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Three and Six Month Renewable Unsecured Subordinated Notes One, Two, Three, Four, Five and Ten Year ... - page 21 / 40

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account. In pre-funded securitizations, we effectively lock in our borrowing costs with respect to the automobile contracts we subsequently sell into the securitization. However, we incur an expense in pre-funded securitizations equal to the difference between the money market yields earned on the proceeds held in escrow prior to subse- quent delivery of automobile contracts and the interest rate paid on the securities issued in the securitization. The amount of such expense may vary. Despite these mitigation strategies, an increase in prevailing interest rates would cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows.

RECENT DEVELOPMENTS

Past Non-compliance with Nasdaq Listing Requirement

We were for some time non-compliant with the minimum bid price requirement for continued listing on the Nasdaq Global Market. We cured such non-compliance as of January 11, 2011, but there can be no assurance that the market price for our common stock might not again drop below Nasdaq’s requirement. If that were to occur, our stock could be delisted. On August 24, 2010, we received from Nasdaq a staff deficiency letter indicating that we had failed to comply with the minimum bid price requirement for continued listing on the Nasdaq Global Mar- ket. A minimum bid price of $1.00 per share is required by Nasdaq Rule 5450(a)(1). Our common stock re- mained listed on the Nasdaq Global Market during the 180-day grace period following such notification of non- compliance. We had until February 22, 2011 to regain compliance with the minimum price rule; otherwise our common stock would have been subject to delisting. We considered several steps that could have been taken to maintain public trading of our common stock. Such steps included (i) proposing and submitting to our sharehold- ers for approval a reverse stock split, (ii) transferring the listing of our common stock to the Nasdaq Capital Mar- ket, or (iii) arranging for the quotation of trades in respect of our common stock through market makers on the OTCQB market. It should be noted that alternative (ii), transfer to the Nasdaq Capital Market, would have done no more than extend the grace period for 180 days following transfer of listing. In the event, we regained compliance without taking any of those steps.

We were subsequently non-compliant with Nasdaq’s requirement of a minimum $15 million aggregate market value of publicly-held shares, which is equivalent in our case to a minimum daily closing bid price of approx- imately $1.18 per share. On June 29, 2011, we received from Nasdaq a staff deficiency letter indicating that we had failed to comply with the minimum requirement for aggregate market value of publicly-held shares. We cured such non-compliance as of July 19, 2011, but there can be no assurance that the market price for our common stock might not again drop below Nasdaq’s requirement and remain below that level for 30 consecutive business days. If that were to occur, we would expect to be notified again of non-compliance with the Nasdaq requirement, and to begin again a 180-day period for cure. If we failed to cure such a deficiency within such period, our stock could be delisted. It should be noted that, as of the date of this prospectus, we are below the $15 million standard, based on a closing bid price on August 12, 2011 of $1.01 per share,

Waivers and Amendments of Financial and Performance Covenants

Certain of our securitization transactions and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include (i) maintaining minimum levels of liquidity or warehouse financing availability, (ii) maintaining minimum levels of adjusted net worth, (iii) not ex- ceeding maximum leverage levels, and (iv) not exceeding maximum financial losses. In addition, certain of our securitization and non-securitization related debt contains cross-default provisions which would allow certain of our creditors to declare a default if a default were declared under a different facility. As a result of waivers and amendments to these covenants and cross-default provisions throughout 2009 and through the date of this prospec- tus, we were in compliance with all such covenants and cross-default provisions as of each monthly or quarterly measurement date and as of date of this prospectus.

There can be no assurance that we will remain in compliance with any of the covenants and cross-default provi- sions in our securitization transactions or our warehouse credit facilities (as the same have been and/or may be amended from time to time) or that we will be able to obtain waivers or amendments to any such covenants and cross default provisions from our senior lenders in the future. If we are unable to remain in compliance with any such covenants and cross-default provisions and we are not able to obtain waivers or amendments to any such co- venants and cross-default provisions, we could be terminated as servicer under the terms of the related securitiza- tion transactions and warehouse credit facilities.

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