exv10w15






Exhibit 10.15




SERVICING AND MANAGEMENT AGREEMENT




     This Servicing and Management Agreement (“Agreement” is made and entered into
effective as of June 10, 2010 (“Effective Date”), by and between SOUTH BAY ACCEPTANCE
CORPORATION, a California corporation (“Borrower”), and WELLS FARGO CAPITAL FINANCE, LLC, a
Delaware limited liability company (“Lender”), as follows:



     Borrower and Lender have entered into that certain Loan and Security Agreement of even date
herewith (the “Loan Agreement”), pursuant to which Lender has agreed to make certain loans
and financial accommodations to Borrower.



     Borrower has entered into, and shall in the future enter into, certain Premium Finance
Agreements with Obligors, which transactions are evidenced by certain Premium Finance Documents and
books and records in respect thereof (collectively referred to, and more particularly defined
below, as the “Portfolio”).



     Borrower is experienced in servicing insurance premium financing transactions of the type
included in the Portfolio and has the expertise and resources to manage, collect, enforce and
generally service the Portfolio for the purpose of maximizing the value thereof.



     Pursuant to the Loan Agreement, Borrower has granted to Lender a continuing security interest,
lien and collateral assignment in and to substantially all present and hereafter acquired property
of Borrower, including without limitation, the Portfolio.



     Borrower and Lender have agreed to enter into this Agreement, provided, that the
arrangements in respect of the engagement and performance by Borrower of its duties hereunder at
all times are in compliance with the requirements of the Loan Agreement.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
and for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed by and between Borrower and Lender as follows:



     1. Definitions. Unless otherwise defined herein, terms defined in the Loan Agreement,
wherever used in this Agreement, shall have the same meanings as are defined by the Loan Agreement
(which definitions, to the extent used in this Agreement, are hereby deemed to be incorporated
herein by reference with the same effect as if set forth herein in their entirety). Further, the
rules of construction set forth in Section 1.4 of the Loan Agreement are hereby deemed to be
incorporated herein by reference with the same effect as if set forth herein in their entirety. In
addition, the following definitions shall also apply in this Agreement:



     “Borrower” has the meaning set forth in the opening paragraph of this Agreement, and
includes any legal successor.



     “Collection Costs” means professional fees and cost reimbursement obligations to
attorneys and other professionals, court costs, filing fees, service or other process fees,



 









 




garnishment fees and other costs incurred by Borrower in respect of or in connection with
servicing the Portfolio.




     “Effective Date” has the meaning set forth in the opening paragraph of this Agreement.



     “Financing Completion Date” means the date when the Loan Agreement and the Lender’s
commitments to make Advances have been terminated and the Obligations have been paid in full.



     “Loan Agreement” means the Loan and Security Agreement described in the Recitals to
this Agreement, as it may be extended, modified, supplemented, amended and restated, amended, or
restated from time to time.



     “Portfolio” means the Premium Finance Documents and all insurance premium finance
transactions evidenced thereby, all Premium Finance Collateral, the Books relating to the Premium
Finance Documents, all Collections and other proceeds in respect thereof, and all rights to payment
and enforcement, remedies and powers related thereto.



     “Servicing Fee” has the meaning set forth in Section 4 hereof.



     “Servicing Termination Date” means (i) in the event the Termination Date occurs
pursuant to Section 10(a), the earlier of the Financing Completion Date or the Transition
Completion Date, and (ii) in the event the Termination Date occurs pursuant to Section
10(b), the Termination Date as determined pursuant to Section 10(b).



     “Termination Date” means the effective date of any termination of this Agreement
pursuant to Sections 10(a) or 10(b), as the case may be.



     “Transition Completion Date” has the meaning set forth in Section 11(b).



     2. Servicing Duties. Borrower agrees to provide servicing and management of the
Portfolio at all times on and after the Effective Date and continuing through the Servicing
Termination Date, in all cases subject to the terms of this Agreement. Such services include,
without limitation, (i) possessing, keeping and maintaining Books, (ii) receiving, processing,
accounting for and delivering all Collections to the Collection Account until the Servicing
Termination Date, (iii) monitoring and pursuing payments under the Premium Finance Documents,
(iv) monitoring and managing all Premium Finance Collateral, (v) subject to Section 7,
non-judicial and judicial enforcement, liquidation and collection of the Premium Finance Documents,
including engagement of attorneys or other professionals for such purpose, and (vi) taking all
lawful actions and procedures as reasonably required to comply with Borrower’s obligations under
the Premium Finance Documents, maximize the value of the Portfolio and collect the Premium Finance
Documents and Premium Finance Collateral included therein.



     3. Borrower’s Reporting Duties. Until the Servicing Termination Date, Borrower will
timely deliver to Lender all reporting required by Section 6.2 of the Loan Agreement and
any other items or information in respect of the Premium Finance Documents required to be



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delivered by Borrower to Lender from time to time pursuant to the Loan Agreement, in each case
in form reasonably satisfactory to Lender.




     4. Servicing Fee. In consideration of Borrower’s services, provided no Event of Default
exists, Borrower shall retain and Lender shall permit Borrower to retain sums sufficient to cover
its operating expenses (“Servicing Fee”).



     5. Borrower’s Performance; Standard of Care and Diligence. At all times Borrower shall
perform its duties under this Agreement with respect to the Portfolio in compliance in all material
respects with all Applicable Laws and in accordance with prudent industry standards for the
servicing and management of similar property. Borrower will use commercially reasonable efforts to
maximize Collections in respect of the Portfolio. Except as otherwise provided in this Agreement,
Borrower will not engage or use any sub-servicer or agent in connection with its obligations under
this Agreement.



     6. Compromise Authority. Unless and until otherwise instructed by Lender at any time
when an Event of Default is in existence, Borrower shall have authority in its sole discretion,
subject to Section 5, to compromise and settle Premium Finance Documents and other
obligations included in the Portfolio, provided, that Borrower has concluded that such compromise
and settlement is necessary for maximizing the value of the Portfolio.



     7. Litigation; Court Costs; Professional Costs. Borrower will not institute legal
proceedings for collection against an Obligor in respect of a Premium Finance Document unless
Borrower has determined that to do so is reasonably expected to enhance the likelihood of
maximizing the amount recoverable in respect of such Premium Finance Document. Borrower will
prosecute such legal proceedings as it deems appropriate or necessary; provided, that
following notice by Lender at any time when an Event of Default exists, such proceedings shall be
conducted solely at the direction of Lender. Borrower shall be solely responsible for payment of
all Collection Costs to the extent not recovered by Borrower directly from Obligors.



     8. [Reserved].



     9. Borrower’s Additional Covenants. In addition to the other covenants and agreements
made by Borrower under this Agreement, Borrower covenants and agrees that during the term of this
Agreement, it will timely perform each of the following:




     (a) Perfect and maintain its interests in the Portfolio.




     (b) Unless otherwise directed by Lender after the Servicing Termination Date, instruct
Obligors in writing, and otherwise take such reasonable steps to ensure, that all payments
by such Obligors shall be directed and delivered to the Collection Account.




     (c) Maintain complete and accurate files with respect to each Premium Finance Document
and all documents in respect thereof, with complete and accurate notations of all collection
activities.




     (d) Provide such information and documentation in respect of the Portfolio, and
Borrower’s activities in performance of its duties under this Agreement, in



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reasonable detail, as Lender may request pursuant to the Loan Agreement, until the
Servicing Termination Date.




     (e) Maintain adequate qualified personnel and appropriate equipment, facilities and
support services necessary to perform its duties under this Agreement.




     (f) Verify, at all appropriate times, that all tangible Portfolio collateral is
properly insured as required by the related Premium Finance Documents.




     (g) To the extent required by the Loan Agreement, promptly notify Lender of the failure
of any Obligor to perform any material obligations under any document relating to a Premium
Finance Document, and also of any of the following of which Borrower has notice: (i) sale or
transfer of any collateral with respect to any Premium Finance Document, (ii) change of
address, death, incapacity, bankruptcy or insolvency of an Obligor, or (iii) material loss
or damage to any collateral securing a Premium Finance Document.



     10. Termination.




     (a) Prior to the Financing Completion Date, this Agreement may be terminated only (i)
by mutual consent of Borrower and Lender or (ii) by Lender pursuant to
Section 12(c).




     (b) On the Financing Completion Date, this Agreement shall be terminated automatically.



     11. Transition in Respect of Termination Prior to Financing Completion Date. In
connection with any termination of this Agreement prior to the Financing Completion Date:




     (a) Borrower shall cooperate fully with Lender in establishing replacement arrangements
for servicing and managing the Portfolio which are satisfactory to Lender in its sole
discretion. Without limitation, Borrower will (i) deliver to Lender or its designee all
documents and Books relating to the Portfolio, including, without limitation, all litigation
files, data, tapes or disks, credit files, ledger cards, printout and other computer
records, (ii) execute any notices to Obligors as may be requested by Lender, and
(iii) provide full assistance and cooperation to Lender and its designee(s) in the transfer
and transition of servicing and managing the Portfolio, as Lender may request. Lender agrees
to provide opportunities to Borrower to make copies or extracts of information delivered
without unreasonable interference with the use of such information.




     (b) Notwithstanding any stated effective date of any such termination, Borrower shall
not be released from its obligations to perform its duties under this Agreement, and
Borrower shall continue performance of such obligations in full compliance with the
standards prescribed by Section 5, until the date (the “Transition Completion
Date”) when the transition and establishment of replacement arrangements for servicing
and managing the Portfolio have been completed to Lender’s satisfaction in its sole
discretion.



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     12. Financing. Until the Servicing Termination Date, notwithstanding any other provision
of this Agreement:




     (a) Acknowledgement of Lender’s Lien. Borrower acknowledges Lender’s
continuing security interest, lien and collateral assignment in and to the Collateral,
including without limitation, the Premium Finance Documents and Premium Finance Collateral.




     (b) Continued Servicing Following Notice. On and after written notice by
Lender to Borrower at any time when any Event of Default is in existence, Borrower shall
continue to perform all of its obligations and duties under this Agreement for the benefit
of Lender, as secured party, for the account of Borrower, in full compliance with the
standards prescribed by Section 5. Borrower expressly acknowledges and agrees that
at all times on and after any notice by Lender under this Section 12(b), Lender is
acting solely as a secured party of Borrower, and Borrower shall be an independent
contractor and not an agent of Lender.




     (c) Termination by Lender. At any time when (i) any Event of Default under
Section 8.1, 8.2(a), 8.4, 8.5, 8.9, or 8.16 of the Loan Agreement has occurred and is
continuing, or (ii) Lender has determined in its Permitted Discretion that Borrower,
Fortegra or any of their respective Affiliates, officers, directors or agents has engaged in
fraudulent conduct in connection with any aspect of its handling of the Premium Finance
Receivables, cash collected on account thereof, or any other Collateral, Lender shall have
the right in its discretion to terminate this Agreement by written notice to Borrower,
subject to Borrower’s continuing transition obligations as provided by Section 11.




     (d) Reports. Borrower hereby agrees to provide to Lender, such records,
reports, information and related documents as are required to be delivered to Lender
pursuant to the Loan Agreement from time to time in respect of the Portfolio or otherwise
relating to Borrower’s actions in respect thereof under this Agreement.




     (e) Loan Agreement. Borrower hereby irrevocably agrees that, in performing or
observing any obligations and duties under this Agreement, it will at all times abide by all
requirements of the Loan Agreement applicable to servicing and management of the Premium
Finance Documents. Without limiting the foregoing, Borrower acknowledges that all
Collections are subject to an express Lien in favor of Lender and agrees that it will cause
all Collections in respect of the Portfolio to be promptly deposited to the Collection
Account, without offset or deduction, in accordance with the requirements of the Loan
Agreement. Borrower acknowledges and agrees that any and all instruments, agreements and
other documents in respect of the Portfolio which come into Borrower’s custodial possession
at all times remain subject to the Lender’s Liens, and Borrower expressly agrees to promptly
deliver possession thereof to Lender on demand at any time when any Event of Default is in
existence. Nothing contained in this Agreement shall authorize Borrower to take any action
under this Agreement which is prohibited by the Loan Agreement or applicable law. Nothing
in this Agreement shall in any manner release or discharge Borrower from its continuing
obligations and duties under the Loan



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Agreement. In the event of any conflict between the provisions of this Agreement and
the Loan Agreement, the provisions of the Loan Agreement shall prevail.




     (f) Borrower irrevocably agrees and acknowledges that Lender is a beneficiary under
this Agreement and shall be entitled to enforce any and all rights or benefits provided
hereunder, in Lender’s name for the account of Borrower, at any time, and from time to time,
provided, that it is expressly agreed that Lender shall have no duties or
obligations under this Agreement, except as expressly provided herein.



     13. INDEMNIFICATION OF LENDER. BORROWER HEREBY INDEMNIFIES, AND AGREES TO DEFEND AND HOLD
LENDER HARMLESS FOR, FROM, AGAINST AND IN RESPECT OF, AND SHALL ON DEMAND REIMBURSE LENDER FOR, ANY
AND ALL LOSS, LIABILITY OR DAMAGE TO LENDER RELATING TO (A) THE FAILURE OF BORROWER TO PERFORM ANY
COVENANT OR AGREEMENT MADE HEREUNDER, (B) THE BREACH OF ANY WARRANTY OR REPRESENTATION MADE BY
BORROWER HEREUNDER, (C) ANY LIABILITIES OR OBLIGATIONS ARISING DIRECTLY OR INDIRECTLY FROM ANY
VIOLATION OR CLAIMED VIOLATION BY BORROWER (OR OTHERS PERFORMING SERVICES ON BORROWER’S BEHALF) OF
ANY APPLICABLE LAW AND (D) ANY AND ALL ACTIONS, SUITS, PROCEEDINGS, CLAIMS, DEMANDS, ASSESSMENTS,
JUDGMENTS, COSTS AND EXPENSES, INCLUDING, WITHOUT LIMITATION, REASONABLE COURT COSTS, REASONABLE
AND DOCUMENTED OUT-OF-POCKET ATTORNEYS’ FEES AND OTHER EXPENSES INCIDENT TO ANY OF THE FOREGOING.
THE PROVISIONS OF THIS SECTION 13 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT. NOTWITHSTANDING
THE FOREGOING, BORROWER SHALL NOT BE REQUIRED TO INDEMNIFY THE LENDER FROM ANY OF THE FOREGOING
ARISING FROM LENDER’S BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR BREACH OF THIS
AGREEMENT BY LENDER.



     14. Notices. All notices or demands under this Agreement shall be in writing and shall be
delivered and effective in accordance with the terms set forth in Section 12 of the Loan Agreement.



     15. Governing Law; Venue; Consent to Jurisdiction.




     (a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.




     (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR



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OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND LENDER WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF
FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.




     (c) EACH OF BORROWER AND LENDER HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.



     16. Captions. The captions of the various Sections of this Agreement have been inserted
only for convenience of reference, and shall not be deemed to modify, explain, enlarge, or restrict
any provision of this Agreement or affect the construction hereof.



     17. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute a single agreement.
Delivery of an executed counterpart of a signature page to this Agreement by either (a) facsimile
transmission or (b) electronic transmission in either Tagged Image Format Files (TIFF) or Portable
Document Format (PDF), shall be equally as effective as delivery of a manually executed counterpart
of this Agreement.



     18. Remedies Cumulative. Except as otherwise expressly limited herein, the rights,
remedies, powers and privileges given to any party by this Agreement shall be in addition to all
rights, remedies, powers and privileges given to that party by any statute or rule of law. Any
forbearance or failure or delay in exercising any right, remedy, power or privilege hereunder shall
not be deemed to be a waiver of such right, remedy, power or privilege and any single or partial
exercise of any right, remedy, power or privilege shall not preclude the further exercise thereof
or be deemed to be a waiver of any other right, remedy, power or privilege.



     19. Severability. If any provision hereof shall be held invalid or unenforceable by any
court of competent jurisdiction or as a result of future legislative action, such holding or action
shall be strictly construed and shall not affect the validity or effect of any other provision
hereof.



     20. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns; provided, that Borrower may not



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delegate performance of its duties hereunder without the prior written consent of Lender,
until the Servicing Termination Date.




     21. Amendment. This Agreement may not be amended or modified except in writing signed by
Borrower and Lender.



     22. Entire Agreement; Amendment. This Agreement (including any exhibits and schedules
hereto), together with the other Loan Documents, contains the entire agreement between the parties
with respect to the transactions contemplated hereby, and supersedes all written or oral
communications and understandings prior to the date hereof. This Agreement may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements.



[Signature Page Follows]



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     IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the Effective Date.



	 	 	 	 	 
	 	BORROWER:





SOUTH BAY ACCEPTANCE CORPORATION

 	 
	 	By:  	/s/ Michael Vrban
 	 
	 	 	Name:  	Michael Vrban 	 
	 	 	Title:  	Treasurer 	 
	 
	 	LENDER:





WELLS FARGO CAPITAL FINANCE, LLC

 	 
	 	By:  	/s/ Kyle Coleman
 	 
	 	 	Name:  	Kyle Coleman 	 
	 	 	Title:  	Vice President 	 
	 



Signature
Page to Servicing and Management Agreement