EXECUTION COPY
FIRST AMENDMENT TO
INVESTOR RIGHTS AGREEMENT
THIS FIRST AMENDMENT TO INVESTORS RIGHTS AGREEMENT, dated as of the 15th
day of April 1998 (this "Amendment"), is entered into by and among Consumer
Portfolio Services, Inc., a California corporation (the "Company"), Xxxxxxx X.
Xxxxxxx, Xx., an individual ("X. X. Xxxxxxx, Xx."), Xxxxxxx X. Xxxxxxx, Xx., an
individual ("X.X. Xxxxxxx, Xx." and, together with X.X. Xxxxxxx, Xx., the
"Bradleys"), Xxxxxxx X. Xxxxx, an individual ("Xx. Xxxx Xxxxx" and, together
with the Bradleys, the "Senior Officers"), and Xxxxxx Xxxxxxxxx Capital Partners
II, L.P., a California limited partnership ("LLCP").
R E C I T A L S
A. The parties have entered into that certain Investors Rights Agreement
dated as of November 17, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Investor Rights Agreement"), under which, among other
things, the Company has granted to LLCP certain management, tag-along and other
rights in connection with the Purchaser's investment in the Note and the Primary
Warrant pursuant to that certain Securities Purchase Agreement dated as of
November 17, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Securities Purchase Agreement"), between the Purchaser and the
Company.
B. The Purchaser and the Company have entered into a First Amendment to
Securities Purchase Agreement dated as of April 15, 1999 (the "First
Amendment"), pursuant to which, among other things, the Purchaser has agreed to
waive the Existing Defaults (as defined in the First Amendment) and amend the
Securities Purchase Agreement, all on the terms and subject to the conditions
set forth therein. Unless otherwise indicated, all capitalized terms used but
are not defined herein have the meanings given to such terms in the Investor
Rights Agreement.
C. It is a condition precedent to the effectiveness of the waiver by the
Purchaser of the Existing Defaults and the amendments to the Securities Purchase
Agreement that the parties execute and deliver this Amendment.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, conditions and provisions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to amend the Securities Purchase
Agreement as follows:
Section 1. Amendment of Section 1.3 (Operating Committee). On and as of
the Effective Date, Section 1.3 of the Investor Rights Agreement shall be
amended by deleting such Section in its entirety and replacing it with the
following:
"1.3 Operating Committee.
(a) The Company shall establish an operating committee (the
"Operating Committee") to, among other things, (i) review the monthly
operating and capital plan of the Company and its subsidiaries for the
next fiscal year, (ii) compare budgeted versus actual performance, and
(iii) analyze the Company's capital needs over the 12 months following
each meeting. The Operating Committee shall also consider such additional
financial matters as the Operating Committee shall deem advisable. The
Operating Committee shall not constitute a committee designated by the
Board pursuant to the Company's Bylaws or Section 311 of the California
Corporations Code, and shall not have any authority to act in the name of
or on behalf of the Company or any subsidiary, but the Operating Committee
shall have the right to make suggestions and to recommend actions to the
Board or to the Board of Directors of any subsidiary of the Company or to
any committee of any such Board of Directors, either in writing or by
attending, through a representative, a meeting of such Board of Directors
or such committee.
(b) The Operating Committee shall at all times be comprised of two
(2) members of senior management of the Company, who initially shall be
X.X. Xxxxxxx, Xx. and Xx. Xxxx Xxxxx, and two (2) members designated by
LLCP. The Company shall cause its officers and other members of senior
management to be available at each meeting of the Operating Committee to
review financial information and discuss other matters.
(c) Regular meetings of the Operating Committee shall take place on
or about the fourth Wednesday of each month (or the next succeeding
Business Day, if the fourth Wednesday is not a Business Day).
(d) From and after April 15, 1999, regular meetings of the Operating
Committee shall take place on Wednesday (or the next succeeding Business
Day, if a Wednesday is not a Business Day) of each week (rather than on a
monthly basis) to review the Company's weekly cash projections until the
Operating Committee
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determines by majority vote that the Company's financial condition and
results of operations are such that weekly meetings are no longer
necessary, in which case the Operating Committee shall meet on a monthly
basis as provided above. All meetings of the Operating Committee may be
conducted by telephone so long as each of the persons attending can hear
each of the other persons attending the meeting.
(e) The Company's financial officers shall prepare a financial
package for delivery to all Operating Committee members at least
forty-eight (48) hours prior to each regularly scheduled weekly or monthly
meeting, as the case may be. The financial package shall include, for each
weekly meeting (as described in paragraph (d) above), (i) a rolling
twelve-week cash flow projection in form and substance acceptable to the
Purchaser and (ii) such other information as any member of the Operating
Committee may from time to time request. The financial package for each
monthly meeting described in paragraph (c) above will be similar to the
package currently provided to the Board of Directors and consist of (w) a
consolidated and consolidating balance sheet, statement of operations and
statement of cash flows for the Company and its consolidated subsidiaries
for the most recent one-month period and for the year-to-date period, (x)
a comparison of the actual results of operations for such periods to the
same periods in the prior year and to the budget and forecast, (y) an
explanation of any variances in such actual results of operations from
such budget and forecast, and (z) such other information as any member of
the Operating Committee may from time to time request."
Section 2. Warrant Shares. The parties acknowledge, agree and affirm that
the term "Warrant Shares" as used in the Investor Rights Agreement includes the
aggregate of 4,450,000 shares of Common Stock issued or issuable upon exercise
of (i) the Amended and Restated Warrant to purchase 3,115,000 shares of Common
Stock, dated as of November 17, 1998, and amended and restated as of April 15,
1999, issued by the Company to the Purchaser in connection with the transactions
contemplated by the Securities Purchase Agreement, as amended by the First
Amendment, and (ii) the April 0000 Xxxxxxx to purchase 1,335,000 shares of
Common Stock, dated as of April 15, 1999, issued by the Company to the Purchaser
in connection with the transactions contemplated by the April 1999 Securities
Purchase Agreement, dated as of April 15,1999.
Section 3. Miscellaneous Provisions.
(a) Governing Law. In all respects, including all matters of
construction, validity and performance, this Amendment and the rights and
obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of California applicable to contracts
made and performed in such state, without regard to the choice of law or
conflicts of law principles thereof.
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(b) Further Assurances. Each party agrees to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable to consummate the transactions contemplated by this Amendment.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and by facsimile, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same instrument.
(d) Full Force and Effect. This Amendment amends the Investor Rights
Agreement on and as of the Effective Date, and the Investor Rights Agreement
shall remain in full force and effect as amended hereby. The Investor Rights
Agreement, as amended hereby, is hereby ratified and affirmed by the parties in
all respects.
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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.
THE COMPANY LLCP
CONSUMER PORTFOLIO XXXXXX XXXXXXXXX CAPITAL
SERVICES,INC., a California PARTNERS, INC., a California
corporation corporation
on behalf of XXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx, Xx. XXXXXXXXX CAPITAL
-------------------------------- PARTNERS II, L.P., a California
Xxxxxxx X. Xxxxxxx, Xx. limited partnership
President and Chief Executive
Officer
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxxxxx
Senior Vice President and Chief Chief Executive Officer
Financial Officer
THE SENIOR OFFICERS:
/s/ Xxxxxxx X. Xxxxxxx, Xx.
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XXXXXXX X. XXXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxxx, Xx.
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XXXXXXX X. XXXXXXX, XX.
/s/ Xxxxxxx X. Xxxxx
------------------------------------
XXXXXXX X. XXXXX
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