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EXHIBIT 10.9
CENTEX CORPORATION
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 August 26, 1985
FOR VALUE RECEIVED, Centex Corporation, a Nevada corporation (herein,
together with any successor to all or substantially all 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 Prime Rate or the Highest Lawful Rate, whichever is the
lesser. As used herein, the term "Prime Rate" shall mean the rate of interest
announced or published by RepublicBank Dallas, N.A. as its prime rate from time
to time. 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 1, 1995.
Accrued interest on this Note shall be payable quarterly on October 1, January
1, April 1, and July 1 in each year, beginning with October 1, 1985, and at
maturity. 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 by Section 3 below), until all Senior Indebtedness has been
paid in full. Any cash, securities, or property received by the Holder in
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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 that Senior Indebtedness
shall not include (i) any indebtedness which is expressly stated in any
instrument binding on the holder of such indebtedness not to be Senior
Indebtedness, (ii) this Note or (iii) 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 twenty-one dollars ($21.00) of Vested Principal so converted, at
any time and from time to time in accordance with the third paragraph of this
Section 3, 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
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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.
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.
The principal of this Note shall become "Vested Principal" as follows:
(a) On March 1, 1986 and on March 1 in each of the following four
years (1987 through 1990), an amount of principal equal to 20% of the
original principal amount of this Note shall become Vested Principal.
(b) If the Holder should cease to be an employee of at least one of
the employers in the group of employers consisting of the Company and its
Affiliates (defined as any parent or subsidiary of the Company, within the
meaning of subsections 425(e) and (f) of the Internal Revenue Code of
1954, as amended), as a result of (i) his death, (ii) his Disability
(defined as mental or physical impairment which, in the opinion of the
Company's board of directors, (A) renders the Holder incapable of
performing his obligations and agreements under the Executive Employment
Agreement between the Company and the Holder dated as of February 20,
1985, and (B) lasts for a period of twelve or more months), or (iii) his
discharge by the Company's or an Affiliate's board of directors for any
reason other than Cause (defined as acts constituting theft, dishonesty,
fraud, embezzlement, or breach of any employment agreement between the
Holder and the Company or an Affiliate, as determined in good faith by the
Company's board of directors), or if the shareholders of the Company
approve a plan of complete liquidation and dissolution of the Company
(other than a plan adopted in connection with a Reorganization, as defined
below), the entire unpaid principal of this Note shall become Vested
Principal.
Notwithstanding the foregoing, if the Holder is discharged as an employee
by the Company's or an Affiliate's board of directors for Cause, 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 Section 3, the term "Common Stock" shall mean the
common stock, $.25 par value, 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),
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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;
(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
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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 and may not in any event be transferred, voluntarily or involuntarily,
by the Holder prior to March 1, 1986; 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
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
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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
Republic Bank Dallas, N.A. (the "Bank") arising under the Company's guarantee
of the Holder's $2,100,000 promissory note to the Bank dated August 19, 1985
(and all renewals, extensions, modifications and amendments of and to such
promissory 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.
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
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balance has been fully paid, the excess interest shall be refunded to the
Company.
This Note shall be governed by and construed in accordance with the laws
of the State of Texas.
CENTEX CORPORATION
By /s/ PAUL R. SEEGERS
Paul R. Seegers, Chairman of the
Board and Chief Executive Officer
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