<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Ace Cash Express, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
ACE CASH EXPRESS, INC.
1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS 75038
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 15, 1999
---------------------
To the Shareholders of ACE Cash Express, Inc.:
The Annual Meeting of Shareholders of ACE Cash Express, Inc., a Texas
corporation (the "Company"), will be held at the Four Seasons Hotel, 4150 North
MacArthur Boulevard, Irving, Texas 75038, on November 15, 1999, at 10:00 a.m.,
Dallas, Texas time, for the following purposes:
(1) To elect six directors to serve until the next annual meeting of
shareholders or until their respective successors are elected and
qualified;
(2) to consider and vote upon a proposal to increase the number of
shares of Common Stock authorized for issuance under the Company's
1997 Stock Option Plan from 900,000 shares to 1,215,000 shares; and
(3) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on September 27,
1999, are entitled to notice of, and to vote at, the meeting or any adjournment
thereof. A list of shareholders entitled to vote at the meeting will be
available for examination at the Company's corporate offices, at 1231 Greenway
Drive, Suite 800, Irving, Texas 75038, for ten days before the meeting.
Whether or not you plan to attend the meeting, please date and sign the
enclosed proxy and return it in the enclosed envelope. No postage is required if
the proxy is mailed in the United States. Your prompt response will reduce the
time and expense of solicitation. Any shareholder that returns a proxy may
revoke it by voting in person at the meeting.
By order of the Board of Directors,
Jay B. Shipowitz
Secretary
Irving, Texas
October 15, 1999
<PAGE> 3
ACE CASH EXPRESS, INC.
1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS 75038
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 15, 1999
---------------------
This Proxy Statement is furnished to shareholders of ACE Cash Express,
Inc., a Texas corporation (the "Company"), in connection with the solicitation,
at the Company's expense and on behalf of the Board of Directors of the Company,
of proxies to be used at the Annual Meeting of Shareholders of the Company to be
held November 15, 1999 (the "Annual Meeting"). Proxies in the form enclosed will
be voted at the Annual Meeting if properly executed, returned to the Company
before the Annual Meeting, and not revoked. Any shareholder giving such a proxy
may revoke it at any time before it is voted by written revocation delivered to
the Company's Secretary, by voting in person at the Annual Meeting, or by giving
a later proxy. This Proxy Statement and the enclosed proxy form are first being
sent to shareholders on or about October 15, 1999.
Included with this Proxy Statement are copies of the Company's Annual
Report to Shareholders for the fiscal year ended June 30, 1999 ("fiscal 1999").
The Annual Report to Shareholders is not part of the proxy solicitation
material.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Outstanding Capital Stock............................................................................... 2
Quorum and Voting....................................................................................... 2
Solicitation of Proxies; Action to be Taken at Meeting...................................................2
Security Ownership of Certain Beneficial Owners and Management...........................................3
Directors and Executive Officers.........................................................................5
Board of Directors..............................................................................5
Directors.......................................................................................5
Committees, Meetings, and Compensation of Members of the Board of Directors.....................6
Compliance with Section 16(a) of the Securities Exchange Act of 1934............................8
Executive Officers..............................................................................8
Executive Compensation...................................................................................9
Summary Compensation Table......................................................................9
Senior Management Bonus Plan....................................................................9
Stock Options..................................................................................10
Compensation Committee Interlocks and Insider Participation....................................10
Compensation Committee Report on Executive Compensation........................................11
Change-in-Control Severance Agreement..........................................................13
Stock Performance Chart.................................................................................14
Proposal to Amend ACE Cash Express, Inc. 1997 Stock Option Plan.........................................14
Background and Summary of Terms................................................................14
Tax Status of Stock Options....................................................................16
Required Vote..................................................................................17
Relationship with Independent Public Accountants........................................................17
Shareholder Proposals for 2000 Annual Meeting...........................................................17
Miscellaneous...........................................................................................18
</TABLE>
-1-
<PAGE> 4
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to vote at the Annual Meeting
is September 27, 1999. At the close of business on that date, the Company had
issued, outstanding and entitled to vote at the Annual Meeting 10,063,805 shares
of Common Stock, $.01 par value per share ("Common Stock").
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
all outstanding shares of the Common Stock on the record date is necessary to
constitute a quorum at the Annual Meeting. Assuming the presence of a quorum,
affirmative votes equal to at least (i) a plurality of the votes cast at the
Annual Meeting in person or by proxy is required for the election of directors,
and (ii) a majority of the votes cast at the Annual Meeting in person or by
proxy is required to approve any other matter. In deciding all questions, each
shareholder is entitled to one vote, in person or by proxy, for each share of
Common Stock held in such shareholder's name on the record date. Abstentions
will be included in vote totals and, as such, will have the same effect on each
proposal as a negative vote. Where nominee record holders do not vote on
specific matters because they did not receive specific instructions on such
matters from the beneficial owners of such shares ("broker non-votes"), such
broker non-votes will not be included in vote totals and, as such, will have no
effect on any proposal.
SOLICITATION OF PROXIES; ACTION TO BE TAKEN AT MEETING
The accompanying proxy for the Annual Meeting is solicited on behalf of
the Board of Directors. The Company will bear the expense of preparing,
printing, and mailing the proxy solicitation material and the form of proxy. In
addition to the use of the mail, proxies may be solicited by personal interview,
telephone, and telegram by the Company's directors, officers, and employees.
Arrangements may also be made with brokerage houses and other custodians,
nominees, and fiduciaries to forward solicitation material to the beneficial
owners of shares of Common Stock held of record by such persons, and the Company
may reimburse them for reasonable out-of-pocket expenses they incur in
connection therewith.
When shareholders have appropriately specified how their proxies should
be voted, the proxies will be voted accordingly. Unless the shareholder
otherwise specifies therein, the accompanying proxy will be voted (i) for the
election as directors of the Company of the six persons named under the caption
"Directors and Executive Officers -- Board of Directors," (ii) for the proposal
to increase the total number of shares of Common Stock authorized to be issued
under the Company's 1997 Stock Option Plan, as amended (the "1997 Option Plan"),
and (iii) at the discretion of the proxy holders, with respect to any other
matter or business that may properly come before the Annual Meeting. The Board
of Directors does not know of any such other matter or business.
-2-
<PAGE> 5
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of September 27, 1999, by each
person the Company knows to beneficially own more than 5% of the outstanding
Common Stock, each of the Company's directors, the Named Executive Officers (as
defined in "Executive Compensation -- Summary Compensation Table" below), and
all directors and executive officers as a group. The Company believes each such
shareholder has sole voting and dispositive power over the shares held, except
as otherwise indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF COMMON
SHARES OF COMMON STOCK STOCK BENEFICIALLY
BENEFICIALLY OWNED OWNED
---------------------- -------------------
<S> <C> <C>
Raymond C. Hemmig 693,125(1) 6.9%
10000 N. Central Expressway, Suite 1060
Dallas, Texas 75231
Donald H. Neustadt 909,026(2) 9.0%
1231 Greenway Drive, Suite 800
Irving, Texas 75038
Howard W. Davis 19,666(3) (9)
Marshall B. Payne 230,005(4) 2.3%
Edward W. Rose III 1,109,322(5) 11.0%
500 Crescent Court, Suite 250
Dallas, Texas 75201
Charles Daniel Yost 24,166(6) (9)
Raymond E. McCarty 182,088(7) 1.8%
Jay B. Shipowitz 32,639(8) (9)
Greenbriar Partners, Ltd. 828,482(10) 8.2%
1901 North Akard
Dallas, Texas 75201
Robert Fleming Inc. 770,371(11) 7.7%
320 Park Avenue, 11th Floor
New York, NY 10022
Peter H. Kamin 573,300(12) 5.7%
One Financial Center, Suite 1600
Boston, Massachusetts 02111
Edwin H. Morgens 502,500(13) 5.0%
10 East 50th Street
New York, New York 10022
All directors and executive officers as a 3,200,038(14) 31.8%
group (8 persons)
</TABLE>
-3-
<PAGE> 6
(1) Includes 11,250 shares Mr. Hemmig holds as custodian for his children,
11,250 shares held for the Hemmig Family Trust and options to purchase
28,325 shares exercisable within 60 days of the date of this Proxy
Statement.
(2) Includes 63,750 shares held by KLN Foundation, a private charitable
foundation of which Mr. Neustadt is one of three officers. Mr. Neustadt
shares voting and dispositive power with those other foundation officers.
Mr. Neustadt disclaims beneficial ownership of the shares held by KLN
Foundation. Also includes options to purchase 8,107 shares exercisable
within 60 days of the date of this Proxy Statement.
(3) Includes options to purchase 12,916 shares exercisable within 60 days of
the date of this Proxy Statement.
(4) Includes 24,120 shares owned by Scout Ventures, a Texas general partnership
of which Mr. Payne is a general partner ("Scout"); Mr. Payne shares voting
and dispositive power over the shares held by Scout with the other partners
of Scout. Also includes options to purchase 19,666 shares exercisable
within 60 days of the date of this Proxy Statement.
(5) Includes 894,005 shares of Common Stock owned by Mr. Rose and options to
purchase 19,666 shares exercisable within 60 days of the date of this Proxy
Statement. Also includes shares owned by the following persons:
a) Evelyn P. Rose, the wife of Mr. Rose - 115,341 shares
b) Lela Helen Rose, the daughter of Mr. & Mrs. Rose - 21,705 shares
c) William E. Rose, the son of Mr. and Mrs. Rose - 21,705 shares
d) Kaiser-Francis Oil Company - 27,675 shares.
e) Ruth Kaiser Nelson - 9,225 shares.
Mr. Rose might be considered to share dispositive power with each of these
persons over the shares of Common Stock owned by that person. Mr. Rose,
however, disclaims beneficial ownership of any of the shares owned by each
of these persons.
(6) Consists of options to purchase 24,166 shares exercisable within 60 days of
the date of this Proxy Statement.
(7) Includes options to purchase 17,080 shares exercisable within 60 days of
the date of this Proxy Statement.
(8) Includes options to purchase 30,539 shares exercisable within 60 days of
the date of this Proxy Statement.
(9) Less than 1%.
(10) Includes 4,500 shares held by Mr. Frederick E. Rowe, Jr., the general
partner of Greenbriar Partners, Ltd. ("Greenbriar"). As general partner,
Mr. Rowe has the power to manage Greenbriar's operations, including the
shared right with Greenbriar to vote and dispose of the 808,982 shares of
Common Stock Greenbriar holds. Mr. Rowe has sole voting and dispositive
power over the 4,500 shares he holds. Also includes an additional 15,000
shares owned by the Rowe Family Partnership, of which Mr. Rowe is a general
partner.
(11) Robert Fleming Inc. is a registered investment adviser with shared voting
and dispositive power over these shares.
(12) Includes 46,650 shares held by Mr. Peter Kamin, the general partner of Peak
Investment Limited Partnership ("Peak"), Petrus Fund LP ("Petrus") and
Pleiades. As general partner, Mr. Kamin has the discretionary authority to
manage Peak's, Petrus' and Pleiades' operations, including the shared right
with Peak, Petrus or Pleiades, as the case may be, to vote and dispose of
the 526,650 shares of Common Stock that Peak, Petrus, and Pleiades hold.
Mr. Kamin has sole voting and dispositive power over the 46,650 shares he
holds.
(13) These shares consist of shares beneficially held by Morgens Waterfall
Vintiadis Investments N.V. ("MWV"), Betje Partners ("Betje"), Phaeton
International, N.V. ("Phaeton"), and Phoenix Partners ("Phoenix"). Betje,
Phaeton, and Phoenix have sole voting and dispositive power over 106,200,
171,225, and 225,075 shares; respectively. Mr. Bruce Waterfall, 610 Fifth
Avenue, New York, New York 10020, could be deemed a beneficial owner of
these shares of Common Stock because of direct and indirect interests he
holds in the Morgens Group.
(14) See Notes (1) through (8).
-4-
<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS
Six directors are to be elected at the Annual Meeting. Each nominee
will be elected to hold office until the next annual meeting of shareholders or
until his successor is elected and qualified. Proxy holders will not be able to
vote the proxies held by them for more than six persons. To be elected a
director, each nominee must receive a plurality of all of the votes cast at the
Annual Meeting for the election of directors. Should any nominee become unable
or unwilling to accept nomination or election, the proxy holders may vote the
proxies for the election, in his stead, of any other person the Board of
Directors may recommend. Each nominee is currently a director of the Company.
Each nominee has expressed his intention to serve the entire term for which
election is sought.
The Board of Directors' nominees for the office of director are as
follows:
<TABLE>
<CAPTION>
YEAR FIRST
AGE BECAME DIRECTOR
--- ---------------
<S> <C> <C>
Raymond C. Hemmig 49 1988
Donald H. Neustadt 50 1987
Howard W. Davis 54 1995
Marshall B. Payne 42 1987
Edward W. Rose III 58 1987
Charles Daniel Yost 50 1996
</TABLE>
DIRECTORS
Raymond C. Hemmig has served as the Chairman of the Board of the
Company since September 1988. From September 1988 to October 1994, Mr. Hemmig
also served as the Company's Chief Executive Officer. Mr. Hemmig serves as a
director of the National Association of Check Cashers and was the founding
President of the Texas Association of Check Cashers, Inc. Since June 1994, Mr.
Hemmig also has served as a director of Restoration Hardware, Inc., a publicly
held retail company. Since December 1995, Mr. Hemmig has served as the Chairman
of the Board and Chief Executive Officer of Retail & Restaurant Growth Capital
L.P., a licensed Small Business Investment Corporation and a provider of
financing to emerging retail and restaurant companies. Since February 1996, Mr.
Hemmig has served as a director of Party City, Inc., a publicly held retail
company. Mr. Hemmig also serves as a director of various private companies. From
1990 until May 1994, Mr. Hemmig also served as a director of On The Border
Cafes, Inc., a publicly held restaurant chain. From 1985 to September 1988, Mr.
Hemmig was a partner and co-founder of Hemmig & Martin, a consulting firm to
clients in the food service, retail, and franchise industries.
Donald H. Neustadt has served as the President and Chief Executive
Officer of the Company since November 1994 and as a director of the Company
since January 1987. Mr. Neustadt served as the Company's President and Chief
Operating Officer from January 1987 to November 1994. From 1972 to January 1987,
Mr. Neustadt served in various capacities with Associates Corporation of North
America ("Associates NA") and its affiliates, including as President of
Associates Financial Express, Inc. ("Associates Financial"), a money order
company; as Senior Vice President and Controller of Associates Diversified
Services, Inc., which owned a consumer credit card bank, a savings and loan and
Associates Financial; as Vice President of Strategic Planning for Associates NA;
and as Controller of Consumer Operations and a systems manager for Associates
Financial Services, a consumer finance company. Mr. Neustadt also currently
serves as a director of a private company.
-5-
<PAGE> 8
Howard W. Davis has served as a director of the Company since February
1995. Since 1993, Mr. Davis has managed his personal investments, served as a
consultant for a number of companies, and worked on a volunteer basis for
several civic and charitable organizations. From 1981 to 1993, Mr. Davis served
as the President and Chief Executive Officer of Dallas-based Tracy Locke, Inc.,
a major national advertising and public relations firm.
Marshall B. Payne has served as a director of the Company since 1987.
Since 1983, Mr. Payne has been Vice President of Cardinal Investment Company,
Inc., an investment management firm. In addition, he serves as a director of
Restoration Hardware, Inc., a publicly held retail company, as a director of
LBP, Inc., formerly engaged in the manufacturing of home improvement products,
and as a director of various private companies.
Edward W. Rose III has served as a director of the Company since 1987.
Since 1974, Mr. Rose has been the President and sole shareholder of Cardinal
Investment Company, Inc. In addition, Mr. Rose serves as Chairman of the Board
of Drew Industries, Inc., an aluminum window manufacturer, and of LBP, Inc.,
formerly engaged in the manufacturing of home improvement products, and as a
director of various private companies.
Charles Daniel Yost has served as a director of the Company since
August 1996. In March 1998, Mr. Yost joined Allegiance Telecom, Inc. as
President and Chief Operating Officer. From July 1997 to March 1998, Mr. Yost
was President and Chief Operating Officer of NETCOM On-line Communications
Systems, Inc., an Internet service provider. From 1994 to 1997, Mr. Yost served
as President of the Southwest Region of AT&T Wireless Services, Inc., a provider
of cellular telephone service. From 1991 to June 1994, Mr. Yost served as
President of the Southwest Region for McCaw Cellular Communications/LIN
Broadcasting. In addition, Mr. Yost serves as a director of a privately held
architectural services provider.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE.
COMMITTEES, MEETINGS, AND COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee and a
Compensation Committee to assist the Board of Directors in carrying out its
duties.
The Audit Committee's duties include:
o Engaging auditors and determining their compensation;
o Making recommendations to the Board of Directors for reviewing
the completed audit and audit report with the independent
auditors, the conduct of the audit, significant accounting
adjustments, recommendations for improving internal controls,
and all other significant findings during the audit;
o Meeting periodically with the Company's management and auditors
to discuss internal accounting and financial controls; and
o Initiating and supervising any special investigation it deems
necessary regarding the Company's accounting and financial
policies and controls.
Messrs. Rose and Yost are currently the Audit Committee members.
-6-
<PAGE> 9
The Compensation Committee's primary functions are to:
o Establish and administer the Company's compensation policies;
o Administer the 1997 Option Plan and the Company's Non-Employee
Directors Stock Option Plan (the "Directors Option Plan"), and
administer the remaining options outstanding under the
Company's 1987 Stock Option Plan (under which no more options
may be granted); and
o Oversee the administration of other employee benefit plans and
fringe benefits paid to or provided for the Company's officers.
See "Executive Compensation -- Compensation Committee Report on
Executive Compensation."
Messrs. Davis and Payne are the Compensation Committee members.
In fiscal 1999, the directors attended at least 75% of the meetings of
the Board of Directors and all the meetings of committees of the Board of
Directors of which they are members. During fiscal 1999, the Board of Directors
held four meetings, the Audit Committee held two meetings, and the Compensation
Committee held two meetings.
The Company has no nominating committee. The entire Board of Directors
is responsible for selecting nominees for election as directors.
Each outside director (currently each director other than Messrs.
Hemmig and Neustadt) receives $1,250 per calendar quarter as a retainer, $1,500
for attendance at each Board of Directors meeting, and $500 for attendance at
each meeting of a committee of the Board of Directors that is not held in
conjunction with a Board of Directors meeting.
Under the Directors Option Plan:
o Each non-employee director elected to the Board of Directors
who has not previously served as a director of the Company is
automatically granted, on the date of his election, an option
to purchase 11,250 shares of Common Stock; and
o Each non-employee director serving on December 1 of each year
is automatically granted an option on that date to purchase
5,000 shares of Common Stock.
The number of shares subject to the automatic annual grant from December 1, 1995
through December 1, 1997 was 6,750; on August 17, 1998, the Board of Directors
reduced that number to 5,000, beginning December 1, 1998. The Directors Option
Plan requires that the exercise price of each option must be equal to the
closing price of the Common Stock on The Nasdaq Stock Market on the date the
option is granted.
Under the Directors Option Plan:
o An option to purchase 11,250 shares of Common Stock at an
exercise price of $3.66 per share was granted to Mr. Davis in
March 1995 relating to his election to the Board of Directors;
o Each of Mr. Davis, Mr. Payne, and Mr. Rose was granted an
option to purchase 6,750 shares of Common Stock at an exercise
price of $4.11 per share on December 1, 1995;
o An option to purchase 11,250 shares of Common Stock at an
exercise price of $5.56 per share was granted to Mr. Yost when
he was elected to the Board of Directors in August 1996;
-7-
<PAGE> 10
o Each of Mr. Davis, Mr. Payne, Mr. Rose, and Mr. Yost was
granted an option to purchase 6,750 shares of Common Stock at
an exercise price of $7.00 per share on December 1, 1996;
o Each of Mr. Davis, Mr. Payne, Mr. Rose, and Mr. Yost was
granted an option to purchase 6,750 shares of Common Stock at
an exercise price of $12.42 per share on December 1, 1997; and
o Each of Mr. Davis, Mr. Payne, Mr. Rose, and Mr. Yost was
granted an option to purchase 5,000 shares of Common Stock at
an exercise price of $13.25 per share on December 1, 1998.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and
holders of more than 10% of the Common Stock to file with the Securities and
Exchange Commission ("SEC") reports of ownership and reports of changes in
ownership of Common Stock. SEC regulations require such directors, executive
officers, and greater than 10% shareholders to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during fiscal 1999, directors, executive officers, and
greater than 10% shareholders complied with all applicable Section 16(a) filing
requirements.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Raymond C. Hemmig Chairman of the Board
Donald H. Neustadt President and Chief Executive Officer
Raymond E. McCarty Senior Vice President - Operations
President - ACE Franchise Group
Jay B. Shipowitz Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
</TABLE>
See "-- Directors" above for business experience information concerning
Messrs. Hemmig and Neustadt.
Raymond E. McCarty, age 57, has served as Senior Vice President
Operations of the Company since 1985. In April 1996, Mr. McCarty was appointed
President of ACE's Franchise Group. From 1982 to 1985, Mr. McCarty served as
Division Vice President of Associates NA and was responsible for organizing
Associates NA's first home improvement loan portfolio acquisition and for
establishing an automobile lending program. From 1963 to 1982, Mr. McCarty
served in various capacities with an affiliate of Barclays American Corporation,
including as an area director for a seven-state region. The Board of Directors
appointed Mr. McCarty, and he serves at its discretion.
-8-
<PAGE> 11
Jay B. Shipowitz, age 36, has served as Senior Vice President and Chief
Financial Officer of the Company since May 1997. He also serves as a director of
the National Association of Check Cashers. From July 1996 to May 1997, Mr.
Shipowitz served as Senior Vice President and Chief Financial Officer of USDATA
Corporation, a software company, in Richardson, Texas. From June 1993 to July
1996, Mr. Shipowitz served as Vice President of Finance and Administration and
Chief Financial Officer of Westinghouse Security Systems, Inc., a residential
security company, in Dallas, Texas. From 1987 to 1993, Mr. Shipowitz worked at
Price Waterhouse in Baltimore, Maryland, in various positions, the last of which
was senior manager. From 1985 to 1987, Mr. Shipowitz worked at KPMG Peat Marwick
in Greensboro, North Carolina. The Board of Directors appointed Mr. Shipowitz,
and he serves at its discretion.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid or accrued for
services rendered to the Company for the last three fiscal years by the Chief
Executive Officer ("CEO") and each of the executive officers of the Company
whose total annual salary and bonus for fiscal 1999 exceeded $100,000
(collectively with the CEO, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- ------------------------------
Awards Payouts
-------------------- ---------
Other
Year Annual Restricted Securities LTIP All Other
Ended Compensation Stock Underlying Payouts Compensation
Name and Principal Position June 30, Salary($) Bonus($) ($)(1) Awards(S) Options/SARs(#) ($) ($)
-------- --------- -------- ------------ ---------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald H. Neustadt 1999 273,563 212,911 13,654 -- 10,275 -- --
(President and Chief 1998 248,012 166,700 13,654 -- 16,458 -- --
Executive Officer) 1997 229,254 191,360 13,735 -- -- -- --
Raymond E. McCarty 1999 171,866 106,931 13,812 -- 6,703 -- --
(Senior Vice President 1998 155,812 83,200 13,812 -- 10,618 -- --
- -Operations) 1997 138,590 92,667 13,584 -- 3,900 -- --
Jay B. Shipowitz 1999 167,222 104,447 13,823 -- 6,710 -- --
(Senior Vice President, 1998 150,275 84,900 13,823 -- 9,955 -- --
Chief Financial Officer 1997 11,538 10,313 1,015 -- 41,250 -- --
Secretary and Treasurer)
</TABLE>
- ------------------------------------------------
(1) Includes a cash car allowance of $9,000 annually.
SENIOR MANAGEMENT BONUS PLAN
The compensation table above includes bonuses paid under the Senior
Management Bonus Plan (the "Bonus Plan") for fiscal 1999. Under the Bonus Plan,
if the Company achieved a 25% increase in pre-tax earnings for fiscal 1999
compared to the fiscal year ended June 30, 1998, target bonuses would be paid to
the Named Executive Officers and certain other members of management. A total of
$500,000 was paid to the Named Executive Officers and other participating
members of management. See "- Compensation Committee Report on Executive
Compensation" below.
-9-
<PAGE> 12
STOCK OPTIONS
The following table provides information on stock option grants to the
Named Executive Officers under the 1997 Option Plan during fiscal 1999:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
- ---------------------------------------------------------------------------------------------------- --------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) (3) 10% ($)(3)
- ---------------------------- ------------ ------------ ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald H. Neustadt(1) 10,275 2.89 13.1875 09/03/08 85,216 215,955
Raymond E. McCarty(1) 6,703 1.88 13.1875 09/03/08 55,592 140,880
Jay B. Shipowitz(1) 6,710 1.88 13.1875 09/03/08 55,650 141,027
</TABLE>
(1) Options become exercisable in four equal annual installments. The exercise
price of each option is equal to the closing price per share of the Common
Stock on The Nasdaq Stock Market on the date the option was granted. Each
option was granted under the 1997 Option Plan.
(2) The values shown in these columns reflect growth rate assumptions the SEC
prescribes. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the Common Stock's future performance and
overall stock market conditions. There can be no assurance that the amounts
reflected in this table will be achieved.
(3) These values represent the difference between the assumed appreciation in
the Common Stock's market value at the date of grant and the exercise price
of the options.
The following table provides information on the stock options/SARs that
the Named Executive Officers held at June 30, 1999:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT FY-END (#) FY-END ($)*
SHARES VALUE ------------- -----------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- -------------------------- -------------- --------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Donald H. Neustadt 0 0 4,114/22,619 10,833/42,137
Raymond E. McCarty 17,725 236,898 13,130/15,967 106,514/36,281
Jay B. Shipowitz 1,900 11,067 28,087/27,928 180,336/118,910
- --------------------------
* Based on the closing price on The Nasdaq Stock Market of the Common
Stock on June 30, 1999 of $14.125 per share.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Howard W. Davis and Marshall B. Payne are, and were during fiscal 1999,
the members of the Compensation Committee. Neither of the members of the
Compensation Committee was during fiscal 1999, or has ever been, an officer or
employee of the Company or any of its subsidiaries.
-10-
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on the
Company's executive compensation program. The report describes the Compensation
Committee's compensation policies applicable to the Company's executive officers
and provides specific information regarding the CEO's compensation.
Non-employee members of the Company's Board of Directors review all
decisions the Compensation Committee makes relating to the Company's executive
officers' compensation. The Compensation Committee makes decisions about, and
recommends to the Board of Directors, grants or awards under the 1997 Option
Plan.
Compensation Policy. The Compensation Committee's overall policy
regarding compensation of the Company's executive officers is to provide salary
levels and compensation incentives that attract and retain qualified individuals
in key positions, that recognize individual performance and the Company's
performance, and that support the Company's objective of achieving sustained
improvements in its financial condition, operating results, and market position.
The Compensation Committee attempts to implement this policy by paying the
Company's executive officers slightly above average compensation with an
emphasis on performance-related pay. The Company's objective is to pay its
executive officers competitively in base pay and automobile allowances compared
with similarly situated executives at comparable companies, and then to give the
executive an incentive by providing the executive officers the opportunity to
earn significantly higher than average performance based compensation. The
performance-based compensation is made up of awards under the Bonus Plan and
stock options under the 1997 Option Plan.
In determining executive officer compensation, the Compensation
Committee considers the Company's performance as compared to its budget; each
individual officer's experience level, level of responsibility, and performance
as compared to the budgeted performance goals for such officer; the Company's
growth; and cash flow performance. Individual salaries are reviewed every 9 to
15 months and, based on evaluations of individual performance, are adjusted in
accordance with budgeted compensation guidelines the Board of Directors has
established for all officers.
Base Salaries and Allowances. The Compensation Committee determines the
base pay and allowances for the CEO and reviews the compensation of the
Company's other officers as determined by the CEO. In this determination or
review, as the case may be, as a basis for comparison, the Compensation
Committee attempts to determine the base salaries and allowances of similarly
situated executives in comparable companies. The Compensation Committee
identifies such comparable companies, in its discretion, after considering a
broad range of factors, including levels of revenues, geographic regions of
operations, growth, and industry (e.g., service versus manufacturing). Then the
Compensation Committee determines a base salary and automobile allowance that is
comparable with that which such similarly situated executives at the comparable
companies would be paid.
Performance Pay. The Compensation Committee determines the
performance-based compensation for the CEO and reviews the performance-based
compensation of the Company's other executive officers as determined by the CEO.
In this determination or review, as the case may be, if the Company's executive
officers have performed in accordance with the Compensation Committee's
expectations as described above, the Compensation Committee ensures the CEO and
the other senior executives are provided with above average (as compared to
similarly situated executives at comparable companies) performance-based bonuses
through the Bonus Plan and stock options through the 1997 Option Plan.
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<PAGE> 14
Senior Management Bonus Plan. The Bonus Plan is an incentive program
for the Named Executive Officers and certain other members of management. The
Bonus Plan's goal is to place a portion of the participants' annual compensation
at risk to encourage and reward performance that meets or exceeds the Company's
expectations. Under the Bonus Plan, at the beginning of the fiscal year, the
Compensation Committee recommends, and the Board of Directors approves, the
current fiscal year plan.
For the Named Executive Officers and certain other members of
management to earn 100% of their targeted bonuses for the current fiscal year,
the Company must achieve a 25% increase in pre-tax earnings for the fiscal year
ending June 30, 2000 compared to the fiscal year ended June 30, 1999. The Named
Executive Officers and certain other members of management begin earning their
bonuses when the Company achieves a 15% increase in pre-tax earnings for the
fiscal year ending June 30, 2000 compared to the fiscal year ended June 30,
1999. To the extent the Company exceeds the targeted increase in pre-tax
earnings of 1%, the bonus pool would be increased $26,000 for each 1% increase
over the targeted increase in pre-tax earnings of 25%.
Stock Options. The Compensation Committee grants stock options under
the 1997 Option Plan to encourage and facilitate personal stock ownership by
officers and key employees, including the CEO, thus strengthening their
commitment to the Company and encouraging a longer-term perspective to their
responsibilities. This feature of the Company's compensation program directly
links officers' and key employees' interests with those of the Company's
shareholders. The Compensation Committee reviews grants of stock options to the
Company's officers and considers the value and benefit of such options during
its review of such officers' overall compensation packages. The Compensation
Committee's policy is to grant stock option awards based on individual
performance and the potential for the option recipient to contribute to the
Company's future success. Under the 1997 Option Plan, the Compensation Committee
may grant either incentive or non-qualified options, but typically grants
incentive stock options because of the tax advantages to the optionees resulting
from the grant of such options. The Compensation Committee generally grants
options under the 1997 Option Plan that expire in 10 years and become
exercisable in equal installments over a four-year period. The Compensation
Committee believes that such limitations provide those holding options with
incentives to remain in the employment of the Company, while also providing a
performance incentive that can provide direct benefits within a relatively short
period of time.
CEO Compensation. In accordance with the policies described above in
this report, the fiscal 1999 base salary of Mr. Neustadt was established at
$273,563. The Compensation Committee believed that this salary was within the
range of salaries paid to chief executive officers of comparable companies in
October 1998, when it was established. This salary, which constituted an
increase of approximately 10% of the salary that had been set for Mr. Neustadt
in fiscal 1998, reflected the Committee's assessment of Mr. Neustadt's past
performance and anticipated future contributions to the Company. Mr. Neustadt
has overseen the Company's operations since November 1994, and has served a key
role in the expansion of the various kinds of business that the Company conducts
and in its growth strategy, including major acquisitions. He is thoroughly
familiar with the consumer or retail financial services industry and would (the
Compensation Committee believed) continue to lead the Company's growth and
success. In accordance with the terms of the Bonus Plan, Mr. Neustadt received a
bonus of $212,911 in fiscal 1999. Mr. Neustadt was also granted options under
the 1997 Option Plan to acquire 10,275 shares of Common Stock. See "-- Stock
Options" above.
The Compensation Committee of the Board of Directors
Howard W. Davis
Marshall B. Payne
-12-
<PAGE> 15
CHANGE-IN-CONTROL SEVERANCE AGREEMENTS
The Compensation Committee and the Board of Directors of the Company
recognized that, as is the case with most publicly held companies, the
possibility of a change in control exists. To help assure continuity of
experienced and qualified management of the Company, the Compensation Committee
recommended, and the Board of Directors authorized and approved, a
Change-in-Control Executive Severance Agreement ("Severance Agreement") with
each of Mr. Neustadt, Mr. McCarty, and Mr. Shipowitz (each an "Executive"). All
of the Severance Agreements, the terms of which are substantially identical,
were entered into on August 20, 1998.
Each Severance Agreement obligates the Company to provide severance
benefits to the Executive if his employment with the Company and its
subsidiaries is terminated, within 24 months after a Change in Control, either
(i) by the Company for any reason other than Cause or the Executive's disability
or (ii) by the Executive for Good Reason. "Change in Control," as defined in the
Severance Agreement, includes (a) the acquisition (other than from the Company)
of 25% or more of the outstanding voting securities of the Company by any person
or group of persons, (b) a change in the Board of Directors such that the
persons who were directors at the beginning of any two-year period (and any new
director whose election was approved by at least two-thirds of the directors who
either were directors at the beginning of the period or whose election was so
approved) cease to constitute a majority of the Board of Directors, or (c) a
reorganization, merger, or consolidation of the Company, or the shareholders'
approval of the sale or substantially all the assets of the Company, other than
in certain circumstances described in the Severance Agreement. "Cause," as
defined in the Severance Agreement, includes the Executive's continued failure
to perform his duties after notice from the Board of Directors or his engaging
in conduct that materially injures the Company. "Good Reason," as defined in the
Severance Agreement, includes a material reduction of the Executive's
compensation or benefits; a material reduction in the Executive's position,
authority, or responsibilities; a forced relocation of the Executive's office by
more than 50 miles; or the failure of any successor to the Company to expressly
assume the Company's obligations under the Severance Agreement.
The severance benefits under the Severance Agreement are (i) a payment
equal to two and one-half times the sum of the Executive's base salary, annual
bonus, and car allowance, (ii) the accelerated vesting of outstanding stock
options, and (iii) the continuation of insurance benefits for 30 months after
termination of employment. The payment is to be made in two equal installments,
the first promptly after the termination of employment, and the second on the
first anniversary of the termination of employment; the second installment is
subject to offset by the Company if the Executive violates the noncompetition
covenant or the nondisclosure covenant in the Severance Agreement. The severance
benefits are limited to the amount that may be paid or provided to the Executive
without making an "excess parachute payment" under federal tax laws.
The Company is obligated to pay the Executive's legal fees and other
expenses incurred in connection with any good-faith enforcement or defense of
his rights under the Severance Agreement.
Each Severance Agreement will be effective until (i) any termination of
the Executive's employment before a Change-in-Control or (ii) June 30, 2000 or
any subsequent year if the Company or the Executive gives at least six months'
notice of termination.
-13-
<PAGE> 16
STOCK PERFORMANCE CHART
The following chart compares the return on the Common Stock with the
NASDAQ Market Index and a financial services peer group (consisting of Cash
America International, Inc.; EZ Corp, Inc.; First Cash, Inc.; H&R Block, Inc;
and World Acceptance Corp.) for the period from June 30, 1994 through June 30,
1999. The comparison assumes that $100 was invested on June 30, 1994, and
assumes reinvestment of dividends and distributions.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR MARKETS
<TABLE>
<CAPTION>
------------------------------ FISCAL YEAR ENDING ------------------------------
COMPANY/INDEX/MARKET 6/30/1994 6/30/1995 6/28/1996 6/30/1997 6/30/1998 6/30/1999
<S> <C> <C> <C> <C> <C> <C>
Ace Cash Express 100.00 114.06 184.38 234.26 484.67 396.87
Customer Selected Stock List 100.00 107.99 89.28 93.26 123.72 144.28
NASDAQ Market Index 100.00 117.28 147.64 177.85 235.75 330.37
</TABLE>
PROPOSAL TO AMEND ACE CASH EXPRESS, INC. 1997 STOCK OPTION PLAN
BACKGROUND AND SUMMARY OF TERMS
In August 1997 the Board of Directors of the Company adopted, and in
November 1997 the shareholders of the Company approved, the 1997 Option Plan,
under which options may be granted to key employees of the Company and its
subsidiaries for the purchase of shares of Common Stock. On September 23, 1999,
the Board of Directors adopted an amendment to the 1997 Option Plan to increase
the number of shares of Common Stock that may be issued upon exercise of options
granted under that plan from 900,000 shares to 1,215,000 shares; the proposed
increase will permit the Company to continue to provide incentive to key
employees of the Company by aligning their interests directly with those of the
Company's shareholders. At the Annual Meeting, the Company's shareholders will
be asked to approve that amendment to the 1997 Option Plan.
The following description of the 1997 Option Plan is only a summary; it
does not purport to be a complete or detailed description of all of the
provisions of the 1997 Option Plan. A copy of the 1997 Option Plan will be
furnished by the Company to any shareholder upon written request to the
Secretary of the Company at the Company's executive offices.
The 1997 Option Plan permits the grant of options to the key employees
(including officers) of the Company and its subsidiaries to purchase shares of
Common Stock. The eligible key employees are those employees whose performance
and responsibilities are determined by the Compensation Committee of the
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<PAGE> 17
Board of Directors (the "Compensation Committee") to be influential to the
success of the Company and its subsidiaries. Approximately 100 of the Company's
employees may participate in the 1997 Option Plan.
The Compensation Committee administers and interprets the 1997 Option
Plan. In that capacity, the Compensation Committee has complete discretion,
within the limits set forth in the 1997 Option Plan, to determine the terms of
the options granted, including the term of, the number of shares subject to, the
exercise price of, and the form of consideration payable upon exercise of each
such option. The Compensation Committee is constituted in a manner intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, relating to
the disinterested administration of employee benefit plans. Members of the
Compensation Committee receive no additional compensation for their services in
connection with the administration of the 1997 Option Plan.
Each option granted under the 1997 Option Plan is evidenced by a
written stock option agreement between the Company and the option holder. The
specific terms of any individual option granted may vary, but only to the extent
permitted by the terms of the 1997 Option Plan.
The term of an option granted under the 1997 Option Plan may not exceed
ten years from the date of grant of that option. The options granted under the
1997 Option Plan are generally for the maximum ten-year period.
Full payment for shares purchased upon exercise of an option must be
made at the time of exercise, and no shares may be issued until full payment is
made. The exercise price of each option is payable in cash or by check or, if
the option agreement with the Company so provides, in shares of Common Stock at
the fair market value per share on the date of exercise.
Though the Compensation Committee has discretion to determine the terms
of the exercise of any option, options are generally exercisable in equal annual
installments over a four-year period. All installments that become exercisable
are generally cumulative and may be exercised at any time after they become
exercisable until the expiration of the term of the option. Incentive stock
options and, unless otherwise specified in the applicable option agreements,
nonqualified stock options may not be transferred other than by will or by the
laws of descent and distribution. If an optionee dies or becomes permanently
disabled before the termination of his option without having totally exercised
the option, the option may be exercised, to the extent that the optionee could
have exercised it on the date of his death or disability, by (i) in the case of
death, his estate or the person who acquired the right to exercise the option by
bequest or inheritance, or (ii) in the case of disability, the optionee or his
personal representative, provided that the option is exercised before the date
of the expiration of the option or 180 days after the date of the optionee's
death or disability, whichever occurs first.
Both incentive stock options and nonqualified stock options may be
granted under the 1997 Option Plan. The 1997 Option Plan requires that the
exercise price of each incentive stock option be at least 100% of the fair
market value of the Common Stock at the time of the grant of the option. No
incentive stock option, however, may be granted under the 1997 Option Plan to
anyone who owns more than 10% of the outstanding Common Stock unless the
exercise price is at least 110% of the fair market value of the Common Stock at
the date of grant and the option is not exercisable for more than five years
after it is granted. There is no limit on the fair market value of incentive
stock options that may be granted to an employee in any calendar year, but no
employee may be granted incentive stock options that first become exercisable
during a calendar year for the purchase of stock with an aggregate fair market
value (determined as of the date of grant of each option) in excess of $100,000.
An option (or an installment thereof) counts against this annual limitation only
in the calendar year in which it first becomes exercisable.
Unless the Board of Directors terminates it sooner, the 1997 Option
Plan will terminate on August 4, 2007, and no options may be granted under the
1997 Option Plan thereafter. The Board of Directors or the Compensation
Committee may amend, alter or discontinue the 1997 Option Plan without
-15-
<PAGE> 18
the shareholders' approval, except that the Board of Directors or the
Compensation Committee does not have the power or authority to materially
increase the number of securities that may be issued under the 1997 Option Plan
or to materially modify the requirements of eligibility for participation in the
1997 Option Plan. The Board of Directors or the Compensation Committee, however,
may make appropriate adjustments in the number of shares the 1997 Option Plan
covers, in the number of outstanding options, and in the option exercise prices
to reflect any stock dividend, stock split, share combination or other
recapitalization and, with respect to outstanding options and option prices, to
reflect any merger, consolidation, reorganization, liquidation or similar
transaction involving the Company.
As of September 27, 1999, options to purchase a total of 736,566 shares
of Common Stock under the 1997 Option Plan (excluding expired or terminated
options) had been granted, options to purchase a total of 6,669 shares had been
exercised, options to purchase a total of 729,897 shares were outstanding, and a
total of 163,434 shares were available for future option grants. As of September
27, 1999, the total market value of all shares of Common Stock subject to
outstanding options was $10,583,506.50 (based upon the closing price of the
Common Stock of $14.50 per share as reported on The Nasdaq Stock Market on that
date).
TAX STATUS OF STOCK OPTIONS
The Compensation Committee may provide for an option under the 1997
Option Plan to qualify either as an incentive stock option ("ISO") or as a
nonqualified stock option for United States federal income tax purposes.
Incentive Stock Options. All stock options that qualify under the rules
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
will be entitled to ISO treatment. To receive ISO treatment, an optionee must
not dispose of the acquired stock within two years after the option is granted
or within one year after exercise. In addition, the individual must have been an
employee of the Company for the entire time from the date of grant of the option
until three months (or one year if the employee is disabled) before the date of
the exercise. The requirement that the individual be an employee and the
two-year and one-year holding periods are waived in the case of death of the
employee. If all such requirements are met, no tax will be imposed upon exercise
of the option, and any gain upon sale of the acquired stock will be entitled to
capital gain treatment. The employee's gain on exercise (the excess of fair
market value at the time of exercise over the exercise price) of an ISO is a tax
preference item and, accordingly, is included in the computation of alternative
minimum taxable income.
If an employee does not meet the two-year and one-year holding
requirement (a "disqualifying disposition"), but does meet all other
requirements, tax will be imposed at the time of sale of the acquired stock, but
the employee's gain on exercise will be treated as ordinary income, rather than
capital gain, and the Company will get a corresponding deduction at the time of
sale in an amount equal to the income that the employee would have recognized on
exercise of the option. Any remaining gain on sale will be short-term or
long-term capital gain, depending on the holding period of the stock. If the
amount realized on the disqualifying disposition is less than the value at the
date of exercise, the amount includible in gross income, and the amount
deductible by the Company, will equal the excess of the amount realized on the
sale or exchange over the exercise price.
An option agreement with the Company may permit payment for stock upon
the exercise of an ISO to be made with other shares of Common Stock. In such a
case, in general, if an employee uses stock acquired pursuant to the exercise of
an ISO to acquire other stock in connection with the exercise of an ISO, it may
result in ordinary income if the stock so used has not met the minimum statutory
holding period necessary for favorable tax treatment as an ISO.
Nonqualified Options. In general, no taxable income will be recognized
by the optionee, and no deduction will be allowed to the Company, upon the grant
of an option. Upon exercise of a nonqualified option, an optionee will recognize
ordinary income (and the Company will be entitled to a corresponding tax
-16-
<PAGE> 19
deduction if applicable withholding requirements are satisfied) in an amount
equal to the amount by which the fair market value of the shares on the exercise
date exceeds the option exercise price. Any gain or loss realized by an optionee
on disposition of such shares generally is a capital gain or loss and does not
result in any tax deduction to the Company.
The foregoing statements are based upon present federal income tax laws
and regulations are subject to change if the tax laws and regulations, or
interpretations thereof, are changed.
REQUIRED VOTE
The favorable vote of the holders of a majority of the shares of Common
Stock present and entitled to vote at the Annual Meeting in person or by proxy
is required to approve the proposed amendment to the 1997 Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO
AMEND THE 1997 OPTION PLAN.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the independent auditors of the Company
for fiscal 1999 and has been selected by the Board of Directors as the
independent auditors of the Company for the current fiscal year. One or more
representatives of Arthur Andersen LLP are expected to attend the Annual
Meeting, at which they will have an opportunity to make a statement and will
respond to appropriate questions from shareholders.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
An eligible shareholder who wishes to submit a proposal to be included
in the Company's proxy materials for the 2000 Annual Meeting of Shareholders
must submit it, in accordance with the SEC's Rule 14a-8, so that it is received
by the Company's Secretary, at the Company's principal executive offices, on or
before June 18, 2000.
A shareholder who wishes to make a proposal at the 2000 Annual Meeting
of Shareholders without complying with the requirements of Rule 14a-8 (and
therefore without including the proposal in the Company's proxy materials) must
give written notice of that proposal to the Company's Secretary, at the
Company's principal executive offices, by September 1, 2000. If a shareholder
fails to timely give that notice, then the persons named as proxies in the proxy
cards solicited by the Company's Board of Directors for that meeting will be
entitled to vote the proxy cards held by them regarding that proposal, if
properly raised at the meeting, in their discretion.
-17-
<PAGE> 20
MISCELLANEOUS
All information contained in this Proxy Statement relating to the
occupations, affiliations, and securities holdings of directors and executive
officers of the Company and their relationship and transactions with the Company
is based upon information received from the individual directors and executive
officers. All information relating to any beneficial owner of more than 5% of
the Common Stock is based upon information contained in reports filed by such
owner with the SEC.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR THE
FISCAL YEAR ENDED JUNE 30, 1999 FILED WITH THE SEC PURSUANT TO SECTION 13 OR
15(D) OF THE EXCHANGE ACT TO ANY SHAREHOLDER (INCLUDING ANY BENEFICIAL OWNER)
UPON WRITTEN REQUEST TO INVESTOR RELATIONS/CORPORATE COMMUNICATIONS, 1231
GREENWAY DRIVE, SUITE 800, IRVING, TEXAS 75038. A COPY OF THE EXHIBITS TO SUCH
REPORT WILL BE FURNISHED TO ANY SHAREHOLDER UPON WRITTEN REQUEST THEREFOR AND
PAYMENT OF A NOMINAL FEE.
By order of the Board of Directors,
Jay B. Shipowitz
Secretary
Irving, Texas
October 15, 1999
-18-
<PAGE> 21
ACE CASH EXPRESS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 15, 1999
I (i) acknowledge receipt of the Notice of Annual Meeting of
Shareholders of Ace Cash Express, Inc., a Texas corporation (the "Company"), to
be held on Monday, November 15, 1999, at 10:00 a.m., Dallas time, at the Four
Seasons Hotel, 4150 North MacArthur Blvd., Irving, Texas 75038, and the Proxy
Statement in connection therewith; and (ii) appoint Raymond C. Hemmig and Donald
H. Neustadt, and each of them, my proxies with full power of substitution, for
and in my name, place and stead, to vote upon and act with respect to all of the
shares of Common Stock of the Company standing in my name, or with respect to
which I am entitled to vote and act, at the meeting and at any adjournment
thereof, and I direct that this proxy be voted as indicated on the other side.
I hereby revoke any proxy or proxies heretofore given to vote upon or
act with respect to such stock and hereby ratify and confirm all that the
proxies, their substitutes, or any of them, may lawfully do by virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
THIS PROXY WILL BE VOTED AS INDICATED BELOW. UNLESS OTHERWISE INDICATED, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES IN ITEM 1 AND FOR THE PROPOSAL IN ITEM 2.
THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES NAMED HEREIN (OR
EITHER OF THEM) REGARDING ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING.
IMPORTANT: SIGN AND DATE ON OTHER SIDE
Fold And Detach Here
<PAGE> 22
1. Election of Directors
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all
to the contrary) to the right
[ ] [ ]
Nominees: Raymond C. Hemmig, Donald H. Neustadt, Howard W. Davis,
Marshall B. Payne, Edward W. Rose III, and Charles Daniel Yost
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
-----------------------------------------------------------------------------
2. The proposal to increase the number of shares of Common Stock authorized
for issuance under the Company's 1997 Stock Option Plan from 900,000 shares
to 1,215,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In the discretion of the proxies, on any other matter that may properly
come before the meeting or any adjournment thereof.
Date: ________________________1999
------------------------------------------
Signature of Shareholder
------------------------------------------
Printed Name of Shareholder
------------------------------------------
Title, if applicable
Please date this proxy and sign your name
exactly as it appears hereon. Where there
is more than one owner, each should sign.
When signing as an attorney,
administrator, executor, guardian or
trustee, please add your title as such.
If executed by a corporation, a duly
authorized officer should sign the proxy.
EACH JOINT TENANT SHOULD SIGN.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED
FOLD AND DETACH HERE
