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EXHIBIT 10.8
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT
BE TRANSFERRED UNLESS THE COMPANY IS FIRST FURNISHED AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES
ACT OR ANY STATE LAWS. TRANSFER OF THIS NOTE IS ALSO RESTRICTED AS HEREINAFTER
PROVIDED.
CENTEX CORPORATION
CONVERTIBLE SUBORDINATED NOTE
$2,100,000 Dallas, Texas May 28, 1999
FOR VALUE RECEIVED, Centex Corporation, a Nevada corporation (herein,
together with any successor to all or substantially all of its assets, by merger
or otherwise, called the "Company"), promises to pay to Laurence E. Hirsch (the
"Holder"), at the Company's principal executive office in Dallas, Dallas County,
Texas, or such other place as the Company may specify to the Holder in writing,
the principal sum of Two Million One Hundred Thousand dollars ($2,100,000), in
lawful money of the United States of America, and to pay interest from the date
hereof on the unpaid principal balance hereof at a fluctuating rate per annum
which shall change from time to time so that it will always be equal to the
Interest Rate (as hereinafter defined) or the Highest Lawful Rate (as
hereinafter defined), whichever is the lesser. As used herein, the term
"Interest Rate" shall mean the rate of interest charged from to time on that
certain promissory note, dated March 1, 1995, between Holder and NationsBank of
Texas, N.A. (now known as Bank of America, N.A.), evidencing an indebtedness in
a maximum amount of $2,100,000 (and all renewals, extensions, modifications and
amendments of and to such promissory note) (the "Bank Note"). The "Highest
Lawful Rate" shall be the maximum rate of interest that the Company may pay on
this Note from time to time under applicable laws. If and to the extent the
Highest Lawful Rate is determined pursuant to the laws of the State of Texas,
the Indicated Rate Ceiling provided by Article 5069-1.04 of the Texas Revised
Civil Statutes Annotated, as amended, shall be the ceiling applicable to this
Note.
1. Payment Terms.
The principal of this Note shall be payable in full on March 31, 2010.
Accrued interest on this Note shall be payable on any day on which interest is
due and payable on the Bank Note, and at maturity of this Note. The Company
promises to pay interest, payable on demand, on overdue principal and, to the
extent permitted by law, on overdue interest, from their due dates at the
Highest Lawful Rate.
2. Subordination.
Upon any liquidation of the Company or distribution of assets to
creditors of the Company in bankruptcy, receivership, or otherwise, no payment
of principal or interest shall be demanded, made, or received on this Note, nor
shall any portion of this Note be directly or indirectly repurchased by the
Company (except through conversion of this Note into Common Stock, to the extent
permitted
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by Section 3 below), until all Senior Indebtedness (as hereinafter defined) has
been paid in full. Any cash, securities, or property received by the Holder in
violation of the immediately preceding sentence shall be held in trust for the
benefit of the holders of Senior Indebtedness and promptly paid over to them,
pro rata as their respective interests may appear, upon demand. The Holder shall
be subrogated to the rights of any holder of Senior Indebtedness to the extent
the Holder or the Company pays funds over to any holder of Senior Indebtedness
pursuant to these subordination provisions, but such right of subrogation may
not be enforced until all Senior Indebtedness has been paid in full. "Senior
Indebtedness" means obligations of the Company, whether outstanding on the date
hereof or created hereafter, for (a) money borrowed by the Company, (b) money
borrowed by others and guaranteed by the Company, (c) indebtedness incurred,
assumed, or guaranteed by the Company in connection with the payment of all or
any portion of the purchase price of any business, real property, or other
assets (except indebtedness incurred for materials acquired or services rendered
in the ordinary course of business of the Company) purchased by the Company or
any of its subsidiaries, (d) indebtedness arising in favor of any bonding
company under any performance or payment bond or other similar bond issued by
such bonding company in connection with any construction contract to which the
Company or any of its subsidiaries is or was a party, (e) renewals, extensions,
and refundings of any indebtedness described in clauses (a)-(d), inclusive, and
(f) interest due and premium and collection costs owed by the Company with
respect to any indebtedness described in clauses (a)-(e), inclusive, including
interest which accrues subsequent to any bankruptcy or similar proceeding
involving the Company; provided, however, that Senior Indebtedness shall not
include (x) any indebtedness which is expressly stated in any instrument binding
on the holder of such indebtedness not to be Senior Indebtedness, (y) this Note,
or (z) any indebtedness as to which neither the Company nor any subsidiary has
any personal liability. Upon request of the Company, the Holder will expressly
confirm to any holder or proposed holder of indebtedness conforming to the
preceding definition that such indebtedness is "Senior Indebtedness" within the
meaning of the preceding sentence.
3. Conversion.
The Holder may, at his option (but subject to the provisions of this
Note relating to compliance with the Securities Act and State Laws), convert the
unpaid Vested Principal (as hereinafter defined) of this Note into Common Stock
(as hereinafter defined) of the Company, at the rate of one share of Common
Stock for each five dollars and twenty five cents ($5.25) of Vested Principal so
converted, at any time and from time to time, by surrendering this Note,
together with written directions as to the amount of Vested Principal to be
converted, to the Company at its principal executive office. Upon such
surrender, the Company shall promptly issue and deliver to the Holder one or
more certificates (as the Holder may specify) evidencing the shares into which
the Vested Principal has been converted, and shall return this Note to the
Holder with a notation thereon showing the amount of Vested Principal that has
been converted and the date of such conversion. Any such conversion shall be
deemed effective, and the shares issuable in respect thereof shall be deemed
issued, on the first Business Day (defined as any day on which banks are
authorized to be open for business under Texas law) following the day this Note
is duly surrendered for conversion, as described above, regardless of when the
Company actually issues and delivers the shares to the Holder. No adjustment
shall be made in respect of any dividends (except common stock dividends, as
hereinafter provided) or distributions paid prior to the effective conversion
date, or payable after the effective conversion date, to holders of record as of
a date prior to the effective conversion date.
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No fractional shares shall be issuable on conversion of this Note, and
if the Holder designates an amount of Vested Principal which would result in
issuance of a fractional share, the amount of Vested Principal to be converted
shall be reduced to eliminate the issuance of such fractional shares.
One Hundred Percent (100%) of the principal amount of this Note shall
be "Vested Principal" on May 28, 1999, the date of issuance of this Note (it
being acknowledged by the Company that One Hundred Percent (100%) of the Vested
Principal of the Original Note (as hereinafter defined) became Vested Principal
prior to the date of issuance of this Note, which is being issued to renew,
extend, modify, and replace the Original Note as provided in the antepenultimate
paragraph of this Note).
Notwithstanding the foregoing, if the Holder is discharged as an
employee by the Company's or an Affiliate's (defined as any parent or subsidiary
of the Company, within the meaning of subsections 425(e) and (f) of the Internal
Revenue Code of 1986, as amended) board of directors for Cause (defined as acts
constituting theft, dishonesty, fraud or embezzlement, as determined in good
faith by the Company's board of directors), then any part of the principal of
this Note which is Vested Principal shall, upon such discharge, cease to be
Vested Principal.
For purposes of this Note, the term "Common Stock" shall mean the
common stock, par value $.25 per share, of Centex Corporation as constituted on
the date of this Note and any stock, securities, or other property (including
cash), whether of Centex Corporation or some other corporation or entity, into
which the outstanding shares of such common stock may hereafter be changed
pursuant to any merger, consolidation, recapitalization, or similar transaction
(collectively, a "Reorganization"). In furtherance of the preceding sentence,
(i) if the outstanding shares of Common Stock of the Company shall be subdivided
into a greater number of shares or combined into a lesser number of shares (by
stock split, reverse stock split, stock dividend, or otherwise), the number of
shares of Common Stock issuable upon conversion of this Note shall be
appropriately adjusted to give effect to such subdivision or combination, and
(ii) if any Reorganization should occur, there shall be delivered to the Holder,
upon conversion of any portion of the Vested Principal of this Note subsequent
to such Reorganization, the stock, securities, or other property (including
cash) that the Holder would have received if he had converted such Vested
Principal into Common Stock prior to such Reorganization and participated
therein as a holder of such Common Stock. No Reorganization shall be effected
unless, under the express terms thereof, the resulting or surviving entity
assumes the obligations of the Company under this Note.
4. Prepayment.
The Company shall not be entitled to prepay all or any part of this
Note, except that this Note shall be prepaid, in full (but not in part):
(a) on the first anniversary of the date the Holder ceases to
be employed by at least one of the employers in the group of employers
consisting of the Company and its Affiliates for any reason other than
(i) the Holder's voluntary termination of employment with the Company
or an Affiliate or (ii) the Holder's discharge by the Company's or an
Affiliate's board of directors for Cause;
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(b) within thirty (30) days after the Holder, as a result of
his voluntary termination of employment, is no longer employed by any
of the employers in the group of employers consisting of the Company
and its Affiliates or is discharged as an employee by the Company's or
an Affiliate's board of directors for Cause; and
(c) within thirty (30) days following the approval by the
shareholders of the Company of a plan of complete liquidation and
dissolution of the Company, other than such a plan adopted in
connection with a Reorganization.
5. Default.
If any one or more of the following events (herein called "Events of
Default") shall occur and be continuing:
(a) Default shall be made in the payment of any principal of
or interest on this Note when due and shall continue for more than 10
days after written notice from the Holder to the Company; or
(b) The Company shall (i) apply for or consent to the
appointment of a receiver, trustee, or liquidator of the Company or all
or substantially all the assets of the Company, (ii) make a general
assignment for the benefit of creditors, (iii) be adjudicated bankrupt
or insolvent, or (iv) file a voluntary petition in bankruptcy, or a
petition or answer seeking reorganization or an arrangement with
creditors to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, moratorium, dissolution, liquidation,
or debtor relief law, or any chapter of any such law, or an answer
admitting the material allegations of a petition filed against it in
any proceeding under any such law or chapter; or an order, judgement,
or decree shall be entered, without the application, approval, or
consent of the Company by any court of competent jurisdiction,
approving a petition seeking liquidation or reorganization of the
Company or of all or substantially all of the assets of the Company and
such order, judgment, or decree shall not have been dismissed within
120 days after it was so entered;
then and in each and every such case the Holder may, subject to the
subordination provisions previously stated in this Note, by notice in writing to
the Company declare the unpaid principal of this Note, with accrued interest
thereon, to be forthwith due and payable and thereon such principal and interest
shall be due and payable without presentment, protest, or further demand or
notice of any kind, all of which are hereby expressly waived.
6. Transfer.
This Note may not be transferred, voluntarily or involuntarily, by the
Holder to any person or entity whatsoever without the written consent of the
Company; provided, however, that such transfer restriction shall not apply (i)
to a transfer, by will or by the laws of descent and distribution, to the
executor or estate of the Holder upon his death, (ii) to the pledge of, or grant
of a security interest in, this Note by the Holder to a bank (or other financial
institution) approved by the Company
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in writing as security for the indebtedness of the Holder to such bank or
institution in connection with the Holder's purchase of this Note, or (iii) to
the foreclosure of any such pledge or security interest so long as only such
bank or financial institution is the purchaser at such sale. In no event may the
conversion privileges of this Note be exercised by any person or entity to whom
this Note is transferred (including the Holder), voluntarily or involuntarily,
in violation of the preceding sentence, or by any transferee of such person or
entity (including the Holder), or by any purchaser (including the bank or other
financial institution that may be the pledgee of or holder of a security
interest in this Note) at a foreclosure sale (even if such foreclosure is
permitted under the preceding sentence).
Subject to the immediately preceding paragraph, this Note is
transferable only on the books of the Company by the Holder or the Holder's duly
authorized attorney-in-fact. The Company shall be entitled to treat the
registered holder of this Note as the true and lawful owner hereof for all
purposes, including payment, notwithstanding any actual knowledge of the Company
to the contrary.
7. Miscellaneous.
Except as otherwise expressly specified in this Note, the Company and
each surety, guarantor, endorser, or other party liable for payment on this Note
hereby waive diligence, presentment, demand, protest, and notice of any kind
whatsoever, and agree that their liability on this Note shall not be affected by
any renewal or extension in the time of payment hereof, by any indulgences, or
by any release or change in any security for payment of this Note.
In no event shall the Company be obligated to issue any Common Stock on
conversion of this Note if, in the opinion of counsel for the Company, such
issuance would violate the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any State Laws. The Holder shall, as a
condition precedent to his right to convert Vested Principal to Common Stock,
make such written representations to, and agreements with, the Company
concerning the Holder's financial position, business and investment experience,
intentions as to resale or other disposition of the shares, and such other
matters as counsel for the Company may deem necessary in order to assure
compliance with the Securities Act, Exchange Act, and applicable State Laws. The
certificates evidencing the shares issued on conversion of this Note shall bear
such legends as counsel for the Company may deem necessary to ensure compliance
with the Securities Act, Exchange Act, and applicable State Laws.
In no event shall the existence of this Note be deemed to create any
right of continued employment of the Holder by the Company or any Affiliate.
The Company is entitled to offset against this Note (whether or not
this Note is then due), (i) any amounts due and owing by the Holder to the
Company or any Affiliate and (ii) any amounts which the Company may owe to Bank
of America, N.A. (the "Bank") arising under the Company's guarantee of the
Holder's obligations under the Bank Note. Any such offset shall be applied first
to accrued and unpaid interest, next to principal that is not Vested Principal,
and then to Vested Principal. Upon any such offset, the offset principal shall
be deemed paid and shall cease to bear interest.
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If this Note is placed in the hands of an attorney for collection after
occurrence of an Event of Default, or if it is collected through legal or
bankruptcy proceedings, the Company agrees to pay all costs of collection,
including but not limited to court costs and reasonable attorneys' fees.
It is the intention of the Holder and the Company that this Note
conform in all respects to applicable law so that no payment of interest or
other sum construed to be interest shall exceed the Highest Lawful Rate. In
determining the rate of interest paid or payable under this Note, all funds paid
or to be paid as interest or construed to be interest shall be prorated,
allocated, or spread as permitted under applicable law. If, through any
circumstances, the provisions of this Note would result in the Company's paying
or agreeing to pay interest on this Note in excess of the Highest Lawful Rate,
or if the Company pays any sum as interest or any amount which is construed to
be interest in excess of such rate, then (1) the amount of interest contracted
for shall be automatically reduced to the amount permitted by the Highest Lawful
Rate and (2) the amount of excess interest paid shall be applied to the
reduction of the principal balance of this Note, if any, and if the principal
balance has been fully paid, the excess interest shall be refunded to the
Company.
This Note renews, extends, modifies, and replaces, but does not
extinguish the indebtedness evidenced by, that certain Centex Corporation
Convertible Subordinated Note dated March 1, 1995, in the original principal
amount of $2,100,000, executed by the Company and payable to the Holder (the
"Original Note").
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE COMPANY AND THE
HOLDER. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE COMPANY AND THE
HOLDER. THIS NOTE MAY NOT BE MODIFIED OR AMENDED, EXCEPT IN WRITING SIGNED BY
THE COMPANY AND THE HOLDER AND SPECIFICALLY REFERENCING THIS NOTE.
This Note shall be governed by, and construed and interpreted in
accordance with, the substantive laws of the State of Texas without giving
effect to any conflict-of-laws rule or principle that would result in the
application of the laws of any other jurisdiction.
CENTEX CORPORATION
By: /s/ David W. Quinn
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David W. Quinn
Vice Chairman and
Chief Financial
Officer
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