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EXHIBIT 4.0
FIRST AMENDMENT TO LOAN AGREEMENT
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Principal Date Maturity Loan No Call Collateral Account Officer Initials
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$25,000,000.00 06-30-1997 536
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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BORROWER: SEARCH FUNDING II, INC. LENDER: HIBERNIA NATIONAL BANK
(TIN: 00-0000000) (TIN: 00-0000000)
000 XXXXX XXXXX XXXXXX 313 CARONDELET STREET
SUITE 2500, L.B. 000 XXXX XXXXXX XXX 00000
XXXXXX, XXXXX 00000-0000 XXX XXXXXXX, XXXXXXXXX 00000
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THIS FIRST AMENDMENT TO LOAN AGREEMENT ("THIS FIRST AMENDMENT"), entered into
as of JUNE 30, 1997, is by and between SEARCH FUNDING II, INC. ("BORROWER"),
and HIBERNIA NATIONAL BANK ("LENDER"), a national banking association, who
agree as follows:
WHEREAS, on SEPTEMBER 11, 1996, Borrower and Lender entered into a Loan
Agreement ("THE LOAN AGREEMENT");
WHEREAS, the Guarantor of the Loan made pursuant to the Loan Agreement has
changed its name from SEARCH CAPITAL GROUP, INC. to SEARCH FINANCIAL
SERVICES INC.; and
WHEREAS, Borrower has requested changes in the Minimum Adjusted Net Worth
requirement and the Event of Default regarding payment of dividends, and
Lender has agreed to make changes in those provisions of the Loan Agreement
on the terms and conditions of this First Amendment;
NOW, THEREFORE, in order to effect the name change of the Guarantor and the
Loan Agreement changes agreed to by Lender, Borrower and Lender do hereby amend
the Loan Agreement in the following respects:
AMENDMENT TO DEFINITION OF GUARANTOR. The definition of the term "GUARANTOR"
under the DEFINITION section of the Loan Agreement is amended to read as
follows:
GUARANTOR. The word "Guarantor" means and includes individually,
collectively, interchangeably and without limitation, SEARCH FINANCIAL
SERVICES INC., and each and all other guarantors, sureties, and
accommodation parties in connection with any Indebtedness.
AMENDMENT OF REPRESENTATIONS AND WARRANTIES. The following representation and
warranty provisions contained in the REPRESENTATIONS AND WARRANTIES section of
the Loan Agreement are hereby amended to read as follows:
STOCK OWNERSHIP. Borrower is a wholly owned subsidiary of SEARCH FINANCIAL
SERVICES INC., a Delaware corporation that was formerly named SEARCH
CAPITAL GROUP, INC. and that is a Guarantor of the Indebtedness and the
owner of all the authorized and issued capital stock of Borrower.
LOCATION OF BORROWER'S REGISTERED OFFICE. The registered office of Borrower
is 000 XXXXX XXXXX XXXXXX, XXXXX 0000, L.B. 000, XXXXXX, XXXXX 00000-0000,
or as Borrower may otherwise notify Lender as required by this Agreement.
LOCATION OF BORROWER'S CHIEF EXECUTIVE OFFICE. The chief executive office
of Borrower [as pertinent under La.-R.S. 10:9-103(3)(d) and similar
applicable laws] is 600 NORTH PEARL STREET, SUITE 2500, L.B. 000, XXXXXX,
XXXXX 00000-0000, or as Borrower may otherwise notify Lender as required
by this Agreement.
LOCATION OF BORROWER'S RECORDS. Borrower maintains an office and keeps its
records concerning any of the Collateral at 000 XXXXX XXXXX XXXXXX, XXXXX
0000, L.B. 000, XXXXXX, XXXXX 00000-0000, or as Borrower may otherwise
notify Lender as required by this Agreement.
AMENDMENT OF AFFIRMATIVE COVENANTS. The following covenants contained in the
AFFIRMATIVE COVENANTS section of the Loan Agreement are hereby amended to read
as follows:
ANNUAL FINANCIAL STATEMENTS - SEARCH FINANCIAL SERVICES. Without demand or
request by Lender, furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, fiscal year-end financial statements (including consolidated balance
sheet, income statement and statement of cash flows) for Borrower's parent
corporation, SEARCH FINANCIAL SERVICES INC., prepared in the form of
consolidated statements for the parent corporation and all of its
subsidiaries, including Borrower, audited by a certified public accountant
satisfactory to Lender and accompanied by the unqualified opinion of the
certified public accountant. The certified public accounting firm of BDO
Xxxxxxx shall be qualified as a certified public accountant satisfactory to
Lender.
MONTHLY FINANCIAL STATEMENTS - SEARCH FINANCIAL SERVICES. Without demand or
request by Lender, furnish Lender with, as soon as available, but in no
event later than ten (10) Business Days after the end of each calendar
month, month-end financial statements (including balance sheet and income
statement) for Borrower's parent corporation, SEARCH FINANCIAL SERVICES
INC., prepared in the form of consolidated statements for the parent
corporation and all of its subsidiaries, including Borrower, for the prior
month, prepared and certified as correct, in all material respects, subject
to year-end adjustments, to the best knowledge and belief, by the chief
financial officer of SEARCH FINANCIAL SERVICES INC., or other officer or
person acceptable to Lender.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, on Lender's forms, and in the
amounts and by the guarantors named below:
GUARANTOR AMOUNTS
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SEARCH FINANCIAL SERVICES INC. UNLIMITED
AMENDMENT OF NEGATIVE COVENANTS. The following covenant contained in the
NEGATIVE COVENANTS section of the Loan Agreement is hereby amended to read as
follows:
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06-30-1997 FIRST AMENDMENT TO LOAN AGREEMENT PAGE 2
LOAN NO. (CONTINUED)
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ISSUANCE OF SHARES. Issue, sell or otherwise dispose of, any shares of its
capital stock or other securities, or rights, warrants or options to
purchase or acquire any shares or securities of Borrower other than shares
of its capital stock issued as stock dividends; provided, however, that (a)
Borrower shall be allowed to issue its shares and securities to, and
acquire its shares and securities from, its parent corporation, SEARCH
FINANCIAL SERVICES INC., and (b) Borrower may also issue its shares and
securities to, and acquire its shares and securities from, others if, after
the transaction, SEARCH FINANCIAL SERVICES INC., owns and controls more
than 50% of the voting rights for the election of directors.
AMENDMENT OF FINANCIAL COVENANTS. The following provisions contained in the
FINANCIAL COVENANTS section of the Loan Agreement are hereby amended to read as
follows:
DEFINITIONS. For purposes of testing compliance with these Financial
Covenants the following terms shall have the following meanings. Except as
otherwise provided by these defined terms, all computations made to
determine compliance with these Financial Covenants shall be made on a
consolidated basis for SEARCH FINANCIAL SERVICES INC., and all of its
subsidiaries, in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified as true and correct, in all
material respects, to the best knowledge and belief, by the chief financial
officer of SEARCH FINANCIAL SERVICES INC., or other officer or person
acceptable to Lender.
ADJUSTED NET WORTH. The term "Adjusted Net Worth" shall mean the
Stated Net Worth of SEARCH FINANCIAL SERVICES INC., and its
subsidiaries, on a consolidated basis, plus Subordinated Debt, less
Intangibles, and less amounts (a) due from any shareholder, director,
officer, employee or agent of SEARCH FINANCIAL SERVICES INC., or of any
subsidiary or affiliate of SEARCH FINANCIAL SERVICES INC., or (b) due
from any person or entity (other than a subsidiary) which is
affiliated with, or related to, SEARCH FINANCIAL SERVICES INC., or any
of its subsidiaries, or any of the shareholders, officers, or
directors of SEARCH FINANCIAL SERVICES INC., or any of its
subsidiaries.
DEBT. The term "Debt" shall mean all liabilities of SEARCH FINANCIAL
SERVICES INC., and its subsidiaries, on a consolidated basis,
INCLUDING SUBORDINATED DEBT.
INTANGIBLES. The term "Intangibles" shall mean all of the intangible
assets of SEARCH FINANCIAL SERVICES INC., and its subsidiaries, on a
consolidated basis, including goodwill, trademarks, patents,
copyrights, organizational expenses, and similar intangible expenses,
but excluding leaseholds and leasehold improvements.
SUBORDINATED DEBT. The term "Subordinated Debt" shall mean
indebtedness and liabilities of SEARCH FINANCIAL SERVICES INC., and its
subsidiaries which have been subordinated by written agreement to the
Indebtedness, and to the indebtedness of any Guarantor to Lender, in
form and substance acceptable to Lender.
STATED NET WORTH. The term "Stated Net Worth" shall mean the total
assets of SEARCH FINANCIAL SERVICES INC., and its subsidiaries, on a
consolidated basis, less total Debt.
MINIMUM ADJUSTED NET WORTH. SEARCH FINANCIAL SERVICES INC., shall maintain
an Adjusted Net Worth of no less than $15,000,000.00 until quarter ending
September 30, 1997. Beginning with the quarter ending on September 30,
1997, SEARCH FINANCIAL SERVICES INC., shall maintain an Adjusted Net Worth
of no less than $20,000,000.00.
MAXIMUM LEVERAGE POSITION. SEARCH FINANCIAL SERVICES INC., shall maintain a
leverage position of no more than 5.00 to 1.00, where leverage position is
the result of the following formula:
Debt - Subordinated Debt
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Stated Net Worth + Subordinated Debt
TESTING FREQUENCY. Compliance with Minimum Adjusted Net Worth and Maximum
Leverage Position requirements shall be tested quarterly (based on the
fiscal year of SEARCH FINANCIAL SERVICES INC.) based on the then most
recent financial statements of SEARCH FINANCIAL SERVICES INC., and its
subsidiaries, on a consolidated basis.
AMENDMENT OF EVENTS OF DEFAULT. The Payment of Dividends by Search Capital
Group, Inc., event contained in the EVENTS OF DEFAULT section of the Loan
Agreement is hereby amended to read as follows:
PAYMENT OF DIVIDENDS BY SEARCH FINANCIAL SERVICES INC. - BEFORE SEPTEMBER
30, 1997. Should SEARCH FINANCIAL SERVICES INC., before September 30, 1997,
pay or declare any dividends on its stock (other than dividends payable in
its stock) unless (a) its Adjusted Net Worth (as defined in the FINANCIAL
COVENANTS section above) exceeds $15,000,000.00, and (b) payment of the
dividend will not reduce its Adjusted Net Worth to an amount equal to or
less than $15,000,000.00.
PAYMENT OF DIVIDENDS BY SEARCH FINANCIAL SERVICES INC. - ON AND AFTER
SEPTEMBER 30, 1997. Should SEARCH FINANCIAL SERVICES INC., on or after
September 30, 1997, pay or declare any dividends on its stock (other than
dividends payable in its stock) unless (a) its Adjusted Net Worth (as
defined in the FINANCIAL COVENANTS section above) exceeds $22,500,000.00,
and (b) payment of the dividend will not reduce its Adjusted Net Worth to
an amount equal to or less than $22,500,000.00.
CONDITIONS PRECEDENT. This First Amendment shall become effective as of JUNE
30, 1997, upon (a) payment by Borrower to Lender of an amendment fee of
$5,000.00, (b) receipt by Lender of evidence sufficient to Lender that
execution of this First Amendment by the undersigned representative of Borrower
has been duly authorized, (c) receipt by Lender of this First Amendment duly
executed by the authorized representative of Borrower, and (d) execution of
this First Amendment by a duly authorized representative Lender.
NO NOVATION. This First Amendment shall not in any manner constitute or be
construed to constitute a novation, discharge, forgiveness, extinguishment or
release of any obligation for amounts due under the Loan Agreement, which
obligations, as amended hereby, shall continue in full force and effect, and
retain the same ranking, priority and order as prior hereto, in accordance with
the terms of the Loan Agreement. Borrower hereby confirms and ratifies all of
the security as described in the Loan Agreement, and all notes, mortgages,
pledges, security agreements, and other agreements executed in connection
therewith, all of the foregoing to secure all amounts described in the Loan
Agreement.
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06-30-1997 FIRST AMENDMENT TO LOAN AGREEMENT PAGE 3
LOAN NO. (CONTINUED)
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REPRESENTATIONS AND WARRANTIES. Borrower hereby confirms, reaffirms, and
restates the representations, warranties, affirmative covenants and negative
covenants set forth in the Loan Agreement. Borrower also represents and
warrants that there has been no undisclosed material adverse change in (i)
Borrower's business operation, (ii) management, and/or (iii) any other facts,
circumstances or conditions upon which Lender has relied or utilized in making
its decision to enter into this First Amendment.
DEFINITIONS. Terms defined in the Loan Agreement shall have their defined
meanings when used herein, except as otherwise provided for herein.
LIMITED EFFECT. Except as amended and modified herein, the Loan Agreement shall
continue to be and shall remain in full force and effect in accordance with its
terms.
GOVERNING LAW. This First Amendment shall be governed by and construed and
interpreted in accordance with the laws of the State of Louisiana.
BORROWER AND LENDER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS FIRST
AMENDMENT TO LOAN AGREEMENT, AND BORROWER AND LENDER AGREE TO ITS TERMS. THIS
AGREEMENT IS EFFECTIVE ON JUNE 30, 1997.
BORROWER:
SEARCH FUNDING II, INC.
By: /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx, Senior Executive Vice President
LENDER:
HIBERNIA NATIONAL BANK
By: /s/
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Authorized Officer
ACKNOWLEDGMENT
XXXXX XX XXXXX
XXXXXX XX XXXXXX
Xx this 15th day of July, 1997, before me, Xxxxx X. Xxxx, a Notary Public in
and for the County and State aforesaid, personally appeared XXXXXX X. XXXX,
duly known to me to be a Senior Executive Vice President of SEARCH FUNDING II,
INC., a Texas corporation, the corporation described as Borrower in this First
Amendment to Loan Agreement and the same corporation that executed this First
Amendment to Loan Agreement, and duly acknowledged to me that he signed his
name thereto by authority granted by the Board of Directors of said
corporation.
NOTARY PUBLIC /s/ XXXXX X. XXXX
My Commission Expires: 11-02-99
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