Notes Payable



Notes payable consist of the following at:	September 30, 2011		December 31, 2010
SunTrust Bank, revolving line of credit — $85.0 million at September 30, 2011 and $55.0 million at December 31, 2010, maturing June 2013	$	64,000	$	36,713
Total notes payable	$	64,000	$	36,713

Revolving Credit Agreement - The Company is party to an $85.0 million revolving credit agreement with SunTrust Bank, N.A., as administrative agent (the "Agent"), and certain lenders, which matures in June 2013 (the "Facility"). The Facility bears interest at a variable Base Rate determined based upon the higher of (i) the prime rate, (ii) the federal funds rate plus 0.50% or (iii) adjusted LIBOR plus 1%, plus a margin tied to the Company's leverage ratio. The Company can select at its discretion to convert the interest rate for all or a portion of the outstanding balance for a period of up to six months to a fixed EURO Dollar Funding rate which is equal to the adjusted LIBOR rate for the elected interest period in effect at the time of election, plus a margin tied to the Company's leverage ratio.

The Company is required to pay a commitment fee of between 0.45% and 0.60% (based upon the Company's leverage ratio) on the unused portion of the Facility. The purpose of the line is for working capital and acquisitions. Interest on the line of credit is payable monthly. The Company's obligations under the Facility are guaranteed by substantially all of its domestic subsidiaries, other than South Bay Acceptance Corporation and the regulated insurance subsidiaries. Under the Facility, the Company may not assign, sell, transfer or dispose of any collateral or effect certain changes to its capital structure and the capital structure of its subsidiaries without the Agent's prior consent. The Company's obligations under the Facility may be accelerated or the commitments terminated upon the occurrence of an event of default under the Facility, including payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, cross defaults to other material indebtedness, defaults arising in connection with changes in control and other customary events of default.

On March 1, 2011, Wells Fargo Bank, N.A., entered into a joinder agreement (the "Wells Fargo Joinder") to the Facility and became a new lender under the Facility with a revolving commitment of $30.0 million, which increased the size of the Facility from $55.0 million to $85.0 million.

The following is a summary of the Company's more significant financial covenants related to the Facility:



	Covenant	September 30, 2011
Minimum debt service charge ratio	1.25	3.76
Maximum debt to EBITDA ratio	3.50	2.33

At September 30, 2011, the Company is in compliance with the above covenants on its line of credit.

Wells Fargo Capital Finance, LLC Line of Credit - On February 7, 2011, the Company terminated its existing revolving $40.0 million credit facility with Wells Fargo Capital Finance, LLC, which was never drawn upon. Upon termination, South Bay paid the fees and expenses owed under the Loan Agreement of $0.1 million, including interest on the Minimum Funding Amount (as defined in the Loan Agreement), unused line fees and monthly loan administration fees. The Company continues to amortize previously capitalized costs with a remaining balance of $0.3 million at September 30, 2011 associated with the Wells Fargo Capital Finance, LLC Line of Credit in connection with the Wells Fargo Joinder to the Facility.

The interest rates on notes payable at the end of the respective periods are as follows:



	September 30, 2011		December 31, 2010
Line of Credit — SunTrust	4.43	%	6.00	%
Line of Credit — Wells Fargo	N/A		3.30	%