cpss8kexhibit090717.htm


    SECOND
AMENDMENT TO

     

    WARRANT
TO PURCHASE 1,500,000 SHARES

     

    OF COMMON
STOCK

     

    (NO.
LLCP-FMV 1)

     

    THIS
SECOND AMENDMENT TO WARRANT TO PURCHASE 1,500,000 SHARES OF COMMON STOCK is
dated as of July 17, 2009 (this "Amendment"), by and between
CONSUMER PORTFOLIO SERVICES, INC., a California corporation (the "Company"), and LEVINE
LEICHTMAN CAPITAL PARTNERS IV, L.P., a Delaware limited partnership (the "Holder" or "Purchaser").

     

    R E C I T
A L S

     

    A. The
Company and the Holder are parties to that certain Securities Purchase Agreement
dated as of June 30, 2008, as amended by a First Amendment to Securities
Purchase Agreement dated as of July 10, 2008 (as so amended, and as further
amended from time to time, the "Securities Purchase
Agreement"), by and between the Company and the Holder.

     

    B. At the
Closing of the transactions contemplated by the Securities Purchase Agreement,
the Company issued the Securities to the Holder, including, among others, a
Warrant to Purchase 1,500,000 Shares of Common Stock (No. LLCP-FMV 1) (the
"Initial Purchaser Closing FMV
Warrant"). The Initial Purchaser Closing FMV Warrant was thereafter
amended pursuant to that certain Amendment to Warrant to Purchase 1,500,000
Shares of Common Stock dated as of September 24, 2008 (the Initial Purchaser
Closing FMV Warrant, as so amended, is referred to herein as the "Purchaser Closing FMV
Warrant"). Unless otherwise indicated, all capitalized terms used and not
otherwise defined herein have the respective meanings ascribed to them in the
Securities Purchase Agreement or the Purchaser Closing FMV Warrant, as
applicable.

     

    C. By
letter dated July 25, 2008, the Company notified the Purchaser pursuant to
Section 3.8(d) of the Purchaser Closing FMV Warrant that the number of Warrant
Shares issuable upon exercise of the Purchaser Closing FMV Warrant is 1,564,324
and the Warrant Purchase Price is $2.4672.

     

    D. This
Amendment is being delivered by the Company pursuant to the terms of, and in
consideration for, that certain consent letter dated as of June 23, 2009 (the
"Consent Letter") with
respect to the Plan Amendments (as defined therein) in order to address the
dilution caused to Purchaser by the Plan Amendments.

     

    A G R E E
M E N T

     

    NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1. Amendment to Warrant
Purchase Price. Pursuant to Section 4.7 of the Purchaser Closing FMV
Warrant, the Company and the Purchaser hereby agree that the Warrant Purchase
Price shall be amended to equal $1.44 (subject to further adjustment as provided
in the Purchaser Closing FMV Warrant).

     

    2. Change of Address for Notice
Purposes. Pursuant to Section 4.8 of the Purchaser Closing FMV Warrant,
the Company hereby notifies the Purchaser that the address and related contact
information of the Company shall be changed as follows:

     

    Consumer
Portfolio Services, Inc.

    19500
Jamboree Road, 6th Floor

    Irvine,
CA 92612

    Attention:
Charles E. Bradley, Jr., President (with a

    copy to
Mark Creatura, General Counsel)

    Telephone:
(949) 753-6800

    Facsimile:
(949) 753-6897

    


     

    3. Release.

     

    (a) In
consideration for the consent provided in the Consent Letter, the Company, for
itself and on behalf of the Subsidiary Guarantors and its and their respective
successors, assigns, and present and future stockholders, officers, directors,
Affiliates, employees, agents and attorneys (collectively, the "Releasing Parties"), hereby
remises, releases and forever discharges the Holder and its present and former
Affiliates, officers, directors, partners (general and limited), stockholders,
members, managers, employees, agents, attorneys, successors and assigns, from
and against any and all claims, rights, actions, causes of action, suits,
liabilities, defenses, damages, losses, costs and expenses (including attorneys'
fees), of whatever nature, type or description, that are based upon, relate to
or arise out of any facts, acts, omissions, events or circumstances existing or
occurring on or prior to the date hereof, whether arising out of or related to
this Amendment, the Securities Purchase Agreement, the Notes, the Guaranties,
the Warrants, the Collateral Documents or any other Investment Document, any of
the transactions contemplated hereby or thereby, the administration or
enforcement of the Obligations or any act, omission or event occurring in
connection herewith or therewith, in each case whether known or unknown,
existing or potential or suspected or unsuspected.

     

    (b) The
Company, for itself and on behalf of the other Releasing Parties, waives any and
all claims, rights and benefits it may have under any law of any jurisdiction
that would render ineffective a release made by a creditor of claims that the
creditor does not know or suspect to exist in its favor at the time of executing
the release and that, if known by it, would have materially affected its
settlement with the applicable debtor. The Company, for itself and on behalf of
the other Releasing Parties, acknowledges that it is aware of the following
provisions of section 1542 of the California Civil Code:

     

    A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.

     

    (c) The
Company, for itself and on behalf of the other Releasing Parties, expressly and
voluntarily waives each and all claims, rights, or benefits it has or may have
under section 1542 of the California Civil Code, or any other similar law of any
other jurisdiction, to the full extent that it may lawfully waive such claims,
rights and benefits in connection with this release. The Company, for itself and
on behalf of the other Releasing Parties, acknowledges that (a) it has been
represented by independent legal counsel of its own choice throughout all of the
negotiation that preceded the execution of this Amendment and that it has
executed this Amendment after receiving the advice of such independent legal
counsel, and (b) it and its respective counsel have had an adequate opportunity
to make whatever investigation or inquiry they deem necessary or desirable in
connection with the release contained in this Section 3.

     

    (d) No
claim shall be made by the Company or any other Releasing Party against the
Holder, or any Affiliates, officers, directors, partners (general and limited),
stockholders, members, managers, employees, agents, attorneys, successors and
assigns of the Holder, for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or under any other theory
of liability arising out of or related to any of the matters being released
under this Section 3. The Company, for itself and on behalf of the other
Releasing Parties, hereby waives, releases and agrees not to sue upon any claim
for such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.

     

    4. Certain Representations and
Warranties. The Company hereby represents and warrants to the Holder that
(a) this Amendment has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligations of the Company,
enforceable against it in accordance with its terms, and (b) as of the date
hereof: (i) the Purchaser Closing FMV Warrant is fully exercisable, in whole or
in part, (ii) the Warrant Shares issuable upon exercise of the Purchaser Closing
FMV Warrant have been duly authorized and, when issued, delivered and paid for
pursuant to the terms of the Purchaser Closing FMV Warrant, shall be duly and
validly issued, fully paid and nonassessable and (iii) no Consent from any
Person (including any Governmental Authority) is required in connection with,
and no restrictions are otherwise applicable to, this Amendment, the
transactions contemplated hereby (including the reduction in the Warrant
Purchase Price) or the issuance by the Company of any Warrant Shares issuable
upon exercise of the Purchaser Closing FMV Warrant.

     

    5. Confirmation; Full Force and
Effect. The amendment set forth in Section 1 amends the Purchaser Closing
FMV Warrant on and as of the date hereof, and the Purchaser Closing FMV Warrant
shall remain in full force and effect, as amended thereby, from and after the
date hereof in accordance with its terms. The Company hereby ratifies, approves
and affirms in all respects each of the Securities Purchase Agreement, the
Notes, the Guaranties, the Warrants (as amended), the Collateral Documents
(including the Liens 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    granted
in favor of the Holder thereunder) and the other Investment Documents, the terms
and other provisions hereof and thereof and the Obligations hereunder and
thereunder.

     

    6. Miscellaneous
Provisions.

     

    (a) Entire Agreement; Successors
and Assigns. This Amendment constitutes the entire understanding and
agreement between the parties with respect to the subject matter hereof, and
supersedes any and all other prior oral and written, and all contemporaneous
oral, agreements, negotiations, discussions and understandings with respect
thereto. This Amendment shall inure to the benefit of, and be binding upon, the
parties and their respective successors and permitted assigns.

     

    (b) Counterparts. This
Amendment may be executed in any number of counterparts and by facsimile
transmission, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.

     

    IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their duly authorized representatives as of the date first written
above.

     

    COMPANY

    


    CONSUMER
PORTFOLIO SERVICES, INC.,

    a
California corporation

    


    By: /s/
Charles E. Bradley, Jr.

    Charles
E. Bradley, Jr.

    President
and Chief Executive Officer

     

    HOLDER

    


    LEVINE
LEICHTMAN CAPITAL PARTNERS,

    INC., a
California corporation

    


    On behalf
of LEVINE LEICHTMAN

    CAPITAL
PARTNERS IV, L.P., a

    Delaware
limited partnership

    


    By: /s/
Steven E. Hartman

    Steven E.
Hartman

    Vice
President

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ACKNOWLEDGMENT
AND CONSENT OF SUBSIDIARY GUARANTORS

     

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

     

    Dated:
July 17, 2009

    


    CPS
MARKETING, INC., a California corporation

    


    By: /s/
Jeffrey P. Fritz

    Jeffrey
P. Fritz

    Vice
President and Chief Financial Officer

    


    CPS
LEASING, INC., a Delaware corporation

    


    By: /s/
Jeffrey P. Fritz

    Jeffrey
P. Fritz

    Vice
President and Chief Financial Officer

    


    MERCURY
FINANCE COMPANY LLC,

    a
Delaware limited liability company

    


    By: /s/
Jeffrey P. Fritz

    Jeffrey
P. Fritz

    Vice
President and Chief Financial Officer

    


    TFC
ENTERPRISES LLC, a Delaware limited liability

    company

    


    By: /s/
Jeffrey P. Fritz

    Jeffrey
P. Fritz

    Vice
President and Chief Financial Officer