accounting firm(s), unless the change in Warrant Purchase
Price determined pursuant to this paragraph is
 
 
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within ten percent (10%) of the change in warrant purchase price as computed by
the Company, in which case the Holder or Holders challenging the determination
shall bear such costs pro rata.
 
3.9. INDEPENDENT APPLICATION.  Except as otherwise provided herein, all
subsections of this SECTION 3 are intended to operate independently of one
another (but without duplication). If an event occurs that requires the
application of more than one subsection, all applicable subsections shall be
given independent effect without duplication.
 
4. MISCELLANEOUS.
 
4.1. RESTRICTIVE LEGEND. This Warrant, any Warrant issued upon transfer of this
Warrant and, unless registered under the Securities Act, any Warrant Shares
issued upon exercise of this Warrant or any portion thereof shall be imprinted
with the following legend, in addition to any legend required under applicable
state securities laws:
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION OR QUALIFICATION THEREFROM.
 
The legend shall be appropriately modified upon issuance of certificates for
shares of Common Stock.
 
Upon request of the holder of a Common Stock certificate, the Company shall
issue to that holder a new certificate free of the foregoing legend, if, with
such request, such holder provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that the securities evidenced
by such certificate may be sold without restriction under Rule 144 (or any other
rule permitting resales of securities without restriction) promulgated under the
Securities Act.
 
4.2. HOLDER ENTITLED TO BENEFITS. This Warrant is the “Warrant” referred to in
the Placement Agency Agreement. The Holder is entitled to certain rights,
benefits and privileges with respect to this Warrant and the Warrant Shares
pursuant to the terms of this Warrant.
 
4.3. REPRESENTATIONS AND WARRANTIES.  The Company makes the following
representations and warranties in respect of this Warrant and the Warrant Shares
to the Holder, which representations and warranties shall survive the Issuance
Date and the termination of this Warrant:
 
(i) this Warrant has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms;
 
 
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(ii) upon issuance of this Warrant and purchase of the Warrant Shares by the
initial Holder, it is not necessary to register either this Warrant or the
Warrant Shares under the Securities Act;
 
(iii) the Warrant Shares, which are authorized on the date hereof, have been
duly authorized and reserved for issuance upon purchase pursuant to this Warrant
by all necessary corporate action; all Warrant Shares, when so issued and
delivered upon such sale pursuant to the terms of this Warrant, will be duly
authorized and validly issued, fully paid and nonassessable and free and clear
of all liens, encumbrances, equities or claims; and the issuance of the Warrant
Shares will not be subject to the preemptive or other similar rights of any
securityholder of the Company other than those of Levine Leichtman Capital
Partners IV, L.P. (“LLCP IV”), which have been waived by LLCP IV;
 
(iv) The execution, delivery and performance by the Company of this Warrant and
the issuance of the Warrant Shares and the consummation of the transactions
contemplated hereby and thereby will not (A) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, loan agreement or other agreement or instrument
to which the Company is a party or by which it is bound or to which any of the
properties or assets of the Company is subject, (B) result in a violation of the
articles of incorporation or bylaws of the Company or (C) result in any
violation of any statute or other order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets, and except as required by state securities laws, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of the Warrant by the Company and the issuance of the
Warrant Shares pursuant to this Warrant.
 
4.4. OTHER COVENANTS.  The Company covenants and agrees that, as long as this
Warrant remains outstanding or any Warrant Shares are issuable with respect to
this Warrant, the Company will perform all of the following covenants for the
express benefit of the Holder: (a) the Warrant Shares shall, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock; (b) the Holder shall, upon the exercise hereof in accordance with the
terms hereof, receive good and marketable title to the Warrant Shares, free and
clear of all voting and other trust arrangements to which the Company is a party
or by which it is bound, preemptive rights of any shareholder other than LLCP
IV, liens, encumbrances, equities and claims whatsoever, including, but not
limited to, all Taxes, Liens and other charges with respect to the issuance
thereof; (c) at all times prior to the Expiration Date, the Company shall have
reserved for issuance a sufficient number of authorized but unissued shares of
Common Stock, or other securities or property for which this Warrant may then be
exercisable, to permit this Warrant (or if this Warrant has been divided, all
outstanding Warrants) to be exercised in full; (d) the Company shall deliver to
the Holder the information and reports delivered to any other holder of the
Company’s common stock; and (e) the Company shall provide the Holder written
notice of all corporate actions, including, without limitation, prior written
notice of any dividends in the same manner and to the same extent as the
shareholders of the Company; provided, however, that, notwithstanding the
foregoing, the Company shall provide such written notice to the Holder
sufficiently in advance of any such corporate action so
 
 
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that the Holder may exercise its rights under this Warrant prior to the taking
of any such corporate action.
 
4.5. ISSUE TAX. The issuance of shares of Common Stock upon the exercise of this
Warrant shall be made without charge to the Holder for any stamp, documentary,
issue or similar tax in respect thereof.
 
4.6. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of this Warrant or of any Warrant Shares in any manner
which interferes with the timely exercise hereof.
 
4.7. NO VOTING RIGHTS; LIMITATION OF LIABILITY. Except as expressly set forth in
this Warrant, nothing contained in this Warrant shall be construed as conferring
upon the Holder (a) the right to vote or to consent as a shareholder in respect
of meetings of shareholders for the election of directors of the Company or any
other matter, or (b) the right to receive dividends except as set forth in
Section 3. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Warrant Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.
 
4.8. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement is sought.
 
4.9. NOTICES. All notices, requests, demands and other communications which are
required or may be given under this Warrant shall be in writing and shall be
deemed to have been duly given if transmitted by telecopier with receipt
acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon receipt, if mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
 
If to the Company:
Consumer Portfolio Services, Inc.

19500 Jamboree Road
Irvine, California  92612
Attention: General Counsel
Telecopier No.: (___) ___-____
Telephone No.:  (___) ___-____

If to the initial
Holder:                                           _____________________
_____________________
_____________________
_____________________

With a copy to:                                _____________________
_____________________
_____________________
 
 
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_____________________

 

or at such other address or addresses as the Holder or the Company, as the case
may be, may specify by written notice given in accordance with this SECTION 4.8.
 
4.10. SUCCESSORS AND ASSIGNS. The Company may not assign any of its rights, or
delegate any of its obligations, under this Warrant without the prior written
consent of the Holder (which consent may be withheld for any reason or no reason
at all). The Holder may make an Assignment of this Warrant, in whole or in part,
at any time or from time to time, without the consent of the Company.  Each
Assignment of this Warrant, in whole or in part, shall be registered on the
books of the Company to be maintained for such purpose, upon surrender of this
Warrant at the Designated Office, together with appropriate instruments of
assignment, duly completed and executed. Upon such surrender, the Company shall,
at its own expense, within three (3) Business Days of surrender, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees
specified in such assignment and in the denominations specified therein and this
Warrant shall promptly be canceled. If any portion of this Warrant is not being
assigned, the Company shall, at its own expense, within three (3) Business Days
issue to the Holder a new Warrant evidencing the part not so assigned. If the
Holder makes an Assignment of this Warrant to one or more Persons, any decisions
that the Holder is entitled to make at any time hereunder shall be made by the
Holders holding more than fifty percent (50%) of the aggregate number of Warrant
Shares issuable upon exercise of all of the then exercisable Warrants.
 
In addition, the Holder may, without notice to or the consent of the Company,
grant or sell Participations to one or more participants in all or any part of
its right, title and interest in and to this Warrant.
 
This Warrant shall be binding upon and inure to the benefit of the Company, the
Holder and their respective successors and permitted assigns, and shall include,
with respect to the Company, any Person succeeding the Company by merger,
consolidation, combination or acquisition of all or substantially all of the
Company’s assets, and in such case, except as expressly provided herein, all of
the obligations of the Company hereunder shall survive such merger,
consolidation, combination or acquisition.
 
4.11. CONSTRUCTION AND INTERPRETATION. The headings of the paragraphs of this
Warrant are for convenience of reference only and do not constitute a part of
this Warrant and are not to be considered in construing or interpreting this
Warrant. No party, nor its counsel, shall be deemed the drafter of this Warrant
for purposes of construing the provisions of this Warrant, and all provisions of
this Warrant shall be construed in accordance with their fair meaning, and not
strictly for or against any party.
 
4.12. LOST WARRANT OR CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or of a stock certificate evidencing Warrant Shares and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company or, in the case of any such mutilation,
upon surrender and cancellation of the Warrant or stock
 
 
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certificate, the Company shall make and deliver to the Holder, within three (3)
Business Days of receipt by the Company of such documentation, a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.
 
4.13. NO IMPAIRMENT. The Company shall not by any action, including, without
limitation, amending its charter documents or regulations or through any
reorganization, reclassification, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value (if
any) of any shares of Common Stock receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (ii) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, free
and clear of all liens, encumbrances, equities and claims, and (iii) use its
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
 
4.14. NO IMPLIED WAIVER. Nothing in this Warrant, including any reference herein
to an act or transaction, shall be construed as, or imply, a waiver of any
provision of the Placement Agency Agreement, including any prohibition therein
against such an act or transaction.
 
4.15. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS WARRANT AND THE RIGHTS AND OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE (WITHOUT REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW
PROVISIONS THEREOF) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
 
4.16. CONSENT TO JURISDICTION AND VENUE. ANY SUIT, LEGAL ACTION OR SIMILAR
PROCEEDING WITH RESPECT TO THIS WARRANT SHALL BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA SITTING IN THE CITY OF LOS ANGELES, STATE OF CALIFORNIA OR
OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA SITTING IN THE CITY
OF LOS ANGELES, STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
WARRANT, EACH OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURTS. EACH OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
 
 
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ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS WARRANT. EACH
OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) HEREBY WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY THE LAW OF THE STATE OF THE NEW YORK.
 
4.17. REMEDIES. If the Company fails to perform, comply with or observe any
covenant or agreement to be performed, complied with or observed by it under
this Warrant, the Holder may proceed to protect and enforce its rights by suit
in equity or action at law, whether for specific performance of any term
contained in this Warrant or for an injunction against the breach of any such
term or in aid of the exercise of any power granted in this Warrant or to
enforce any other legal or equitable right, or to take any one or more of such
actions. The Company hereby agrees that the Holder shall not be required or
otherwise obligated to, and hereby waives any right to demand that the Holder,
post any performance or other bond in connection with the enforcement of its
rights and remedies hereunder. The Company agrees to pay all fees, costs, and
expenses, including, without limitation, fees and expenses of attorneys,
accountants and other experts retained by the Holder, and all fees, costs and
expenses of appeals, incurred or expended by the Holder in connection with the
enforcement of this Warrant or the collection of any sums due hereunder, whether
or not suit is commenced. None of the rights, powers or remedies conferred under
this Warrant shall be mutually exclusive, and each right, power or remedy shall
be cumulative and in addition to any other right, power or remedy whether
conferred by this Warrant or now or hereafter available at law, in equity, by
statute or otherwise.
 
4.18. ENTIRE AGREEMENT. This Warrant constitutes the full and entire agreement
and understanding between the Holder and the Company with respect to the subject
matter hereof and supersede all prior oral and written, and all contemporaneous
oral, agreements and understandings relating to the subject matter hereof.
 
4.19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS,
THE COMPANY HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS WARRANT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE COMPANY AND THE HOLDER WITH RESPECT TO THE WARRANT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND THE COMPANY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE COMPANY OR
ANY HOLDER MAY FILE AN ORIGINAL COPY OF THIS SECTION 4.18 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE COMPANY HERETO TO THE WAIVER OF ITS RIGHT
TO TRIAL BY JURY.
 

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and
issued by its duly authorized representative on the date first written above.
 

 
CONSUMER PORTFOLIO SERVICES, INC.,
 
a California corporation
 

 

 
By:           ______________________________
Charles E. Bradley, Jr.
President and Chief Executive Officer

 
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