exv10w2



 






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.




 









 






	 	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.




6









 






	 	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




10









 






	 	 	 	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




11









 






	 	 	 	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




12









 






	 	 	 	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”)