<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CONSUMER PORTFOLIO SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
CONSUMER PORTFOLIO SERVICES, INC.
16355 Laguna Canyon Road, Irvine California 92618
Phone: 949-753-6800
The annual meeting of the shareholders of Consumer Portfolio Services, Inc. (the
"Company") will be held at 10:00 a.m., local time, on Wednesday, May 26, 1999 at
the Company's offices, 16355 Laguna Canyon Road, Irvine, California for the
following purposes:
1) To elect the Company's entire Board of Directors for a one-year term.
2) To approve the issuance of a warrant initially exercisable to purchase
1,335,000 shares of common stock.
3) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999.
4) To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on April 20, 1999 are
entitled to notice of and to vote at the meeting.
Whether or not you expect to attend the meeting in person, please complete,
date, and sign the enclosed proxy exactly as your name appears thereon and
promptly return it in the envelope provided, which requires no postage if mailed
in the United States. Proxies may be revoked at any time and, if you attend the
meeting in person, your executed proxy will be returned to you upon request.
By Order of the Board of Directors
Jeffrey P. Fritz, Secretary
Dated: April 30, 1999
1
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
CONSUMER PORTFOLIO SERVICES, INC.
16355 Laguna Canyon Road
Irvine, California 92618
949-753-6800
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1999
-----------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Consumer Portfolio Services, Inc. (the
"Company" or "CPS") for use at the annual meeting of the shareholders to be held
at 10:00 a.m., local time, on Wednesday, May 26, 1999 at the Company's offices,
16355 Laguna Canyon Road, Irvine, California 92618, and at any adjournment
thereof (the "Annual Meeting").
All shares represented by properly executed proxies received in time
will be voted at the Annual Meeting and, where the manner of voting is specified
on the proxy, will be voted in accordance with such specifications. Any
shareholder who executes and returns a proxy may revoke it at any time prior to
the voting of the proxy by giving written notice to the Secretary of the
Company, by executing a later-dated proxy, or by attending the meeting and
giving oral notice of revocation to the Secretary of the Company.
The Board of Directors of the Company has fixed the close of business
on April 20, 1999, as the record date for determining the holders of outstanding
shares of the Company's Common Stock, without par value ("CPS Common Stock")
entitled to notice of, and to vote at the Annual Meeting. On that date, there
were 18,773,501 shares of CPS Common Stock issued and outstanding. Each such
share of CPS Common Stock is entitled to one vote on all matters to be voted
upon at the meeting, except that holders of CPS Common Stock have the right to
cumulative voting in the election of directors, as described herein under the
heading "Voting of Shares."
The notice of the Annual Meeting, this proxy statement and the form of
proxy are first being mailed to shareholders of the Company on or about April
30, 1999. Expenses incurred in connection with the solicitation of proxies will
be paid by the Company. The proxies are being solicited principally by mail. In
addition, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone, for which they will receive no payment other
than their regular compensation. The Company will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting material to the
beneficial owners of Common Stock of the Company and will reimburse such persons
for their expenses so incurred.
2
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINATIONS
Each of the of the Company's six current directors has been nominated
for election as a director at the Annual Meeting, and each has agreed to serve
as a director if elected. Directors of the Company are elected annually to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified.
The names of the nominees, their principal occupations, and certain
other information regarding them set forth below is based upon information
furnished to the Company by them.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
<S> <C> <C>
Charles E. Bradley, Sr. 69 Chairman of the Board of Directors
Charles E. Bradley, Jr. 39 President, Chief Executive Officer, and Director
William B. Roberts 62 Director
John G. Poole 56 Vice Chairman of the Board of Directors
Robert A. Simms 60 Director
Thomas L. Chrystie 66 Director
</TABLE>
Charles E. Bradley, Sr. has been the Chairman of the Board of the Company since
its formation in March 1991. Mr. Bradley is one of the founders of Stanwich
Partners, Inc. ("Stanwich"), a Connecticut investment firm which acquires
controlling interests in companies in conjunction with the existing operating
management of such companies, and has been President, a director and a
shareholder of that company since its formation in 1982. He is also President,
Chief Executive Officer and a director of Reunion Industries, Inc., a publicly
held company which manufactures precision plastic products and provides
engineered plastics services. Mr. Bradley is currently Chairman of the Board and
Chief Executive Officer of DeVlieg-Bullard, Inc. and Chatwins Group, Inc., and a
director of Texon Energy Corp., General Housewares Corp., Zydeco Exploration,
Inc., and Sanitas, Inc. He is Chairman of the Board and Chief Executive Officer
of NAB Asset Corporation (38% of whose outstanding shares of voting stock are
held by the Company). Other than Stanwich, all of the above corporations are
publicly-held or are required to file periodic reports under Section 13 or 15(d)
of the Securities Exchange Act of 1934. Mr. Bradley is the father of Charles E.
Bradley, Jr.
Charles E. Bradley, Jr. has been the President and a director of the Company
since its formation in March 1991. In January 1992, Mr. Bradley was appointed
Chief Executive Officer of the Company. From April 1989 to November 1990, he
served as Chief Operating Officer of Barnard and Company, a private investment
firm. From September 1987 to March 1989, Mr. Bradley, Jr. was an associate of
The Harding Group, a private investment banking firm. Mr. Bradley, Jr. is
currently serving as a director of NAB Asset Corporation, Chatwins Group, Inc.,
Texon Energy Corporation and Thomas Nix Distributor, Inc. Charles E. Bradley,
Sr. is his father.
William B. Roberts has been a director of the Company since its formation in
March 1991. Since 1981, he has been the President of Monmouth Capital Corp., an
investment firm which specializes in management buyouts. Mr. Roberts serves on
the board of directors of Atlantic City Racing Association, a publicly-held
corporation, which owns and operates a race track.
John G. Poole has been a director of the Company since November 1993 and its
Vice Chairman since January 1996. He was a co-founder of Stanwich in 1982 and
has been a director, vice president and shareholder of that company since its
formation. Mr. Poole is a director of Reunion Industries, Inc., Sanitas, Inc.,
Chatwins Group, Inc., and DeVlieg-Bullard, Inc.
Robert A. Simms has been a director of the Company since April 1995. He has been
the Chairman and Chief Executive Officer of Simms Capital Management, Inc. since
1984. He is a director of the National Football Foundation and Hall of Fame. Mr.
Simms also serves on the Board of Overseers of Rutgers University and was
formerly a partner in Bear Stearns & Co.
3
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
Thomas L. Chrystie has been a director of the Company since April 1995. He has
been self-employed as an investor, through Wycap Corporation, since 1988. His
previous experience includes 33 years at Merrill Lynch & Co. in various
capacities including heading Merrill Lynch's investment banking, capital markets
and merchant banking activities. In addition, he served as Merrill Lynch & Co.'s
Chief Financial Officer.
The Board of Directors has established an Audit Committee and a Compensation and
Stock Option Committee. The members of the Audit Committee are Thomas L.
Chrystie (chairman), Robert A. Simms and William B. Roberts. The Audit Committee
is empowered by the Board of Directors to review the financial books and records
of the Company in consultation with the Company's accounting and auditing staff
and its independent auditors and to review with the accounting staff and
independent auditors any questions raised with respect to accounting and
auditing policy and procedure.
The members of the Compensation and Stock Option Committee are Robert A. Simms
(chairman), Thomas L. Chrystie and William B. Roberts. This Committee makes
recommendations to the Board of Directors as to general levels of compensation
for all employees of the Company, the annual salary of each of the executive
officers of the Company, authorizes the grants of options to employees under the
Company's 1991 Stock Option Plan, and the 1997 Long-Term Incentive Plan and
reviews and approves compensation and benefit plans of the Company.
The Company does not have a Nominating Committee. Shareholders who wish to
suggest individuals for possible future consideration for board positions should
direct recommendations to the Board of Directors at the Company's principal
offices.
The Board of Directors held four regular meetings and [three] special meetings
in 1998. The Audit Committee and the Compensation Committee each met [twice]
during 1998.
The Board of Directors recommends a vote FOR each of the nominees above.
4
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
PROPOSAL NO. 2
APPROVAL OF WARRANT INITIALLY EXERCISABLE FOR 1,335,000 SHARES
NASDAQ STOCK MARKET POLICY
The Common Stock of the Company is traded on the Nasdaq National Market. It is
the policy of the Nasdaq National Market to require stockholder approval of the
issuance of common stock or securities convertible into or exercisable for
common stock in any transaction other than a public offering, at a price less
than book value or market value, if the number of shares of common stock to be
issued will amount to 20% or more of the number of shares of common stock
outstanding before the issuance. In two transactions, in November 1998 and April
1999, the Company issued to Levine Leichtman Capital Partners II, L.P. ("LLCP")
warrants to purchase a total of 4,450,000 shares of Common Stock of the Company.
Since this number represents more than 20% of the number of shares of Common
Stock currently outstanding, the stockholders are being asked to approve the
issuance of the second warrant.
TRANSACTIONS WITH LLCP
On November 17, 1998, the Company sold $25,000,000 aggregate principal amount of
Senior Subordinated Notes to LLCP. As part of that transaction, the Company
issued a common stock purchase warrant (the "November Warrant") giving LLCP the
right to purchase up to 3,450,000 shares of Common Stock of the Company for an
exercise price of $3.00 per share. Because the November Warrant covered shares
that would constitute more than 20% of the then outstanding CPS Common Stock,
this transaction provided that LLCP initially would have the right to exercise
only 3,105,000 shares (equal to approximately 19.8% of the then outstanding CPS
Common Stock), and that the Company would be required to obtain stockholder
approval, not later than May 31, 1999, for the remaining 345,000 shares issuable
under this warrant.
On April 15, 1999, to meet its capital requirements, the Company sold an
additional $5,000,000 aggregate principal amount of Senior Subordinated Notes to
LLCP. As part of that transaction, (i) LLCP waived or modified certain
provisions of the November 1998 documentation, (ii) the Company and LLCP
modified the November Warrant by reducing the number of shares thereunder to
3,115,000 and reducing the exercise price to $.01 per share, and (iii) the
Company issued a second stock purchase warrant (the "April Warrant") to LLCP,
giving LLCP the right to purchase 1,335,000 shares of CPS Common Stock for an
exercise price of $.01 per share at any time through April 15, 2009.
Immediately following the issuance of the April Warrant, LLCP exercised the
November Warrant for 3,115,000 shares at $.01 per share. Since the November
Warrant (as amended to cover only 3,115,000 shares) was within the 20% Nasdaq
limitation, it did not require stockholder approval. However, since the November
1998 and April 1999 transactions could be deemed a series of related
transactions, the Company has agreed with LLCP to obtain stockholder approval of
the April Warrant.
Under the agreements related to the issuance of notes in April 1999, the failure
of the Company to obtain the requisite stockholder approval by May 31, 1999
would constitute an Event of Default under the two Senior Subordinated Notes
described above, and LLCP could then demand immediate repayment of the entire
$30,000,000 principal amount of the two Senior Subordinated Notes. The Company
would have great difficulty satisfying such a demand for repayment unless it
liquidated substantial assets, which would materially adversely affect the
Company's financial condition and future operations; and there can be no
assurance that, even by liquidating assets, the Company could satisfy such a
demand.
The documents governing the November 1998 and April 1999 transactions also
include, among other things, provisions giving LLCP the right to require the
Company to register shares issuable under the Warrants for resale, and the right
to designate one member of the Board of Directors of the Company. The Company
appointed Arthur E. Levine, a principal of LLCP, as a member of the Board of
Directors from November 17, 1998. Mr. Levine resigned from the board on April 2,
1999.
5
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
DILUTION RESULTING FROM THE APRIL WARRANT
Exercise of part or all of the April Warrant would result in an increase in the
number of shares of Common Stock outstanding. An issuance of Common Stock at a
price below the book value per share (i.e., the exercise of the April Warrant at
any time that the CPS Common Stock has a book value of more than $.01 per share)
would have a dilutive effect on the book value of outstanding shares of Common
Stock. Such issuance would also have a dilutive effect on earnings per share and
the relative voting power of present stockholders. Even before exercise, the
Company's diluted earnings per share (if any) will be reduced, because this
figure is calculated as if the April Warrant were exercised in full. The
exercise price of each of the Warrants is $.01 per share. The book value per
share of the Common Stock as of December 31, 1998 was $7.60 per share, and the
reported closing sale price of the Common Stock on the Nasdaq National Market on
April 16, 1999 was $3.875 per share.
Both the April Warrant and the amended November Warrant contain anti-dilution
provisions that would, upon the occurrence of certain events, adjust upward the
number of shares issuable upon the exercise thereof. Among such events are
changes to the Company's capital stock that cause more shares to be outstanding
(such as stock splits or stock dividends) and any issuances of common stock (or
its equivalents) at less than fair market value. If, for example, the Company
were to raise capital by issuance of convertible debt (or debt with warrants),
and the conversion or exercise price were to be less than the prevailing market
price of the Company's common stock at the time such convertible debt was
issued, then the number of shares issuable upon exercise of the April Warrant
and the November Warrant would increase. Although the November Warrant has been
exercised in full, the April Warrant contains a provision providing for the
issuance of additional shares of common stock, without the payment of additional
consideration, in connection with certain events that would have required an
increase in the number of shares issuable upon exercise of the November Warrant.
VOTE REQUIRED
Approval of the issuance of the April Warrant will require the affirmative vote
of a majority of the shares voted on this proposal in person or by proxy.
Abstentions and broker non-votes, if any, will not be treated as votes cast and,
therefore, will have no effect on the outcome of the vote on this proposal.
LLCP intends to vote its 3,115,000 shares in favor of this proposal. In
addition, Charles E. Bradley, Sr., Charles E. Bradley, Jr. and certain other
shareholders affiliated with Stanwich Financial Services Corp. are in favor of
the issuance of the April Warrant and have given irrevocable proxies to LLCP and
entered into voting agreements with LLCP with respect to an aggregate of
7,107,117 shares of the Company's Common Stock, granting LLCP the right to vote
such shares on this proposal. Thus, LLCP has the power to vote an aggregate of
10,222,117 shares (more than 50% of the total number of shares entitled to vote)
on this proposal, and the Company therefore believes that this proposal is
certain to be approved.
BOARD RECOMMENDATION
The Board of Directors has approved the issuance of the April Warrant, and
recommends that the Company's stockholders vote "FOR" approval of the proposal
regarding the issuance of the April Warrant.
PROPOSAL NO. 3
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on recommendation of the Audit Committee, has appointed
the accounting firm of KPMG Peat Marwick to be the Company's independent
auditors for the year ending December 31, 1999.
A proposal to ratify that appointment will be presented to shareholders at the
Annual Meeting. If the shareholders do not ratify the selection of KPMG Peat
Marwick another firm of independent public accountants will be selected by the
Board of Directors at the Annual Meeting. Representatives of KPMG Peat Marwick
will be present at the Annual Meeting. Such representatives will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions from shareholders in attendance.
The Board of Directors recommends a vote FOR ratification of the selection of
KPMG Peat Marwick.
6
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
INFORMATION REGARDING THE COMPANY
EXECUTIVE COMPENSATION
The following pages set forth information in tabular form regarding compensation
of the Company's executive officers.
SUMMARY OF COMPENSATION
The following table summarizes all compensation earned during the three fiscal
years ended December 31, 1998, 1997 and 1996 by the Company's Chief Executive
Officer and by its four most highly compensated other executive officers (such
five individuals, the "named executive officers") who were serving as executive
officers at December 31, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
===============================================================================================================
Compensation for Long Term Compensation
period shown Awards
---------------------------------------------------------------------------------------------------------------
Name and Principal Position Year Salary Bonus Options/SARs (1)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHARLES E. BRADLEY, JR. 1998 450,000
Chief Executive Officer 1997 425,000 575,000 0
1996 381,250 372,500 200,000
---------------------------------------------------------------------------------------------------------------
NICHOLAS P. BROCKMAN 1998 137,000
Senior Vice President, Asset Recovery 1997 127,000 62,000 0
1996 117,039 59,500 12,600
---------------------------------------------------------------------------------------------------------------
WILLIAM L. BRUMMUND, JR. 1998 143,000
Senior Vice President, Systems 1997 129,000 84,000 0
1996 117,039 55,500 5,000
---------------------------------------------------------------------------------------------------------------
JEFFREY P. FRITZ 1998 200,000
Senior Vice President, Finance 1997 175,000 96,000 0
1996 154,938 78,250 5,000
---------------------------------------------------------------------------------------------------------------
CURTIS K. POWELL 1998 170,000
Senior Vice President, Marketing 1997 143,000 97,000 0
1996 124,500 51,000 75,000
===============================================================================================================
</TABLE>
(1) Number of shares that may be purchased upon exercise of options that were
granted in the period shown.
OPTION AND SAR GRANTS
The Company in the year ended December 31, 1998, did not grant any stock
appreciation rights to any of the named executive officers, and granted options
to such officers on two occasions. The Company in the past had made a practice
of granting stock options to its executive officers and other employees from
time to time, and in January 1998 granted options to each of its named executive
officers. Each named executive officer other than the chief executive officer
received in January a grant of options with respect to 20,000 shares, to become
exercisable at the then-current market price of $9.00 per share. The chief
executive officer received in January a grant of options with respect to 70,000
shares, also to become exercisable at $9.00 per share. On October 22, 1998, the
compensation committee of the board of directors determined that the decline in
the prevailing market price of the Company's common stock had greatly impaired
the incentive value of the Company's outstanding options, and made it advisable
to alter the terms of such options so as to maintain an incentive value. The
Company therefore at that time amended each outstanding option in two respects:
(i) to reduce the exercise price thereof to $3.25 per share, which was the
market price of such shares on the October date of the amendment, and (ii) to
prohibit the exercise of all or any part of such modified options prior to
October 23, 1999. The following table summarizes each 1998 grant to any of the
named executive officers.
7
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
<TABLE>
<CAPTION>
OPTIONS/GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value At
Assumed Annual Rates Of
Stock Price Appreciation For
INDIVIDUAL GRANTS Option Term
- -------------------------------------------------------------------------------------------------------------------------------
Percent Of
Total Options
Number of Shares Granted To Exercise or
Underlying Options Employees in Base Price Expiration
Name Granted 1998 ($/Share) Date 5% 10%
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Bradley, Jr. 39,200 1.1% $3.25 1/12/08 $72,444 $179.584
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 30,800 0.9% $3.25 1/12/08 $56,920 $141,102
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 200,000 5.7% $3.25 3/31/06 $284,512 $671,053
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 8,400 0.2% $3.25 12/15/04 $9,555 $21,763
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 150,000 4.3% $3.25 3/31/04 $148,308 $331,548
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 39,200 1.1% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 30,800 0.9% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
Jeffrey P. Fritz 20,000 0.6% $3.25 1/12/08 $36,961 $91,625
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 32,000 0.9% $3.25 5/02/04 $32,220 $72,196
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 7,600 0.2% $3.25 10/31/04 $8,445 $19,172
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 5,000 0.1% $3.25 3/31/06 $7,113 $16,776
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 20,000 0.6% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
Curtis K. Powell 10,000 0.3% $3.25 1/12/08 $18,481 $45,812
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 10,000 0.3% $3.25 1/12/08 $18,481 $45,812
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 35,000 1.0% $3.25 3/13/06 $49,790 $117,434
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 20,000 0.6% $3.25 1/17/05 $23,137 $52,828
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 43,000 1.2% $3.25 10/31/04 $47,779 $108,473
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 40,000 1.1% $3.25 3/31/06 $56,902 $134,211
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 10,000 0.3% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 10,000 0.3% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
William L. Brummund, Jr. 20,000 0.6% $3.25 1/12/08 $36,961 $91,625
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 32,000 0.9% $3.25 5/02/04 $32,220 $72,196
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 7,600 0.2% $3.25 10/31/04 $8,445 $19,172
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 5,000 0.1% $3.25 3/31/06 $7,113 $16,776
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 20,000 0.6% $9.00 1/12/08 * *
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
Nicholas P. Brockman 20,000 0.6% $3.25 1/12/08 $36,961 $91,625
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 12,600 0.4% $3.25 3/31/06 $17,924 $42,276
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 32,000 0.9% $3.25 5/02/04 $32,220 $72,196
- ---------------------------- -------------------- --------------- --------------- ------------- ---------------- --------------
" 20,000 0.6% $9.00 1/12/08 * *
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The recipients of such options will receive no value therefrom, as such
options were cancelled and replaced in October 1998, as shown in the above table
8
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
OPTIONS REPRICING
THE FOLLOWING TABLE SETS FORTH INFORMATION REGARDING EACH REPRICING OF ANY
OPTIONS HELD BY ANY EXECUTIVE OFFICER OF THE COMPANY, AT ANY TIME FROM INCEPTION
TO THE PRESENT:
<TABLE>
<CAPTION>
Number of
Shares Market Price Length of Original
Underlying of Stock at Exercise Price Option Term
Options Time of at Time of New Remaining at Date
Repriced or Repricing or Repricing or Exercise of Repricing or
Name Date Amended Amendment Amendment Price Amendment
<S> <C> <C> <C> <C> <C> <C> <C>
Blizzard, Thurman (1) 10/22/98 70,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Bradley, Jr., Charles E. 10/22/98 150,000 $3.2500 $5.3750 $3.2500 5 Years 162 Days
Bradley, Jr., Charles E. 10/22/98 8,400 $3.2500 $7.2500 $3.2500 6 Years 55 Days
Bradley, Jr., Charles E. 10/22/98 200,000 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Bradley, Jr., Charles E. 10/22/98 39,200 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Bradley, Jr., Charles E. 10/22/98 30,800 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Brockman, Nicholas P. 10/22/98 32,000 $3.2500 $5.3750 $3.2500 5 Years 194 Days
Brockman, Nicholas P. 10/22/98 12,600 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Brockman, Nicholas P. 10/22/98 20,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Brummund, Jr., William L. 10/22/98 32,000 $3.2500 $5.3750 $3.2500 5 Years 194 Days
Brummund, Jr., William L. 10/22/98 7,600 $3.2500 $11.0000 $3.2500 6 Years 10 Days
Brummund, Jr., William L. 10/22/98 5,000 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Brummund, Jr., William L. 10/22/98 20,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Creatura, Mark (2) 10/22/98 20,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Creatura, Mark 5/7/97 50,000 $8.4375 $12.0000 $8.5000 8 Years 177 Days
Creatura, Mark 10/22/98 50,000 $3.2500 $8.4375 $3.2500 8 Years 198 Days
Fritz, Jeffrey P. 10/22/98 32,000 $3.2500 $5.3750 $3.2500 5 Years 194 Days
Fritz, Jeffrey P. 10/22/98 7,600 $3.2500 $11.0000 $3.2500 6 Years 10 Days
Fritz, Jeffrey P. 10/22/98 5,000 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Fritz, Jeffrey P. 10/22/98 20,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Powell, Curt 10/22/98 35,000 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Powell, Curt 10/22/98 40,000 $3.2500 $8.8750 $3.2500 7 Years 161 Days
Powell, Curt 10/22/98 43,000 $3.2500 $7.2500 $3.2500 6 Years 10 Days
Powell, Curt 10/22/98 20,000 $3.2500 $6.6250 $3.2500 6 Years 88 Days
Powell, Curt 10/22/98 10,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Powell, Curt 10/22/98 10,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Trotter, Richard P. (3) 10/22/98 32,000 $3.2500 $5.3750 $3.2500 5 Years 194 Days
Trotter, Richard P. 10/22/98 70,000 $3.2500 $4.3750 $3.2500 5 Years 75 Days
Trotter, Richard P. 10/22/98 7,600 $3.2500 $7.2500 $3.2500 6 Years 161 Days
Trotter, Richard P. 5/7/97 25,000 $8.4375 $12.0000 $8.5000 8 Years 177 Days
Trotter, Richard P. 5/7/97 18,000 $8.4375 $12.0000 $8.5000 8 Years 177 Days
Trotter, Richard P. 10/22/98 20,000 $3.2500 $9.0000 $3.2500 9 Years 83 Days
Trotter, Richard P. 10/22/98 25,000 $3.2500 $8.4375 $3.2500 8 Years 199 Days
Trotter, Richard P. 10/22/98 18,000 $3.2500 $8.4375 $3.2500 8 Years 199 Days
(1) Sr. Vice President - Collections
(2) Sr. Vice President - Legal
(3) Sr. Vice President - Originations
</TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth, as of December 31, 1998, the number of
unexercised options held by each of the named executive officers, the number of
shares subject to then exercisable and unexercisable options held by such
persons and the December 31, 1998 value of all unexercised options held by such
persons. Each option referred to in the table was granted under the Company's
1991 Stock Option Plan, or under the 1997 Long-Term Incentive Plan, at an option
price per share equal to the fair market value per share on the date of grant.
9
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
<TABLE>
<CAPTION>
==========================================================================================================================
Number of Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired on Value December 31, 1998 at December 31, 1998(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles E. Bradley, Jr. 0 0 1,840/164,000 $7,130/$635,500
- --------------------------------------------------------------------------------------------------------------------------
Nicholas P. Brockman 0 0 18,400/64,600 71,300/250,325
- --------------------------------------------------------------------------------------------------------------------------
William L. Brummund, Jr. 0 0 48,000/64,600 186,000/250,325
- --------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Fritz 0 0 69,000/64,600 267,375/250,325
- --------------------------------------------------------------------------------------------------------------------------
Curtis K. Powell 0 0 0/29,400 0/113,925
==========================================================================================================================
</TABLE>
(1) Valuation is based on the last sales price on December 31, 1998 of $3.875
per share, as reported by Nasdaq.
BONUS PLAN
The named executive officers and other officers participate in a management
bonus plan, pursuant to which such employees are entitled to earn cash bonuses,
if the Company achieves certain net income levels or goals established by the
Board of Directors. The amount of bonus payable to each officer is determined by
the Board of Directors upon recommendation of the Compensation Committee.
DIRECTOR COMPENSATION
During the year ended December 31, 1998, the Company paid director compensation
of $125,000 to Mr. Bradley, Sr., for his service as Chairman of the Board of
Directors, and $75,000 to Mr. Poole for his service as Vice-Chairman of the
Board of Directors. Mr. Bradley, Jr., President of the Company, received no
additional compensation for his service as a director. The remaining directors
received a retainer of $1,000 per month and an additional fee of $500 per diem
for attendance at meetings.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES IN GENERAL
As to base salary, the Company's objective is to establish base salaries at
levels competitive with those in its industry. Annual adjustments in base
salaries of officers other than the chief executive officer are approved by the
Compensation Committee, acting on the recommendation of the chief executive
officer.
The Company has made a practice of paying annual bonuses to encourage executive
officers and key management personnel to exercise their best efforts and
management skills toward achieving the Company's objectives. Under the Company's
bonus plan as applied to the year ended December 1998, executive officers of the
Company other than its chief executive officer were eligible to receive a cash
bonus of up to 100% of their base salaries. The amount of such bonus is
determined by the Compensation Committee, acting on the recommendation of the
chief executive officer. The principal determining factor in the amount of bonus
is whether the Company as a whole has met its earnings objectives. Such
objectives are set by the board of directors at its spring meeting of the prior
year. Other factors in determining the amount of bonus are whether the executive
has met individual objectives set by the chief executive officer and a
subjective evaluation of the officer's performance. The Compensation Committee
also considers whether the level of compensation proposed would be fully
deductible to the Company for federal income tax purposes.
Applying the above principles, the Compensation Committee in 1999 approved bonus
compensation to each of the named executive officers, other than the chief
executive officer, of approximately ___% to ___% of his base salary for the year
ended December 31, 1998.
10
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
The Company's long-term incentive plan has consisted of awards of incentive and
non-qualified stock options designed to promote the identity of long-term
interests between the Company's executives and its shareholders and to assist in
the retention of key executives and management personnel. Since the full benefit
of stock option compensation cannot be realized unless stock appreciation occurs
over a number of years, stock option grants are designed to provide an incentive
to create shareholder value over a sustained period of time.
In exercising its discretion as to the level of executive compensation and its
components, the Compensation Committee considers a number of factors. Financial
factors considered include growth in the Company's revenue, income and earnings
per share; the extent of appreciation in its stock price; and return on equity.
Operational factors considered include the Company's cost of funds; indicators
of the credit quality of the Company's servicing portfolio, including levels of
delinquencies and charge-offs; and indicators of successful management of
personnel, including the number of employees hired and employee stability.
On October 22, 1998, the Company reduced the exercise price of substantially all
of the outstanding common stock options under the 1991 Stock Option Plan and the
1997 Long-Term Incentive Stock Plan to the fair market value per share as of the
date of the reduction in price. The Company repriced these options in an effort
to retain employees at a time when a significant percentage of stock options had
exercise prices that were above fair market value. The Company believes that
stock options are a valuable tool in compensating and retaining employees. All
of the Company's executive officers participated in this repricing.
The Company also maintains certain broad-based employee benefit plans in which
executive officers are permitted to participate on the same terms as
non-executive personnel who meet applicable eligibility criteria, subject to any
legal limitations on the amounts that may be contributed or the benefits that
may be payable under the plans.
COMPENSATION OF THE COMPANY'S CHIEF EXECUTIVE OFFICER
The Company's general approach in setting the annual compensation of its chief
executive officer is to seek to be competitive with financial services companies
similar to the Company, but to have a large percentage of his target
compensation be dependent upon the Company's financial performance. During the
year ended December 1997, the Company's chief executive officer, Charles E.
Bradley, Jr., received $450,000 in base salary, which was an increase from a
rate of $425,000 per year applicable to 1996. In setting that rate, the
Compensation Committee considered primarily the levels of chief executive
officer compensation prevailing among fast-growing financial services companies.
The Committee also took note of the growth in the Company's revenues and
earnings in deciding to approve an increase in base salary.
The Company's policy regarding cash bonuses paid to its chief executive officer
has been similar to its policy regarding cash bonuses for other executive
officers, except that the Compensation Committee exercises a greater degree of
discretion with respect to award of a bonus to the chief executive officer than
it exercises with respect to bonuses paid to other executive officers. Pursuant
to a plan adopted in 1998, the maximum for the current and future years would be
a bonus of 3% of the Company's pre-tax earnings.
Applying the criteria set forth in the plan, the Compensation Committee in 1999
approved bonus compensation to the chief executive officer of approximately
_____% of his base salary for the year ended December 31, 1998. In determining
bonus compensation to be paid, the Compensation Committee considered
______________, _______________ and __________________. The Compensation
Committee also sought to have the combined salary and bonus be competitive with
cash compensation paid to chief executive officers at comparable firms.
THE COMPENSATION COMMITTEE
Robert A. Simms
William B. Roberts
Thomas L. Chrystie
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate by reference future filings, including this Proxy
Statement, in whole or in part, the preceding report and the following
Performance Graph shall not be incorporated by reference into any such filings.
11
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
PERFORMANCE GRAPH
The following graph compares the yearly change in the Company's cumulative total
shareholder return on its common stock from March 31, 1994 through December 31,
1998, with (i) the cumulative total return of the Center for Research in
Security Prices ("CRSP") Index for the Nasdaq Stock Market (U.S. Companies), and
(ii) the cumulative total return of the CRSP Index for Nasdaq Financial Stocks.
The graph assumes $100 was invested on March 31, 1994 in the Company's common
stock, and in each of the two indices shown, and that all dividends were
reinvested. Data are presented for the last trading day in each of the Company's
fiscal years. The Company's fiscal year ended on March 31 until 1995, when the
Company changed its fiscal year-end to December 31.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CONSUMER PORTFOLIO SERVICES, INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) AND NASDAQ FINANCIAL STOCKS.
[a line graph representing the data in the following table appears at this point
in the printed proxy statement. the following table appears immediately below
said graph:]
<TABLE>
<CAPTION>
MAR 1994 MAR 1995 DEC 1995 DEC 1996 DEC 1997 DEC 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Consumer Portfolio Services, Inc. $100.00 $151.18 $169.75 $209.31 $179.07
Nasdaq Stock Market (U.S.) $100.00 $111.31 $144.39 $177.57 $217.98
Nasdaq Financial Stocks (U.S. & Foreign) $100.00 $112.00 $148.27 $190.02 $290.40
</TABLE>
12
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of CPS Common
Stock (its only class of voting securities) owned beneficially as of April 19,
1999 (i) by each person known to the Company to own beneficially more than 5% of
the outstanding Common Stock, (ii) by each director or named executive officer
of the Company, and (iii) by all directors and executive officers of the Company
as a group. Except as otherwise indicated, and subject to applicable community
property and similar laws, each of the persons named has sole voting and
investment power with respect to the shares shown as beneficially owned by such
persons. The address of Messrs. Bradley, Jr., Brockman, Fritz, Brummund, Jr. and
Powell is c/o Consumer Portfolio Services, Inc., 16355 Laguna Canyon, Irvine, CA
92618.
<TABLE>
<CAPTION>
Amount & Nature of Percent of
Name & Address of Beneficial Owner Beneficial Ownership Class
---------------------------------- -------------------- -----
<S> <C> <C>
Charles E. Bradley, Sr....................................................
Stanwich Partners, Inc., 62 Southfield Avenue, Stamford, CT 06902 5,151,052(1)(2) 25.6%
William B. Roberts........................................................
Monmouth Capital Corp., 126 East 56th Street, New York, NY10022 1,043,982 5.6%
John G. Poole.............................................................
Stanwich Partners, Inc., 62 Southfield Avenue, Stamford, CT 06902 632,284(3) 3.3%
Thomas L. Chrystie........................................................
P.O. Box 640, Wilson, WY 83014 90,000(4) 0.5%
Robert A. Simms...........................................................
55 Railroad Ave., Plaza Suite, Greenwich, CT 06830 150,144(5) 0.8%
Charles E. Bradley, Jr.................................................... 1,400,816(6) 7.5%
Nicholas P. Brockman...................................................... 54,100 0.3%
William L. Brummund, Jr................................................... 40,000 0.2%
Jeffrey P. Fritz.......................................................... 28,000 0.2%
Curtis K. Powell.......................................................... 0 0%
All directors and executive officers combined (13 persons) ___%
Levine Leichtman Capital Partners II, L.P.................................
335 North Maple Road, Suite 240, Beverly Hills, CA 90210 4,450,000 22.1%
New South Capital Management .............................................
1000 Ridgeway Loop Road, Suite 233, Memphis, TN 38120 2,484,700 13.2%
Robert T. Gilhuly and Kimball J. Bradley, Trustees........................
c/o Cummings & Lockwood
Two Greenwich Plaza, Box 2505, Greenwich, CT 06830 847,080 4.5%
</TABLE>
- ---------------------------
(1) Approximately _____ of such shares are pledged to secure certain
obligations to LLCP, discussed below under "Certain Transactions".
(2) Includes 207,490 shares owned by the named person's spouse as to which he
has no voting or investment power, and ______ shares owned by Stanwich
Financial Services Corp., a corporation of which the named person is
president and director.
(3) Includes ______ shares held by Mr. Poole as custodian for his children.
(4) Includes ______ shares held by the Thomas L. Chrystie Living Trust.
(5) Includes ______ shares owned by Mr. Simms' spouse as to which he has no
voting or investment power.
(6) Includes 211,738 shares held by a trust of which Mr. Bradley is the
beneficiary, as to which he has no voting or investment power. Also
includes, in addition to the ________ shares referred to in footnote 1,
600,000 shares that Mr. Bradley, Jr. has the presently exercisable right to
acquire from Mr. Bradley, Sr.
(7) These shares are held in trusts of which the beneficiaries are Charles E.
Bradley, Sr.'s adult children, including, among others, Charles E. Bradley,
Jr., (as to 211,738 shares) and Kimball J. Bradley (as to 211,802 shares).
13
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's directors, certain officers, and persons holding more than ten
percent of the Company's common stock are required to report, within certain
periods, their initial ownership of and any subsequent transactions in any of
the Company's equity securities. Based solely upon reports furnished to the
Company and written representations and information provided to the Company by
the persons required to make such filings, all such individuals have satisfied
such filing requirements in full with respect to the year 1998, except that
_____________________.
CERTAIN TRANSACTIONS
The Company has retained Stanwich (a corporation of which Charles E. Bradley,
Sr. and John G. Poole are principal shareholders) to provide consulting services
for compensation at the rate of $75,000 per year. Stanwich has agreed to provide
such level of consulting services relating to strategic business and tax
planning and investment analysis as the Company reasonably may request. No
fixed, minimum or maximum number of hours of service is specified.
In January 1997, the Company acquired 80% of the outstanding shares of the
capital stock of CPS Leasing, Inc. (then known as Stanwich Leasing, Inc.) for an
aggregate purchase price of $100,000. The selling shareholders included Charles
E. Bradley, Sr. and John G. Poole, each of whom is an officer, director and
shareholder of the Company and who received, respectively, $45,000 and $15,000
of the purchase price. Messrs. Bradley, Sr. and Poole, the founders of CPS
Leasing, Inc. purchased their shares in 1996 for $450 and $150, respectively.
CPS Leasing, Inc. ("CPSL") is in the business of leasing equipment and
containers to others. The purchase price for CPSL was determined by negotiation
between the Company and CPSL's selling shareholders. The transaction was
approved by the Company's disinterested directors, consisting of Messrs.
Chrystie, Roberts and Simms. The remaining 20% of CPSL not acquired by the
Company is held by Charles E. Bradley, Jr., who is the President and a director
of the Company.
The purpose of acquiring CPSL was to enter into the equipment leasing business.
CPSL finances its purchases of the equipment that it leases to others through
either of two lines of credit. Amounts borrowed by CPSL under one of those two
lines of credit have been guaranteed by the Company. As of March 31, 1999 the
total amount outstanding under the two lines of credit was approximately
$____________, of which the Company had guarantied approximately $___________.
The Company has also financed the operations of CPSL by making operating
advances and by advancing to CPSL the fraction of the purchase prices of its
leased equipment that CPSL does not borrow under its lines of credit. The
aggregate amount of advances made by the Company to CPSL as of March 31, 1999,
is $__________. The advances related to operations bear interest at the rate of
8.5% per annum. The advances related to the fraction of the purchase price of
leased equipment is not interest bearing.
In the ordinary course of its business operations, the Company from time to time
purchases retail automobile installment contracts from an automobile dealer,
Cars USA, which is owned by a corporation of which Mr. Bradley, Sr. and Mr.
Bradley, Jr. are the principal shareholders. During the year ended December 31,
1998, the Company purchased ____ such contracts, with an aggregate principal
balance of $___________. The Company paid an aggregate of $_____________ for
such contracts. All such purchases were on the Company's normal business terms.
The Company has provided inventory financing ("flooring") and has lent
additional monies to Cars USA. As of December 31, 1998, the total amount owed to
the Company was $___________, of which $__________ represented flooring. The
largest aggregate amount of indebtedness outstanding under the flooring line at
any time since the beginning of the last fiscal year was $___________, as of
_______. The flooring financing is a revolving line of credit, bearing interest
at 10% per year, with a maximum advance depending upon the value of used car
inventory, and with an overall maximum of $1,500,000. Other borrowings in the
aggregate amount of $250,000 do not bear interest. The remainder of the amount
owed to the Company represents fees for services performed for the dealer by the
Company.
14
<PAGE>
PRELIMINARY PROXY MATERIALS -- SUBJECT TO REVISION
The Company also issued certain securities to LLCP, on the terms and conditions
described above in the description of Proposal Two.
The agreements and transactions described above were not entered into between
parties negotiating or dealing on an arm's length basis, but were entered into
by the Company with the parties who personally benefited from such transactions
and who had a control or fiduciary relationship with the Company. In each case
such agreements and transactions have been reviewed and approved by the members
of the Company's Board of Directors who are disinterested with respect thereto.
VOTING OF SHARES
The Board of Directors recommends that an affirmative vote be cast in favor of
each of the nominees and proposals listed on the proxy card.
The Board of Directors knows of no other matters that may be brought before the
meeting which require submission to a vote of the shareholders. If any other
matters are properly brought before the meeting, however, the persons named in
the enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
Holders of CPS Common Stock are entitled to one vote per share on each matter
other than election of directors. As to election of directors, each holder of
CPS Common Stock may cumulate such holder's votes and give any nominee an
aggregate number of votes equal to the number of directors to be elected
multiplied by the number of shares of CPS Common Stock held of record by such
holder as of the record date, or distribute such aggregate number of votes among
as many nominees as the holder thinks fit. However, no such holder shall be
entitled to cumulate votes for any nominee unless such nominee's name has been
placed in nomination prior to the voting and the holder has given notice at the
annual meeting prior to the voting of the holder's intention to cumulate votes.
If any one holder has given such notice, all holders may cumulate their votes
for nominees. Discretionary authority is sought hereby to cumulate votes of
shares represented by proxies.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by the
Inspector of Elections with the assistance of the Company's transfer agent. The
Inspector of Elections will also determine whether or not a quorum is present.
The affirmative vote of a majority of shares represented and voting at a duly
held meeting at which a quorum is present is required for approval of Proposal
No. 2 (Approval of Warrant to Purchase 1,335,000 Shares) and Proposal No. 3
(Selection of Independent Auditors). In general, California law provides that a
quorum consists of a majority of the shares entitled to vote, represented either
in person or by proxy. The Inspector of Elections will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as not voting for purposes of determining the approval
of any matter submitted to the shareholders for a vote. Any proxy which is
returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted FOR the election of nominees for director named
herein; FOR the approval the Warrant to Purchase 1,355,000 Shares; and FOR the
ratification of the appointment of KPMG Peat Marwick as the Company's
independent auditors for the year ending December 31, 1999; and will be deemed
to grant discretionary authority to vote upon any other matters properly coming
before the meeting. If a broker indicates on the enclosed proxy or its
substitute that it does not have discretionary authority as to certain shares to
vote on a particular matter ("broker non-votes"), those shares will be
considered as abstentions with respect to that matter. While there is no
definitive specific statutory or case law authority in California concerning the
proper treatment of abstentions and broker non-votes, the Company believes that
the tabulation procedures to be followed by the Inspector of Elections are
consistent with the general statutory requirements in California concerning
voting of shares and determination of a quorum.
SHAREHOLDER PROPOSALS
The Company expects to hold its 2000 Annual Meeting of Shareholders on
Wednesday, May 31, 2000. In order to be considered for inclusion in the
Company's proxy statement and form of proxy for the 1999 Annual Meeting, any
proposals by shareholders intended to be presented at such meeting must be
received by the Secretary of the Company at 16355 Laguna Canyon Road, Irvine,
California 92618 by no later than December 31, 1999.
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 26, 1999
The undersigned shareholder of CONSUMER PORTFOLIO SERVICES, INC., a
California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement with respect to the Annual Meeting
of Shareholders of Consumer Portfolio Services, Inc. to be held at the offices
of said corporation at 16355 Laguna Canyon Road, Irvine, California 92618 on
Wednesday, May 26, 1999, at 10:00 a.m., and hereby appoints Charles E. Bradley,
Jr. and Jeffrey P. Fritz, and each of them, proxies and attorneys-in-fact, each
with power of substitution and revocation, and each with all powers that the
undersigned would possess if personally present, to vote the Consumer Portfolio
Services, Inc. Common Stock of the undersigned at such meeting and any
postponements or adjournments of such meeting, as set forth below, and in their
discretion upon any other business that may properly come before the meeting
(and any such postponements or adjournments).
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR
THE ELECTION OF THE NOMINEES, FOR PROPOSALS 2 AND 3, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
/x/ Please mark
votes as in
this example PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
FOR AGAINST ABSTAIN
1. Election of Directors Nominees: 2. To approve issuance of a warrant / / / / / /
Charles E. Bradley, Sr., Charles E. Bradley, Jr., to purchase up to 1,335,000 shares
John G. Poole, Robert A. Simms, William B. Roberts of common stock.
and Thomas L. Chrystie
FOR ALL WITHHELD
NOMINEES FROM ALL
NOMINEES
/ / / / 3. To ratify the appointment of KPMG / / / / / /
Peat Marwick LLP as independent
auditors of the Company for the
For all nominees except as noted above year ending December 31, 1999.
- -------------------------------------- 4. To transact such other business as / / / / / /
may properly come before the meeting
or any adjournment(s) thereof.
MARK HERE FOR / /
ADDRESS CHANGE
AND NOTE AT LEFT
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
Signature:_____________________________ Date:_________________ Signature:_____________________________ Date:________________
</TABLE>
NOTE: This proxy should be signed by the shareholder(s) exactly as his or her
name(s) appear(s) hereon, dated and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both persons should sign.
15
