Exhibit 10.2
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS (“BLUE SKY
LAWS”). SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE BLUE
SKY LAWS. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS
NOTE.

      Issuance Date:                     , 2005   Principal:  U.S.
$                    

 
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
     Ace Cash Express, Inc., a Texas corporation (the “Company”), for value
received, promises to pay to Popular Cash Express, Inc., a Delaware corporation,
or its registered assigns, (the “Holder”), the principal sum of
                     dollars ($___), in lawful money of the United States of
America and in immediately available funds, plus interest on the principal
amount hereof, at the annual rate of three and five-eighths percent (3.625%),
payable in accordance with the terms set forth in Section 2 hereof.

  1.   Definitions. Unless the context indicates otherwise, capitalized terms
used herein but not defined herein shall have the meanings given them in the
Asset Purchase Agreement. In addition, the following terms used herein shall
have the following meanings:

  1.1   “Affiliate” means, with respect to Holder, another person that directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Holder.     1.2   “Asset Purchase
Agreement” means the Asset Purchase Agreement dated as of                     ,
2005 between the Holder, the Company and Popular North America, Inc., a Delaware
corporation.

 

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  1.3   “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in Texas are required or authorized to be closed.     1.4
  “Change of Control” shall mean (i) any transaction or series of related
transactions as a result of which any person or persons, including but not
limited to any “person” or “group” (as such terms are used in sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
other than the Permitted Investors, acquires beneficial ownership (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 50% of (a) the
then outstanding shares of common stock of the Company or (b) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (provided, however, that an
underwritten public offering of the Company’s common stock registered under the
Securities Act of 1933, as amended, that has been approved by a majority of the
Continuing Directors shall not be deemed to be a Change of Control); (ii) any
merger, consolidation, share exchange, sale of assets or other reorganization to
which the Company is a party and as a result of which members of the Board of
Directors in office immediately prior to such transaction or event thereafter
constitute less than a majority of the whole Board of Directors; or (iii) the
first day on which a majority of the members of the Board of Directors of the
Company is not constituted by Continuing Directors. As used herein, “Continuing
Directors” shall mean as of any date of determination, the directors of the
Company on the Initial Closing Date and each other individual becoming a
director subsequent to the Closing Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of a majority of
the Continuing Directors as of such date, and “Permitted Investors” shall mean,
collectively, (i) all officers of the Company on the Initial Closing Date,
(ii) all members of the Board of Directors of the Company on the Initial Closing
Date, (iii) Raymond C. Hemmig, (iv) Donald H. Neustadt, (v) Marshall B. Payne,
and (vi) Edward W. Rose III.     1.5   “Common Stock” means the Company’s common
stock, $.01 par value per share.     1.6   “Conversion Date” means the date of
the Conversion Notice delivered to the Company by the Holder in accordance with
Section 4 hereof.     1.7   “Conversion Price” means $___1 per share of Common
Stock, subject to adjustment as set forth in Section 12 hereof.

 

1   This number shall be calculated as follows and inserted into the executed
Note: equal to the product of (A) the average of the closing stock trading
prices of the Common Stock, as

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  1.8   “Credit Agreement” means the First Amended and Restated Credit
Agreement, dated as of July 30, 2004, among the Company, the lenders party
thereto, and Wells Fargo Bank, National Association, as Administration Agent, as
such agreement may have been or may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from time
to time (including successive modifications of the foregoing).     1.9  
“Interest Payment Date” shall mean March 31, June 30, September 30 and
December 31 of each year, commencing December 31, 2005.     1.10   “Note” means
this Convertible Promissory Note.     1.11   “Senior Indebtedness” means (i) all
indebtedness, liabilities and obligations of the Company, whether absolute or
contingent, now or hereafter existing, or due or to become due and from time to
time outstanding, under or pursuant to the Credit Agreement (including, without
limitation, all principal, interests, fees, costs, expenses and indemnity
obligations thereunder) and any and all post-petition interest and costs from
and after the date of filing of a petition by or against the Company in any
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding, and (ii) all other
indebtedness of the Company and all obligations of the Company thereunder,
whether outstanding on the date of this Note or thereafter incurred, unless the
instrument under which such indebtedness is incurred expressly provides that it
is on parity or subordinated in right of payment to this Note.

  2.   Maturity, Payment of Interest.

  2.1   Maturity. Unless otherwise converted as provided herein, the outstanding
principal under this Note and accrued and unpaid interest thereon will be due
and payable in full on demand at any time after the earlier to occur of:
(i) December 31, 2025; (ii) upon the date of a redemption at the option of the
Company in accordance with Section 5.1 hereof; (iii) upon the date the Company
is obligated to repurchase at the option of the Holder in accordance with
Section 5.2 hereof; or (iv) upon the date the Company is obligated to repurchase
at the option of the Holder in accordance with Section 5.4 hereof (each a
“Maturity Date”).     2.2   Interest. The outstanding principal balance of this
Note shall bear interest at 3.625% from the date hereof until the earlier to
occur of: (i) the conversion

 

    quoted on the Nasdaq National Market, during the thirty (30) trading days
prior to the date of the Initial Closing, multiplied by (B) one hundred thirty
five percent (135%).

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      pursuant to Section 4.1 hereof; or (ii) the Maturity Date. Interest shall
be computed on the basis of a year of a 360-day year comprised of twelve 30-day
months. Interest shall be paid quarterly in arrears on each Interest Payment
Date. If the principal balance of this Note is not paid by the Maturity Date, it
shall accrue interest until paid in full.

  3.   Subordination. The indebtedness evidenced by this Note, and the payment
of principal of, premium, if any, and interest on the Notes (including with
respect to any repurchase of the Notes) is hereby expressly subordinated in
right of payment to Senior Indebtedness. So long as any default by the Company
has occurred under any instrument or agreement evidencing any Senior
Indebtedness, no payment shall be made in respect of this Note until, in the
case of a payment default, upon the date on which such default is cured or
waived and, in the case of a non-payment default, the earlier of the date on
which such non-payment default is cured or waived or 179 calendar days after the
date on which the applicable payment blockage notice is received by the Company,
unless a payment default has occurred and is continuing, including as a result
of the acceleration of the maturity of any Senior Indebtedness. After a payment
blockage notice is given for a non-payment default, no new period of payment
blockage for a non-payment default may be commenced unless and until three
hundred sixty (360) calendar days have elapsed since the effectiveness of the
immediately prior payment blockage notice and all scheduled payments of
principal, premium, if any and interest on this Note that have come due have
been paid in full in cash. Nothing in this Section 3 hereof shall prohibit
conversion of this Note pursuant to Section 4 hereof. Upon any distribution to
the creditors of the Company upon any total or partial liquidation, dissolution
or winding up of the Company or in any bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property,
whether voluntary or involuntary, or assignment for the benefit of creditors or
any marshalling of the Company’s assets or liabilities, the holders of Senior
Indebtedness shall be entitled to be indefeasibly paid in full in cash before
the Holder shall be entitled to receive any payment. In the event the Holder
obtains any payment in violation of the terms of subordination contained herein,
such funds shall be held in trust for the holders of Senior Indebtedness and
paid to them or their representatives upon request. The Holder may not commence
any action or proceeding against the Company to recover all or any part of this
Note unless (a) a representative of the lenders under the Credit Agreement shall
(i) also join in bringing any proceedings against the Company or (ii) request
the Holder to file a claim in any such proceeding or (iii) the Senior
Indebtedness has been indefeasibly paid in fill in cash. If any payment or other
transfer to any holder of Senior Indebtedness is held to constitute a preference
or voidable transfer under applicable state or federal laws, or if for any other
reason any holder of Senior Indebtedness is required to refund such payment to
the payor thereof or to pay the amount thereof to any other Person or to
reconvey any property transferred, such payment or other transfer to such holder
of Senior Indebtedness shall not constitute a release of the Holder from any
liability or obligations hereunder, and the Holder agrees and acknowledges that
the

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      subordination provided in this Section 3 shall continue to be effective or
shall be reinstated, as the case may be, to the extent of any such payment or
payments or other transfer. No action or inaction taken by any holders of any
Senior Indebtedness shall in any manner impair the obligations of the Holder or
affect the rights of any holder of any Senior Indebtedness in respect of the
subordination provided in this Section 3.

  4.   Conversion of the Note. This Note shall be convertible according to the
following terms:

  4.1.   Conversion. Subject to Section 5.1 hereof, the Holder is entitled, at
the Holder’s option to convert this Note, plus accrued and unpaid interest, if
any, up to, but excluding, the Conversion Date into fully paid and nonassessable
shares of Common Stock at the Conversion Price in effect at the time of such
conversion.     4.2.   Mechanics of Conversion. To effect a conversion pursuant
to Section 4.1 hereof, the Holder shall surrender this Note, duly endorsed, at
the principal offices of the Company or any transfer agent for the Company
together with a conversion notice (a “Conversion Notice”) in the Form of
Exhibit A hereto. The Company shall promptly, as soon as practicable (but in no
event later than five (5) Business Days) after receipt of such notice, issue and
deliver at such office to the Holder a certificate or certificates for the
number of shares of Common Stock, to which such Holder shall be entitled as
aforesaid. No fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of any fractional shares to which the Holder would
otherwise be entitled, the Company shall pay cash equal to such fraction
multiplied by the effective Conversion Price.     4.3.   Effect of Conversion.
By delivering the shares of Common Stock and the cash payment in lieu of any
fractional shares to the Holder or such Holder’s nominee or nominees, the
Company shall have satisfied in full its obligation with respect to such Note,
and upon such delivery, accrued and unpaid Interest, if any, with respect to
such Note shall be deemed to be paid in full rather than canceled, extinguished
or forfeited, and such amounts shall no longer accrue with respect to the Note.
    4.4.   Restrictions on Conversion. A Note in respect of which the Holder has
delivered a repurchase notice under Section 5.2 or 5.4 hereof may not thereafter
be converted, unless the Company defaults on its obligation to repurchase the
Notes under Section 5.2 or 5.4 hereof.

  5.   Optional Redemption and Repurchase at the Option of the Holder.

  5.1.   Redemption at the Option of the Company. The Note shall not be
redeemable before December 31, 2010. At any time on or after December 31, 2010,
and

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      from time to time thereafter, the Company may redeem the Note in whole or
in part for cash at a redemption price equal to 100% of the principal amount of
the Note, plus accrued and unpaid interest, if any, to, but not including, the
Redemption Date (defined below) by delivering a written notice of redemption
(the “Redemption Notice”) at least thirty (30) calendar days but not more than
ninety (90) calendar days before the date of redemption specified therein (the
“Redemption Date”) to the Holder at the Holder’s address designated in Section 8
hereof. Upon receipt of the Redemption Notice, the Holder shall have the
opportunity of converting the Note by providing a Conversion Notice in
accordance with Section 4 hereof within ten (10) calendar days of receipt of the
Redemption Notice. If the Holder elects not to convert the Note in accordance
with Section 4 hereof or fails to deliver a Conversion Notice to the Company
within such ten (10) calendar day period, the Holder’s right to convert the Note
shall be suspended unless and until the Company fails to redeem the Notes on the
Redemption Date. In the case where the Note is called for partial redemption
(a) the suspension of the Holder’s right to convert shall apply only to the
portion of the Note being called for redemption by the Company, and (b) upon
redemption, the Company shall execute and deliver to the Holder, without charge
to the Holder, a new Note in an aggregate principal amount equal to the
unredeemed portion of the original Note.     5.2.   Purchase by the Company at
the Option of the Holder. On December 31, 2010 or, if such date is not a
Business Day, the next Business Day thereafter (the “Repurchase Date”), at the
option of the Holder upon delivery of a notice of repurchase (the “Repurchase
Notice”) to the Company in accordance with this Section 5.2, the Company shall
become obligated to repurchase, at the option of the Holder, this Note and all
other Notes outstanding issued in connection with the Asset Purchase Agreement
at a repurchase price equal to 100% of the principal amount of the Notes plus
accrued and unpaid interest, if any, to, but not including, the Repurchase Date.
The Repurchase Notice shall be mailed at least ninety (90) calendar days but not
more than one-hundred twenty (120) calendar days before the Repurchase Date to
the Company at the Company’s address designated in Section 8 hereof.     5.3.  
Effect on Note. Delivery of payment to the Holder or such Holder’s nominee or
nominees upon a redemption by the Company in accordance with Section 5.1 hereof
or a repurchase by the Company at the option of the Holder in accordance with
Sections 5.2 and 5.4 hereof shall satisfy in full the Company’s obligation with
respect to such Note, and upon such delivery, accrued and unpaid interest, if
any, with respect to such Note shall be deemed to be paid in full rather than
canceled, extinguished or forfeited, and such amounts shall no longer accrue
with respect to the Note, or in the case of a partial redemption by the Company,
the redeemed portion of the Note.

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  5.4.   Change of Control. If a Change of Control shall occur at any time, then
the Holder shall have the right to require that the Company repurchase, at the
option of the Holder, this Note and all other Notes outstanding issued in
connection with the Asset Purchase Agreement at a repurchase price equal to 100%
of the principal amount of the Notes plus accrued and unpaid interest, if any,
to but not including the repurchase date. Within fifteen (15) calendar days
following a Change of Control, the Company shall send a notice to the Holder
containing the instructions and materials necessary to enable the Holder to
elect this option. The repurchase date shall be set by the Company, and shall be
no earlier than thirty (30) calendar days nor later than sixty (60) calendar
days from the date the notice is mailed.

  6.   Defaults and Remedies.

  6.1.   Events of Default. The following events shall be considered events of
default (“Events of Default”) with respect to the Note:

  (a)   The Company shall fail to make the payment of any interest or principal
on the Note when the same becomes due and payable at its Interest Payment Date,
with respect to any interest, or its Maturity Date, with respect to any
principal, and (in the case of interest, but not principal) such failure
continues for a period of fifteen (15) calendar days after written notice of
default is given to the Company by the Holder demanding a cure of such default.
    (b)   The Company shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition for bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, dissolution or similar relief under any present or future statute,
law or regulation, or shall file any answer admitting the material allegations
of a petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company, or of all or any substantial part of the properties
of the Company, or the Company or its respective directors or majority
shareholders shall take any action looking to the dissolution or liquidation of
the Company; or     (c)   Within thirty (30) calendar days after the
commencement of any proceeding against the Company seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed or, within thirty (30)

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      calendar days after the appointment without the consent or acquiescence of
the Company of any trustee, receiver or liquidator of the Company or of all or
any substantial part of the properties of the Company, such appointment shall
not have been vacated.     (d)   The Company’s failure to cure a breach of its
obligation under Section 4.2 hereof to issue and deliver promptly certificates
for shares of Common Stock upon conversion.

  6.2.   Remedies. Upon the occurrence of an Event of Default under
Section 6.1(a) or 6.1(d) hereof, at the option and upon the declaration of the
Holder, and upon the occurrence of an Event of Default under Section 6.1(b) or
6.1(c) hereof automatically and without any declaration of the Holder, (i) the
entire unpaid principal and accrued and unpaid interest on the Note shall,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived, be forthwith due and payable, and (ii) the Holder may,
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under such Note and exercise any and all other
remedies granted to it at law, in equity, or otherwise.     6.3.   Set Off. In
addition to and not in limitation of any rights of set off that the Holder may
now or hereafter have under applicable law, the Holder, upon the occurrence and
during the continuation of any Event of Default, is hereby authorized at any
time or from time to time, to set off and to appropriate and apply any and all
deposits and any other indebtedness at any time held or owing by the Holder to
or for the credit or the account of the Company against and on account of the
obligations and liabilities of the Company to the Holder under this Note and all
other claims of any nature or description arising out of or connected with this
Note, irrespective of whether or not the Holder shall have made any demand
hereunder and although said obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.

  7.   Attorneys’ Fees and Costs. If any amount is not paid as and when due
hereunder, the Company agrees to pay all costs of collection and reasonable
attorneys’ fees which the Holder may incur.     8.   Notices. Unless otherwise
provided herein, all notices, requests, instructions or consents required or
permitted under this Note shall be in writing and will be deemed given (i) when
delivered personally; (ii) when sent by confirmed facsimile; (iii) three
(3) Business Days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) two (2) Business Days after deposit
with an

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      internationally recognized commercial overnight carrier specifying
next-day delivery, with written verification of receipt. All communications
shall be addressed as follows:

If to the Company:
Ace Cash Express, Inc.
1231 Greenway Drive, Suite 600
Irving, Texas 75038
Attn: General Counsel
Fax: (972) 582-1426
If to the Holder:
                                        
                                        
                                        
Attn:                    
Fax:

  9.   Asset Purchase Agreement. This Note is one of the Notes referred to in
the Asset Purchase Agreement and is subject in all respects to the rights and
obligations, including without limitation amendment or waiver, provided therein.
    10.   Assumption; Assignment. This Note shall be binding upon and inure to
the benefit of the Company and the Holder and their respective successors and
assigns, except that (1) neither the Holder nor the Company may assign or
transfer any of its rights or obligations under this Note without the prior
written consent of the other party (except that the Holder may assign or
transfer any of its rights or obligations to its Affiliates without the prior
written consent of the Company), which consent may not be unreasonably withheld
and (2) the Holder may not sell or transfer this Note or the shares of Common
Stock issuable upon conversion of the Note except in conformity with the
requirements of the legend on the first page of this Note. Prior to the
consummation of any Change of Control, the Company shall secure from any person
purchasing the Company’s assets or Common Stock or any successor resulting from
such Change of Control (in each case, an “Acquirer”) a written agreement by the
Acquirer to assume the obligations under this Note or deliver to the Holder a
security of the Acquirer evidenced by a written instrument substantially similar
in form and substance to the Note, including, without limitation, having a
principal amount and interest rate equal to the principal amounts and the
interest rate of the Note. Any purported assignment or transfer in breach of
this Section 10 shall be of no force and effect.

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  11.   Governing Law. This Note and all actions arising out of or in connection
with this Note shall be governed in all respects by the laws of the State of
Texas, without regard to principles of conflicts of law.     12.   Conversion
Price Adjustment.

  12.1.   The Company will adjust the Conversion Price if (without duplication):

  (1)   Stock Dividends, Combinations, Stock Splits and Reclassifications: The
Company (a) pays a dividend or other distribution in shares of Common Stock to
all holders of Common Stock, (b) subdivides its outstanding Common Stock into a
greater number of shares, (c) combines its outstanding Common Stock into a
smaller number of shares or (d) reclassifies its outstanding Common Stock, the
Conversion Price in effect immediately prior thereto shall be adjusted so that
the Holder thereafter shall be entitled to receive the number of shares of
Common Stock which the Holder would have owned or been entitled to receive had
the Holder converted the Note at the then applicable Conversion Price
immediately prior to the happening of such event. An adjustment made pursuant to
this Clause (1) shall become effective immediately after the effective date in
the case of subdivision, combination or reclassification, and shall become
effective immediately after the record date in the case of a dividend or
distribution, provided, however, that the Conversion Price shall be readjusted
to the extent that the dividend or distribution is not effected.     (2)  
Distributions of Indebtedness, Securities or Assets: The Company distributes to
all or substantially all holders of Common Stock any shares of capital stock of
the Company (other than Common Stock) or evidences of its indebtedness, other
securities or other assets, or shall distribute to all or substantially all
holders of Common Stock, rights, warrants or options to subscribe for or
purchase any of its securities (excluding (i) dividends, distributions,
subdivisions and combinations referred to in clause (1) above and (ii) dividends
and distributions paid in cash referred to in Clause (4) below), then in each
such case the Conversion Price shall be decreased so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction, (a) the numerator of which
shall be the closing sales price of the Common Stock on the record date for the
determination of holders of Common Stock entitled to receive such distribution
minus the fair market value on such record date (as determined in good faith on
a reasonable basis by the Board of Directors, whose determination shall be
conclusive) of the portion of the capital stock or evidences of indebtedness,
securities

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      or assets so distributed or of such rights, warrants or options, in each
case applicable to one share of Common Stock, and (b) the denominator of which
shall be the closing sales price on such record date, such adjustment to become
effective immediately after the record date for such distribution; provided that
if the numerator of the foregoing fraction is less than $1.00 (including a
negative amount), then in lieu of the foregoing adjustment, adequate provision
shall be made so that the Holder shall have the right to receive upon
conversion, in addition to the cash and Common Stock issuable upon such
conversion, the distribution the Holder would have received had the Holder
converted the Note into Common Stock at the then applicable Conversion Price
immediately prior to the record date for such distribution; provided further
that no adjustment under this Clause (2) will be made if the Holder is entitled
to participate in the distribution on substantially the same terms as holders of
the Common Stock as if the Holder had converted the Note into Common Stock
immediately prior to such distribution at the then applicable Conversion Price;
    (3)   Tender or Exchange Offers: The Company or any subsidiary of the
Company makes a payment in respect of a tender or exchange offer to holders of
Common Stock where the cash and other consideration included in the payment per
share exceeds the closing sales price of the Common Stock on the last trading
day on which tenders or exchanges may be made pursuant to the tender or exchange
offer (as it may be amended) (the “Offer Expiration Time”), the Conversion Price
shall be decreased so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the Offer
Expiration Time by a fraction, (a) the numerator of which shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Offer Expiration Time multiplied by the closing sales price of the Common
Stock on the trading day upon which the Offer Expiration Time occurs, and
(b) the denominator of which shall be the sum of (i) the fair market value (as
determined in good faith on a reasonable basis by the Board of Directors, whose
determination shall be conclusive) of the aggregate consideration payable to
holders of Common Stock based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares of Common Stock validly
tendered or exchanged and not withdrawn as of the Offer Expiration Time (the
            shares deemed so accepted up to any such maximum being referred to
as the “Purchased Shares”) and (ii) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) at the Offer Expiration
Time and the closing sales price of the Common

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      Stock on the trading day on which the Offer Expiration Time occurs, such
adjustment to become effective immediately prior to the opening of business on
the day following the Offer Expiration Time.     (4)   Cash Distributions: The
Company declares a cash dividend or cash distribution to all or substantially
all of the holders of Common Stock, the Conversion Price shall be decreased so
that the Conversion Price equals the price determined by multiplying the
Conversion Price in effect immediately prior to the record date for such
dividend or distribution by a fraction, (a) the numerator of which shall be the
average of the closing sales prices of the Common Stock for the three
consecutive trading days ending on the trading day immediately preceding the
record date for such dividend or distribution (the “Pre-Dividend Sale Price”),
minus the full amount of the dividend or distribution to the extent payable in
cash applicable to one share of Common Stock, and (b) the denominator of which
shall be the Pre-Dividend Sale Price, such adjustment to become effective
immediately after the record date for such dividend or distribution; provided
that if the numerator of the foregoing fraction is less than $1.00 (including a
negative amount), then in lieu of the foregoing adjustment, adequate provision
shall be made so that the Holder shall have the right to receive upon
conversion, in addition to the cash and Common Stock issuable upon such
conversion, the amount of cash the Holder would have received had the Holder
converted the Note into Common Stock at the then applicable Conversion Price
immediately prior to the record date for such cash dividend or cash
distribution. If such cash dividend or cash distribution is not effected, or is
only effected in part, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect to the extent such dividend or
distribution had not been effected.

  12.2.   If the Company reclassifies its Common Stock or the Company is a party
to a consolidation, merger, share exchange, sale of all or substantially all of
its or our properties and assets or other similar transaction or series of
transactions, in each case pursuant to which the holders of the shares of Common
Stock become entitled to receive (a) any shares of capital stock, partnership
interests, membership interests, or other shares, interests, participations or
other equivalents (however designated and of any class) in the capital of, or
other ownership interests in, any person (“Shares”), (b) cash, (c) securities,
or (d) other assets or property with respect to or in exchange for Common Stock,
then at the effective time of the transaction, the Holder’s right to convert the
Note into cash and shares of Common Stock will be changed into a right to
convert such Notes into the kind and amount of Shares, cash, securities and
other assets or property that such Holder would have received if such Holder

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      had converted the Note solely into shares of the Common Stock at the then
applicable Conversion Price immediately prior to the effective date of such
transaction. If the Company’s shareholders have a right of election as to the
kind or amount of Shares, cash, securities or other assets or property
receivable upon such reclassification, consolidation, merger, share exchange,
sale or similar transaction or series of transactions, the Holder shall have the
right to elect to convert the Note into the kind and amount of Shares, cash,
securities or other property receivable by the Company’s shareholders that
exercised such election or the kind and amount of cash, securities or other
property by the Company’s shareholders that did not exercise such election. In
connection with the consummation of any transaction subject to this
Section 12.2, the Company shall use its commercially reasonable efforts to
obtain from each person whose Shares, cash, securities or other assets or
property will be issued, delivered or paid to the holders of Common Stock (other
than the Company), a Note Supplement or other document in a form substantially
similar hereto and executed and delivered to the Holder, whereby such person
expressly assumes the obligations to deliver to the Holder such Shares, cash,
securities or other assets or property, as, in accordance with this Section 12.2
and all other obligations and liabilities under this Note     12.3.   The
Conversion Price will not be adjusted for the issuance of the Common Stock (or
securities convertible into or exchangeable for the Common Stock), except as
described above.

[signature page follows]

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                  ACE CASH EXPRESS, INC.    
 
                     
 
  By:   William S. McCalmont    
 
  Its:   Executive Vice President and Chief Financial Officer    

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EXHIBIT A
TO CONVERTIBLE PROMISSORY NOTE
NOTICE OF CONVERSION
To: ACE CASH EXPRESS, INC.

(1)   The undersigned hereby elects to convert the attached Convertible
Promissory Note pursuant to the terms of the attached Convertible Promissory
Note. The undersigned desires to convert the entire outstanding principal
amount, plus accrued and unpaid interest, if any, up to, but not including, the
Conversion Date

(2)   In converting such Convertible Promissory Note, the undersigned hereby
confirms and acknowledges that the shares of Common Stock (as defined in the
Convertible Promissory Note) are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any such
shares of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state or foreign
securities laws or unless pursuant to Rule 144 of such Securities Act.

(3)   Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:

     
 
   
 
  Print Name
 
   
 
   
 
  Sign Name
 
   
 
   
 
  Date (the “Conversion Date”)