-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RKx0LKuAwLtYDK0fgYqoIzWCDofbQwVze5frBvGU0imrUEAcUXJ7HLRW23OshqOK 6Mf2ztDZbcjif402kmj/cA== 0001002124-97-000212.txt : 19980102 0001002124-97-000212.hdr.sgml : 19980102 ACCESSION NUMBER: 0001002124-97-000212 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19971231 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SEARCH FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000318672 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 411356819 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-32463 FILM NUMBER: 97747931 BUSINESS ADDRESS: STREET 1: 600 N PEARL ST STREET 2: STE 2500 CITY: DALLAS STATE: TX ZIP: 75201-2899 BUSINESS PHONE: 2149656000 MAIL ADDRESS: STREET 1: 600 N PEARL STREET STREET 2: SUITE 2500 CITY: DALLAS STATE: TX ZIP: 75201-2899 FORMER COMPANY: FORMER CONFORMED NAME: SEARCH CAPITAL GROUP INC DATE OF NAME CHANGE: 19930910 FORMER COMPANY: FORMER CONFORMED NAME: SEARCH NATURAL RESOURCES INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: VALUE PARTNERS LTD /TX/ CENTRAL INDEX KEY: 0000926614 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752291866 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O FISHER EWING PARTNERS STREET 2: 2200 ROSE AVE SUITE 4660 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149991900 MAIL ADDRESS: STREET 1: C/O FISHER EWING PARTNERS STREET 2: 2200 ROSS AVE #4660 CITY: DALLAS STATE: TX ZIP: 75201 SC 13D/A 1 AMENDMENT NO. 4 TO THE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 (Amendment No. 4) SEARCH FINANCIAL SERVICES, INC. - ---------------------------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value 9%/7% Convertible Preferred Stock, $.01 par value - ---------------------------------------------------------------------- (Title of Class of Securities) 812207 40 5 - ---------------------------------------------------------------------- (CUSIP Number) Timothy G. Ewing Value Partners, Ltd. c/o Fisher Ewing Partners Suite 4660 West 2200 Ross Avenue Dallas, Texas 75201-2790 (214)999-1900 - ----------------------------------------------------------------------- (Name, Address, Telephone Number of Person Authorized to Receive Notices and Communications) December 19, 1997 - ---------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. Page 1 of 20 Pages CUSIP NO. 812207 40 5 13D PAGE 2 of 20 PAGES 1 NAMES OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Value Partners, Ltd. 75-2291866 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] N/A 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER 1,158,376 8 SHARED VOTING POWER N/A 9 SOLE DISPOSITIVE POWER 1,158,376 10 SHARED DISPOSITIVE POWER N/A 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,158,376 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] N/A 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.3% 14 TYPE OF REPORTING PERSON* PN CUSIP NO. 812207 40 5 13D PAGE 3 OF 20 PAGES 1 NAMES OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Fisher Ewing Partners 75-2393946 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* N/A 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] N/A 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER N/A 8 SHARED VOTING POWER 1,158,376 9 SOLE DISPOSITIVE POWER N/A 10 SHARED DISPOSITIVE POWER 1,158,376 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,158,376 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] N/A 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.3% 14 TYPE OF REPORTING PERSON* PN CUSIP NO. 812207 40 5 13D PAGE 4 OF 20 1 NAMES OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Timothy G. Ewing 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* N/A 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] N/A 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER N/A 8 SHARED VOTING POWER 1,158,376 9 SOLE DISPOSITIVE POWER N/A 10 SHARED DISPOSITIVE POWER 1,158,376 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,158,376 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] N/A 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.3% 14 TYPE OF REPORTING PERSON* IN CUSIP NO. 812207 40 5 AMENDMENT NO. 4 PAGE 5 OF 20 This statement on Schedule 13D (the "Statement") relating to shares of the common stock, $.01 par value (the "Common Stock"), and 9%/7% Convertible Preferred Stock, $.01 par value ("Convertible Preferred Stock"), of Search Financial Services, Inc. (the "Issuer" or "Search") is hereby amended as follows: Item 1. Security and Issuer The prior response to Item 1 remains unchanged. Item 2. Identity and Background The prior response to Item 2 remains unchanged, except that Richard W. Fisher was sworn in as Deputy U.S. Trade Representative (which carries the rank of a United States Ambassador) on December 11, 1997. Mr. Fisher will begin in his new position on January 12, 1998 and is withdrawing as a general partner of Fisher Ewing Partners effective as of December 31, 1997. As a result, Mr. Fisher is no longer deemed as of December 31, 1997 to have any shared voting or dispositive power over the shares of the Issuer. Item 3. Source and Amount of Funds or Other Consideration The prior response to Item 3 remains unchanged. Item 4. Purpose of Transaction Value Partners originally acquired its shares of Convertible Preferred Stock and Common Stock solely for investment purposes. However, on December 11, 1997, Value Partners sent a letter to the Issuer expressing various concerns regarding the Issuer, the Convertible Preferred Stock and the acquisition of Dealers Alliance Credit Corporation ("DACC"). A copy of the December 11, 1997 letter was previously filed as Exhibit 4. Value Partners is concerned about the inability of the Issuer to pay dividends on the Convertible Preferred Stock and about the Issuer's proposal to amend its Restated Certificate of Incorporation to provide for a mandatory reclassification and conversion of the Convertible Preferred Stock into Common Stock. In its December 11, 1997 letter, Value Partners stated that it will not vote in favor of the proposed reclassification and that it will take whatever steps are necessary to block the proposed reclassification. To this end, Value Partners has requested a list of the holders of the Convertible Preferred Stock, as well as various Board of Directors'minutes, financial analyses and other books and records regarding the proposed reclassification. With respect to the proposed voluntary exchange offer of Common Stock for Convertible Preferred Stock, Value Partners presently does not intend to tender its shares but has not yet decided whether to oppose the voluntary exchange offer. CUSIP NO. 812207 40 5 AMENDMENT NO. 4 PAGE 6 OF 20 If the Issuer proceeds with the mandatory reclassification of the Convertible Preferred Stock, Value Partners currently intends to take one or more of the following steps to block the reclassification: (1) purchasing additional shares of Convertible Preferred Stock so that the Issuer does not receive the two-thirds approval required; (2) soliciting other holders of the Convertible Preferred Stock to vote against the reclassification; or (3) pursuing litigation. In the event the Issuer does not pay dividends on the Convertible Preferred Stock for four consecutive quarters, then the holders of the Convertible Preferred Stock will have the right, voting separately as a class, to elect two-thirds of the Board of Directors of the Issuer. If four consecutive quarterly dividends are not paid, Value Partners currently intends to exercise its right to elect directors to the full extent deemed appropriate at the time. However, since such voting rights will not be triggered prior to the summer of 1998, no decision has been made by Value Partners at this time as to how many directors Value Partners will seek to elect on its own or with the support of other holders of Convertible Preferred Stock or whom such directors will be. Value Partners also expressed concerns in its December 11, 1997 letter about the Issuer securities issued in the DACC acquisition for less than their fair market value. Under the anti-dilution provisions governing the terms of the Convertible Preferred Stock, Value Partners believes that the number of shares of Convertible Preferred Stock need to be immediately adjusted upward and the conversion price needs to be adjusted downward. By letter dated December 19, 1997 from the Executive Vice President and General Counsel of Search, Search stated that it does not believe that any adjustment is required, without stating the reasons for such belief. A copy of such letter is filed as Exhibit 5 hereto. Value Partners intends to further pursue such matter. Value Partners also set forth other concerns regarding the acquisition of DACC, including the purchase accounting adjustments that were made and then restated. Value Partners has requested various Board minutes, financial analyses, purchase accounting analyses and other books and records relating to the acquisition of DACC. Value Partners may be willing to provide additional funding to the Issuer, provided that the terms of the Convertible Preferred Stock are amended to be more favorable to the holders thereof and if certain changes are made in the senior management of the Issuer. To date, such proposals have not been finalized by Value Partners and have not been discussed on a preliminary basis with the Issuer. There can be no assurance that any such proposals, if finalized, will be viewed favorably by the Issuer. In its December 19, 1997 letter, Search indicated that it needed more time to "search for and analyze" most of the books and records requested by Value Partners. Search also indicated that it hoped a face to face meeting might result in Value Partners not pursuing its formal demand for books and records and not pursuing its opposing proxy solicitation. CUSIP NO. 812207 40 5 AMENDMENT NO. 4 PAGE 7 OF 20 The December 19, 1997 letter also made reference to a confidentiality agreement, which was provided by letter dated December 24, 1997 from Search. A copy of Search's December 24, 1997 letter is filed as Exhibit 6 hereto. On December 24, 1997, counsel to Value Partners sent Search a letter indicating that Value Partners was willing to meet with representatives of Search, but that among other things such meeting should not result in Search delaying the production of the requested books and records. Value Partners agreed to extend the statutory deadline for Search to produce such materials from December 19, 1997 to December 30, 1997 for the stockholder information requested in paragraphs 11 to 14 of Value Partners' December 11, 1997 letter and to January 5, 1998 for the remaining outstanding items requested by such letter. Value Partners further indicated that the confidentiality agreement prepared by Search was unacceptable, particularly since it would preclude Value Partners from communicating with its fellow stockholders the contents of the requested books and records. Search delivered the stockholder information to Value Partners on December 30, 1997, which is currently being reviewed by Value Partners. Search also orally indicated that it intends to produce the other books and records on January 5, 1998. A copy of Search's letter dated December 30, 1997 is filed as Exhibit 8 hereto. Other than as set forth above, Value Partners does not have any at this time specific plans or proposals that relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer The response to Item 5(a) is hereby supplemented as follows: (a) Value Partners beneficially owns 444,177 shares of the Convertible Preferred Stock of the Issuer, which amounts to 18.0% of the 2,470,124 shares of Convertible Preferred Stock issued and outstanding. In addition, Value Partners owns 270,022 shares of the Issuer's Common Stock, which represents 4.0% of the 6,682,886 shares of Common Stock issued and outstanding as of November 14, 1997. Because each share of Convertible Preferred Stock is convertible into two shares of Common Stock, Value Partners is deemed to beneficially own for purposes of Rule 13d-3 an aggregate of 1,158,376 shares of Common Stock, or 15.3% of the 7,571,240 shares of Common Stock that would be issued and outstanding if Value Partners fully converted its Convertible Preferred Stock into Common Stock. Neither Fisher Ewing nor Mr. Ewing directly owns any shares of Convertible Preferred Stock or Common Stock. However, since Fisher Ewing is the general partner of Value Partners and since Mr. Ewing is the general partner of Fisher Ewing, each of Fisher CUSIP NO. 812207 40 5 AMENDMENT NO. 4 PAGE 8 OF 20 Ewing and Mr. Ewing may be deemed to have shared voting and dispositive power over the shares of Convertible Preferred Stock and Common Stock directly owned by Value Partners. For the reasons stated above, Mr. Fisher is no longer deemed as of December 31, 1997 to have any shared voting or dispositive power over the shares of Convertible Preferred Stock and Common Stock directly owned by Value Partners. The prior responses to Items 5(b) through 5(e) remain unchanged, except that for the reasons stated above, Mr. Fisher is no longer deemed as of December 31, 1997 to have any shared voting or dispositive power over the shares of Convertible Preferred Stock and Common Stock directly owned by Value Partners. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer The prior response to Item 6 remains unchanged. Item 7. Material to Be Filed as Exhibits The prior response to Item 7 is hereby supplemented by adding the following exhibits: Exhibit 5 Letter Dated December 19, 1997 from Search to Value Partners Exhibit 6 Letter Dated December 24, 1997 from Search to Value Partners Exhibit 7 Letter Dated December 24, 1997 to Search from Value Partners' counsel Exhibit 8 Letter Dated December 30, 1997 from Search to Value Partners CUSIP NO. 812207 40 5 AMENDMENT NO. 4 PAGE 9 OF 20 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. VALUE PARTNERS, LTD. By: Fisher Ewing Partners as General Partner December 31, 1997 By:/s/Timothy G. Ewing ------------------- Timothy G. Ewing General Partner FISHER EWING PARTNERS December 31, 1997 By:/s/Timothy G. Ewing ------------------- Timothy G. Ewing General Partner December 31, 1997 By:/s/Timothy G. Ewing -------------------- Timothy G. Ewing EX-5 2 SEARCH ELLIS A. REGENBOGEN FINANCIAL EXECUTIVE VICE PRESIDENT SERVICES, INC. GENERAL COUNSEL December 19, 1997 BY HAND Value Partners, Ltd. Suite 4660 West 2200 Ross Avenue Dallas, TX 75201-2790 Gentlemen: This letter is in partial response to your letter of December 11, 1997 addressed to George Evans, Chairman and Chief Executive Officer of Search Financial Services Inc. ("Search"). Mr. Evans received your letter on December 12, 1997. As General Counsel of Search, my response focuses on pages 5-7 of your letter, relating to your demand pursuant to Section 220 of the Delaware General Corporation Law that you be given the right to inspect specified books and records of Search and to make copies or extracts therefrom. It is my hope that a face to face meeting can be scheduled to address the balance of your letter. It is also my hope that after reviewing this response, and given the materials we've already provided to you, you will conclude that pursing your formal demand is unnecessary. Without waiver of any objections to the demand stated in your letter, Search is prepared to make available to you books and records that are responsive to paragraphs 1 - 10 and 15 - 18 of your demand. However, because your demand covers 18 different subject matters, more time is needed to search for and analyze most of the documents you seek. Furthermore, we should have a reasonable confidentiality agreement in place before delivering these documents to you. We will send you a proposed confidentiality agreement early next week and probably will be able to deliver additional documents soon after the agreement is executed. Because it is publicly available as part of the Registration Statement on Form S-4 that we filed with the Securities and Exchange Commission on December 4, 1997, I am enclosing a copy of the fairness opinion issued by Principal Financial Securities inc. ("Principal") with respect to our proposed preferred stock reclassification and exchange offer (demanded in paragraph 16 of your letter). I understand that a copy of that Registration Statement was hand delivered to Mr. Ewing shortly after it was filed. The Registration Letter: Value Partners, Ltd. December 19, 1997 Page 2 Statement contains detailed descriptions of the analyses undertaken by Principal in reaching its conclusion regarding the fairness of the reclassification and exchange offer as well as the reasons for the Board of Directors' approval of them that may be sufficient to make your inspection of certain of the documents unnecessary. Most importantly, as you know from correspondence dated November 26, 1997 sent to Mr. Ewing by Mr. James Leary, Search's Vice Chairman-Finance, Search is desirous of meeting with Mr. Ewing and other of your representatives to review some of the very matters that are the subject of your demand. In particular, Search believes it is important for you to be able to discuss those matters, and the benefits of them to Search's stockholders, with representatives of Principal and other of Search's financial advisors. Search has also over the last several months voluntarily supplied you with accounting and other financial information related to the acquisition of Dealers alliance Credit Corp. In this latter regard, I should say that Search does not believe that the acquisition of Dealers Alliance Credit Corp. requires any adjustment pursuant to the anti-dilution provisions of the Certificate of Designation for the 9%/7% Convertible Preferred Stock. Search believes a face to face meeting at which the matters to which the demanded books and records relate is the most appropriate way for your and Search's concerns and positions regarding those matters to be expressed, understood and resolved. I understand that Mr. Leary will be calling Mr. Ewing today or Monday to arrange such a meeting. Hopefully, after such a meeting and your having a chance to review the documents we deliver, you will feel comfortable with the reclassification and exchange offer, or at least conclude that you do not intend to solicit proxies or consents in opposition to them. If you do reach the firm conclusion that you will solicit proxies or consents, we will produce the relevant lists and other documents identified in paragraphs 11 - 14 of your letter, subject to a review of this issue by our Delaware counsel. Please feel free to contact me or have your attorney contact me with respect to any matter in this letter. Sincerely, /s/ Ellis A. Regenbogen ----------------------- Ellis A. Regenbogen Enclosure cc:Mr. George C. Evans EX-6 3 SEARCH ELLIS A. REGENBOGEN FINANCIAL EXECUTIVE VICE PRESIDENT SERVICES INC. GENERAL COUNSEL December 24, 1997 BY HAND Value Partners, Ltd. Suite 4660 West 2200 Ross Avenue Dallas, TX 75201-2750 Gentlemen: Enclosed are two copies of the confidentiality agreement, prepared by our Delaware counsel, referenced in my letter of December 19, 1997. Please sign both copies of the agreement in the space provided for your signature and return one of the fully signed copies to my attention. Once I receive the signed copy, we will be able to begin delivering documents to you in addition to those sent with my letter of December 19th and Jim Leary's letter of December 23rd. Sincerely, /s/ Ellis A. Regenbogen ----------------------- Ellis A. Regenbogen Enclosures CONFIDENTIALITY AGREEMENT WHEREAS, by letter dated December 11, 1997, Value Partners, Ltd. ("Value Partners") made a demand to inspect and to copy certain documents of Search Financial Services Inc. ("Search") pursuant to Section 220 of the Delaware General Corporation Law (the "Demand"); WHEREAS, Search has provided to Value Partners certain publicly available documents responsive to request number 16 of the Demand; WHEREAS, Search has agreed to provide to Value Partners copies of documents responsive to requests number 1-10, 15, 17 and 18 of the Demand, subject to the terms and conditions set forth below; IT IS HEREBY AGREED by and between the undersigned parties, this 24th day of December 1997, as follows: 1. Search shall produce to Value Partners copies of documents responsive to requests 1-10, 15, 17 and 18 of the Demand, with the legend "Confidential" affixed to each page thereof. 2.Value Partners shall hold all documents designated as "Confidential" pursuant to this Confidentiality Agreement ("Agreement") in confidence, and will not disclose, publish or communicate such documents of the contents thereof (the "Information") to anyone, either directly or indirectly, except as provided in this Agreement. 3.Subject to the provisions of this Agreement, Value Partners may provide the Information to an advisor, once it has first received from such advisor a duly executed Undertaking in the form attached hereto as Exhibit A, which signed Undertaking shall be forwarded to Search before the delivery of any Information to the advisor. For purposes of this Agreement, "advisor" shall mean Value Partners' legal, accounting, financial or investment advisors. 4.If Value Partners or any advisor is legally required (by interrogatory, subpoena, civil investigatory demand or any similar process relating to any legal proceeding, investigation, hearing or otherwise) to disclose any Information, Value Partners and the advisor will (a) provide Search with prompt notice in advance of such disclosure so that Search may seek a protective order or other appropriate remedy and/or waive compliance with this Agreement, and (b) cooperate with Search in pursuing any such course of action. In the event that such protective order or other remedy is not obtained, or if Search waives compliance with the provisions of this Agreement, Value Partners and the advisor will furnish only such Information as they are advised is legally required and will exercise their best efforts to obtain assurance that confidential treatment will be accorded to any Information which is compelled to be disclosed. 5.Nothing herein shall preclude Value Partners from applying to the Delaware Court of Chancery for an Order that would remove any confidentiality restriction from the documents designated as "Confidential" by Search pursuant to this Agreement, and nothing herein shall prevent Search from opposing any such application that is made. 6.Value Partners agrees and consents to personal jurisdiction and venue in any action brought in any court, federal or state, within the State of Delaware, and to the appointment of The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, as its agent for service of process in connection with any matter arising under this Agreement. 7.If any action is initiated by Search to enforce the provisions hereof, the prevailing party shall be entitled to reimbursement of all costs and expenses, including reasonable counsel fees, incurred by it in connection therewith. 2 8.This Agreement may be modified or waived only by a separate writing executed by Value Partners and Search that expressly so modifies or waives this Agreement. No failure or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege hereunder shall precede any other or further exercise of any right, power or privilege. 9.This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles. VALUE PARTNERS, LTD. By:Fisher Ewing Partners as General Partner By: ------------------- Timothy G. Ewing General Partner SEARCH FINANCIAL SERVICES INC. By:/s/ Ellis A. Regenbogen ----------------------- Ellis A. Regenbogen Executive Vice President 3 Exhibit A UNDERTAKING As required by a Confidentiality Agreement dated December 24, 1997 (the "Confidentiality Agreement") by and between Value Partners, Ltd. ("Value Partners") and Search Financial Services Inc. ("Search"), pursuant to which the undersigned will receive confidential, sensitive and/or proprietary nonpublic information (the "Information") relating to Search, the undersigned hereby represents and agrees as follows: 1.The undersigned represents that he or she is an accounting, legal, investment banking or other financial advisor to Value Partners with respect to its investment in Search, having the business and home addresses set forth below: The undersigned further represents that his/her sole purpose in seeking access to the Information is to perform the above described function and that the undersigned is not seeking the Information for purposes other than those stated. 2.The undersigned has read the Confidentiality Agreement and hereby agrees to be fully bound by its terms and conditions. 3.For purposes of enforcement of the terms and conditions of the Confidentiality Agreement, the undersigned consents to the jurisdiction of any court, federal or state, within the State of Delaware and to the appointment of The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, as the agent of the undersigned for service of process. 4.The undersigned agrees not to use the Information for any purpose or in any manner, other than as stated in paragraph 1 herein. Dated: -------------------- ------------------- EX-7 4 [Elias, Matz, Tiernan & Herrick L.L.P. Letterhead] December 24, 1997 VIA TELECOPY AND REGULAR MAIL Ellis A. Regenbogen, Executive Vice President and General Counsel Search Financial Services, Inc. 600 N. Pearl Street Suite 2500 Dallas, Texas 75201-2899 Re: Value Partners, Ltd. Request for Books and Records Dear Mr. Regenbogen: As special counsel to Value Partners, Ltd., we have reviewed your letters dated December 19, 1997 and December 24, 1997 to Value Partners. Please be advised that while Value Partners is willing to meet with representatives of Search to discuss the concerns of Value Partners, Value Partners believes that any such meeting should (1) be held as promptly as possible, (2) be with either the full Board of Directors or a committee of outside directors, (3) not result in Value Partners receiving information of a confidential nature, and (4) most importantly, not result in Search delaying the production of the books and records requested by Value Partners in its letter dated December 11, 1997. In light of the holiday season, Value Partners has been patient over the last few days in giving Search additional time to produce the books and records. However, on behalf of Value Partners, we must insist that the books and records be provided promptly. We hereby demand that the stockholder information requested in paragraphs 11 to 14 of the December 11, 1997 letter be made available to Value Partners no later than 3:00 p.m. on Tuesday, December 30, 1997. Failure by Search to do so will result in Value Partners seeking an appropriate order from the Delaware Court of Chancery, together with a request for reimbursement of legal fees. With respect to the remaining documents requested in the December 11, 1997 letter, in light of your request for additional time, Value Partners is willing to extend the deadline Ellis A. Regenbogen, Executive Vice President December 24, 1997 Page 2 for producing such documents to 3:00 p.m. on Monday, January 5, 1998. We acknowledge receipt of the November 10, 1997 fairness opinion of Principal Securities requested in paragraph 16. Again, any failure by Search to do so will result in Value Partners seeking an appropriate court order, together with a request for reimbursement of legal fees. Finally, please be advised that we are unaware of any requirement for Value Partners to execute a confidentiality agreement prior to receiving the requested documents. The requested documents are of an historical nature with respect to publicly disclosed transactions. The form of confidentiality agreement delivered by you to Value Partners earlier today is completely unacceptable. Your proposed confidentiality agreement would preclude Value Partners from disclosing the contents of the requested documents to anyone other than certain advisors and would thus preclude Value Partners from communicating with its fellow stockholders regarding the contents of such documents. We frankly find these proposed restrictions to be outrageous from a corporate governance standpoint, since you are in effect trying to restrict an owner of the company from communicating what it finds to other owners of the company. Value Partners is not requesting any information consisting of financial projections for future periods or regarding proposed transactions or acquisitions that have not been publicly disclosed. To the extent that any of the financial analyses requested in paragraphs (4) and (17) of the December 11, 1997 letter consist of financial projections for future periods, you may redact the future projections. If you believe that any of the information provided yesterday (which has not yet been reviewed) consists of financial projections for future periods, please let us know immediately. If you have any questions, please call either Timothy B. Matz of this office or the undersigned at (202) 347-0300. Sincerely, /s/Gerald F. Heupel, Jr. Gerald F. Heupel, Jr. cc:Value Partners, Ltd. EX-8 5 SEARCH ELLIS A. REGENBOGEN FINANCIAL EXECUTIVE VICE PRESIDENT SERVICES INC. GENERAL COUNSEL December 30, 1997 Value Partners, Ltd. Suite 4660 West 2200 Ross Avenue Dallas, TX 75201-2790 Gentlemen: In response to the demands contained in paragraphs 11-14 of your letter dated December 19, 1997, we are enclosing the documents listed in Schedule A attached to this letter (the "stockholder list"). These are the most recent documents in our possession that are responsive to those paragraphs. In providing the stockholder list to you, we have relied on the affidavit of Mr. Timothy G. Ewing stating that (1) the stockholder list will be used for the limited purposes of soliciting proxies or consents with respect to the proposed exchange offer of common stock of Search Financial Services Inc. ("Search") for preferred stock of Search and/or the proposed reclassification of Search's preferred stock into common stock and/or communicating with stockholders regarding the operations of Search, and for no other purposes and (2) no disclosure of any information contained in the stockholder list will be made to any person other than the record and beneficial owners of Search's preferred stock or an employee or agent of yours to the extent necessary to effect the communication with or solicitation of such stockholders. If your plans change so that the affidavit is no longer accurate, we must require that you immediately return the stockholder list to us. We are continuing to review and analyze documents that may be responsive to the other paragraphs of your December 19th letter. As your counsel has suggested, we will redact documents to the extent they include financial projections. The documents provided to you by Mr. Leary on December 23rd do include financial projections. Some of the responsive documents may include non-public information regarding proposed transactions or acquisitions and other proprietary information (e.g., the approach Search uses in analyzing potential acquisitions) the public disclosure of which could cause competitive harm to Search. Such information is properly the subject of a confidentiality agreement. See, e.g., Maddrey/Rainsford Partners v. Milliken & Co., Del Ch., C.A. No. 11199, Harnett, V.C. (May 4, 1990) (conditioning shareholders' right to inspect corporation's books and records upon the execution of a reasonable confidentiality agreement). As we complete our review of these documents, we will advise you if we believe a confidentiality agreement is necessary. Sincerely, /s/ Ellis A. Regenbogen Ellis A. Regenbogen Enclosures cc:Gerald F. Heupel, Jr. (w/o enclosures) Schedule A 1. List of registered holders of the 9%/7% Convertible Preferred Stock (the "Preferred Stock") 2. Security Position Listing of The Depository Trust Company with respect to the Preferred Stock 3. List of Non-Objecting Beneficial Owners of the Preferred Stock 4. Omnibus Proxies with respect to the Preferred Stock from the following: a.The Depository Trust Company b.Pershing/Division of DLJ c.Philadelphia Depository Trust Co. d.Chemical Banking Corporation e.The Chase Manhattan Bank f.United Missouri Bank, N.A. g.The Bank of New York(3) -----END PRIVACY-ENHANCED MESSAGE-----