<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
DECEMBER 16, 1998
(Date of earliest event reported)
ACE CASH EXPRESS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-20774 75-2142963
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS 75038
(Address of principal executive offices)
(972) 550-5000
(Registrant's telephone number,
including area code)
NOT APPLICABLE
(Former Name or Former Address,
if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
In April 1998, the Company signed a money order agreement with Travelers Express
Company, Inc. ("Travelers Express"), under which the Company would exclusively
sell money orders issued by Travelers Express (the "Money Order Agreement"). In
July 1998, the Company signed a Credit Agreement with a syndicate of banks (the
"Lenders") represented by Wells Fargo Bank (Texas), National Association ("Wells
Fargo Bank"), as lead agent and Chase Bank of Texas as co-agent (the "Credit
Agreement"). Both the Money Order Agreement and the Credit Agreement were to
become effective upon the expiration or termination of the Company's 1992 Master
Agreement, as amended (the "Previous Money Order Agreement"), with Integrated
Payment Systems Inc. ("IPS").
On December 16, 1998, the Company:
* terminated the Previous Money Order Agreement and paid and made
arrangements to pay IPS all amounts due under the Previous Money
Order Agreement;
* first borrowed under the Credit Agreement;
* amended the Credit Agreement to increase the amounts that the Company
may borrow and to extend the time during which the Company may borrow
under the Credit Agreement; and
* began selling money orders issued by Travelers Express under the
Money Order Agreement.
With those events, the Credit Agreement, as amended (the "Amended Credit
Agreement"), and the Money Order Agreement became effective. Also, the original
Collateral Trust Agreement signed in November 1996 was terminated, and the
Amended and Restated Collateral Trust Agreement that was signed with the Credit
Agreement in July 1998 (the "Amended Collateral Trust Agreement") and other
documents ancillary to the Credit Agreement became effective.
The Company's initial borrowing under the Amended Credit Agreement was $60.5
million, composed of $50 million under the Revolving Facility (defined below)
and $10.5 million under the Term-Loan Facility (defined below). The borrowed
funds were used to pay IPS the proceeds of, and fees for, money order sales by
the Company and to repay all borrowings from IPS under the Previous Money Order
Agreement. The initial borrowing was therefore a re-funding of amounts used for
the Company's day-to-day operations, for capital expenditures (including opening
new business locations), and for acquisitions of third-party business locations.
The Company also delivered to IPS a stand-by letter of credit of $575,000,
issued under the Amended Credit Agreement, to pay or secure payment of amounts
due to IPS under the Previous Money Order Agreement; the amounts ultimately due
to IPS will be determined in accordance with a termination agreement between the
Company and IPS.
<PAGE> 3
The First Amendment to Credit Agreement signed by the Company, the Lenders, and
Wells Fargo Bank as agent for the Lenders:
* increased from $90 million to $110 million the maximum amount that
the Company may borrow under the revolving (line-of-credit) facility, to be used
for working capital and general corporate purposes (the "Revolving Facility");
* increased from $15 million to $20 million the maximum amount that the
Company may borrow from Wells Fargo Bank as additional ten-day revolving
advances in addition to the Revolving Facility;
* extended from July 30, 1999 to December 15, 1999 the availability of
the Revolving Facility and of the term-loan facility, to be used for store
construction and relocation and other capital expenditures, including
acquisitions (the "Term-Loan Facility");
* extended from July 31, 2004 to December 16, 2004 the date on which
the Company must pay all amounts due to the Lenders resulting from borrowings
under the Term-Loan Facility; and
* reallocated among the Lenders their respective commitments to lend
under the Term-Loan Facility (but without changing the total amount of the
Term-Loan Facility).
The Company's borrowings under the Revolving Facility and the Term-Loan Facility
bear interest at variable or "floating" rates. Borrowings under the Revolving
Facility bear interest at an annual rate equal to, at the Company's discretion,
either the prime rate publicly announced by Wells Fargo Bank (the "Prime Rate")
or the London InterBank Offered Rate ("LIBOR") plus 0.75%. Borrowings under the
Term-Loan Facility bear interest at an annual rate equal to, at the Company's
discretion, either the Prime Rate plus 0.25% or LIBOR plus 1.75%.
To reduce its risk of greater interest expense upon a rise in the Prime Rate or
LIBOR, the Company has entered into interest-rate swap agreements with
NationsBank, N.A. Those agreements will effectively convert a portion of the
Company's floating-rate interest obligations to fixed-rate interest obligations
for a two-year period beginning January 4, 1999. The agreements involve the
exchange of amounts calculated using a fixed interest rate, as applied to a
notional amount determined by the parties, for amounts calculated using a
floating interest rate, as applied to that same notional amount, over the two
years; the notional amount is merely a base for the rate calculations and is not
exchanged.
<PAGE> 4
The notional amount for interest rates under the Revolving Facility will be $33
million; the notional amount for interest rates under the Term-Loan Facility
will initially be $9.75 million, increasing to $10.75 million in September 1999,
with decreases in the second year of the swap agreement corresponding to
term-loan payments due from the Company under the Amended Credit Agreement. The
notional amounts were determined by the Company based on its minimum projected
borrowings during the next two years. Under the swap agreements, the fixed rate
applicable to the notional amount under the Revolving Facility will be 5.14% for
the 1999 calendar year and 5.23% for the 2000 calendar year. The fixed rate
applicable to the notional amount under the Term-Loan Facility will be 6.23% for
the 1999 calendar year and 6.38% for the 2000 calendar year.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibit is filed herewith in
accordance with the provisions of Item 601 of Regulation S-K:
10.43 First Amendment to Credit Agreement dated as of December
16, 1998, among the Company, Wells Fargo Bank (Texas),
National Association, as agent, and the Lenders named therein,
with Schedules 2.01(a) and 2.01(b) thereto.
[THE SIGNATURE FOLLOWS ON THE NEXT PAGE.]
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACE CASH EXPRESS, INC.
(Registrant)
By: /s/ JAY B. SHIPOWITZ December 23, 1998
---------------------------
Jay B. Shipowitz
Senior Vice President and Chief Financial Officer
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
10.43 First Amendment to Credit Agreement dated as of
December 16, 1998, among the Company, Wells Fargo
Bank (Texas), National Association, as agent, and
the Lenders named therein, with Schedules 2.01(a)
and 2.01(b) thereto.
</TABLE>
<PAGE> 1
EXHIBIT 10.43
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
and entered into effective as of the 16th day of December, 1998. Reference is
made to the Credit Agreement, dated as of July 31, 1998 (as amended,
supplemented or otherwise modified and in effect on the date hereof, the "Credit
Agreement") by and among ACE CASH EXPRESS, INC., a Texas corporation (the
"Borrower"), the lenders party hereto (collectively, together with all
successors and assigns, the "Lenders") and WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, a national banking association, as Agent (the "Agent").
PRELIMINARY STATEMENTS
A. Pursuant to Section 9.07 of the Credit Agreement, the Borrower has
requested that the Lenders extend (x) the Revolving Credit Termination Date and
the Scheduled Advance Term Loan Termination Date to a date that is three hundred
sixty-four (364) days after the Amex Termination Date and (y) the Final Maturity
Date to a date that is five (5) years after the Amex Termination Date.
B. The Borrower has also requested that the Revolving Credit Commitment
be increased from ninety million dollars ($90,000,000) to one hundred ten
million dollars ($110,000,000) and that the Swingline Loan facility be increased
from fifteen million dollars ($15,000,000) to twenty million dollars
($20,000,000) in order to accommodate recent acquisitions and the acceleration
of new store openings.
C. In connection with the increase in the aggregate amount of the
Commitments, the Lenders have requested that the allocations of the Advance Term
Loan Commitments and the Revolving Credit Commitments be changed as hereinafter
set forth.
D. The Borrower and Lenders desire to amend the Credit Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
AGREEMENT
ARTICLE I. DEFINITIONS
SECTION 1.01 Certain Defined Terms. Capitalized terms used in this
Amendment are used as defined in the Credit Agreement, as amended hereby, unless
otherwise stated.
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ARTICLE II. AMENDMENTS
SECTION 2.01 Amendment to Section 1.01 - Certain Defined Terms.
Effective as of the date hereof, Section 1.01 of the Credit Agreement is hereby
amended by amending and restating the following definitions:
"`Final Maturity Date' shall mean the fifth (5th) anniversary of the Amex
Termination Date."
"`Interest Payment Date' shall mean (a) with respect to any Alternate Base Loan,
(i) the last Business Day of each month commencing on the month following the
first Credit Event and (ii) (x) with respect to any Advance Term Loan that is an
Alternate Base Loan, the Final Maturity Date and (y) with respect to any
Revolving Credit Loan that is an Alternate Base Loan, the Revolving Credit
Termination Date, (b) with respect to any Eurodollar Loan, (i) the last day of
the Interest Period applicable thereto, and, in addition, in respect of any
Eurodollar Loan of more than three (3) months' duration, each earlier day which
is three (3) months after the first day of such Interest Period and (ii) the
Final Maturity Date, and (c) with respect to any Reference Rate Loan, (i) the
last Business Day of each month commencing on the month following the first
Credit Event, and (ii) the Revolving Credit Termination Date."
"`Revolving Credit Termination Date' shall mean the earlier to occur of (a)
three hundred sixty-four (364) days after the Amex Termination Date and (b) such
date as the Revolving Credit Loans shall otherwise be payable in full and the
Revolving Credit Commitment shall terminate, expire or be canceled in accordance
with the terms of this Agreement."
"`Scheduled Advance Term Loan Termination Date' shall mean the day which is
three hundred sixty-four (364) days after the Amex Termination Date."
SECTION 2.02 Amendment to Section 2.17 - Swingline Loans. Effective as
of the date hereof, Section 2.17 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 2.17. Swingline Loans. Notwithstanding any other provision of this
Agreement, WFB may make Swingline Loans to the Borrower, at WFB's sole
discretion, from the Amex Termination Date to the Revolving Credit Termination
Date, in an aggregate principal amount at any time outstanding not to exceed
twenty million dollars ($20,000,000). In addition to the other terms and
conditions of this Agreement, such Swingline Loans shall be subject to the
following conditions: (i) each Swingline Loan made by WFB shall be evidenced by
a single Swingline Note prepared by the Borrower, duly executed on behalf of the
Borrower, dated the date of the proposed borrowing, substantially in the form of
Exhibit L hereto, delivered by the Borrower and payable to WFB in a principal
amount equal to the Swingline Loan made on such date; (ii) subject to the
provisions of Section 2.08 and Section 9.08 hereof, each Swingline Loan shall
bear interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin then in effect; (iii) any Swingline Loans made to the Borrower
must be repaid in full to WFB within ten (10) days after the date such Swingline
Loan is made; (iv) any Swingline Loans will be subject to the Borrowing Base and
shall not be made if such Swingline Loan would cause the unpaid amount of the
Revolving Credit Loans together with the amount of such Swingline Loan to exceed
the Borrowing Base then
<PAGE> 3
in effect; (v) Swingline Loans shall not be outstanding for more than a total of
twenty-five (25) days during any consecutive twelve (12) month period; (vi) in
no event shall WFB make any Swingline Loan if the unpaid amount of the Revolving
Credit Loans then outstanding is less than the Total Revolving Credit
Commitment; and (vii) any payments made by the Borrower to the Agent during a
period when a Swingline Loan is outstanding shall be applied first to the unpaid
interest on such Swingline Loan, secondly to the unpaid principal of such
Swingline Loan, and thereafter in accordance with the terms of this Agreement,
provided, however, that if an Event of Default occurs or is continuing while any
Swingline Loan is outstanding, any payments made by the Borrower to the Agent
shall be applied pari passu with the Revolving Credit Loans and such Swingline
Loan."
SECTION 2.03 Schedule 2.01(a) - Advance Term Loan Commitments.
Effective as of the date hereof, all references in the Credit Agreement to
Schedule 2.01(a), which is entitled "Advance Term Loan Commitments", shall be
deemed references to the Schedule 2.01(a) which is attached hereto as Annex A.
SECTION 2.04 Schedule 2.01(b) - Revolving Credit Commitments. Effective
as of the date hereof, all references in the Credit Agreement to Schedule
2.01(b), which is entitled "Revolving Credit Commitments", shall be deemed
references to the Schedule 2.01(b) which is attached hereto as Annex B.
ARTICLE III. CONDITIONS PRECEDENT
SECTION 3.01 Conditions to Effectiveness. The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent:
(a) The Lenders shall have received (i) this Amendment, duly
executed by the Borrower and all Lenders, (ii) new Advance Term Notes, dated as
of the date hereof but otherwise substantially in the form of Exhibit A to the
Credit Agreement, executed by the Borrower in favor of each Lender reflecting
the Advance Term Loan Commitments as amended herein (collectively, the "New
Advance Term Notes"), (iii) new Revolving Credit Notes, dated as of the date
hereof but otherwise substantially in the form of Exhibit B to the Credit
Agreement, executed by the Borrower in favor of each Lender reflecting the
Revolving Credit Commitments as amended herein (the "New Revolving Credit
Notes"), (iv) a certificate of the Secretary of the Borrower acknowledging (A)
that the Borrower's Board of Directors has adopted, approved, consented to and
ratified resolutions which authorize the execution, delivery and performance by
such Borrower of this Amendment, the New Advance Term Notes, the New Revolving
Credit Notes and all other Credit Documents to which the Borrower is or is to be
a party, and (B) the names of the officers of the Borrower authorized to sign
this Amendment, the New Advance Term Notes, the New Revolving Credit Notes, and
each of the other Credit Documents to which the Borrower is or is to be a party
hereunder (including the certificates contemplated herein) together with
specimen signatures of such officers, and (v) such additional documents,
instruments and information as the Lenders may reasonably request;
(b) Each Lender shall have received, in consideration of this
Amendment, an amendment fee of ten thousand dollars ($10,000.00);
<PAGE> 4
(c) The representations and warranties contained herein and in
the Credit Agreement and the Credit Documents, as each is amended hereby, shall
be true and correct in all material respects as of the date hereof, as if made
on the date hereof (except insofar as such representations and warranties relate
expressly to an earlier date);
(d) After giving effect to this Amendment, no Default or Event
of Default shall have occurred and be continuing; and
(e) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to the Lenders and
their legal counsel.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties. Borrower hereby represents
and warrants to the Agent and the Lenders that (a) the representations and
warranties contained in the Credit Agreement, as amended hereby, and in any
other Credit Documents are true and correct in all material respects on and as
of the date hereof as though made on and as of the date hereof (except insofar
as such representations and warranties relate expressly to an earlier date); (b)
no Default or Event of Default under the Credit Agreement, as amended hereby,
has occurred and is continuing; and (c) Borrower is in full compliance with all
covenants and agreements contained in the Credit Agreement and in the other
Credit Documents, as amended hereby.
ARTICLE V. MISCELLANEOUS PROVISIONS
SECTION 5.01 Return of Previous Notes. Within five (5) business days
after the date hereof, each Lender shall return to the Agent the Advance Term
Note and the Revolving Credit Note executed by the Borrower in favor of such
Lender dated July 31, 1998 (individually, a "Previous Note" or collectively, the
"Previous Notes"). Within the later of (i) five (5) business days after the
Agent receives any Previous Note, or (ii) five (5) business days after the date
on which the Agent has received for the benefit of the Lenders the New Revolving
Credit Notes and the New Advance Term Notes, the Agent shall return such
Previous Note or Previous Notes to the Borrower for cancellation.
SECTION 5.02 Ratification of Credit Agreement and Other Credit
Documents. Except as expressly provided herein, the Credit Agreement and all
other Credit Documents shall remain unmodified and in full force and effect as
supplemented and amended hereby. The Borrower hereby affirms all the provisions
of the Credit Agreement, as amended hereby, and the Credit Documents.
<PAGE> 5
SECTION 5.03 Confirmation of the Security Documents. The Borrower
hereby acknowledges and confirms that the Collateral (as defined in the Security
Documents) continues to secure the Liabilities (as defined in the Security
Documents), including those arising under the Credit Agreement, as amended
hereby.
SECTION 5.04 Counterparts. This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been executed and is effective as of the
date first above-written.
BORROWER:
ACE CASH EXPRESS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AGENT:
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LENDERS:
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
GUARANTY FEDERAL BANK, F.S.B.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 7
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FIRST UNION NATIONAL BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
NATIONSBANK, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PARIBAS
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 8
ANNEX A
ADVANCE TERM LOAN COMMITMENTS
(See Attached)
<PAGE> 9
SCHEDULE 2.01(a)
ADVANCE TERM LOAN COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Lender Commitment Commitment
<S> <C> <C>
Wells Fargo Bank (Texas), National Association $ 9,333,333.00 26.67%
Chase Bank of Texas, National Association $ 7,144,331.00 20.41%
Paribas $ 4,630,584.00 13.23%
First Union National Bank $ 4,630,584.00 13.23%
Guaranty Federal Bank, F.S.B. $ 4,630,584.00 13.23%
NationsBank, N.A. $ 4,630,584.00 13.23%
Total Advance Term Loan Commitments $35,000,000.00 100.0%
</TABLE>
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ANNEX B
REVOLVING CREDIT COMMITMENTS
(See Attached)
<PAGE> 11
SCHEDULE 2.01(b)
REVOLVING CREDIT COMMITMENTS
<TABLE>
<CAPTION>
Percentage of
Lender Commitment Commitment
<S> <C> <C>
Wells Fargo Bank (Texas), National Association $ 38,666,667.00 35.15%
Chase Bank of Texas, National Association $ 19,855,669.00 18.05%
Paribas $ 12,869,416.00 11.70%
First Union National Bank $ 12,869,416.00 11.70%
Guaranty Federal Bank, F.S.B. $ 12,869,416.00 11.70%
NationsBank, N.A. $ 12,869,416.00 11.70%
Total Revolving Credit Commitments $110,000,000.00 100.00%
</TABLE>
