<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
<PAGE>
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
<PAGE>
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
<PAGE>
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
-------------------- -------------------
<PAGE>
<PAGE>
[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
<PAGE>
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.
<PAGE>
<PAGE>
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)
<PAGE>
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)
<PAGE>
