Asset Purchase Agreement

Exhibit 10.1 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (the " Agreement" ), dated as of September 21, 2005 (the " Effective Date" ), is entered into among ACE CASH EXPRESS, INC., a Texas corporation (" Purchaser" ), POPULAR CASH EXPRESS, INC., a Delaware corporation (" PCE" ), POPULAR CASH EXPRESS - CALIFORNIA, INC., a California corporation (" PCEC" ; PCE and PCEC are collectively referred to herein as " Seller" ), and POPULAR NORTH AMERICA, INC., a Delaware corporation (" Shareholder" ). Purchaser, Seller and Shareholder are collectively referred to herein as the " Parties ." WHEREAS, Seller desires to sell, and Purchaser desires to purchase, substantially all of the assets of Seller used or useful in or relating to the check-cashing and related business operations conducted by Seller at the locations (the " Locations" ) set forth on Schedule 1 (the check-cashing and related business operations conducted by Seller at such Locations being referred to herein as the " Business" ), in accordance with this Agreement; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: ARTICLE 1.
PLAN OF ACQUISITION 1.1. Acquisition of Assets. (a) Upon the terms and conditions stated in this Agreement, Seller hereby agrees to sell, and Purchaser hereby agrees to acquire, all of the assets, business, properties, goodwill, and rights of Seller of every kind and character, whether real or personal, tangible or intangible, owned or leased, of or relating to the Business, free and clear of all Liens (as defined in Section 2.8(b) ) other than Permitted Liens (as defined in Section 2.8(c) ), excluding only the Excluded Assets (as defined in Section 1.1(b) ). The items being sold and purchased are collectively referred to herein as the " Assets ." Without limiting the foregoing, the Assets include: (i) All of the properties and assets described on Exhibit A attached hereto and made a part hereof; (ii) All rights in any data processing systems and equipment used or useful in the Business, including computer software, databases and related documentation (excluding therefrom the Prime Solutions software and computer hardware (other than computer monitors)) and all of Seller' s operational manuals (excluding therefrom, however, manuals and operating procedures relating to Seller' s compliance with applicable laws, orders and regulations); (iii) All client, customer and supplier lists related to the Business;


(iv) All rights of Seller in and to the use of all telephone and facsimile numbers used in or for the Business and related goodwill, including, without limitation, the benefit of the existing telephone listings and advertising; (v) All furniture, fixtures and leasehold improvements used or useful in the Business, including mailboxes; (vi) All rights of Seller under the contracts set forth on Exhibit B attached hereto and made a part hereof (collectively, the " Assumed Contracts" ), including, without limitation, the Real Property Leases (as defined in Section 2.26 ) and all security deposits relating to the Real Property Leases, all personal property leases relating to the business (the " Personal Property Leases" ) and all security deposits with respect to the Personal Property Leases and the Subleases (as defined in Section 2.27 ) and all security deposits with respect to the Subleases; (vii) All other intangible properties and assets of the Business (except for the Intangibles (as defined below)); (viii) All accrued, asserted or unasserted claims of Seller against third parties relating to the continuing operation of the Business or the Assets, but excluding the accounts receivable that are part of the Excluded Assets; (ix) All prepaid expenses and deposits of or for the Business; (x) Customer checks cashed before a Closing Date (as hereinafter defined) with respect to a Location that are returned unpaid and that have not been transferred to a third-party collector; and (xi) All files, books and records of all kinds and forms regarding the foregoing (except for those books and records that are identified as Excluded Assets). (b) The Assets sold and acquired hereunder shall not include any of the following (collectively, the " Excluded Assets" ): (i) Seller' s cash on hand and bank accounts and corresponding checks; (ii) Seller' s proceeds of all checks cashed by Seller before a Closing Date as part of the Business; (iii) Seller' s inventory of money orders, lottery tickets, bus passes, telephone cards, credit cards, and other items for sale (other than pagers and paging equipment); (iv) Seller' s prepaid postage; (v) Seller' s minute books and other similar corporate records;


(vi) Except for the Assumed Contracts, Seller' s contracts, agreements, and leases, including, without limitation, contracts for armored transport services, for alarm systems at the Locations, for vending and other equipment and for local Yellow Pages or other telephone book advertising (though Purchaser shall be entitled to the benefits of existing advertising thereunder), Seller' s agreements with any money transfer company or its affiliates and Seller' s agreements with any money order company or its affiliates (collectively, the " Non-Assumed Contracts" ); (vii) Seller' s vending machines; (viii) Seller' s accounts receivable; (ix) All accrued, asserted or unasserted claims of Seller against third parties unrelated to the continuing operation of the Business or the Assets; (x) Seller' s fee simple title and interest in and to the real property on which Seller' s Store #19 at 700 N.W. 79 th Street, Miami, Florida 33150 is located (the " Excluded Florida Real Property" ); (xi) Seller' s fee simple title and interest in and to the real property located at and known as 8980 Scranton Avenue, Houston, Texas 77057; (xii) All of Seller' s registered and unregistered names (including all of Seller' s rights to any names, including " Popular Cash Express" , whether used as part of corporate names, trademarks, trade names or otherwise), trade names, brand names, trademarks, trade styles, service marks, trade secrets, copyrights, corporate names, fictitious names, logos, trade dress, web sites, domain names, computer programs and other software, know how, methods and processes of Seller used in the conduct of the Business, all other general intangible assets and intellectual property of Seller and the Business (collectively, the " Intangibles" ); (xiii) All computer hardware (excluding computer monitors) at the Locations; provided, however , that Purchaser shall assemble all such computer hardware after each Closing and shall deliver such computer hardware to a location(s) designated by Seller. The cost of transporting such computer hardware shall be borne by Seller provided Seller shall have reviewed and approved the cost estimate obtained by Purchaser for such purpose; and (xiv) All hardware (including, without limitation, all routers) and software relating to the voice over internet protocol (" VOIP" ) systems utilized by Seller at the Locations operated by Seller in the State of California. (c) As full consideration for the Assets and for the noncompetition and nonsolicitation agreements of Seller and Shareholder set forth in this Agreement (the " Noncompetition Agreements" ), Purchaser shall pay Seller the following amounts (collectively, the " Purchase Price" ) at each Closing (as hereinafter defined) for a Location as follows. The aggregate Purchase Price for the acquisition of all Locations shall be $36,000,000 of which


$13,500,000 of such amount shall be in the form of cash (the " Cash Amount" ) and $22,500,000 of such amount shall be in the form of Convertible Notes (as hereinafter defined) (the " Convertible Note Amount" ), subject in each case to adjustment as set forth below: (i) On the first Closing Date (the " First Closing Date" ), for the Acquired Locations acquired on such First Closing Date, an amount in cash up to a maximum of $10,000,000 (subject to adjustment as set forth in Section 1.1(c)(iii) below) equal to the sum of the amounts attributable to such Acquired Locations on the Phased Closing Schedule (as hereinafter defined), and if such amounts exceed $10,000,000 (subject to adjustment as set forth in Section 1.1(c)(iii) below), then the balance to be paid in the form of the execution and delivery by Purchaser to Seller of a promissory note (a " Convertible Note" ) with a face amount equal to such excess amount. Such Convertible Note will provide for an interest rate, right to convert into common stock of Purchaser (the " Common Stock" ) and certain other terms and conditions more particularly described on Exhibit C attached hereto and made a part hereof, subject to any revisions requested by the Lenders under the ACE Credit Agreement (as hereinafter defined); (ii) On each Closing Date occurring after the First Closing Date, for the Locations acquired on such Closing Date (together with Locations acquired on the First Closing Date, the " Acquired Locations" ), an amount: (A) in cash equal to the sum of the amounts attributable to such Acquired Locations on the Phased Closing Schedule ( provided that the aggregate amount of cash paid at the First Closing Date and all subsequent Closing Dates shall not exceed $10,000,000 (subject to adjustment as set forth in Section 1.1(c)(iii) below)), and (B) to the extent that the cash paid in clause (A) is insufficient to pay the amount owed for the Locations acquired on such Closing Date, a Convertible Note with a face amount equal to such excess amount; and (iii) Notwithstanding anything to the contrary in this Section 1.1(c) , in the event that, at the First Closing Date, the Convertible Note Ownership Percentage (as defined below) is equal to or greater than five percent (5%), then the Cash Amount portion of the Purchase Price shall be increased, and the Convertible Note Amount portion of the Purchase Price shall be decreased, on a dollar for dollar basis, such that the Convertible Note Ownership Percentage at the First Closing Date is less than five percent (5%). " Convertible Note Ownership Percentage" means the (A) the number of shares (the " Issuable Shares" ) of common stock of Purchaser which Seller would have the right to acquire upon conversion of Convertible Notes, assuming that $22,500,000 of Convertible Notes were issued at the First Closing Date, divided by (B) (1) the number of outstanding shares of the common stock of Purchaser at the First Closing Date, plus (2) the number of Issuable Shares 1.2. Liabilities Not Assumed . Except as provided in Section 1.3 below, Purchaser does not assume, and shall not be responsible for, the payment, performance, or discharge of any liabilities or obligations of Seller, whether now existing or hereafter arising. Without limiting


the preceding sentence, Seller, and not Purchaser, shall be responsible for (i) any and all liabilities, responsibilities, expenses and obligations relating to the Business or the Assets (or any part thereof) at an Acquired Location incurred, accruing or arising before the Closing Date with respect to each such Acquired Location, even if not asserted until on or after such Closing Date, (ii) any and all liabilities, responsibilities and obligations relating to the Excluded Assets, including the Non-Assumed Contracts and all liabilities and obligations thereunder, and (iii) any and all accrued and unperformed liabilities, responsibilities, expenses and obligation relating to the Assumed Contracts with respect to any Acquired Location that first accrued before the Closing Date with respect to such Acquired Location. 1.3. Purchaser' s Liabilities . Purchaser shall pay, perform and discharge, and Seller shall not be responsible for, the following liabilities relating to the business conducted by Purchaser at an Acquired Location on and after the Closing Date with respect to such Acquired Location: (a) All United States federal and state income tax liabilities based on the income of Purchaser as the result of Purchaser' s operations at such Acquired Locations on and after the applicable Closing Date with respect to such Acquired Locations. (b) All trade payables for such Acquired Locations first arising or accruing on and after the applicable Closing Date with respect to such Acquired Locations. (c) Liabilities and obligations under the Assumed Contracts (including, without limitation, the Real Property Leases and the Personal Property Leases) for such Acquired Locations first arising or accruing on and after the applicable Closing Date with respect to such Acquired Locations. (d) All obligations for salary and benefits due to employees of Purchaser relating to such Acquired Locations first arising or accruing on and after the applicable Closing Date with respect to such Acquired Locations. (e) All other costs and expenses incurred in the operation of the Business at each Acquired Location first arising or accruing on or after the applicable Closing Date with respect to such Acquired Location except to the extent they are Seller' s or Shareholder' s responsibility, obligation or liability under the terms of this Agreement or any of the Exhibits or Schedules hereto as executed. 1.4. Closing . The transfer of ownership of the Assets from Seller to Purchaser as described in this Agreement with respect to an Acquired Location shall occur as of the date (individually, a " Closing Date" and collectively, the " Closing Dates" ) set forth for such Acquired Location on Schedule 1.4 (the " Phased Closing Schedule" ). Closings to document and evidence the transactions in this Agreement (each, a " Closing" as to an Acquired Location and collectively, the " Closings" ) shall occur pursuant to the Phased Closing Schedule (assuming the satisfaction of the conditions set forth in Article 6). Delivery of the documents at each Closing Date may be made by telecopy and (to some extent) in person at one or more locations agreed upon by the Parties. The original or definitive copies of documents delivered by telecopy shall


be sent by the delivering Party to the other Party or Parties by courier within three (3) Business Days after each Closing Date. 1.5. Phased Closing Schedule . The Parties shall consummate the Closings pursuant to the Phased Closing Schedule on Schedule 1.4 . Seller shall deliver possession of each Acquired Location to be delivered to Purchaser pursuant to the Phased Closing Schedule at the beginning of business on the Closing Date identified in the Phased Closing Schedule. Upon completion of delivery by Seller of each Acquired Location, Purchaser shall (i) pay to Seller the Closing Amount for such Acquired Locations and (ii) execute and deliver to Seller the Convertible Note attributable to such Acquired Locations. Purchaser' s acquisition of the Business and Assets with respect to the Acquired Locations on a Closing Date shall be effective as of the beginning of business on such Closing Date. Seller shall be entitled to all revenues of the Acquired Locations transferred on a Closing Date for the period through the day before such Closing Date and Purchaser shall be entitled to all revenues of such Acquired Locations as of such Closing Date. Seller shall be responsible for all costs and expenses of operations at the Acquired Locations transferred on a Closing Date through the day before such Closing Date and Purchaser shall be responsible for all costs and expenses of operations at such Acquired Locations as of such Closing Date. The Parties acknowledge the possibility that, due to damage to or destruction of a Location or the failure to satisfy any or all of the conditions set forth in Section 6.1 , a Location contemplated by this Agreement to be acquired by and delivered to Purchaser on a Closing Date may not be so acquired and delivered on such Closing Date. To the extent that there is not a Closing for a Location as a result of the foregoing, the Parties shall proceed with the Closing as to all other Locations to be transferred on such Closing Date pursuant to the Phased Closing Schedule and postpone the Closing with respect to the other Locations until such time as Purchaser determines in its reasonable discretion that Seller has repaired or replaced such damaged or destroyed Locations or the conditions set forth in Schedule 6.1 have been satisfied, as applicable (at which time the Closing for such other Locations shall occur in accordance with this Agreement). If such damaged or destroyed Locations have not been repaired or replaced or if the conditions set forth in Schedule 6.1 with respect to a Closing have not been satisfied to the reasonable satisfaction of Purchaser on or before ninety (90) days after the scheduled Closing Date for such Locations, Purchaser may, at its option, notify Seller in writing that it elects to terminate the Agreement with respect to such Location (each, a " Terminated Location" and collectively, the " Terminated Locations" ), in which event Purchaser shall not acquire such Terminated Locations and the Purchaser Price shall be reduced by the value attributable to each such Terminated Locations on Schedule 1.4 . The parties acknowledge that the inability of Seller to obtain a landlord' s consent to the assignment of a Real Property Lease on a certain Closing Date shall not constitute a default hereunder, provided that the total number of Locations affected by such inability does not exceed fifteen (15). 1.6. Basic Prorations; Utilities; Taxes . As of each Closing Date for an Acquired Location, the personal property and real estate taxes for such Acquired Locations, the base rent for the current month under each Real Property Lease or the Excluded Florida Real Property Lease for such Acquired Locations and water, gas, electricity and other utilities and common area maintenance reimbursements to the landlords under each Real Property Lease and the Excluded Florida Real Property Lease for such Acquired Locations, except (in any case) for any tax or expense relating to an obligation not assumed by Purchaser for such Acquired Location, shall be prorated between Purchaser and Seller. Personal property and real estate taxes for 2005


shall be prorated on the basis of actual amounts billed for such year or, if not so billed, on the basis of 100% of actual taxes assessed or levied in 2004, adjusted to reflect changes in assessments or rates of taxes known to be in effect for 2005. In addition, there shall be a proration between Purchaser and Seller as of each Closing Date for an Acquired Location with respect to charges under other Assumed Contracts for such Acquired Locations. The items prorated in accordance with this Section 1.6 shall be prorated, based on a daily average, in accordance with the number of days in the month, the year, or other applicable time period within which each Closing Date occurs (with the allocation for such Closing Date to Purchaser). The proration payments shall be made, to the extent reasonably practicable, at or promptly after each Closing. This Section 1.6 shall survive each Closing. 1.7. Further Assurances . After each Closing, the Parties shall execute and deliver such additional documents and take such additional actions as may reasonably be deemed necessary or advisable by any Party to consummate the transactions contemplated by this Agreement and to vest more fully in Purchaser the ownership of the Business and Assets transferred and conveyed pursuant to this Agreement, or intended so to be. 1.8. Assignment and Assumption of Assumed Contracts . Seller shall assign all of its right, title and interest in and to, and Purchaser will assume, perform and discharge all of Seller' s remaining obligations under, the Assumed Contracts with respect to each Acquired Location from and after the Closing Date for such Acquired Location. Notwithstanding the foregoing, the Assumed Contracts do not include, and nothing in this Agreement will be deemed to constitute an assignment or attempted assignment of, any contract, agreement or license to which Seller is a party if the attempted assignment without the consent of the other party thereto would constitute a breach or affect in any way the rights of Seller thereunder and for which consent has not been obtained (collectively, the " Excluded Contracts" ). If the consent of any such other party is not obtained on or prior to the Closing Date with respect to an Acquired Location, or an attempted assignment on the Closing Date would be ineffective and would affect the rights of Seller, or Purchaser as assignee, thereunder, and Purchaser agrees in its sole discretion to waive the conditions set forth in Section 6.1(d) , Seller will cooperate with Purchaser in a reasonable arrangement designed to provide for Purchaser the economic benefits, to the extent of Purchaser' s performance of Seller' s obligations, under each Excluded Contract and Purchaser will continue after such Closing to use its commercially reasonable efforts to obtain consent to such assignment. ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER Seller and Shareholder jointly and severally represent and warrant to Purchaser as of the date hereof and, except as otherwise specified herein, as of each Closing Date as follows: 2.1. Organization, Good Standing and Qualification of Seller and Shareholder . PCE is a corporation validly doing business in, and in good standing under the laws of, the State of Delaware. PCEC is a corporation validly doing business in, and in good standing under the laws of, the State of California. Shareholder is a corporation validly doing business in, and in good standing under the laws of, the State of Delaware.


2.2. Power and Authority of Seller . Seller has the requisite corporate power and authority, and all licenses and permits from governmental authorities, to own, lease and operate its properties and assets and to carry on its business. 2.3. Ownership of Seller . Shareholder is the record and beneficial holder of all of the issued and outstanding shares of capital stock of PCE. PCE is the record and beneficial holder of all of the issued and outstanding shares of capital stock of PCEC. There are no outstanding contracts, options, warrants, or commitments of any character whatsoever requiring the issuance, sale or transfer of any shares of capital stock or other equity securities in Seller. 2.4. Authority and Validity . Seller has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other documents executed by it in connection with this Agreement; and the execution, delivery and performance by Seller of this Agreement and the other documents executed by it in connection with this Agreement have been duly authorized by all necessary corporate action. Shareholder has the legal capacity to execute, deliver and perform his obligations under this Agreement and the other documents executed by him in connection with this Agreement. 2.5. Binding Effect . This Agreement and the other documents executed by Seller or Shareholder in connection with this Agreement have been duly executed and delivered by it and are the legal, valid and binding obligations of it, enforceable in accordance with their terms, except as may be limited by (i) bankruptcy, insolvency or other similar laws affecting creditors' rights generally, and (ii) equitable principles of general applicability. 2.6. Necessary Approvals and Consents . Other than the consents, approvals and releases of third parties described on Schedule 2.6 hereto that are being delivered by Seller at each Closing, no authorization, consent, permit, license or approval of, or declaration, registration or filing with, any person (including any governmental authority) is required or advisable as a condition to or in connection with the execution, delivery or performance by Seller or Shareholder of this Agreement or the other documents executed by either of them in connection with this Agreement or the consummation by Seller and Shareholder of the transactions contemplated hereby and thereby. 2.7. No Conflict with Other Instruments . Having obtained the consents, approvals and releases of third parties set forth on Schedule 2.6 , neither the execution, delivery or performance by Seller or Shareholder of this Agreement or the other documents executed by either of them in connection with this Agreement nor the consummation by Seller and Shareholder of the transactions contemplated hereby or thereby, will (with or without notice or lapse of time): (i) violate Seller' s Articles of Incorporation or Bylaws; (ii) violate, breach, conflict with, or constitute a default under, or permit the termination or the acceleration or maturity of, any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or lease agreement, or other agreement or instrument, including any of the Assumed Contracts, by which Seller or Shareholder is bound or to which the Assets are subject; (iii) result in the imposition of any Lien, security interest, or other restriction upon any of the Assets or upon any attribute of Seller' s ownership interest in any of the Assets; (iv) violate any judgment, order, injunction or decree of any government or governmental authority by which Seller or Shareholder is bound or to which the Assets are subject; or (v) violate any license, authorization or permit issued or granted to


Seller or Shareholder by any government or governmental authority or under any law, statute, rule, regulation or ordinance with respect to the Assets. 2.8. Title to Assets . (a) Seller has good and merchantable title to all of the Assets, including those properties and assets described on Exhibit A . On a Closing Date the representation and warranty set forth in this Section 2.8(a) shall not apply to the Assets that have already been transferred to Purchaser as provided in this Agreement. (b) The Assets are owned by Seller free and clear of any lien, claim, or encumbrance (collectively, " Liens" ), except as set forth on Schedule 2.8 hereto and except for: (i) Liens for taxes, assessments, or other governmental charges not yet delinquent; and (ii) statutory Liens incurred in the ordinary course of business of the Business that are not yet delinquent.On a Closing Date, the representation and warranty set forth in this Section 2.8(b) shall not apply to the Assets that have already been transferred to Purchaser as provided in this Agreement. (c) Upon the consummation of the transactions contemplated hereby, Purchaser shall receive good and merchantable title to the Business and the Assets, free and clear of all Liens other than the Liens described in Subsections 2.8(b)(i) and (ii) (the " Permitted Liens" ). (d) Except for the rights of Seller under the Non-Assumed Contracts (which are not included in the Assets), as of the Closing with respect to a Location Seller shall have conveyed to Purchaser, and Purchaser will own or lease, all assets of Seller necessary to or used or useful in the conduct of the Business as conducted by Seller immediately before the Closing Date for such Location. 2.9. Condition of Tangible Assets . Except as set forth on Schedule 2.9 , the tangible Assets are in good operating condition and repair (except for ordinary wear and tear), are adequate for the uses to which they are being put in the ordinary course of business of the Business, and conform with all applicable laws, regulations and ordinances. On a Closing Date, the representation and warranty set forth in this Section 2.9 shall not apply to the Assets that have already been transferred to Purchaser as provided in this Agreement. 2.10. Intellectual Property . Except as set forth on Schedule 2.10, Seller owns (free of any Lien) the name " Popular Cash Express" and all logos, trade names and service marks relating thereto (the " Intellectual Property" ) without infringing or violating the rights of any other person, and no consent of any other person will be required for the grant by Seller to Purchaser of the License (as defined in Section 4.4 below). No claim has been asserted or, to the knowledge of Seller, threatened by any person that challenges or questions Seller' s ownership or right to use any of the Intellectual Property or challenges or questions the validity or effectiveness of any of the Intellectual Property.


2.11. Taxes . Subject to non-material deviations and audits, monies required to be withheld by Seller from employees or collected from customers for income taxes, social security, medicare and unemployment insurance taxes, and sales, excise and use taxes with respect to the Business, and all such taxes to be paid by Seller to governmental authorities, have been collected or withheld and paid to the respective governmental authorities, or such monies have been accrued, reserved against and entered upon the books of Seller. All federal, state, county and local income, gross receipts, excise, property, franchise, license, sales, use, withholding and other tax and information returns and declarations required to have been filed before each Closing Date by Seller with respect to the Business have been duly and timely filed, and each such return correctly ...