DISTRIBUTION AND MANAGEMENT AGREEMENT

Distribution Agreement

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CONSUMER PORTFOLIO SERVICES, INC. | SUMNER HARRINGTON LTD.

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Title: DISTRIBUTION AND MANAGEMENT AGREEMENT
Governing Law: Minnesota Date: 1/7/2005
Industry: Consumer Financial Services Law Firm: Oppenheimer Wolff & Donnelly LLP;Andrews Kurth LLP

DISTRIBUTION AND MANAGEMENT AGREEMENT, Parties: consumer portfolio services inc. , sumner harrington ltd.

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EXHIBIT 1.1

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DISTRIBUTION AND MANAGEMENT AGREEMENT

DATED AS OF JANUARY __, 2005

CONSUMER PORTFOLIO SERVICES, INC.

AND

SUMNER HARRINGTON LTD.

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$100,000,000.00

RENEWABLE UNSECURED SUBORDINATED NOTES

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<TABLE>

TABLE OF CONTENTS

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<S> <C>

ARTICLE I DEFINITIONS..........................................................................1

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Section 1.01 Defined Terms..................................................................1

Section 1.02 Accounting Terms...............................................................4

ARTICLE II APPOINTMENT OF THE AGENT AND RELATED AGREEMENTS......................................5

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Section 2.01 Appointment; Exclusivity.......................................................5

Section 2.02 Scope of Agency................................................................5

Section 2.03 Compensation to the Agent......................................................6

Section 2.04 Brokers and Dealers............................................................8

Section 2.05 The Agent's Unrelated Activities...............................................8

Section 2.06 Best Efforts; Independent Contractor...........................................8

Section 2.07 Issuance and Payment............................................................8

ARTICLE III SERVICES; STANDARD OF CARE..........................................................8

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Section 3.01 Services for the Notes.........................................................8

Section 3.02 Maintenance of Files and Records..............................................11

Section 3.03 Monthly Reports to the Company................................................12

ARTICLE IV REPRESENTATIONS AND COVENANTS OF THE COMPANY........................................13

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Section 4.01 Representations, Warranties and Agreements of the Company.....................13

Section 4.02 Covenants of the Company......................................................20

ARTICLE V REPRESENTATIONS AND COVENANTS OF THE AGENT; CONDITIONS...............................22

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Section 5.01 Representations and Warranties of the Agent...................................22

Section 5.02 Covenants of the Agent........................................................24

ARTICLE VI CONDITIONS..........................................................................25

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Section 6.01 Conditions of the Agent's Obligations.........................................25

Section 6.02 Conditions of the Company's Obligations.......................................31

ARTICLE VII INDEMNIFICATION AND CONTRIBUTION...................................................31

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Section 7.01 The Company's Indemnification of the Agent....................................31

Section 7.02 The Agent's Indemnification of the Company....................................32

Section 7.03 Notice of Indemnification Claim...............................................33

Section 7.04 Contribution..................................................................34

Section 7.05 Notice of Contribution Claim..................................................34

Section 7.06 Reimbursement.................................................................35

Section 7.07 Arbitration...................................................................35

Section 7.08 Intellectual Property Infringement............................................35

Section 7.09 Confidentiality...............................................................35

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ARTICLE VIII TERM AND TERMINATION..............................................................36

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Section 8.01 Effective Date of this Agreement..............................................36

Section 8.02 Termination Prior to Initial Closing Date.....................................36

Section 8.03 Notice of Termination.........................................................37

Section 8.04 Termination After Initial Closing Date........................................37

Section 8.05 Termination Without Termination of Offering...................................38

ARTICLE IX MISCELLANEOUS.......................................................................38

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Section 9.01 Survival......................................................................38

Section 9.02 Notices.......................................................................38

Section 9.03 Successors and Assigns; Transfer..............................................39

Section 9.04 Cumulative Remedies...........................................................39

Section 9.05 Attorneys' Fees...............................................................39

Section 9.06 Entire Agreement..............................................................39

Section 9.07 Choice of Law; Venue..........................................................39

Section 9.08 Rights to Investor Lists......................................................39

Section 9.09 Waiver; Subsequent Modification...............................................40

Section 9.10 Severability..................................................................40

Section 9.11 Joint Preparation.............................................................40

Section 9.12 Captions......................................................................40

Section 9.13 Counterparts..................................................................40

Section 9.14 Third Party Contractors.......................................................40

</TABLE>

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DISTRIBUTION AND MANAGEMENT AGREEMENT

THIS DISTRIBUTION AND MANAGEMENT AGREEMENT is entered into as of this

___ day of January, 2005 by and between Consumer Portfolio Services, Inc., a

California corporation (the "Company"), and Sumner Harrington Ltd., a Minnesota

corporation (the "Agent").

RECITALS

WHEREAS, the Company proposes to register and publicly offer and sell

an aggregate principal amount of up to $100,000,000.00 of renewable, unsecured,

subordinated notes of the Company; and

WHEREAS, subject to the termination rights set forth herein, the

Company desires to appoint the Agent to act as the Company's exclusive selling

agent in connection with the offer, sale and renewal of such notes on a best

effort basis and as the Company's servicing agent to provide certain

administrative services with respect to the notes, and Agent desires to accept

such duties, all as provided for by the terms of this Agreement.

NOW, THEREFORE, in consideration of the above and for other good and

valuable consideration, receipt of which is acknowledged, and in consideration

of the mutual promises, covenants, representations and warranties hereinafter

set forth, the parties hereto agree as follows:

ARTICLE I

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DEFINITIONS

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SECTION 1.01 DEFINED TERMS. Whenever used in this Agreement, the

following terms have the respective meanings set forth below. The definitions of

such terms are applicable to the singular as well as to the plural forms of such

terms.

(a) ACCEPTED NOTE PRACTICES. As applicable to the context in

which this term is used, those procedures and practices with respect to

the offering, marketing, selling, servicing and administration of the

Notes that satisfy the following: (i) meet at least the same

demonstrable standards that Agent would follow in exercising reasonable

care in offering, marketing, selling, servicing and administering

similar programs for publicly offered notes or securities; (ii) comply

with all Governmental Rules; (iii) comply with the provisions of this

Agreement and the Indenture; and (iv) give due consideration to the

accepted standards of practice of prudent investment banking firms that

offer, market, sell, service or administer comparable programs for

publicly offered notes or securities and the reliance of the Company on

the Agent for the offering, marketing, selling, servicing and

administration of the Renewable Note Program.

(b) AGENT. Sumner Harrington Ltd., a Minnesota corporation, or

its successors in interest or assigns, if approved by the Company as

provided in Sections 5.02(c) and 9.03, below.

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including any exhibits or attachments hereto, as originally executed,

and as amended or supplemented from time to time in accordance with the

terms hereof.

(d) BUSINESS DAY. Any day other than (a) a Saturday or Sunday

or (b) another day on which banking institutions in the State of New

York or the State of Minnesota are authorized or obligated by law,

executive order, or governmental decree to be closed.

(e) COMMISSION or SEC. The Securities and Exchange Commission.

(f) COMPANY. Consumer Portfolio Services, Inc., or its

successors or assigns, if approved by Agent as provided in Section

9.03, below.

(g) DUE PERIOD. The monthly, quarterly, semi-annual, or annual

periods, or the full term of the Note if interest is due at maturity,

for which scheduled payments of interest will be paid on any Note.

(h) EXCHANGE ACT. The Securities Exchange Act of 1934, as

amended, and as hereafter amended, and the rules and regulations

thereunder.

(i) GOVERNMENTAL RULES. Any law, rule, regulation, ordinance,

order, code, interpretation, judgment, decree, policy, decision or

guideline of any governmental agency, court or authority.

(j) HOLDER. The registered owner of any Note as it appears on

the records of the Registrar, including any purchaser or any subsequent

transferee or other holder thereof.

(k) INCORPORATED DOCUMENTS. All documents that, on or at any

time after the effective date of the Registration Statement, are

incorporated by reference therein, in the Prospectus, or in any

amendment or supplement thereto.

(l) INDENTURE. That certain Indenture dated on or about

January __, 2005, by and between the Company and the Trustee with

respect to the Notes.

(m) INITIAL CLOSING DATE. ________________, 2005, or such

later date as may be agreed by the Company and the Agent.

(n) INVESTOR. Any person who purchases Notes or who contacts

the Agent expressing an interest in purchasing the Notes or requesting

information concerning the Notes.

(o) MATERIAL AGREEMENT. With respect to a person, any

agreement, contract, joint venture, lease, commitment, guaranty or

other contractual arrangement or any bond, debenture, indenture,

mortgage, deed of trust, loan or security agreement, note, instrument

or other evidence of indebtedness, which in the case of any of the

foregoing is material to the business, assets, operations, condition or

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prospects, financial or otherwise, of such person or which is material

to the ability of such person to perform its obligations under this

Agreement.

(p) NASD. National Association of Securities Dealers, Inc.

(q) NOTE CONFIRMATION. With respect to the issuance and

ownership of the Notes in book-entry form, an appropriate written

confirmation of the issuance and ownership or transfer of ownership of

a Note to a Holder, the format of which shall comply with the

provisions of the Indenture.

(r) NOTE PORTFOLIO. The aggregate of individual Notes, as it

exists from time to time, which, unless the context otherwise requires

or provides, determined by the principal balances of the Notes.

(s) NOTES. The renewable, unsecured, subordinated notes of the

Company that are being offered and sold pursuant to the Registration

Statement and that have an aggregate principal amount up to

$100,000,000.00 and such other terms as described in the Prospectus,

and any additional principal amount of the same or similar notes as may

be registered from time to time pursuant to the Registration Statement.

(t) OFFERING. The offer and sale of the Notes in accordance

with the terms and subject to the conditions set forth in the

Registration Statement.

(u) PAYING AGENT. Wells Fargo Bank, National Association or

its successors or assigns, or such other paying agent with respect to

the Notes as may be subsequently appointed by the Company pursuant to

the Indenture.

(v) PAYING AGENT AGREEMENT. That certain agreement, if any, by

and between the Company and the Paying Agent relating to the Company's

engagement of the Paying Agent to act as the paying agent for the

Notes.

(w) PAYING AGENT FEES. All fees and expenses payable to the

Paying Agent in accordance with the Paying Agent Agreement.

(x) PROPOSAL. That certain proposal made by the Agent to, and

accepted by, the Company dated ________________ with respect to the

Renewable Note Program.

(y) PROPRIETARY RIGHTS. All rights worldwide in and to

copyrights, rights to register copyrights, trade secrets, inventions,

patents, patent rights, trademarks, trademark rights, confidential and

proprietary information protected under contract or otherwise under

law, and other similar rights or interests in intellectual or

industrial property.

(z) PROSPECTUS. The prospectus included in the Registration

Statement at the time it was declared effective by the Commission, as

supplemented by all prospectus supplements (including interest rate

supplements) related to the Notes that are filed with the Commission

pursuant to Rules 424(b) or (c) under the Securities Act. References to

the Prospectus shall be deemed to refer to and include the Incorporated

Documents to the extent incorporated by reference therein.

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(aa) REDEMPTION PAYMENT. The payment of principal plus any

accrued and unpaid interest that is being made at the discretion of the

Company in accordance with the Indenture.

(bb) REGISTRATION STATEMENT. That certain Registration

Statement on Form S-2_ (File No. ___________) of the Company with

respect to the Notes filed with the Securities and Exchange Commission

under the Securities Act on or about _____________, 2005, as amended

and declared effective by the Commission, including the respective

copies thereof filed with the Commission. References to the

Registration Statement shall be deemed to refer to and include the

Incorporated Documents to the extent incorporated by reference therein.

(cc) RENEWABLE NOTE PROGRAM. The marketing, subscription and

sale, administration, customer service and investor relations,

registration of ownership, reporting, payment, repurchase, redemption,

renewal and related activities associated with the Notes.

(dd) REPURCHASE PAYMENT. The payment of principal plus any

accrued and unpaid interest, less any penalties upon the repurchase of

any Note, that is being made at the request of the Holder in accordance

with the Indenture.

(ee) SCHEDULED PAYMENT. For any Due Period and any Note, the

amount of interest and/or principal indicated in such Note as required

to be paid by the Company under such Note for the Due Period and giving

effect to any rescheduling or reduction of payments in any insolvency

or similar proceeding and any portion thereof.

(ff) SECURITIES ACT. The Securities Act of 1933, as amended,

and as hereafter amended, and the rules and regulations thereunder.

(gg) SUBSCRIPTION AGREEMENT. A subscription agreement entered

into by a Person under which such Person has committed to purchase

certain Notes as identified thereby, in such form and substance as

mutually agreed by the parties and as filed as an exhibit to the

Registration Statement.

(hh) TRUST ACCOUNT. The trust account established by the

Trustee pursuant to the Indenture.

(ii) TRUST INDENTURE ACT. The Trust Indenture Act of 1939, as

amended, and as hereafter amended, and the rules and regulations

thereunder.

(jj) TRUSTEE. Wells Fargo Bank, National Association, or its

successors or assigns, or any replacement Trustee under the terms of

the Indenture.

(kk) TRUSTEE'S FEES. All fees and expenses payable to the

Trustee in accordance with the Indenture.

SECTION 1.02 ACCOUNTING TERMS. Unless otherwise specified in this

Agreement, all accounting terms used in this Agreement shall be interpreted, all

accounting determinations under this Agreement shall be made, and all financial

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statements required to be delivered by any person pursuant to this Agreement

shall be prepared, in accordance with U.S. generally accepted accounting

principles, as in effect from time to time and as applied on a consistent basis.

To the extent such principles do not apply to certain reports or accounting

practices of the Agent, the parties will mutually agree on the accounting

practices and assumptions.

ARTICLE II

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APPOINTMENT OF THE AGENT AND RELATED AGREEMENTS

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SECTION 2.01 APPOINTMENT; EXCLUSIVITY. On the basis of the

representations, warranties and agreements herein contained, and subject to the

terms and conditions set forth herein and in the Prospectus during the term of

this Agreement, the Company appoints the Agent as its exclusive agent for

purposes of selling, including the offer and sale of the Notes, and servicing,

including the servicing and administration of the Notes, in each case, under the

Renewable Note Program upon the terms and conditions set forth herein,

including, without limitation, compliance and conformity with Accepted Note

Practices and Governmental Rules, and the Agent agrees to use its best efforts

as such agent to offer and sell the Notes to Investors until the later of the

termination of the Offering or the sale of all of the Notes, or until the

termination of this Agreement, if earlier. In connection with the administration

of the Renewable Note Program, the Agent will carry out the duties provided for

herein and as described in the Prospectus as being carried out by the Agent.

During the term of this Agreement, the Company agrees to direct to the Agent all

inquiries it receives with respect to sales of the Notes or administration of

the Renewable Notes Program, as applicable.

SECTION 2.02 SCOPE OF AGENCY. In the performance of its duties

hereunder, the Agent shall have full power and authority to take any and all

actions for purposes of selling, including the offer and sale of Notes, and

servicing, including the servicing and administration of the Notes, in each

case, under the Renewable Note Program that the Agent, in its discretion, deems

necessary or appropriate, subject in all respects to compliance and conformity

with Accepted Note Practices and Governmental Rules. Such discretion shall

include, without limitation, the right to accept or reject Subscription

Agreements, waive or reduce early repurchase penalties when appropriate, change

interest payment dates, enforce early repurchase penalties and allow prepayment

of Notes, with or without penalty, subject, in each case to such limitations or

conditions as may be provided in the Indenture. Notwithstanding the foregoing,

the Agent's authority to take any action on the Company's behalf, other than the

rejection of Subscription Agreements, which has an immediately discernable,

direct financial impact of $500 or more shall be subject to receiving the prior

written consent of the Company. In the performance of its duties hereunder, the

Agent shall (i) act as the agent of the Company in connection with the Renewable

Note Program; (ii) hold, in trust and as custodian, all Subscription Agreements,

notices or other documents received by it in connection with the Renewable Note

Program for the sole and exclusive use and benefit of the Company; and (iii)

make dispositions of the items in clause (ii) only in accordance with this

Agreement or at the written direction of the Company. Except as set forth herein

with respect to the Renewable Note Program, the Agent shall have no authority,

express or implied, to act in any manner or by any means for or on behalf of the

Company.

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SECTION 2.03 COMPENSATION TO THE AGENT.

(a) THE AGENT'S FEES AND COMMISSIONS. In consideration of the

agreement of the Agent to provide its services as set forth in this

Agreement, the Company will pay the Agent the following amounts:

(i) a commission as set forth in Exhibit B to the

Proposal (which exhibit is hereby incorporated by reference),

which shall be payable in consideration for the Agent's

selling and marketing of Notes; and

(ii) an annual portfolio management fee equal to

0.25% of the weighted average daily principal balance of the

Note Portfolio, to be invoiced monthly as provided below,

which shall be payable in consideration for the administrative

services provided by the Agent.

(b) THE AGENT'S EXPENSES. The Company agrees with the Agent

that whether or not this Agreement is terminated or cancelled or the

sale of the Notes hereunder is consummated, and regardless of the

reason for or cause of any such termination, cancellation, or failure

to consummate, the Company will pay or cause to be paid to the

applicable persons the following, whether incurred prior or subsequent

to the date of this Agreement:

(i) subject to the prior written approval by the

Company and in addition to such other costs specifically

provided for below, all reasonable out-of-pocket costs of the

Agent or its affiliates incurred in connection with the

Offering, including, but not limited to, designing, printing

and mailing all offering and advertising materials, document

fulfillment services, advertisements in newspapers, on the

radio, on the internet and through direct mail, operating a

toll-free telephone number, and assisting the Company with

creating a web site, including any costs of a web developer or

other third party consultants;

(ii) all reasonable fees and expenses of persons

(other than the Agent and its affiliates), including, without

limitation, fees and expenses of the Company's auditors and

legal counsel, in connection with the preparation, printing,

filing, and delivery of the Registration Statement (including

the financial statements therein and all amendments,

schedules, and exhibits thereto), the Prospectus, and any

amendment thereof or supplement thereto;

(iii) to the extent applicable, all reasonable fees

and expenses incurred in connection with the qualification of

the Notes for offer and sale under the securities or Blue Sky

laws of the states and other jurisdictions which the Agent may

designate (with the prior approval of the Company) in

accordance with the terms herewith;

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(iv) all reasonable out-of-pocket costs incurred by

the Agent or any other contractor in connection with the

preparation, printing, filing, and delivery of maturity and

renewal notices, quarterly statements, newsletters and any

other materials to be sent to Holders in connection with the

Notes or the Offering;

(v) all reasonable fees and expenses of the Agent's

legal counsel related to the Offering and the ongoing

servicing and administration of the Renewable Note Program as

provided herein;

(vi) all fees and expenses of the Trustee and the

Paying Agent in connection with the Notes, and

(vii) all reasonable out-of-pocket costs incidental

to the performance of the Agent's obligations hereunder with

respect to the ongoing servicing and administration of the

Renewable Note Program that are not otherwise specifically

described herein.

The provisions of this Section are intended to relieve the Agent from the

payment of reasonable fees, expenses and out-of-pocket costs that the Company

hereby agrees to pay and shall not impair or limit any of the other obligations

of the Company hereunder to the Agent.

of each month, or as soon thereafter as practicable, the Agent shall

provide the Company with a written invoice for such month's fees and

commissions that are payable with respect to Notes issued up to the

last five Business Days of such month, and Notes issued in the last

five Business Days of the immediately preceding month that are, in each

case, not rescinded. Such commissions and fees will be due and payable

by the later of the fifteenth (15th) day of every month or fifteen (15)

days after the date such invoice is received.

(d) PRIOR PAYMENTS. The parties hereby acknowledge prior

payment of $_________________ to the Agent as a deposit against its due

diligence costs, which amount was paid upon execution of the Proposal.

Upon the request of the Company, the Agent will provide a written

accounting of this deposit to the Company. Any remaining funds from

this deposit will be applied against the Agent's expenses related to

marketing and administering the Notes. To the extent that this

Agreement is terminated, the Agent will promptly refund the excess of

any unused portion of such funds over amounts otherwise owed hereunder.

(e) COMPENSATION LIMITATIONS. Notwithstanding any other

provision of this Agreement or of EXHIBIT A, other as provided in

Section 2.03(b) and (d) in the event of termination of this Agreement,

in no event will the Company pay or cause to be paid to the Agent or

its affiliates (including Agency, as defined in Section 3.01(b)(i))

compensation under Section 2.03(a), Section 2.03(b) and Exhibit A, in

the aggregate, in excess of 8% of the aggregate principal amount of the

Notes sold from time to time hereunder.

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SECTION 2.04 BROKERS AND DEALERS. The Agent may, in its sole discretion

and at no additional obligation or expense to the Company, use the services of

other brokers or dealers who are members in good standing of the NASD in

connection with the offer and sale of the Notes. The Agent may enter into

agreements with any such broker or dealer to act as its sub-agents for the sale

of the Notes and shall be solely responsible for the payment of any portion of

the Agent's compensation hereunder to such broker or dealer.

SECTION 2.05 THE AGENT'S UNRELATED ACTIVITIES. The Company agrees that

the Agent may sell other notes or securities in offerings similar to the

Offering for other issuers during the course of the Offering, and the Agent (and

the Agency as defined in Section 3.01(b) below) may advertise other notes or

securities of other issuers on websites, in print, by radio, or by any other

means and at such times as they may determine. The Agent shall have the right to

advertise or otherwise disclose to unrelated prospective issuers, at its own

expense, its relationship with the Company, the services it provides in

connection with the Notes and the amount of money that it raised through the

Offering and the performance of the Offering.

SECTION 2.06 BEST EFFORTS; INDEPENDENT CONTRACTOR. Anything to the

contrary notwithstanding, the Agent shall have no obligation to sell any minimum

principal amount of Notes or to purchase Notes for its own account, for resale

or for any other purpose, but rather the Agent shall use its best efforts as

selling agent in connection with the Offering of the Notes. During the term of

this Agreement, all actions taken by the Agent pursuant to this Agreement shall

be in the capacity of an independent contractor, all sales of Notes conducted by

the Agent shall be solely for the account and at the risk of the Company, and in

no event shall the Agent have any obligations under the Notes.

SECTION 2.07 ISSUANCE AND PAYMENT. The Notes shall be issued pursuant

to the Indenture and all Scheduled Payments, Redemption Payments and Repurchase

Payments shall be made by electronic funds transfer or automated clearing house

(i.e., ACH) remittance from the Trust Account by the Paying Agent in accordance

with the Paying Agent Agreement and the Indenture.

ARTICLE III

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SERVICES; STANDARD OF CARE

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SECTION 3.01 SERVICES FOR THE NOTES. The services to be provided to the

Company by the Agent pursuant to and during the term of this Agreement shall

include the following:

(a) NOTE STRUCTURE AND INTEREST RATES. During the term of this

Agreement, the Agent shall advise the Company regarding the structure

of the Notes and provide sample document forms. Throughout the

Offering, the Agent shall assist the Company in determining appropriate

Note terms and interest rates based on current market conditions and

the Company's capital goals.

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(b) MARKETING AND ADVERTISING. During the term of this

Agreement, the Agent shall develop and execute a direct response

marketing strategy for the Notes designed to meet the Company's capital

goals in a timely manner, which shall be subject to the prior approval

of the Company. The Agent shall also oversee designing and printing all

marketing materials, in accordance with the Securities Act, including

the applicable rules and regulations and any other requirements of the

SEC and the NASD and any other Governmental Rules.

(i) For purposes of Sections 2.05 and 3.01 only,

Sumner Harrington Agency, Inc., an affiliate of the Agent (the

"Agency"), is hereby made a party to this Agreement. During

the term of the Agent's activities to market and sell the

Notes hereunder, the Agency will provide the Company with

media planning, media buying, media production, media

placement and other marketing services related to the Offering

as described on EXHIBIT A hereto, and the terms of which shall

be binding upon the Company and the Agency.

(ii) Notwithstanding the foregoing, the authority of

the Agent and the Agency with respect to all ad placements and

use of all marketing materials shall be subject to receiving

the prior written approval of the Company.

(iii) In order to minimize advertising costs, the

Agent and/or the Agency may recommend that the Company enter

into long term contracts (not to exceed one year) with various

newspapers and radio stations, and in such event, in addition

to the direct cost of the advertisements themselves, the

Company shall be responsible for any termination fees that

result from the early cancellation of such contracts if

approved by the Company.

(iv) During the term of this Agreement, the Company

shall allow the Agent and the Agency to use the Company's

logo, corporate colors, trademarks, trade names, fonts, and

other aspects of corporate identity in advertisements and

marketing materials related to the Notes and on the Agent's

website, subject to the Company's prior written approval of

the specific use of these items in writing in each instance

(which shall not be unreasonably withheld). Neither the Agent

nor the Agency will make use of the Company's logo, corporate

colors, trademarks or trade names in any manner that would

reasonably be expected to disparage or damage such marks or

the reputation of the Company or diminish the Company's

goodwill. It is expressly agreed that neither the Agent nor

the Agency is acquiring any right, title or interest in the

Company's logo, corporate colors, trademarks or trade names,

and the rights of the Agent and Agency to use the same shall

terminate upon the termination of this Agreement.

Agreement, the Agent shall review and process each Subscription

Agreement for the Notes received from an Investor with the objective of

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determining whether (i) such agreement is complete and accurate in all

material respects, including without limitation the execution thereof

by such Investor, (ii) such Investor timely remits the proper purchase

price for the Notes in accordance with the Subscription Agreement, and

(iii) the principal amount, interest rate and term to maturity and any

other material terms of the Notes are verified for accuracy and

completeness. Upon delivery by each Investor of a completed

Subscription Agreement for Notes and full payment of the principal

amount of such Notes in accordance with the Investor's Subscription

Agreement, and subject to the prior written consent of the Company if

required pursuant to Section 2.02 (which, for the avoidance of doubt,

may be given in the form of general directives to sell up to a

particular aggregate amount of Notes) the Agent shall promptly (i)

accept or reject such Subscription Agreements on the Company's behalf

based upon such factors as the Agent shall determine, including,

without limitation, the suitability of the proposed Investor, (ii)

verify that the payment of the principal amount of such Investor's

accepted subscription for the Notes is being remitted to the Company in

accordance with the Subscription Agreement in an account established by

the Company for such purpose or in such other manner as may be directed

by the Company from time to time, and (iii) remit to the Trustee

electronic or hard copies of all accepted Subscription Agreements and

related records as may be reasonably requested by the Trustee,

including without limitation, a record of each deposit relating to the

payment of the subscription amount of the Notes. Pursuant to the

preceding sentence, Notes shall be issued by the Agent on the Company's

behalf in book-entry form only and the Agent shall deliver a Note

Confirmation to each Holder with respect to such Holder's respective

accepted Subscription Agreement and the receipt of full payment for

such Holder's Notes. The Company hereby appoints the Agent, and the

Agent hereby accepts such appointment, as its initial Registrar (as

such term is defined in the Indenture) for the Notes pursuant to the

terms of the Indenture. For so long as the Agent shall serve as the

Registrar for the Notes, the Agent shall perform, in accordance with

the terms of the Indenture, all of the duties and obligations of the

Registrar under the Indenture, including, without limitation, the

obligation to maintain a book-entry registration and transfer system

for the ownership of the Notes in accordance with the terms of the

Indenture.

(d) INVESTOR RELATIONS AND REPORTING. During the term of this

Agreement, the Agent, in conjunction with the Trustee, shall manage all

aspects of the customer service and investor relations functions with

respect to the Offering, including, but not limited to, handling all

inquiries from Investors, mailing investment kits, delivering to each

Investor the Prospectus and Subscription Agreement, meeting with

Investors, processing Subscription Agreements, responding to all

written or telephonic questions by Investors and Holders relating to

the Notes, recording changes in Holders' addresses or accounts, issuing

maturity and renewal notices, quarterly statements and newsletters to

Holders, directing the Paying Agent to make Scheduled Payments,

Repurchase Payments and Redemption Payments to Holders in a timely

manner, and directing the Paying Agent to issue Form 1099INT's to

Holders as required by law. In addition, the Agent shall provide the

Trustee (and copy the Company) with management reports regarding the

Notes as required under the Indenture.

<PAGE>

(e) WEB SITE DEVELOPMENT. Subject to compliance and conformity

with Accepted Note Practices by the Agent, the Agent (or a third party

service provider working at the Agent's direction) shall assist the

Company in developing a dedicated Internet web site separate from the

Company's corporate site to allow Investors to view online and download

copies of the Offering documents (including the Prospectus and

Subscription Agreement) and marketing materials that are included in

the investment kit or comparable information.

(f) OWNERSHIP OF WEB PAGES. Any and all web pages developed or

maintained by the Agent in connection with the marketing and selling of

the Notes (the "Web Pages"), and all associated Proprietary Rights,

shall be owned exclusively by the Agent; provided, however, it is

expressly acknowledged and agreed that the Company shall retain, and

the Agent shall not hereby acquire, any Proprietary Rights in the

Company's logos, corporate colors, trademarks, trade names, and

slogans, any descriptions of the Company's business. The Agent hereby

grants the Company a nonexclusive, perpetual, worldwide license to use

the Web Pages for the purpose of marketing and selling the Notes.

SECTION 3.02 MAINTENANCE OF FILES AND RECORDS. The Agent shall

establish and maintain at all times during the term of this Agreement files and

records (including, without limitation, computerized records) regarding the

Notes and the Note Portfolio, with full and correct entries of all transactions

or modifications in a reasonably secure, up-to-date manner and in accordance

with the following:

(a) LOCATION. All Note and Note Portfolio files and records

shall be stored and maintained at the Agent's principal place of

business, or other location as designated by the Agent. The Agent shall

keep in its files all correspondence received or sent regarding each

Note, each Investor, and each Holder, whether upon any purchase or

transfer of a Note.

(b) ORIGINAL DOCUMENTS. The Agent will store all original

Subscription Agreements, Note Confirmations, correspondence from

Investors and Holders and other materials relating to the Renewable

Note Program in a reasonably secure manner at the Agent's principal

offices or such other location as may be agreed upon with the Company.

The Agent shall exercise due care in handling and delivering the

original documents and the other documents in the Note files and

records. The Agent shall not grant or allow any person an interest in

original documents or rights thereunder, and all original documents in

the possession of the Agent shall be deemed to be in the possession of

the Company.

business hours, the Company and its agents and representatives may

physically inspect any documents, files or other records relating to

the Renewable Note Program and discuss the same with the Agent's

officers and employees. The Agent shall supply copies of any such

documents, files, or other records upon the request of the Company, as

soon as is reasonably and commercially practicable at the Company's

cost and expense.

<PAGE>

(d) RETENTION. Unless otherwise requested by the Company, or

unless otherwise required by Governmental Rules, the Agent shall

retain, with respect to each Note, for a period of 24 months from the

date the Note is fully paid, all records, files and documents related

to each such Note. At the end of such 24-month period, all such items

shall be transferred to the Company, or to a third party as designated

by the Company, at the Company's sole cost and expense. The Agent shall

be permitted to retain copies of any such documents for its own files

for its own account and at its own expense. The Agent shall maintain

the privacy of the Investors and Holders in accordance with all

applicable Governmental Rules.

(e) RETURN. If this Agreement is terminated, the Agent shall

promptly deliver to the Company or its designee, as the case may be,

all Note files and records (including, without limitation, copies of

computerized records and servicing and other software, except as may be

prohibited by any third party contract or license) related to the

selling and servicing of the Notes and all monies collected by it

relating to the Renewable Note Program (less any fees or expenses due

to the Agent). The Agent shall be entitled to make and keep copies of

such records, at its cost and expense. In addition to delivering such

data and monies, the Agent shall use its best efforts to effect the

orderly and efficient transfer of the selling and servicing of the

Notes to the Company or other party designated by the Company to assume

responsibility for such selling and servicing, including, without

limitation, directing Holders to remit all repurchase or other notices

to the address designated by the Company. All costs of conversion and

transfer of such records to the Company or another agent shall be paid

by the Company.

(f) SECURITY. The parties shall take appropriate security

measures to protect customer nonpublic personal information ("NPI"), as

defined in the Gramm-Leach-Bliley Act of 1999, Title V, and its

implementing regulations, against accidental or unlawful destruction

and unauthorized access, tampering, and copying during storage in

either party's computing or paper environment. Access to NPI must be

restricted to only the personnel that have a business need relating to

the Renewable Note Program. NPI must be stored in a secured format

within all systems at both parties' location and any other locations

where the data may reside. Transmission of such NPI between the parties

or vendors must be done in a secure manner, in a method mutually agreed

upon by both parties. Each party will engage appropriate and

industry-standard measures necessary to meet information security

guidelines as required by the Gramm-Leach-Bliley Act, Title V and its

implementing regulations as applicable to such party to effectuate this

Agreement.

SECTION 3.03 INFORMATION TO THE COMPANY. As agreed by the parties, the

Agent shall make reports and analyses available to the Company regarding the

status of the Note Portfolio, the marketing efforts and the amount of Notes

remaining available for issuance under the Registration Statement. The Agent

shall also provide interim or custom reports at the Company's request as is

commercially reasonable, including, without limitation, a weekly update via

email identifying new Holders by name, address and principal amount of Notes

purchased.

<PAGE>

ARTICLE IV

----------

REPRESENTATIONS AND COVENANTS OF THE COMPANY

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

SECTION 4.01 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.

The Company represents and warrants to and agrees with the Agent as follows,

which representations and warranties shall be deemed to be made continuously

from and as of the date hereof until this Offering is terminated and all then

outstanding Notes have been paid in full or such earlier date that this

Agreement has been terminated, except for those representations and warranties

that address matters only as of a particular date, which representations and

warranties shall be deemed to be made as of such date.

(a) The Company satisfies all of the requirements for the use

of Form S-2 with respect to the offer and sale of securities as

contemplated by the Offering. The Commission has not issued any order

preventing or suspending the use of the Registration Statement or

Prospectus and no proceeding for that purpose has been instituted or,

to the Company's knowledge, threatened by the Commission or the

securities authority of any state or other jurisdiction.

(b) The Registration Statement, in the form in which it became

effective and also in such form as it may be when any post-effective

amendment thereto shall become effective, and the Prospectus, and any

supplement or amendment thereto when filed with the Commission under

Rule 424 under the Securities Act, complied or will comply with the

provisions of the Securities Act and the Trust Indenture Act, and did

not or will not at any such times contain an untrue statement of

material fact or omit to state a material fact required to be stated

therein or necessary to make the statements made therein, in light of

the circumstances in which they were made, not misleading, except that

this representation and warranty does not apply to: (i) any statements

in, or omissions from the Agent Disclosure Statements (as defined in

Section 5.01(f) below) in the Registration Statement or the Prospectus,

or any amendment thereof or supplement thereto; or (ii) statements in

or omissions from the Registration Statement (or any amendment thereto)

related to or resulting from the specific terms of the Offering, which

terms are included in the Prospectus.

they were filed, complied in all material respects with the

requirements of the Exchange Act, and all subsequently filed

Incorporated Documents will, at the time they are filed, comply in all

material respects with the requirements of the Exchange Act. No such

previously filed Incorporated Document, when filed, contained an untrue

statement of a material fact or omitted to state a material fact

required to be stated therein or necessary in order to make the

statements therein not misleading; and no such further Incorporated

Document, when filed, will contain an untrue statement of a material

fact or omit to state a material fact required to be stated therein or

necessary in order to make the statements therein not misleading,

except that this representation and warranty does not apply to the

extent that any misstatement or omission in any Incorporated Document

is superseded by a subsequent Incorporated Document, but in such case

only with respect to the period from and after the filing of the

subsequent Incorporated Document.

<PAGE>

(d) The Company has been duly incorporated and is validly

existing as a corporation in good standing under the laws of the State

of California, with full power and authority to own, lease and operate

its properties and conduct its business as described in the

Registration Statement, the Prospectus and the Incorporated Documents.

The Company is duly qualified to do business and is in good standing in

each jurisdiction in which the ownership or lease of its properties or

the conduct of its business requires such qualification and in which

the failure to be qualified or in good standing would have a material

adverse effect on the condition (financial or otherwise), earnings,

operations or business of the Company and, to the best of the Company'

s knowledge, no proceeding has been instituted in any such jurisdiction

revoking, limiting or curtailing, or seeking to revoke, limit or

curtail, such power and authority or qualification.

(e) Each subsidiary of the Company has been duly incorporated

or organized and is validly existing in good standing under the laws of

the jurisdiction of its incorporation or organization, with full power

and authority to own, lease and operate its properties and conduct its

business as described in the Registration Statement, the Prospectus and

the Incorporated Documents. Each such subsidiary is duly qualified to

do business and is in good standing in each jurisdiction in which the

ownership or lease of its properties or the conduct of its business

requires such qualification and in which the failure to be qualified or

in good standing would have a material adverse effect on the condition

(financial or otherwise), earnings, operations or business of the

Company and, to the best of the Company' s knowledge, no proceeding has

been instituted in any such jurisdiction revoking, limiting or

curtailing, or seeking to revoke, limit or curtail, such power and

authority or qualification.

(f) The Company and each subsidiary has operated and is

operating in material compliance with all authorizations, licenses,

certificates, consents, permits, approvals and orders of and from all

state, federal and other governmental regulatory officials and bodies

necessary to own its properties and to conduct its business as

described in the Registration Statement, the Prospectus and the

Incorporated Documents, all of which are, to the best of the Company's

knowledge, valid and in full force and effect. The Company and each

subsidiary is conducting its business in substantial compliance with

all applicable laws, rules and regulations of the jurisdictions in

which it is conducting business, and the Company and each subsidiary is

not in material violation of any applicable law, order, rule,

regulation, writ, injunction, judgment or decree of any court,

government or governmental agency or body, domestic or foreign, having

jurisdiction over the Company or any such subsidiary or their

respective over its properties.

(g) The Company and each subsidiary is not in violation of its

certificate or articles of incorporation or bylaws (or similar

governing documents) or in default in the performance or observance of

any obligation, agreement, covenant or condition contained in any

Material Agreement to which it is a party or by which it or its

properties are bound.

(h) The Company has full requisite power and authority to

enter into this Agreement and perform the transactions contemplated

hereby. This Agreement has been duly authorized, executed and delivered

<PAGE>

by the Company and is a valid and binding agreement on the part of the

Company, enforceable against the Company in accordance with its terms

subject to bankruptcy, insolvency, fraudulent transfer, reorganization,

moratorium and similar laws of general applicability relating to or

affecting creditors' rights and to general principles of equity. The

performance of this Agreement and the consummation of the transactions

herein contemplated will not result in a breach or violation of any of

the terms and provisions of, or constitute a default under:

(i) any Material Agreement to which the Company or

any subsidiary is a party or by which the Company or any

subsidiary or their respective properties may be bound;

(ii) the articles of incorporation or bylaws of the

Company, or

(iii) any applicable law, order, rule, regulation,

writ, injunction, judgment or decree of any court, government

or governmental agency or body, domestic or foreign, having

jurisdiction over the Company or any subsidiary or their

respective properties.

(i) No consent, approval, authorization or order of or

qualification with any court, governmental agency or body, domestic or

foreign, having jurisdiction over the Company or over its properties is

required for the execution and delivery of this Agreement and the

consummation by the Company of the transactions herein contemplated,

except such as may be required under the Securities Act, the Exchange

Act, the Trust Indenture Act, or under state or other securities or

blue sky laws, all of which requirements have been satisfied.

(j) Except as is otherwise expressly described in or

incorporated by reference into the Registration Statement or

Prospectus, there is neither pending nor, to the best of the Company's

knowledge, threatened, any action, suit, claim or proceeding against

the Company or any subsidiary or any of their respective officers or

properties, assets or rights before any court, government or

governmental agency or body, domestic or foreign, having jurisdiction

there over which, if successful, would be likely to (A) result in any

material adverse change in the condition (financial or otherwise),

earnings, operations or business of the Company or might materially and

adversely affect its properties, assets or rights, or (B) prevent

consummation of the transactions contemplated hereby.

(k) The authorized, issued and outstanding capital stock of

the Company is as set forth in the Prospectus and the shares of issued

and outstanding Common Stock set forth thereunder have been duly

authorized, validly issued, are fully paid and non-assessable, have

been issued in compliance with all federal and state securities laws,

were not issued in violation of or subject to any preemptive rights or

other rights to subscribe for or purchase securities, and the

authorized and outstanding capital stock of the Company conforms in all

material respects with the statements relating thereto contained or

incorporated by reference in the Registration Statement and the

Prospectus. The Notes to be sold hereunder by the Company have been

duly authorized for issuance and sale pursuant to the Indenture and

<PAGE>

this Agreement and, when issued and delivered against payment therefor

in accordance with the terms of the Indenture and this Agreement, will

be duly and validly issued and fully paid and non-assessable and will

constitute valid and legally binding obligations of the Company

enforceable in accordance with their terms, subject to bankruptcy,

insolvency, fraudulent transfer, reorganization, moratorium and similar

laws of general applicability relating to or affecting creditors'

rights and to general principles of equity and will be sold free and

clear of any pledge, lien, security interest, encumbrance, claim or

equitable interest; and no preemptive right, co-sale right,

registration right, right of first refusal or other similar right of

stockholders exists with respect to any of the Notes to be sold

hereunder by the Company or the issuance and sale thereof.

(l) KPMG LLP, which has expressed its opinion with respect to

certain of the financial statements filed or incorporated by reference

as part of the Registration Statement, is an independent accounting

firm within the meaning of the Securities Act. The financial statements

of the Company set forth or incorporated by reference in the

Registration Statement and Prospectus comply in all material respects

with the requirements of the Securities Act and fairly present the

financial position and the results of operations of the Company at the

respective dates and for the respective periods to which they apply in

accordance with generally accepted accounting principles consistently

applied throughout the periods involved; and the supporting schedules

included or incorporated by reference in the Registration Statement

present fairly the information required to be stated therein.

(m) Subsequent to the respective dates as of which information

is given in the Registration Statement and Prospectus, except as is

otherwise disclosed in the Registration Statement or Prospectus or as

is otherwise incorporated into the Registration Statement pursuant to

the Securities Act, there has not been (i) any material adverse change

in the condition, financial or otherwise, earnings, affairs or business

prospects of the Company or any subsidiary, or (ii) any material

transactions entered into by the Company, or any of its subsidiaries,

other than those in the ordinary course of business, including, without

limitation:

(i) any material change in the capital stock or

long-term debt (including any capitalized lease obligation) or

material increase in the short-term debt of the Company;

(ii) any material issuance of options (other than to

directors and employees of the Company), warrants, convertible

securities or other rights to purchase the capital stock of

the Company;

(iii) any material adverse change, or any development

involving a material adverse change, in or affecting the

condition (financial or otherwise), earnings, operations,

business or business prospects, management, financial

position, stockholders' equity, results of operations or

general condition of the Company;

<PAGE>

(iv) any transaction entered into by the Company that

is material to the Company, except transactions entered into

by the Company in the ordinary course of business that are

consistent with past practices (including without limitation

any securitization transaction);

(v) any material obligation, direct or contingent,

incurred by the Company, except obligations incurred in the

ordinary course of business; or

(vi) any loss or damage (whether or not insured)

sustained to the property of the Company, which has a material

adverse effect on the condition (financial or otherwise),

earnings, operations or business of the Company.

(n) Except as is otherwise expressly disclosed in the

Registration Statement or Prospectus or as is otherwise incorporated

into the Registration Statement pursuant to the Securities Act:

(i) the Company and its subsidiaries have good and

marketable title to all of the property, real and personal,

and assets described in the Registration Statement or

Prospectus as being owned by them, free and clear of any a

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