10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

JOINT QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended

June 30, 2001

Commission File No. 1-6776

Centex Corporation

A Nevada Corporation
IRS Employer Identification No. 75-0778259
2728 N. Harwood
Dallas, Texas 75201
(214) 981-5000

Commission File Nos. 1-9624 and 1-9625, respectively

3333 Holding Corporation
A Nevada Corporation
Centex Development Company, L.P.
A Delaware Limited Partnership

IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively
2728 N. Harwood
Dallas, Texas 75201
(214) 981-6770

The registrants have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and have been subject to such filing requirements for the past 90 days.

Indicate the number of shares of each of the registrants’ classes of common stock (or other similar equity securities) outstanding as of the close of business on July 31, 2001:

Centex Corporation
3333 Holding Corporation
Centex Development Company, L.P.
Centex Development Company, L.P. Common Stock
Common Stock
Class A Units of Limited Partnership Interest
Class C Units of Limited Partnership Interest 60,687,912 shares
1,000 shares
32,260 units
185,711 units

TABLE OF CONTENTS

Centex Corporation and Subsidiaries Part I. Financial Information
	ITEM 1. Condensed Consolidated Financial Statements
		Condensed Consolidated Statements of Earnings
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Cash Flows
		Notes to Condensed Consolidated Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Part II. Other Information
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Signatures
3333 Holding Corporation and Subsidiary Centex Development Company, L.P. and Subsidiaries Part I. Financial Information
	ITEM 1. Condensed Combining Financial Statements
		Condensed Combining Statements of Operations
		Condensed Combining Balance Sheets
		Condensed Combining Statements of Cash Flows
		Notes to Condensed Combining Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Part II. Other Information
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Signatures
EX-10.1 Management Agreement dated April 1, 2001
EX-10.2 Employment Agreement - Richard C. Decker

Centex Corporation and Subsidiaries
3333 Holding Corporation and Subsidiary
Centex Development Company, L.P. and Subsidiaries

Form 10-Q Table of Contents

June 30, 2001

Centex Corporation and Subsidiaries

			Page
Part I. Financial Information
	Item 1.	Condensed Consolidated Financial Statements	1
		Condensed Consolidated Statements of Earnings for the Three Months Ended June 30, 2001	2
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2001	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		24
Part II. Other Information
	Item 6. Exhibits and Reports on Form 8-K		25
Signatures			26

i

TABLE OF CONTENTS

3333 Holding Corporation and Subsidiary
Centex Development Company, L.P. and Subsidiaries

			Page
Part I. Financial Information
	Item 1.	Condensed Combining Financial Statements	27
		Condensed Combining Statements of Operations for the Three Months Ended June 30, 2001	28
		Condensed Combining Balance Sheets	29
		Condensed Combining Statements of Cash Flows for the Three Months Ended June 30, 2001	30
		Notes to Condensed Combining Financial Statements	31
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		40
Part II. Other Information
	Item 6. Exhibits and Reports on Form 8-K		40
Signatures			41

ii

Centex Corporation and Subsidiaries

Part I. Financial Information

Condensed Consolidated Financial Statements

ITEM 1.

      The condensed consolidated financial statements include the accounts of Centex Corporation and subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. References herein to “Centex” or the “Company” will include all subsidiaries of Centex Corporation, through which all operations are conducted, except where the context indicates that such reference is only to the registrant, Centex Corporation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The Company suggests that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. In the opinion of the Company, all adjustments necessary to present fairly the information in the following condensed consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

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Centex Corporation and Subsidiaries
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except per share data)
(unaudited)

			For the Three Months Ended June 30,
			2001		2000
Revenues
	Home Building
		Conventional Homes	$	1,039,161	$	887,022
		Manufactured Homes		27,570		36,486
	Financial Services			162,593		95,909
	Construction Products			117,423		115,065
	Contracting and Construction Services			313,633		298,659
	Investment Real Estate			24,098		3,481
	Home Services			24,667		—
				1,709,145		1,436,622
Costs And Expenses
	Home Building
		Conventional Homes		941,041		814,472
		Manufactured Homes		29,126		36,583
	Financial Services			137,423		95,841
	Construction Products			104,481		78,886
	Contracting and Construction Services			306,175		292,155
	Investment Real Estate			8,843		(2,621	)
	Home Services and Other			22,749		(320	)
	Corporate General and Administrative			11,246		8,731
	Interest Expense			27,242		21,790
	Minority Interest			2,833		13,036
				1,591,159		1,358,553
Earnings Before Income Taxes				117,986		78,069
	Income Taxes			42,770		29,864
Net Earnings			$	75,216	$	48,205
Earnings Per Share
	Basic		$	1.25	$	0.82
	Diluted		$	1.22	$	0.81
Average Shares Outstanding
	Basic			60,174,973		58,803,345
	Common Share Equivalents
		Options		1,332,271		651,220
		Convertible Debenture/Restricted Stock		402,848		400,000
	Diluted			61,910,092		59,854,565
Cash Dividends Per Share			$	0.04	$	0.04
See notes to condensed consolidated financial statements.

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Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in thousands)

			Centex Corporation and Subsidiaries
			June 30,			March 31,
			2001*			2001**
Assets
Cash and Cash Equivalents			$	87,299		$	57,752
Restricted Cash				63,977			57,428
Receivables -
	Residential Mortgage Loans			2,444,014			1,996,746
	Other			609,684			606,069
Inventories				2,375,065			2,202,295
Investments -
	Centex Development Company, L.P.			224,016			210,807
	Joint Ventures and Other			85,711			72,035
	Unconsolidated Subsidiaries			—			—
Property and Equipment, net				737,150			729,099
Other Assets -
	Deferred Income Taxes			38,263			43,116
	Goodwill, net			356,059			323,971
	Mortgage Securitization Residual Interest			143,434			146,394
	Deferred Charges and Other			215,593			203,331
			$	7,380,265		$	6,649,043
Liabilities and Stockholders’ Equity
Accounts Payable and Accrued Liabilities			$	1,222,626		$	1,271,464
Debt -
	Non-Financial Services			1,695,550			1,464,993
	Financial Services			2,520,545			2,054,898
Payables to Affiliates				—			—
Minority Stockholders’ Interest				146,677			143,624
Stockholders’ Equity -
	Preferred Stock, Authorized 5,000,000
		Shares, None Issued		—			—
	Common Stock $.25 Par Value; Authorized 100,000,000 Shares; Issued and Outstanding 60,413,944 and 59,929,344 respectively			15,092			14,982
	Capital in Excess of Par Value			39,852			25,779
	Unamortized Value of Restricted Stock			(2,662	)		—
	Retained Earnings			1,751,200			1,678,400
	Accumulated Other Comprehensive Loss			(8,615	)		(5,097	)
Total Stockholders’ Equity				1,794,867			1,714,064
			$	7,380,265		$	6,649,043
See notes to condensed consolidated financial statements.
*   Unaudited
**   Condensed from audited financial statements.

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Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in thousands)

Centex Corporation						Financial Services
June 30,			March 31,			June 30,			March 31,
2001*			2001**			2001*			2001**
$	56,709		$	45,987		$	30,590		$	11,765
	4,643			5,442			59,334			51,986
	—			—			2,444,014			1,996,746
	472,281			486,816			137,403			119,253
	2,366,106			2,193,838			8,959			8,457
	224,016			210,807			—			—
	85,711			72,035			—			—
	346,901			314,868			—			—
	684,892			673,846			52,258			55,253
	2,185			12,838			36,078			30,278
	339,457			307,369			16,602			16,602
	—			—			143,434			146,394
	160,037			149,917			55,556			53,414
$	4,742,938		$	4,473,763		$	2,984,228		$	2,490,148
$	1,108,643		$	1,153,215		$	113,983		$	118,249
	1,695,550			1,464,993			—			—
	—			—			2,520,545			2,054,898
	—			—			64,992			50,072
	143,878			141,491			2,799			2,133
	—			—			—			—
	15,092			14,982			1			1
	39,852			25,779			201,944			200,467
	(2,662	)		—			—			—
	1,751,200			1,678,400			80,015			64,328
	(8,615	)		(5,097	)		(51	)		—
	1,794,867			1,714,064			281,909			264,796
$	4,742,938		$	4,473,763		$	2,984,228		$	2,490,148
In the supplemental data presented above, “Centex Corporation” represents the adding together of all subsidiaries other than those included in Financial Services. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets.

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Centex Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)

			For the Three Months Ended June 30,
			2001			2000
Cash Flows — Operating Activities
	Net Earnings		$	75,216		$	48,205
	Adjustments -
		Depreciation and Amortization		21,365			13,447
		Deferred Income Taxes		3,475			519
		Equity in Earnings of Centex Development Company, L.P. and Joint Ventures		(2,660	)		(313	)
		Minority Interest, net of taxes		1,898			8,291
	Increase in Restricted Cash			(6,549	)		(8,372	)
	Increase in Receivables			(3,615	)		(26,785	)
	Increase in Residential Mortgage Loans			(447,268	)		(397,695	)
	Increase in Inventories			(168,253	)		(157,687	)
	Decrease in Payables and Accruals			(48,838	)		(83,728	)
	Increase in Other Assets			(49,282	)		(38,147	)
	Other, net			1,155			10,095
				(623,356	)		(632,170	)
Cash Flows — Investing Activities
Increase in Advances to Centex Development Company, L.P. and Joint Ventures				(28,742	)		(26,134	)
	Increase in Property and Equipment, net			(25,037	)		(19,078	)
				(53,779	)		(45,212	)
Cash Flows — Financing Activities
	Increase in Short-Term Debt, net			147,866			185,733
Non-Financial Services
		Issuance of Long-Term Debt		376,213			287,607
		Repayment of Long-Term Debt		(221,843	)		(115,117	)
Financial Services
		Issuance of Long-Term Debt		480,000			350,000
		Repayment of Long-Term Debt		(86,032	)		—
	Retirement of Common Stock			—			(784	)
	Proceeds from Stock Option Exercises and Restricted Stock Activity			11,521			1,078
	Dividends Paid			(2,416	)		(2,352	)
				705,309			706,165
Effect of Exchange Rate Changes on Cash				1,373			882
Net Increase In Cash and Cash Equivalents				29,547			29,665
Cash and Cash Equivalents At Beginning of Period				57,752			135,853
Cash and Cash Equivalents At End of Period			$	87,299		$	165,518

See notes to condensed consolidated financial statements.

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Centex Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2001
(Dollars in thousands)
(unaudited)

(A)   A summary of comprehensive income for the three months ended June 30, 2001 is presented below:

Net Earnings		$	75,216
Other Comprehensive Income (Loss):
	Foreign Currency Translation Adjustments		1,373
	Unrealized Loss on Hedging Instruments		(4,891	)
Comprehensive Income		$	71,698

      The Foreign Currency Translation Adjustments are primarily the result of Centex’s investment in Centex Development Company, L.P. and its foreign subsidiaries. For additional information on Centex Development Company, L.P. and subsidiaries, see their separate financial statements included elsewhere in this Report. The Unrealized Loss on Hedging Instruments represents the deferral in Other Comprehensive Income of the unrealized loss on swap agreements designated as cash flow hedges. The accounting for interest rate swaps and other derivative financial instruments is discussed in detail in Note (G) of this Report.

(B)   A summary of changes in stockholders’ equity is presented below:

								Unamortized						Accumulated
						Capital in		Value of						Other
		Preferred		Common		Excess of		Restricted			Retained			Comprehensive
		Stock		Stock		Par Value		Stock			Earnings			(Loss) Income			Total
Balance, March 31, 2001		$	—	$	14,982	$	25,779	$	—		$	1,678,400		$	(5,097	)	$	1,714,064
	Net Earnings		—		—		—		—			75,216			—			75,216
	Issuance of Restricted Stock		—		17		2,738		(2,755	)		—			—			—
	Amortization of Restricted Stock		—		—		—		93			—			—			93
	Exercise of Stock Options		—		93		11,335		—			—			—			11,428
	Cash Dividends		—		—		—		—			(2,416	)		—			(2,416	)
	Unrealized Loss on Hedging Instruments		—		—		—		—			—			(4,891	)		(4,891	)
	Foreign Currency Translation Adjustments		—		—		—		—			—			1,373			1,373
Balance, June 30, 2001		$	—	$	15,092	$	39,852	$	(2,662	)	$	1,751,200		$	(8,615	)	$	1,794,867

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(C)   In March 1987, certain of Centex’s subsidiaries contributed to Centex Development Company, L.P. (the “Partnership”), a newly-formed master limited partnership, properties in exchange for 1,000 Class A limited partnership units (“Class A Units”). The Partnership was formed to enable the stockholders of Centex to participate in long-term real estate development projects, the dynamics of which are inconsistent with Centex’s traditional financial objectives.

      The Partnership is managed by its general partner, 3333 Development Corporation (“Development”), which is in turn wholly-owned by 3333 Holding Corporation (“Holding”). Holding is a separate public company whose stock trades in tandem with Centex’s common stock. The common stock of Holding was distributed in 1987, together with warrants to purchase approximately 80% of the Partnership’s Class B limited partnership units (“Class B Units”), as a dividend to the stockholders of Centex. These securities are held by a nominee on behalf of the stockholders and will trade in tandem with the common stock of Centex until such time as they are detached. The securities may be detached at any time by Centex’s Board of Directors, but the warrants to purchase Class B Units will automatically become detached in November 2007.

      The stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are not directors, affiliates, or employees of Centex. Thus, through Holding, the stockholders of Centex control the general partner of the Partnership. The general partner and the independent Board of Holding manage how the Partnership conducts its activities, including the acquisition, development, maintenance, operation, and sale of properties. The general partner, acting on behalf of the Partnership, may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner. The Company accounts for its limited partner investment in the Partnership on the equity method of accounting because the Company does not control the Partnership.

      During fiscal year 1998, the agreement governing the Partnership was amended to allow for the issuance of Class C limited partnership units (“Class C Units”). During fiscal 1998, the 1,000 outstanding Class A Units owned by Centex were converted to 32,260 new Class A Units. As of June 30, 2001, 185,711 Class C Units had been issued in exchange for assets, including cash and land, with a fair market value of $185.7 million. These assets were recorded by the Partnership at fair market value. The partnership agreement provides that Centex, as the Class A and Class C limited partner, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its capital contributions, adjusted for cash or other distributions representing return of capital contributions. As of June 30, 2001, Unrecovered Capital totaled $218.5 million, and preference payments in arrears amounted to $26.0 million. No preference payments have been made since fiscal 1998.

      Supplementary condensed combined financial statements for Centex and subsidiaries, Holding and subsidiary and the Partnership and subsidiaries are set forth below. For additional information on Holding and subsidiary and the Partnership and subsidiaries, see their separate financial statements and related footnotes included elsewhere in this Report.

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Supplementary Condensed Combined Balance Sheets

		June 30,		March 31,
		2001		2001*
Assets
	Cash and Cash Equivalents	$	97,211	$	60,786
	Restricted Cash		63,977		57,428
	Receivables		3,058,298		2,613,035
	Inventories		2,853,351		2,629,733
	Investments in Joint Ventures and Other		86,727		72,679
	Property and Equipment, net		740,783		732,490
	Other Assets		798,587		757,882
		$	7,698,934	$	6,924,033
Liabilities And Stockholders’ Equity
	Accounts Payable and Accrued Liabilities	$	1,304,654	$	1,352,467
	Short-term Debt		787,896		602,185
	Long-term Debt		3,664,445		3,111,607
	Minority Stockholders’ Interest		147,072		143,710
	Stockholders’ Equity		1,794,867		1,714,064
		$	7,698,934	$	6,924,033

      *   Condensed from audited financial statements.

Supplementary Condensed Combined Statements of Earnings

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	1,789,975		$	1,507,364
Costs and Expenses		1,671,698			1,428,649
Earnings Before Income Taxes		118,277			78,715
Income Taxes		43,061			30,510
Net Earnings		75,216			48,205
Other Comprehensive Loss		(3,518	)		(270	)
Comprehensive Income	$	71,698		$	47,935

(D)   The Company’s home building activities include: the acquisition of raw and semi-developed land; the planning, supervision and funding of subcontractors’ activities to complete development of that land primarily into single-family home sites; and the construction of homes on those sites for sale to individual home purchasers. The Company conducts its land acquisition and development activities directly and through its participation in joint ventures in which the Company holds less than a majority interest.

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      The Company has paid $61 million as options toward the purchase of undeveloped land and developed lots having a total purchase price of approximately $1.6 billion in order to ensure the future availability of land for home building. These options expire at various dates through the year 2007. The Company has also committed to purchase land and developed lots totaling approximately $1.8 million.

(E)   Interest expenses relating to the Financial Services segments are included in its costs and expenses. Interest related to segments other than Financial Services is included as interest expense. For the three months ending June 30, 2001, $10.4 million of interest costs were capitalized to qualifying assets, principally within the Home Building segment, and $6.4 million of previously capitalized interest was charged to interest expense.

	For the Three Months Ended
	June 30,
	2001			2000
Total Interest Incurred	$	67,167		$	33,898
Capitalized Interest, net		(3,992	)		—
Less — Financial Services		(35,933	)		(12,108	)
Interest Expense, net	$	27,242		$	21,790

(F)   The Company operates in six principal business segments: Home Building, Financial Services, Construction Products, Contracting and Construction Services, Investment Real Estate, and Home Services and Other. These segments operate primarily in the United States, and their markets are nationwide. Revenues from any one customer are not significant to the Company.

      Intersegment revenues and investments in joint ventures are not material and are not shown in the following tables. The investment in the Partnership (approximately $224 million) is included in the Investment Real Estate segment.

      The following tables set forth financial information relating to the business segments.

HOME BUILDING

Conventional Homes

      Conventional Homes operations involve the purchase and development of land or lots as well as the construction and sale of single-family homes.

	For the Three Months Ended June 30,
	2001			2000
	(Dollars in millions)
Revenues	$	1,039.2		$	887.0
Cost of Sales		(772.4	)		(679.5	)
Selling, General & Administrative Expenses		(168.7	)		(135.0	)
Operating Earnings	$	98.1		$	72.5

-9-

Manufactured Homes

      Manufactured Homes operations involve the construction in factories of single-family homes and, to a lesser degree, commercial structures and the sale of these products through a network of company-owned and independent dealers.

	For the Three Months Ended
	June 30,
	2001			2000
	(Dollars in millions)
Revenues	$	27.6		$	36.5
Cost of Sales		(23.4	)		(29.3	)
Selling, General & Administrative Expenses		(5.8	)		(7.3	)
Operating Loss	$	(1.6	)	$	(0.1	)

FINANCIAL SERVICES

      Financial Services operations consist primarily of home financing, home equity and sub-prime lending, and the sale of title and other insurance coverages. These activities include mortgage origination and other related services for homes sold by Centex subsidiaries and by others.

	For the Three Months Ended
	June 30,
	2001			2000
	(Dollars in millions)
Revenues*	$	162.6		$	95.9
Selling, General & Administrative Expenses		(101.5	)		(83.7	)
Interest Expense		(35.9	)		(12.1	)
Operating Earnings	$	25.2		$	0.1

*  Financial Services revenues include interest income of $52.6 million and $16.1 million for the three months ended June 30, 2001 and 2000, respectively.

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CONSTRUCTION PRODUCTS

      Construction Products operations involve the manufacture, production, distribution, and sale of cement, gypsum wallboard, recycled paperboard, aggregates, and readymix concrete.

	For the Three Months Ended
	June 30,
	2001			2000
	(Dollars in millions)
Revenues	$	117.4		$	115.0
Cost of Sales		(103.3	)		(77.2	)
Selling, General & Administrative Expenses		(1.2	)		(1.7	)
Operating Earnings		12.9			36.1
Minority Interest*		(2.8	)		(13.0	)
Net Operating Earnings to Centex	$	10.1		$	23.1

      *   Minority interest includes interest expense, which is significantly higher in fiscal 2001.

      Centex’s ownership interest in Construction Products was 65.2% as of June 30, 2001 and 64.4% as of June 30, 2000.

CONTRACTING AND CONSTRUCTION SERVICES

      Contracting and Construction Services operations involve the construction of buildings for both private and government interests, including (among others) office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities, and educational institutions. As this segment generates significant positive cash flow (payables and accruals consistently exceed identifiable assets), intercompany interest income (credited at the prime rate in effect) is reflected in this segment; however, this amount is eliminated in consolidation.

	For the Three Months Ended
	June 30,
	2001			2000
	(Dollars in millions)
Revenues	$	313.6		$	298.7
Construction Contract Costs		(291.0	)		(279.2	)
Selling, General & Administrative Expenses		(15.1	)		(13.0	)
Operating Income, as reported		7.5			6.5
Intercompany Interest Income		2.1			2.3
Total Economic Return	$	9.6		$	8.8

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INVESTMENT REAL ESTATE

      Investment Real Estate operations involve the acquisition, development, and sale of land, primarily for industrial, office, multi-family, retail, and mixed-use projects, and investments in other real estate operations.

	For the Three Months Ended
	June 30,
	2001			2000
	(Dollars in millions)
Revenues	$	24.1		$	3.5
Cost of Sales		(5.2	)		(0.3	)
Selling, General & Administrative Expenses		(3.6	)		(1.1	)
Negative Goodwill Amortization		—			4.0
Operating Earnings	$	15.3		$	6.1

HOME SERVICES AND OTHER

      Home Services operations include pest management, electronic security, structured wiring, and chemical lawn care.

	For the Three Months Ended
		June 30,
		2001
	(Dollars in millions)
Revenues		$	24.7
Cost of Sales			(9.2	)
Selling, General & Administrative Expenses			(13.6	)
Operating Earnings		$	1.9	*

*  Before fiscal 2002, revenues and operating expenses of the Home Services and Other segment were reflected on a net basis, as this segment was not considered material for purposes of segment reporting. Operating earnings for the three months ended June 30, 2000 were $0.3 million.

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(G)   The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, on April 1, 2001. This statement requires that derivatives be recognized as either assets or liabilities in the balance sheet and that those instruments be measured at fair value. The accounting for the gain or loss resulting from the change in fair value depends on the intended use of the derivative. For a derivative used to hedge changes in fair value of a recognized asset or liability or an unrecognized firm commitment, the gain or loss on the derivative will be recognized in earnings along with the offsetting loss or gain on the hedged item. This results in earnings recognition only to the extent that the hedge is ineffective in achieving offsetting changes in fair value. For a derivative used to hedge changes in cash flows, the gain or loss on the effective portion of the derivative will be deferred and reported as accumulated other comprehensive income until such time as the hedged transaction affects earnings. For derivative instruments not accounted for as hedges, changes in fair value are required to be recognized in earnings. The effect of the adoption of SFAS No. 133 on the Company's operating earnings was not significant.

      The Company has various interest rate swap agreements which effectively fix the variable interest rate on approximately $378 million of outstanding debt. The swap agreements have been designated as cash flow hedges and, accordingly, are reflected at their fair value in Other Assets in the condensed consolidated balance sheets. The related loss is deferred in stockholders’ equity as Accumulated Other Comprehensive Loss. The Company accounts for its interest rate swaps using the shortcut method, as described in SFAS No. 133. Amounts to be received or paid as a result of the swap agreements are recognized as adjustments to interest incurred on the related debt instrument. Subsequent to the Company's adoption of SFAS No. 133 through June 30, 2001, the liability and accumulated other comprehensive loss was $4.9 million.

      Financial Services, in the normal course of business, uses derivative financial instruments to reduce its exposure to fluctuations in interest rates. CTX Mortgage Company enters into interest rate lock commitments (“IRLCs”) with its customers under which CTX Mortgage Company agrees to make mortgage loans at agreed upon rates within a period of time, generally from 10 to 60 days, if certain conditions are met within the terms of the IRLCs. These IRLCs are derivative instruments. CTX Mortgage Company also executes mandatory forward trades of mortgage loans to hedge the risk of fluctuations in value of these IRLCs and of mortgage loans. The gain resulting from the net change in the estimated fair value of such mandatory forward trades and IRLCs was $1.5 million for the quarter ended June 30, 2001, and is reflected in the accompanying condensed consolidated statements of earnings.

      From time to time, Centex Home Equity Corporation uses interest rate swaps to hedge the market risk associated with the carrying of mortgages in anticipation of issuance of securitization debt to finance subprime mortgages. At June 30, 2001, there were no such interest rate swaps outstanding.

(H)   In July 2001, the Financial Accounting Standards Board issued new Statements, SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”, which the Company has elected to adopt effective April 1, 2001. SFAS No. 141 requires all business combinations to be accounted for using the purchase method and requires acquired intangible assets to be recognized as assets apart from goodwill if certain criteria are met. SFAS No. 142 provides guidance on accounting for intangible assets and eliminates the amortization of goodwill and certain identifiable intangible assets. Under the provisions of SFAS No. 142, intangible assets, including goodwill, that are not subject to amortization will be tested for impairment annually at the reporting unit level using a two step impairment assessment. Impairment testing must be performed more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company is in the process of completing the first step, which tests for potential impairment by determining whether the carrying amount of a reporting unit exceeds its fair value.

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This step must be completed within six months of adoption. If an impairment is identified, the second step of the goodwill impairment test, which measures the amount of impairment loss, if any, will be performed. If required, this step must be performed within a year of adoption.

      The pro forma adoption of SFAS No. 142 for the three months ended June 30, 2000, which included amortization of goodwill and negative goodwill, would have resulted in a decrease in net earnings of $981 thousand and a decrease of $.02 in both basic and diluted earnings per share. Identifiable intangible assets, other than goodwill, are immaterial. Goodwill was $356.1 million at June 30, 2001 and $324.0 million at March 31, 2001. The increase relates to acquisitions made in the first quarter of fiscal 2002.

(I)   SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” was issued in September 2000. This statement replaces SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but carries most of SFAS No. 125’s provisions without reconsideration. The implementation of SFAS No. 140 on April 1, 2001 did not have a material impact on the Company’s results of operations or financial position.

(J)   Certain prior year balances have been reclassified to be consistent with the June 30, 2001 presentation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
               OPERATIONS

      Centex’s consolidated revenues for the three months ended June 30, 2001 were $1.7 billion, a 19% increase over $1.4 billion for the same period last year. Earnings before income taxes were $118.0 million, 51% higher than $78.1 million last year. Net earnings for the three months ended June 30, 2001 were $75.2 million, 56% higher than $48.2 million for the same period last year.

HOME BUILDING

Conventional Homes

      The following summarizes Conventional Homes’ results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions, except per unit data):

		For the Three Months Ended June 30,
		2001					2000
Revenues		$	1,039.2		100.0	%		$	887.0		100.0	%
Cost of Sales			(772.4	)	(74.4	)%			(679.5	)	(76.6	)%
Selling, General & Administrative Expenses			(168.7	)	(16.2	)%			(135.0	)	(15.2	)%
Operating Earnings		$	98.1		9.4	%		$	72.5		8.2	%
Units Closed			4,850						4,408
	% Change		10.0	%					12.0	%
Unit Sales Price		$	210,754					$	196,314
	% Change		7.4	%					4.1	%
Operating Earnings Per Unit		$	20,231					$	16,459
	% Change		22.9	%					9.5	%
Backlog Units			10,152						8,707
	% Change		16.6	%					14.4	%

      Conventional Homes’ revenues for the three months ended June 30, 2001 increased by $152.2 million from revenues for the same period last year. This improvement resulted from an increased number of operating neighborhoods along with an increase in units per neighborhood, and a higher average unit selling price compared to the fiscal 2001 per-unit sales price.

      Operating earnings for the three months ended June 30, 2001 were 9.4% of revenue and approximately $20,231 on a per-unit basis compared to operating earnings of 8.2% of revenue and approximately $16,459 on a per-unit basis for the same period last year. The operating earnings increase was primarily attributable to sales price increases and continued cost reductions due to lower raw material prices and process improvements.

      Home sales (orders) totaled 5,658 units during the three months ended June 30, 2001, compared to 5,537 units during the same period last year, representing a 2.2% increase. The backlog of homes sold but not closed at June 30, 2001 was 10,152 units, 16.6% more than the 8,707 units for the same period last year.

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Manufactured Homes

      The following summarizes Manufactured Homes’ results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions):

	For the Three Months Ended June 30,
	2001					2000
Revenues	$	27.6		100.0	%		$	36.5		100.0	%
Cost of Sales		(23.4	)	(84.7	)%			(29.3	)	(80.4	)%
Selling, General & Administrative		(5.8	)	(20.9	)%			(7.3	)	(19.9	)%
Operating Loss	$	(1.6	)	(5.6	)%		$	(0.1	)	(0.3	)%
Units sold		874						1,226

      Manufactured Homes currently operates three manufacturing plants in the Phoenix, Arizona area and 26 retail locations. As a consequence of an oversupply of homes in the total industry distribution pipeline and the reduced availability and higher cost of financing for purchasers of manufactured homes, Manufactured Homes’ construction sales and retail sales declined from the same period last year. In response, management idled its New Mexico and Texas plants last year, and slowed production in its other plants until the return of more favorable market conditions.

FINANCIAL SERVICES

      The following summarizes Financial Services’ results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions):

			For the Three Months Ended
			June 30,
			2001		2000
Revenues			$	162.6	$	95.9
Operating Earnings			$	25.2	$	0.1
Origination Volume			$	3,719	$	2,379
Number of Loans Originated
	CTX Mortgage Company
		Centex-built Homes (“Builder”)		3,182		2,466
		Non-Centex-built Homes (“Retail”)		18,110		11,699
				21,292		14,165
	Centex Home Equity Corporation			6,808		6,429
				28,100		20,594

      Financial Services’ operating earnings for the three months ended June 30, 2001 were $25.2 million compared to $0.1 million for the same period last year, due primarily to results from CTX Mortgage Company, which benefitted from a significant increase in mortgage refinancings. Financial Services’ revenues for the first quarter of fiscal 2002 increased $66.7 million, or 70%, from the same period last year.

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      CTX Mortgage Company and related companies (“CTX Mortgage”) had operating earnings totaling $24.7 million for the three months ended June 30, 2001 compared to operating earnings of $5.2 million for the same period last year. The increase in CTX Mortgage’s operating earnings is primarily due to lower interest rates in the first quarter of fiscal 2002 compared to the same period last year, which has resulted in a significant increase in mortgage refinancings. Originations for the three months ended June 30, 2001 totaled 21,292 compared to 14,165 originations in the same period last year. The per-loan profit for the three months ended June 30, 2001 was $1,189, 224% higher than $367 for the same period last year. CTX Mortgage’s total mortgage applications for the three months ended June 30, 2001 increased 39% to 22,016 from 15,828 applications for the same period last year.

      Centex Home Equity Corporation and related companies (“Home Equity”) returned to profitability after having begun to account for its securitizations completed subsequent to March 31, 2000 as borrowings rather than as sales (as discussed further below), reporting operating earnings of $433 thousand for the quarter ended June 30, 2001 compared to an operating loss of $5.1 million for the same period last year.

      Home Equity’s originations for the three months ended June 30, 2001 were 6,808, a 6% increase over 6,429 originations for the same period last year. Loan volume for the three months ended June 30, 2001 was $503.9 million, a 27% improvement over $395.7 million in volume in the same period last year. Loan volume for the three months ended June 30, 2001 was favorably impacted by an increase in average loan size to $74 thousand from $62 thousand. Home Equity’s mortgage applications totaled 41,074 for the quarter ended June 30, 2001, an increase of 9% over the 37,653 applications for the same period last year.

      Substantially all of the mortgage loans produced by Home Equity are securitized, generally on a quarterly basis. As a result of increased loan volume during the quarter ended June 30, 2001, Home Equity completed $480 million in loan securitizations, compared to $350 million of loan securitizations during the same period last year. Home Equity retains the servicing rights associated with these securitized loans and is the long-term servicer of these loans. At June 30, 2001, Home Equity’s servicing portfolio consisted of 52,804 loans totaling $3.55 billion, compared to 36,484 loans totaling $2.34 billion at June 30, 2000. Service fee income related to this long-term servicing was $8.5 million in the three months ended June 30, 2001, a 67% increase from the $5.1 million in the same period last year.

      Home Equity’s securitizations entered into prior to March 31, 2000 were structured in a manner that caused them to be accounted for as sales. The resulting gains on such sales were reported as revenues during the month in which the securitizations closed. Home Equity changed the structure for securitizations occurring subsequent to March 31, 2000, such that securitizations after that date are being accounted for as borrowings. Although the change in structure of the securitizations resulting in the transaction being accounted for as borrowings will have no effect on the profit recognized over the life of the mortgages, the change does affect the timing of profit recognition. The transaction structure requires that loan originations be reflected as loans receivable on the Company’s balance sheets and the interest income and interest expense associated with this loan portfolio be reflected on the Company’s income statements. Consequently, net interest income, rather than gain on sale of loans, as in past years, will be Home Equity’s primary source of operating income. Primarily as a result of this change, Home Equity’s interest income increased 330% in the first quarter of fiscal 2002 to $47.7 million from $11.1 million for last year, and interest expense for the first quarter of fiscal 2002 was $31.6 million, a 327% increase from $7.4 million for the first quarter of last fiscal year. Therefore, Home Equity’s net interest income increased 335% in the first quarter of fiscal 2002 to $16.1 million from $3.7 million for the same period last year.

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      The Financial Services segment also has other sources of income that include, among other things, loan origination fees, servicing fee income, title policy fees and insurance commissions, mortgage loan broker fees, and fees for mortgage loan quality control and processing services. In addition, the United Kingdom mortgage operation, which was formed in fiscal 2001, incurred start-up costs of $572,000 for the first quarter of fiscal 2002.

CONSTRUCTION PRODUCTS

      The following summarizes Construction Products’ results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions):

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	117.4		$	115.0
Interest Income		1.0			1.7
Cost of Sales		(104.3	)		(78.9	)
Selling, General & Administrative Expenses		(1.2	)		(1.7	)
Operating Earnings		12.9			36.1
Minority Interest*		(2.8	)		(13.0	)
Net Operating Earnings to Centex	$	10.1		$	23.1
* Minority interest includes interest expense, which is significantly higher in fiscal 2001.

      Construction Products’ revenues were $117.4 million for the three months ended June 30, 2001, a 2% increase from the same period last year. For the three months ended June 30, 2001, Construction Products’ operating earnings, net of minority interest, were $10.1 million, a 56% decrease from the $23.1 million reported for the same period last year. Construction Products’ results for the three month period ending June 30, 2001 include the November 2000 strategic assets purchase of recycled paperboard and wallboard operations. These results were negatively impacted due to a 55% drop in gypsum wallboard pricing.

CONTRACTING AND CONSTRUCTION SERVICES

      The following summarizes Contracting and Construction Services’ results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions):

	For the Three Months Ended
	June 30,
	2001		2000
Revenues	$	313.6	$	298.7
Operating Earnings	$	7.5	$	6.5
New Contracts Executed	$	391	$	303
Backlog of Uncompleted Contracts	$	2,099	$	1,387

-18-

      Contracting and Construction Services’ revenues for the three months ended June 30, 2001 were $313.6 million. Operating earnings for the group improved 15% to $7.5 million for the three months ended June 30, 2001 over the same period last year. This increase was primarily the result of a continuing shift in recent years to higher-margin private negotiated projects from lower-margin public bid work.

      The Contracting and Construction Services operations provided a positive average net cash flow in excess of Centex’s investment in the group of $110.5 million for the three months ended June 30, 2001 and $96.8 million for the same period last year.

INVESTMENT REAL ESTATE

      The following summarizes Investment Real Estate’s results for the three months ended June 30, 2001 compared to the same period last year (dollars in millions):

	For the Three Months Ended
	June 30,
	2001		2000
Revenues	$	24.1	$	3.5
Operating Earnings	$	15.3	$	6.1

      For the three months ended June 30, 2001, Centex’s Investment Real Estate operations, through which all investment property transactions are reported, had operating earnings of $15.3 million, 150% higher than $6.1 million for the same period a year ago. The timing of land sales is uncertain and can vary significantly from period to period.

      Negative goodwill amortization was zero and $4 million for the three months ended June 30, 2001 and 2000, respectively.

      A significant portion of Investment Real Estate’s revenues and operating earnings is derived from its investment in the Partnership. As noted in Note C to the condensed consolidated financial statements, this investment is accounted for on the equity method of accounting because Investment Real Estate does not control the Partnership. The largest component of the Partnership is its International Home Building segment, which operates through Fairclough Homes Group Limited (“Fairclough”), a London, England-based home builder. Investment Real Estate’s investment in Fairclough resulted in operating earnings of $2.4 million for the three months ended June 30, 2001. Fairclough closed 299 units at an average sales price per unit of $188,000 and had operating earnings per unit of $8,000 for the three months ended June 30, 2001.

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HOME SERVICES AND OTHER

      The following summarizes Home Services and Other’s results for the three months ended June 30, 2001 (dollars in millions):

	For the Three Months Ended
		June 30,
		2001
Revenues		$	24.7
Operating Earnings		$	1.9

      Before fiscal 2002, revenues and operating expenses of the Home Services and Other segment were reflected on a net basis, as this segment was not considered material for purposes of segment reporting. Operating earnings for the three months ended June 30, 2001 were $1.9 million compared to $0.3 million for the same period last year. This increase is primarily the result of increased revenue and margin from internal growth and acquisitions.

FINANCIAL CONDITION AND LIQUIDITY

      At June 30, 2001, the Company had cash and cash equivalents of $151.3 million, including $64.0 million of restricted cash and $21.8 million belonging to the Company’s 65.2%-owned Construction Products subsidiary. The net cash used in or provided by the operating, investing, and financing activities for the three months ended June 30, 2001 and 2000 is summarized below (dollars in thousands):

			For the Three Months Ended
			June 30,
			2001			2000
Net cash provided by (used in)
	Traditional Operations*
		Operating Activities	$	(162,632	)	$	(180,832	)
		Investing Activities		(53,408	)		(42,895	)
		Financing Activities		226,742			240,326
				10,702			16,599
	Financial Services
		Operating Activities		(460,724	)		(451,338	)
		Investing Activities		(371	)		(2,317	)
		Financing Activities		478,567			465,839
				17,472			12,184
	Effect of exchange rates on cash			1,373			882
Net increase in cash			$	29,547		$	29,665

*  Traditional operations is the combining of all subsidiaries other than those included in the Financial Services business segment.

-20-

      For the first three months of fiscal 2002, cash was used in Traditional Operations – Operating Activities to finance increases in housing inventories. The increase in housing inventories relates to the increased level of sales and resulting units under construction during the year and to the acquisition of land for development. The funds provided by Traditional Operations – Financing Activities included new debt used to fund the increased home building activity.

      For the first three months of fiscal 2002, cash was used in Financial Services – Operating Activities to finance increases in residential mortgage loans. The funds provided by Financial Services – Financing Activities included new debt used to fund the increased residential mortgage loan activity.

      Short-term debt as of June 30, 2001 was $627 million, which included $550.7 million of debt applicable to the Financial Services operation (see below). Excluding Financial Services and Construction Products, the Company’s short-term borrowings are generally financed at prevailing market interest rates from the Company’s commercial paper programs and from uncommitted bank facilities. In August 2000, the Company entered into a $600 million committed multi-bank revolving credit facility expiring in 2005 which serves as backup for commercial paper borrowings. Construction Products has a $325 million senior revolving credit facility, expiring in November 2003, which was reduced to $275 million in July 2001, under which $259.8 million had been borrowed at June 30, 2001. In June 2001, Construction Products entered into an annually renewable committed $50 million trade receivable financing through a bank multi-seller commercial paper conduit. At June 30, 2001 $26.2 million was outstanding. These Construction Products facilities have no recourse to Centex Corporation.

      The Financial Services segment obtains most of its own short-term liquidity needs through separate facilities which require only limited support from Centex Corporation. CTX Mortgage sells, at closing, substantially all of its Conforming, Jumbo A, and GNMA eligible mortgages to Harwood Street Funding I, LLC (“HSF-I”) under a revolving sales agreement. HSF-I, an unaffiliated special purpose entity, acquires and then resells mortgages originated by CTX Mortgage into secondary markets. Under the sales agreement between CTX Mortgage and HSF-I, which expires in November 2004 with certain renewal options, CTX Mortgage is not required to sell its mortgage loans to HSF-I; however, HSF-I has committed to purchase all eligible loans offered by CTX Mortgage. This arrangement gives CTX Mortgage daily access, on a revolving basis, to HSF-I’s $1.5 billion of capacity. CTX Mortgage also maintains $150 million of committed secured mortgage warehouse facilities to finance mortgages not sold to HSF-I. At June 30, 2001, CTX Mortgage had borrowed $100 million under these facilities.

      In addition, the various consolidated joint ventures, of which CTX Mortgage is the managing general partner, maintain, in the aggregate, $40 million of secured committed mortgage warehouse facilities with no recourse to Centex Corporation or Financial Services, to finance mortgages. At June 30, 2001, these joint ventures had borrowed a total of $13.1 million under these facilities.

      Home Equity finances its inventory of mortgage loans through Harwood Street Funding II, LLC (“HSF-II”) under a revolving sales agreement. HSF-II, a wholly-owned special purpose entity, finances mortgages originated or acquired by Home Equity and then resells them into the secondary market or into securitization structures. Under the sales agreement between Home Equity and HSF-II, Home Equity is not required to sell its mortgage loans to HSF-II; however, HSF-II has committed to purchase all eligible loans offered by Home Equity. This arrangement gives Home Equity daily access, on a revolving basis, to HSF-II’s $550 million of capacity. HSF-II obtains funds through the sale by it in the capital markets of five-year subordinated notes and short-term secured liquidity notes. At June 30, 2001,

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HSF-II had outstanding $27.5 million of subordinated notes and $186 million of secured liquidity notes, which are included in Financial Services debt in the accompanying consolidated balance sheets. Home Equity continues to service the loans acquired by HSF-II. Home Equity also has $325 million of committed secured mortgage warehouse facilities, expiring through March 2002, to finance sub-prime mortgages not financed by HSF-II. There were no borrowings outstanding under these facilities at June 30, 2001.

      Financial Services also maintains a $90 million uncommitted unsecured credit facility under which it can borrow and, in turn, allocate such borrowed funds to its CTX Mortgage, Home Equity, and other subsidiaries. At June 30, 2001, Financial Services had borrowed $90 million under this facility; $45 million of such borrowings were allocated to CTX Mortgage and $45 million to Home Equity. All borrowings under this unsecured facility are guaranteed by Centex Corporation.

      CTX Mortgage and Home Equity share a $175 million uncommitted secured credit facility to finance mortgage inventory. At June 30, 2001, CTX Mortgage had borrowed $64.5 million and Home Equity had borrowed $5.7 million under this facility. This facility has limited recourse to Centex Corporation.

      In addition, Centex Corporation and Financial Services share a $125 million uncommited unsecured credit facility. At June 30, 2001, CTX Mortgage had borrowed $57 million, Home Equity had borrowed $34.5 million, and Centex Corporation had no borrowings under this facility.

-22-

      Debt outstanding as of June 30, 2001 was as follows (dollars in thousands):

Non-Financial Services:
	Short-Term Notes Payable		$	76,187
	Senior Debt:
		Medium-Term Note Programs, 5.28% to 7.95%, due through 2007		506,499
		Long-Term Notes, 6.40% to 9.75%, due through 2011		614,946
		Other Indebtedness, weighted-average 5.52%, due through 2027		298,522
	Subordinated Debt:
		Subordinated Debentures, 7.38%, due in 2006		99,808
		Subordinated Debentures, 8.75%, due in 2007		99,588
				1,695,550
Financial Services:
	Short-Term Bank Notes Payable			174,773
	Secured Liquidity Notes			186,036
	Other Short-Term Debt			189,900
	Home Equity Loans Asset-backed Certificates, 4.21% to 7.81%, due through 2032			480,000
	Home Equity Loans Asset-backed Certificates, 4.04% to 8.48%, due through 2031			285,111
	Home Equity Loans Asset-backed Certificates, 4.04% to 7.99%, due through 2030			348,806
	Home Equity Loans Asset-backed Certificates, 4.05% to 7.17%, due through 2031			369,826
	Home Equity Loans Asset-backed Certificates, 4.04% to 6.80%, due through 2031			458,593
	Home Equity Loans Asset-backed Subordinated Note, 5.51% due 2006			27,500
				2,520,545
Total			$	4,216,095

      Maturities of non-financial services long-term debt (in thousands), during the next five fiscal years are: 2002, $347,596; 2003, $69,919; 2004, $268,666; 2005, $236; 2006, $324,976; and $607,970 thereafter.

      Financial Services debt related to securitized residential mortgage loans structured as collateralized borrowings was $2.0 billion at June 30, 2001. The principal and interest on these notes are paid using the cash flow from the underlying residential mortgage loans, which serve as collateral for the debt. Accordingly, the timing of the principal payments on these notes is dependent on the payment received on the underlying residential mortgage loans. The expected maturities of this component of long-term debt (in thousands) based on contractual maturities adjusted for projected repayments and prepayments of principal during the next five fiscal years are: 2002, $416,000; 2003, $397,537; 2004, $287,427; 2005, $209,560; 2006, $187,587; and $471,725 thereafter.

-23-

FORWARD-LOOKING STATEMENTS

      The Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Other Developments and Outlook and other sections of this report on Form 10-Q contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company’s actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Company’s businesses; adverse weather; changes in property taxes and energy costs; changes in federal income tax laws and federal mortgage financing programs; governmental regulations; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Company’s markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Company’s actual performance and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company is exposed to market risks related to fluctuations in interest rates on its direct debt obligations, on mortgage loans receivable, residual interest in mortgage securitizations, and securitizations classified as debt. The Company utilizes derivative instruments, including interest rate swaps, in conjunction with its overall strategy to manage the debt outstanding that is subject to changes in interest rates. The Company utilizes forward sale commitments to mitigate the risk associated with the majority of its mortgage loan portfolio. Other than the forward commitments and interest rate swaps discussed earlier, the Company does not utilize forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments.

      There have been no material changes in the Company’s market risk from March 31, 2001. For further information regarding the Company’s market risk, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2001.

-24-

Part II. Other Information

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(1)	Exhibits
	None
(2)	Reports on Form 8-K
	Current Report on Form 8-K of Centex Corporation dated April 25, 2001, filed with the SEC on April 26, 2001.
	Current Report on Form 8-K of Centex Corporation dated June 19, 2001, and filed with the SEC on June 22, 2001.

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Signatures

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CENTEX CORPORATION
	Registrant
August 13, 2001	/s/ Leldon E. Echols
	Leldon E. Echols
	Executive Vice President and
	Chief Financial Officer
	(principal financial officer)
August 13, 2001	/s/ Mark A. Blinn
	Mark A. Blinn
	Vice President — Controller and
	Financial Strategy
	(chief accounting officer)

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3333 Holding Corporation and Subsidiary
Centex Development Company, L.P. and Subsidiaries

Part I. Financial Information

Condensed Combining Financial Statements

ITEM 1.

      The condensed combining financial statements include the accounts of 3333 Holding Corporation (“Holding”) and subsidiary and Centex Development Company, L.P. (the “Partnership”) and subsidiaries (collectively the “Companies”), and have been prepared by the Companies, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Companies believe that the disclosures are adequate to make the information presented not misleading. The Companies suggest that these condensed combining financial statements be read in conjunction with the financial statements and the notes thereto included in the Companies’ latest Annual Report on Form 10-K. In the opinion of the Companies, all adjustments necessary to present fairly the information in the following condensed combining financial statements of the Companies have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Statements of Operations
(Dollars in thousands, except per unit/share data)
(unaudited)

	For the Three Months Ended June 30,
	2001						2000
			Centex						Centex
			Development						Development
			Company, L.P.		3333 Holding				Company, L.P.		3333 Holding
			and		Corporation				and		Corporation
	Combined		Subsidiaries		and Subsidiary		Combined		Subsidiaries		and Subsidiary
Revenues	$	83,955	$	83,345	$	660	$	71,117	$	71,116	$	1
Costs and Expenses		80,589		80,555		84		70,070		69,965		105
Earnings (Loss) Before Income Taxes		3,366		2,790		576		1,047		1,151		(104	)
Income Taxes		291		291		—		646		646		—
Net Earnings (Loss)	$	3,075	$	2,499	$	576	$	401	$	505	$	(104	)
Net Earnings Allocable to Limited Partners			$	2,499					$	505
Earnings (Loss) Per Unit/Share			$	13.79	$	576			$	7.49	$	(104	)
Weighted-Average Units/Shares Outstanding				181,244		1,000				67,356		1,000

See notes to condensed combining financial statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Balance Sheets
(Dollars in thousands)

			June 30, 2001*							March 31, 2001**
					Centex							Centex
					Development							Development
					Company, L.P.		3333 Holding					Company, L.P.		3333 Holding
					and		Corporation					and		Corporation
			Combined		Subsidiaries		and Subsidiary			Combined		Subsidiaries		and Subsidiary
Assets
Cash			$	9,912	$	9,908	$	4		$	3,034	$	3,029	$	5
Accounts Receivable				4,545		9,914		—			10,185		15,353		—
Notes Receivable				10		10		—			14		14		—
Inventories				378,148		376,726		1,422			340,827		339,455		1,372
Investments -
	Commercial Properties, net			91,575		91,575		—			83,649		83,649		—
	Real Estate Joint Ventures			2,881		2,881		—			2,699		2,699		—
	Affiliate			—		—		1,716			—		—		1,716
Property and Equipment, net				3,633		3,633		—			3,391		3,331		60
Other Assets -
	Goodwill, net			27,585		27,585		—			27,616		27,616		—
	Deferred Charges and Other			17,405		17,305		100			13,235		13,135		100
			$	535,694	$	539,537	$	3,242		$	484,650	$	488,281	$	3,253
Liabilities, Stockholders’ Equity and Partners’ Capital
Accounts Payable and Accrued Liabilities			$	82,349	$	82,921	$	5,371		$	81,536	$	81,320	$	5,958
Notes Payable				229,386		229,386		—			187,301		187,301		—
		Total Liabilities		311,735		312,307		5,371			268,837		268,621		5,958
Stockholders’ Equity and Partners’ Capital				223,959		227,230		(2,129	)		215,813		219,660		(2,705	)
			$	535,694	$	539,537	$	3,242		$	484,650	$	488,281	$	3,253

*     Unaudited.

**   Condensed from audited financial statements.

See notes to condensed combining financial statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Statements of Cash Flows
(Dollars in thousands)
(unaudited)

		For the Three Months Ended June 30,
		2001									2000
					Centex									Centex
					Development									Development
					Company, L.P.			3333 Holding						Company, L.P.			3333 Holding
					and			Corporation						and			Corporation
		Combined			Subsidiaries			and Subsidiary			Combined			Subsidiaries			and Subsidiary
Cash Flows — Operating Activities
Net Earnings (Loss)		$	3,075		$	2,499		$	576		$	401		$	505		$	(104	)
Adjustments:
	Depreciation and Amortization		896			896			—			997			987			10
	Equity in Earnings from Joint Ventures		(10	)		(10	)		—			(67	)		(67	)		—
Decrease (Increase) in Receivables			5,658			5,658			—			(2,825	)		(2,828	)		3
Decrease in Notes Receivable			4			4			—			1,758			1,758			—
Increase in Inventories			(33,187	)		(33,137	)		(50	)		(22,376	)		(21,893	)		(483	)
Increase in Commercial Properties			(8,617	)		(8,617	)		—			(406	)		(406	)		—
Increase in Other Assets			(4,282	)		(4,282	)		—			(8,155	)		(8,155	)		—
Increase (Decrease) in Payables and Accruals			1,620			2,208			(588	)		(6,858	)		(7,417	)		559
			(34,843	)		(34,781	)		(62	)		(37,531	)		(37,516	)		(15	)
Cash Flows — Investing Activities
(Increase) Decrease in Advances to Joint Venture and Investment in Affiliate			(172	)		(172	)		—			685			685			—
Property and Equipment Additions, net			(358	)		(419	)		61			(23	)		(23	)		—
			(530	)		(591	)		61			662			662			—
Cash Flows — Financing Activities
Increase (Decrease) in Notes Payable			42,275			42,275			—			(9,150	)		(9,150	)		—
			42,275			42,275			—			(9,150	)		(9,150	)		—
Effect of Exchange Rate Changes
	On Cash		(24	)		(24	)		—			(2,221	)		(2,221	)		—
Net Increase (Decrease) In Cash			6,878			6,879			(1	)		(48,240	)		(48,225	)		(15	)
Cash at Beginning of Period			3,034			3,029			5			58,314			58,298			16
Cash at End of Period		$	9,912		$	9,908		$	4		$	10,074		$	10,073		$	1
Supplemental Disclosures:
Issuance of Class C Units in Exchange for Assets		$	4,517		$	4,517		$	—		$	1,346		$	1,346		$	—

See notes to condensed combining financial statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Notes to Condensed Combining Financial Statements
June 30, 2001
(Dollars in thousands)
(unaudited)

(A)   In March 1987, certain subsidiaries of Centex Corporation (“Centex”) contributed to Centex Development Company, L.P. (the “Partnership”), a newly-formed master limited partnership, properties with a historical cost basis (which approximated market value) of approximately $76 million in exchange for 1,000 Class A limited partnership units (“Class A Units”). The Partnership was formed to enable the stockholders of Centex to participate in long-term real estate development projects, the dynamics of which are inconsistent with Centex’s traditional financial objectives.

      The Partnership is managed by its general partner, 3333 Development Corporation (“Development”), which is in turn wholly-owned by 3333 Holding Corporation (“Holding”). Holding is a separate public company whose stock trades in tandem with Centex’s common stock. The common stock of Holding was distributed in 1987, together with warrants to purchase approximately 80% of the Partnership’s Class B limited partnership units (“Class B Units”), as a dividend to the stockholders of Centex. These securities are held by a nominee on behalf of the stockholders and will trade in tandem with the common stock of Centex until such time as they are detached. The securities may be detached at any time by Centex’s Board of Directors, but the warrants to purchase Class B Units will automatically become detached in November 2007.

      The stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are not directors, affiliates, or employees of Centex. Thus, through Holding, the stockholders of Centex control the general partner of the Partnership. The general partner and the independent Board of Holding manage how the Partnership conducts its activities, including the acquisition, development, maintenance , operation , and sale of properties. The general partner, acting on behalf of the Partnership, may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner.

      During fiscal 1998, the agreement governing the Partnership was amended to allow for the issuance of Class C limited partnership units (“Class C Units”). During fiscal 1998, the 1,000 outstanding Class A Units owned by Centex were converted to 32,260 new Class A Units. As of June 30, 2001, 185,711 Class C Units had been issued in exchange for assets, including cash and land, with a fair market value of $185.7 million. These assets were recorded by the Partnership at fair market value. The partnership agreement provides that Centex, as the Class A and Class C limited partner, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its capital contributions, adjusted for cash or other distributions representing return of capital contributions. As of June 30, 2001, Unrecovered Capital totaled $218.5 million, and preference payments in arrears amounted to $26.0 million. No preference payments have been made since fiscal 1998.

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      See Note (C) to the condensed consolidated financial statements of Centex included elsewhere in this Report for supplementary condensed combined financial statements for Centex and subsidiaries, Holding and subsidiary, and the Partnership and subsidiaries.

(B)   During the quarter ended June 30, 2001, a subsidiary of the Partnership purchased approximately 43 acres in South Kohala, Hawaii, from an unaffiliated third party. The total consideration of $33 million consisted of a $32 million non-recourse purchase money mortgage note and a $1 million cash payment. Concurrently, Centex Homes has entered into a purchase agreement for this property.

      During the quarter ended June 30, 2001, the Partnership issued 4,517 Class C Units to Centex Homes in exchange for land with a fair market value of $4.5 million.

(C)   A summary of comprehensive income for the three months ended June 30, 2001 is presented below:

Net Earnings		$	3,075
Accumulated Other Comprehensive Income:
	Foreign Currency Translation Adjustments		554
Comprehensive Income		$	3,629

(D)   A summary of changes in stockholders’ equity and partners’ capital is presented below:

					Centex Development Company,						3333 Holding Corporation
					L.P. and Subsidiaries						and Subsidiary
					Class B		General		Limited				Capital In		Retained
					Unit		Partner’s		Partner’s		Stock		Excess of		Earnings
			Combined		Warrants		Capital		Capital		Warrants		Par Value		(Deficit)
Balance at March 31, 2001			$	215,813	$	500	$	1,142	$	218,018	$	1	$	800	$	(3,506	)
	Partnership Units Issued in Exchange for Assets			4,517		—		—		4,517		—		—		—
	Net Earnings			3,075		—		—		2,499		—		—		576
	Accumulated Other Comprehensive Income:
		Foreign Currency   Translation   Adjustments		554		—		—		554		—		—		—
Balance at June 30, 2001			$	223,959	$	500	$	1,142	$	225,588	$	1	$	800	$	(2,930	)

(E)   On April 15, 1999, Centex Development Company UK Limited (“CDCUK”), a company incorporated in England and Wales and a wholly-owned subsidiary of the Partnership, closed its acquisition of all the voting shares of Fairclough. The purchase price at closing (approximately $219 million) was paid by the delivery of two-year non-interest-bearing promissory notes. In addition, the seller of the voting shares retained non-voting preference shares in Fairclough that entitled it to receive substantially all of the net after-tax earnings of Fairclough until March 31, 2001. Because the non-voting preference shares retained by the seller had the characteristics of debt, the preference obligations were reported as interest expense in the financial statements.

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      As of March 31, 2001, the non-interest-bearing promissory notes were repaid in full (less the holdback described below) from a combination of bank borrowings, equity contributions to CDCUK from the Partnership, and a loan to CDCUK from the Partnership. CDCUK has retained a $6.9 million holdback relative to CDCUK exercising its right of offset for asserted breaches of representations and warranties by the seller under the share purchase agreement.

      During the quarter ended June 30, 2001, the Partnership entered into a management agreement with Centex Homes, pursuant to which Centex Homes agreed to manage and oversee the Partnership’s investment in Fairclough Homes Group Limited, a British home builder (“Fairclough”). The Partnership will pay Centex Homes a monthly fee and will reimburse Centex Homes for its direct expenses associated with its management and oversight.

(F)   The Companies operate in four principal business segments: International Home Building, Commercial Development, Multi-Family Communities (formerly known as Multi-Family Development), and Corporate-Other (formerly known as Land Sales and Other). All of the segments operate in the United States except for International Home Building, which acquires and develops residential properties and constructs single and multi-family housing units in the United Kingdom.

      In prior years, the Companies operated a Domestic Home Building segment which was sold in fiscal year 2001 to Centex Homes. The Domestic Home Building segment had revenues of $3.4 million and operating earnings of $4 thousand for the three months ended June 30, 2000.

      The following tables set forth financial information relating to the business segments for the three months ended June 30, 2001 and 2000.

INTERNATIONAL HOME BUILDING

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	56,163		$	64,172
Cost of Sales		(48,201	)		(55,321	)
Selling, General & Administrative Expenses		(5,589	)		(5,660	)
Interest		—			(2,536	)
Operating Earnings	$	2,373		$	655

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COMMERCIAL DEVELOPMENT

	For the Three Months Ended
	June 30,
	2001			2000
Rental Income and Other	$	4,110		$	2,380
Cost of Sales		153			—
Selling, General & Administrative Expenses		(1,767	)		(1,019	)
Interest		(1,591	)		(1,007	)
Operating Earnings before Depreciation		905			354
Depreciation		(751	)		(462	)
Operating Earnings (Loss)	$	154		$	(108	)

MULTI-FAMILY COMMUNITIES

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	23,621		$	1,004
Cost of Sales		(21,682	)		—
Selling, General & Administrative Expenses		(559	)		(476	)
Operating Earnings	$	1,380		$	528

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CORPORATE-OTHER

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	61		$	115
Selling, General & Administrative Expenses		(602	)		(146	)
Operating Loss	$	(541	)	$	(31	)

(G)   In July 2001, the Financial Accounting Standards Board issued new Statements, SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”, which the Companies have elected to adopt effective April 1, 2001. SFAS No. 141 requires all business combinations to be accounted for using the purchase method and requires intangible assets to be recognized as assets apart from goodwill if certain criteria are met. SFAS No. 142 provides guidance on accounting for intangible assets and eliminates the amortization of goodwill and certain identifiable intangible assets. Under the provisions of SFAS No. 142, intangible assets, including goodwill, that are not subject to amortization will be tested for impairment annually at the reporting unit level using a two step impairment assessment. Impairment testing must be performed more frequently if events or changes in circumstances indicate that the asset might be impaired. The first step, which the Companies are in the process of completing, is to identify potential impairment by determining whether the carrying amount of a reporting unit exceeds its fair value. This step must be completed within six months of adoption. If an impairment is identified, the second step of the goodwill impairment test, which measures the amount of impairment loss, if any, will be performed. If necessary, this step must be performed within a year of adoption.

      The pro forma adoption of SFAS No. 142 for the three months ended June 30, 2000, which included amortization of goodwill, would have caused an increase in net earnings of $288 thousand and an increase of $4.28 in earnings per unit. Identifiable intangible assets, other than goodwill, are immaterial. Goodwill was $27.6 million at June 30, 2001 and at March 31, 2001.

(H)   Certain prior year balances have been reclassified to be consistent with the June 30, 2001 presentation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
               OPERATIONS

RESULTS OF OPERATIONS

      On a combined basis, the Companies’ revenues for the three months ended June 30, 2001 totaled $84.0 million compared to $71.1 million for the three months ended June 30, 2000. Operating results for the three months ended June 30, 2001 reflect net earnings of $3.1 million compared to $401 thousand for the same period last year. The increase in revenues for the quarter ended June 30, 2001 compared to the same period last year primarily resulted from significantly increased sales revenue in the Companies’ Multi-Family Communities segment, offset by decreased sales revenue in the Companies’ International Home Building business segment.

INTERNATIONAL HOME BUILDING

      The following summarizes International Home Building’s results for the quarter ended June 30, 2001 compared to the same period last year (dollars in thousands, except per unit data):

		For the Three Months Ended June 30,
		2001					2000
Revenues		$	56,163		100.0	%	$	64,172		100.0	%
Cost of Sales			(48,201	)	(85.8	)%		(55,321	)	(86.2	)%
General & Administrative Expenses			(5,589	)	(10.0	)%		(5,660	)	(8.8	)%
Interest Expense, Paid to Seller			—		—	%		(2,536	)	(4.0	)%
Operating Earnings		$	2,373		4.2	%	$	655		1.0	%
Units Closed			299					300
	% Change		(0.3	)%				(26.7	)%
Unit Sales Price		$	187,836				$	213,907
	% Change		(12.2	)%				25.8	%
Operating Earnings Per Unit		$	7,936				$	2,183
	% Change		263.5	%				242.1	%

      International Home Building’s revenues for the three months ended June 30, 2001 decreased by $8.0 million from revenues for the same period last year. This decrease is attributable to a lower per unit sales price resulting from an increase in the number of lower-priced units sold compared to the same period last year.

      Operating earnings for the three months ended June 30, 2001 were 4.2% as a percentage of revenues and approximately $7,936 on a per unit basis compared to the same period last year, which had operating earnings of 1.0% of revenues and approximately $2,183 on a per unit basis. International Home Building, whose functional currency is the British pound sterling, translates its financial statements into U.S. dollars. Income statement accounts are translated using the average exchange rate for the period.

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      The average exchange rate used for translation was 1.42 and 1.53 for the quarters ending June 30, 2001 and 2000, respectively, representing a decrease of 7.2%.

      Home sales (orders) totaled 404 units during the three months ended June 30, 2001 compared to 299 units during the same period last year. The backlog of homes sold but not closed as of June 30, 2001 was 432 units, 18% more than the 365 units for the same period last year.

      The preferred distribution to the seller totaled $0 and $2.5 million for the three months ended June 30, 2001 and 2000, respectively. Although preferred stock is ordinarily treated as an equity security, in this case the preference shares had the essential characteristics of debt and, among other things, had a nominal residual interest value that was subject to redemption. Therefore, the preference shares were treated as debt and the preferred distribution was recorded as interest expense for the three months ended June 30, 2000. The Companies’ obligation to pay such continuing preferred distributions ceased as of March 31, 2001.

DOMESTIC HOME BUILDING

      Results for the Domestic Home Building segment for the three months ended June 30, 2000, were revenues of $3.4 million, and operating earnings of $4 thousand. On March 31, 2001, the Partnership sold its Domestic Home Building segment to Centex Homes.

COMMERCIAL DEVELOPMENT

      The following summarizes Commercial Development’s results for the quarter ended June 30, 2001, compared to the same period last year (dollars and square feet in thousands):

	For the Three Months Ended
	June 30,
	2001			2000
Rental Income	$	4,110		$	2,380
Cost of Sales		153			—
Selling, General & Administrative Expenses		(1,767	)		(1,019	)
Interest Expense		(1,591	)		(1,007	)
Operating Earnings before Depreciation		905			354
Depreciation		(751	)		(462	)
Operating Earnings (Loss)	$	154		$	(108	)
Operating Square Feet		1,664			1,043

      At June 30, 2001, Commercial Development owned, either directly or through interests in joint ventures, 1,664,000 square feet of office and industrial space in California, Texas, Florida, North Carolina and Massachusetts. As of June 30, 2001, the occupancy level was 95%. Operating earnings increased

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during the quarter ended June 30, 2001, as compared to the same period last year due to the addition of 621,000 square feet of operating properties.

MULTI-FAMILY COMMUNITIES

      The following summarizes Multi-Family Communities’ (“Multi-Family”) results for the quarter ended June 30, 2001, compared to the same period last year (dollars in thousands):

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	23,621		$	1,004
Cost of Sales		(21,682	)		—
Selling, General & Administrative Expenses		(559	)		(476	)
Operating Earnings	$	1,380		$	528

      During the quarter ended June 30, 2001, Multi-Family closed on the sale of a 400-unit apartment complex in Grand Prairie, Texas. During the quarter ended June 30, 2000, a joint venture in which Multi-Family had an interest closed on the sale of a 182-unit apartment complex in College Station, Texas.

CORPORATE-OTHER

      The following summarizes Corporate-Other’s results for the three months ended June 30, 2001, compared to the same period last year (dollars in thousands):

	For the Three Months Ended
	June 30,
	2001			2000
Revenues	$	61		$	115
Selling, General & Administrative Expenses		(602	)		(146	)
Operating Loss	$	(541	)	$	(31	)

      The Corporate-Other (formerly known as Land Sales and Other) segment is involved in the acquisition and disposition of land and other assets of the Partnership not identified with another business segment. Revenues for the three months ended June 30, 2001 and 2000, included $0 and $47 thousand from earnings in joint ventures, respectively, $53 thousand and $68 thousand in interest income, respectively, and $8 thousand and $0 in other income, respectively.

      General and Administrative Expenses for the three months ended June 30, 2001 have increased as compared to the same period last year, reflecting employment-related expenses for certain employees of the Companies who were previously employed by Centex Corporation (“Centex”).

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LIQUIDITY AND CAPITAL RESOURCES

      The Companies finance land acquisition and development activities primarily from financial institution borrowings, equity contributions from third-party investors in project-specific joint ventures, seller financing, issuance of Class C limited partnership units to Centex affiliates, and cash flow from operations (comprised largely of proceeds from the sale of real estate).

      Properties under development are typically financed through short-term variable and fixed-rate secured construction loans, and to a limited extent depending on the timing of the project construction, cash flow from operations. Construction loans totaled $39.0 million at June 30, 2001. As properties are completed, the properties are either sold or refinanced with long-term fixed-rate debt. In both instances, the proceeds are used to repay the short-term borrowings. Permanent commercial project loans outstanding at June 30, 2001 totaled $75.2 million compared to $50.8 million at June 30, 2000.

      The International Home Building segment has secured a revolving bank credit facility of 100 million in British pounds sterling. The term of this facility expires in fiscal 2003. Advances under this facility totaled $70.8 million at June 30, 2001.

      During the three months ended June 30, 2001, the Partnership issued 4,517 Class C limited partnership units in exchange for land valued at $4.5 million.

      The Companies believe that the revenues, earnings, and liquidity from the sale of single-family homes, land sales, and the sale and permanent financing of development projects will be sufficient to provide the necessary funding for their current and future needs.

OTHER DEVELOPMENTS

      During the first quarter of fiscal 2002, Multi-Family Communities entered into an agreement with the City of Saint Paul, Minnesota, and a related governmental agency, to re-develop a site along the Mississippi River in downtown Saint Paul into a mixed-use project containing “for-sale” and “for-rent” housing units and related retail. Multi-Family Communities also has a 398-unit multi-family project under construction in Haltom City, Texas.

FORWARD-LOOKING STATEMENTS

      The Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other sections of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Companies are discussing their beliefs, estimates, or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecasted in such forward-looking statements. The principal risks and uncertainties that may affect the Companies’ actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Companies’ businesses; adverse weather; changes

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in property taxes; changes in federal income tax laws; government regulation; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Companies’ markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Companies’ actual performance and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      There have been no material changes in the Companies’ market risk from March 31, 2001. For more information regarding the Companies’ market risk, refer to the Companies’ Annual Report on Form 10-K for the fiscal year ended March 31, 2001.

Part II. Other Information

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(1) Exhibits

10.1	Management Agreement dated as of April 1, 2001, by and between Centex Development Company, L.P. and Centex Homes, (filed herewith).
10.2	Employment Agreement, dated as of April 1, 2001, by and between Centex Development Company, L.P. and Richard C. Decker (filed herewith).

(2)	Reports on Form 8-K
	The Registrant filed no reports on Form 8-K during the quarter ended June 30, 2001.

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Signatures

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	3333 HOLDING CORPORATION
	Registrant
August 13, 2001	/s/ Stephen M. Weinberg
	Stephen M. Weinberg
	Director, President and Chief Executive Officer
	(principal executive officer)
August 13, 2001	/s/ Todd D. Newman
	Todd D. Newman
	Senior Vice President, Chief Financial
	Officer and Treasurer
	(principal financial officer and
	chief accounting officer)

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Signatures

      Pursuant to the requirements of the Securities Exchange Act of 1934, 3333 Development Corporation, as general partner of, and on behalf of the Registrant, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CENTEX DEVELOPMENT COMPANY, L.P.
	Registrant
	By: 3333 Development Corporation,
	General Partner
August 13, 2001	/s/ Stephen M. Weinberg
	Stephen M. Weinberg
	Director, President and Chief Executive Officer
	(principal executive officer)
August 13, 2001	/s/ Todd D. Newman
	Todd D. Newman
	Senior Vice President, Chief Financial
	Officer and Treasurer
	(principal financial officer and
	chief accounting officer)

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INDEX TO EXHIBITS

EXHIBIT NUMBER	DESCRIPTION
10.1	Management Agreement, dated as of April 1, 2001, by and between Centex Development Company, L.P. and Centex Homes (filed herewith).
10.2	Employment Agreement, dated as of April 1, 2001, by and between Centex Development Company, L.P. and Richard C. Decker (filed herewith).

EX-10.1 3 d89717ex10-1.txt EX-10.1 MANAGEMENT AGREEMENT DATED APRIL 1, 2001 1 EXHIBIT 10.1 MANAGEMENT AGREEMENT This MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of 1 April 2001 by and between CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited partnership (the "Partnership"), and CENTEX HOMES, a Nevada general partnership ("Manager"). WITNESSETH The Partnership desires to engage the services of Manager to oversee, manage and increase in value the investment of Centex Development Company (UK) Limited, a subsidiary of the Partnership, in Fairclough Homes Group Limited, a United Kingdom house building company ("Fairclough"). Manager desires to accept such engagement, upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partnership and Manager do hereby agree as follows: 1. Term of Agreement. The initial term of this Agreement shall extend from the date hereof to the close of business on 31 March 2002, provided that this Agreement shall continue thereafter for successive one-year terms unless either the Manager or the Partnership elects to terminate this Agreement upon at least thirty (30) days' written notice to the other party prior to 31 March of any year, and, provided further, that this Agreement may be sooner terminated in accordance with the provisions of Section 13 hereof. 2. Management Services. Unless the Partnership shall instruct it otherwise, Manager shall perform the services hereinafter described in this Section 2 with respect to Fairclough. a. Oversight of the Operations of Fairclough. i. Enhancement of Value of the Assets of Fairclough. Manager shall use reasonable efforts, working in concert with the employees of Fairclough and of Centex Development Holding Company UK Limited (together the "European Management"), to protect and enhance the value of all assets of Fairclough, including real property, show homes, work in progress, homes under construction, equipment, cash and accounts receivable (the "Assets"). Such efforts shall include, but not be limited to, counseling and participating in strategic planning and the development of (procuring) an annual business plan, and providing oversight of Fairclough operations, including land acquisition and development, construction, warranty repair, marketing, sales and completions. ii. Annual Business Plan. During the fourth quarter of each fiscal year while this Agreement is in effect, each fiscal year commencing 1 April and terminating on the following 31 March, Manager will submit to, or will cause (procure) the Page 1 2 submission to, the Partnership for its review and approval of an annual business plan for the upcoming fiscal year. Such annual business plan will be mutually agreed by Manager and Partnership prior to the commencement of the upcoming fiscal year. iii. Expansion of Business. Manager shall use reasonable efforts, working in concert with the European Management, to improve and expand the house building operations of Fairclough, and all collateral operations (herein collectively the "Business"). Among other things, management will provide oversight and strategic planning aid to Fairclough, working in concert with European Management, in order to enhance and expand the Business. iv. Implementation of Business Plan. The Partnership hereby delegates to Manager full authority, working in concert with European Management, to take all actions necessary to carry out on behalf of the Partnership the annual business plan approved by the Partnership for Fairclough, subject to reacting to unforseen changes in the marketplace and other appropriate business adjustments. Although this Agreement contemplates that Manager will work in concert and in conjunction with European Management, the power delegated to Manager in this Agreement includes the power to direct European Management, within the limits of the delegated power. b. General. i. Reporting. Within forty-five (45) days after the end of each calendar quarter, beginning with the quarter ending 30 June 2001, Manager shall prepare and deliver to, or shall cause (procure) to be prepared and delivered to, the Partnership a detailed statement of revenues received and expenditures incurred or paid during the calendar quarter by Fairclough. Within ninety (90) days after the end of each calendar year, Manager shall prepare and deliver to, or shall cause (procure) to be prepared and delivered to, the Partnership a detailed statement of revenues received and expenditures incurred or paid during the calendar year by Fairclough. Manager shall furnish, or shall cause (procure) the furnishing, of such additional information as may be reasonably requested by the Partnership from time to time with respect to the financial, physical or operational condition of Fairclough, the Assets and the Business, including quarterly reports on operations and a comparison of the annual business plan to results actually achieved during each quarter. The foregoing reporting requirements will not alter in any material respect the accounting reporting processes which occur typically within ten (10) working days following the close of each quarter under which Fairclough provides its financial results for inclusion within the financial statements of the Partnership. Page 2 3 ii. Bookkeeping. All bookkeeping, clerical and other general and administrative expenses (including but not limited to costs of office supplies and equipment, data processing services, postage, transportation for managerial personnel, telephone services, hotel accommodation, travel, subsistence, entertaining and other communication services) shall be borne by Manager out of its own funds. Notwithstanding the foregoing, the portion of the bookkeeping, clerical and other general and administrative expenses that is reasonably allocable to the performance by Manager of its duties and obligations under this Agreement shall be borne by the Partnership and shall be paid to Manager upon demand, but not more frequently than every three (3) months. Compensation for such services performed by the Manager, including insurance costs described in Section 11 below, shall be paid directly to Manager from the resources of the Partnership. iii. Statutory Compliance. Manager shall perform its duties hereunder in full compliance with all applicable laws and regulations of the United Kingdom and all subparts thereof. 3. Additional Services. Manager shall provide such additional tax, accounting, bookkeeping, clerical, financial reporting, legal and similar services to the Partnership relative to Fairclough as may from time to time be reasonably requested by the Partnership. 4. Authority of Manager to Act on General Instructions. The authority granted to Manager, working in conjunction with the European Management, by the terms of this Agreement shall be deemed to include the authority to take, without further authorization from the Partnership, such specific actions as may be reasonably necessary or appropriate in connection with the performance by Manager of its duties and obligations under this Agreement and the carrying out of the instructions given to it by the Partnership in accordance with this Agreement, notwithstanding the fact that such actions may not have been specifically authorized by the provisions of this Agreement or by the Partnership. However, unless contemplated in the current business plan, Manager may not take any of the following actions without the prior written consent of Partnership: a. sell or transfer all or a substantial part of any of the business, assets or undertaking of Fairclough; b. resolve that Fairclough be wound up voluntarily in circumstances where such winding up would be a voluntary winding up under the United Kingdom Insolvency Act 1986; c. require the employees of Fairclough to devote significant time or attention otherwise than to the business of Fairclough; d. allow any goods and/or services purchased by Fairclough to be used otherwise than exclusively for the benefit of Fairclough; Page 3 4 e. consolidate or merge the businesses carried on by Fairclough with any other entity; f. change the Auditors of Fairclough; g. allow Fairclough to incur or enter into any agreement or commitment involving any capital expenditure in excess of(pound)500,000 per item and(pound)1,500,000 in aggregate in any one financial year; h. increase the indebtedness of Fairclough in excess of(pound)2 million per transaction and in excess of(pound)5 million in aggregate in any one financial year; i. allow Fairclough to acquire or agree to acquire or dispose of or agree to dispose of any material asset or material stocks or enter into or amend any material contract or arrangement which in aggregate or per item involves consideration, expenditure or liabilities in excess of (pound)5 million in any one financial year. j. allow Fairclough to acquire or agree to acquire any share, shares or other interest in any company, partnership or joint venture (other than the establishment of joint venture management companies) which would have a material impact on Fairclough's business; k. except in the ordinary course of its business including, without limitation, normal debt recovery actions, allow Fairclough to initiate, compromise, settle, release, discharge or compound litigation or arbitration proceedings or a liability, claim, action, demand or dispute or waive all rights in relation to litigation or arbitration proceedings in excess of (pound)350,000 per action and in excess of (pound)750,000 in aggregate in any one fiscal year; l. take any steps directly or indirectly to cause Fairclough to cease carrying on its business or to change the nature of its business in a manner which its directors should reasonably have been aware would have a material adverse effect on the operating profits of the business; m. take or omit to take any steps directly or indirectly which would affect (or by omission would affect) adversely the ability of European Management to operate effectively its business during the term of this Agreement or its ability to maximize operating profits from its business. 5. Use of Affiliates. Manager shall have the right to hire any affiliate of Manager or the European Management to perform any services in connection with the operation, management or development of Fairclough, provided, however, that the fees paid to any affiliate of Manager or the European Management for such services shall be similar to fees charged by nonaffiliate entities providing the same or similar services on an arms length basis. 6. Liability of Manager. Manager shall not be liable, responsible or accountable in damages or otherwise to the Partnership for any act performed by Manager on behalf of the Partnership and Page 4 5 in a manner reasonably believed by Manager to be within the scope of the authority granted to it by this Agreement and in the best interests of the Partnership, provided that Manager was not guilty of gross negligence or willful or wanton misconduct with respect to such act. 7. Indemnification. The Partnership shall indemnify, save harmless and defend Manager and each of Manager's partners and its and their shareholders, directors, officers, employees, agents, attorneys, insurers and any affiliate of Manager hired or authorized by Manager pursuant to the terms of this Agreement to perform any services in connection with the operation, management or development of the Assets and the Business (individually, an "Indemnitee") against any and all losses, damages, liabilities, judgments, fines, penalties, amounts paid in settlement and expenses (including reasonable attorneys' fees), including losses, damages, liabilities, judgments, fines, penalties, amounts paid in settlement and expenses (including reasonable attorneys' fees) incurred as the result of the NEGLIGENCE OF ANY INDEMNITEE, arising out of or in connection with anything done or omitted by such Indemnitee in connection with the performance by Manager of its duties and obligations under this Agreement, provided that such Indemnitee's conduct did not constitute gross negligence or willful or wanton misconduct. Manager agrees that if the Partnership defaults under this Agreement, the Partnership's liability under this Agreement will be limited to its interest in Fairclough. Manager waives any rights it may have to seek recourse for such obligations against the partners, members, officers, employees, directors, or shareholders of the Partnership or against any other assets or interests of the Partnership (other than its interest in Fairclough). The terms of this Section 7 shall survive, and remain in effect following, the termination of this Agreement. 8. Reimbursement of Manager. Manager shall in no event be required to advance any of its own funds for the payment of the costs and expenses that it is authorized by this Agreement to pay. If, however, Manager shall at any time advance any of its own funds in payment of such costs and expenses (which Manager shall have the right but not the obligation to do), Manager may submit an invoice to the Partnership for the amount of such advance (which invoice shall describe in reasonable detail the costs and expenses so paid by Manager and shall be accompanied by the receipt(s) for such payment), and the Partnership shall pay such amount to Manager within ten (10) days after its receipt of such invoice and accompanying receipts. If the Partnership fails to make such payment within such ten (10) day period, the amount so owing by the Partnership to Manager, if Manager so elects, shall bear interest from and after the day on which Manager paid such costs and expenses on behalf of the Partnership until such amount has been paid in full at a rate equal to the lesser of the prime rate announced or published by Bank of America (or its successor) from time to time or the maximum rate of interest permitted under applicable law. 9. Insurance. Manager may (but shall not be obligated to) maintain, at the expense of the Partnership, a program of insurance approved by the Partnership, which program may include, Page 5 6 without limitation, such insurance as Manager shall deem prudent to protect against liability of Manager that may be occasioned by its activities under this Agreement. Manager shall not make any material change in such program of insurance without the prior written consent of the Partnership (which consent shall not be unreasonably withheld or delayed), unless such change does not result in an increase in the potential liability of the Partnership in any respect. Unless otherwise specifically authorized by the Partnership, Manager shall obtain the insurance authorized by this Section 10 from the insurance carriers that currently provide similar types of insurance coverage to Centex Corporation and its subsidiary companies, and, to the extent practicable, Manager shall, in lieu of obtaining separate insurance coverage, be added as an insured under the policies constituting the program of insurance maintained by the Partnership (which program, as in effect on the date hereof, is hereby approved by the Partnership for purposes of this Section 10), whether such policies were obtained directly by the Partnership or through Centex Corporation or its subsidiary corporations. Manager shall provide to the Partnership, promptly after obtaining any insurance policy pursuant to this Section 10 (other than a policy under which the Partnership is also an insured), a description, in reasonable detail, of the terms and provisions of such policy. Manager shall give written notice to the Partnership of the expiration or anticipated termination of any insurance policy maintained by Manager in connection with its performance of this Agreement at least fifteen (15) days before such expiration or anticipated termination. Manager shall not be liable to the Partnership or its general partner or to any other person for damages, including consequential damages, for its failure to obtain or maintain adequate insurance coverage. 10. Compensation. a. Management Fee. Manager shall receive a fee for its services under this Agreement of $1,000 per month, which shall be paid by the Partnership to Manager within five (5) days after the end of each month. b. Additional Compensation. It is understood that all actions taken by Manager pursuant to the provisions of this Agreement shall be on behalf and for the sole benefit of the Partnership and that Manager shall not be entitled to any compensation for such actions except as expressly provided in this Agreement. Notwithstanding the foregoing, the Partnership shall negotiate with Manager from time to time in good faith regarding the payment by the Partnership to Manager of, and shall pay to Manager, reasonable additional compensation for the efforts taken or to be taken by Manager pursuant to the provisions of this Agreement that the parties agree have resulted or will result in the enhancement of the value of the Assets or the Business; provided, however, that any such payments shall be approved in advance by the Board of Directors of 3333 Development Corporation, General Partner of the Partnership. Page 6 7 11. Assignment and Subcontracting. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that this Agreement may not be assigned by either party without the prior written consent of the other party hereto. Any consent granted by either party to an assignment by the other party shall not be deemed a consent to any subsequent assignment. Notwithstanding the foregoing, Manager may, without the consent of the Partnership, assign and delegate the performance of, and the responsibility for, all but not less than all of the duties and obligations of Manager hereunder to any corporation, firm, joint venture or partnership fifty percent (50%) or more of whose voting stock (or its equivalent) is owned directly or indirectly by, or which is otherwise controlled by, Centex Corporation. Upon execution of any such assignment and delegation, notice thereof in the form of an executed copy of the document or instrument effecting such assignment and delegation shall be delivered promptly by Manager to the Partnership and Manager shall be released from any further obligation or responsibility under this Agreement for the performance of the duties and obligations so assigned and delegated. 12. Termination. This Agreement may be terminated by any of the following methods: a. By notice of Manager or Partnership, as provided in Section 1 hereof. b. By written agreement of the parties hereto. c. If the Partnership breaches any of the terms of this Agreement, or if Manager breaches any of the terms of this Agreement, then the other party hereto shall give the breaching party written notice of such breach. If the breaching party fails to remedy the breach within thirty (30) days after receiving such notice, the other party may terminate this Agreement. d. If either party hereto shall be dissolved and its business terminated, this Agreement shall automatically terminate upon the effectiveness of such dissolution. e. By Manager if there is a detachment from Centex Corporation common stock of the ownership interests in the Partnership and 3333 Holding Corporation which are presently held by a nominee for and on behalf of the holders of Centex Corporation common stock, and such stock and ownership interests no longer trade in tandem. No termination of this Agreement shall have the effect of terminating Manager's right to collect any amounts owed to it under this Agreement. Within ninety (90) days following the termination of this Agreement, Manager shall deliver to the Partnership the originals of all books, accounts and records in its possession or under its control pertaining to Fairclough. The Manager may, at its expense, retain copies of any such documents. Page 7 8 13. Notices. Any notice, statement or demand required or permitted to be given under this Agreement shall be in writing and shall be personally delivered, sent by mail, or sent by telegram or telex, confirmed by letter, addressed to the party in the manner and at the address shown below, or at such other address as the party shall have designated in writing to the other party: To the Partnership: Centex Development Company, L.P. c/o 3333 Development Corporation 2728 N. Harwood Dallas, Texas 75201 Attention: President To Manager: Centex Homes 2728 N. Harwood Dallas, Texas 75201 Attention: Chairman and CEO 14. Nature of Relationship. The parties hereto intend that Manager's relationship to the Partnership shall be that of an independent contractor. Nothing contained in this Agreement shall constitute or be construed to be or create a partnership or joint venture between Manager and the Partnership or their successors or assigns, and neither Manager nor any officer or employee of Manager shall be considered at any time to be an employee of the Partnership. 15. Amendments. This Agreement cannot be amended, changed or modified except by another agreement in writing, duly signed by both parties hereto. 16. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes in its entirety the Management Agreement previously made between the parties as of 1 October 2000, which agreement is hereby cancelled and terminated. 17. Headings. The section headings contained herein are for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. 18. Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of Texas. 19. Severability. Any provision of this Agreement that is prohibited or unenforceable under the laws of any jurisdiction shall be ineffective in such jurisdiction to the extent necessary to Page 8 9 render such provision valid and enforceable, and if such provision cannot be rendered valid and enforceable in such jurisdiction by limitation it shall be ineffective therein. The invalidity or unenforceability of any provision of this Agreement shall not render invalid or unenforceable any other provision of this Agreement. IN WITNESS WHEREOF, the Partnership and Manager have duly executed this Agreement as of the day and year first set forth above. CENTEX DEVELOPMENT COMPANY, L.P. By 3333 Development Corporation General Partner By: /s/ STEPHEN M. WEINBERG Stephen M. Weinberg President and CEO CENTEX HOMES - ---------- By Centex Real Estate Corporation, General Partner By: /s/ TIMOTHY R. ELLER Timothy R. Eller Chairman and CEO - ---------- Page 9 EX-10.2 4 d89717ex10-2.txt EX-10.2 EMPLOYMENT AGREEMENT - RICHARD C. DECKER 1 EXHIBIT 10.2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of April 1, 2001, by and between CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited partnership ("CDCLP"), and RICHARD C. DECKER ("Executive"), an individual resident of Coppell, Texas. RECITALS A. Vista Properties Company (now known as Centex-Vista Properties), a division of Centex Homes, a Nevada general partnership ("Centex-Vista"), and Executive entered into an Employment Agreement dated as of July 26, 1996 (the "Original Agreement"). B. Executive and David Quinn, acting on behalf of Centex-Vista and CDCLP, executed a Memorandum dated July 31, 1998 (the "Memorandum"), to clarify that the terms of the Original Agreement apply to all activities of Executive performed on behalf of Centex-Vista and CDCLP. (Because CDCLP is managed by 3333 Development Corporation, a Nevada corporation, its sole general partner, the term "CDCLP" as used in this Agreement will include both Centex Development Company, L.P. and 3333 Development Corporation). C. Since the signing of the Original Agreement, a number of strategic and organizational changes have occurred within Centex-Vista, CDCLP and their related affiliated entities. Although Executive continues to be involved in the disposition of real estate assets owned or controlled by Centex-Vista, Executive's duties and responsibilities now primarily relate to CDCLP and its operations. D. CDCLP and Executive desire to terminate the Original Agreement and enter into this Agreement to reflect the current agreement between CDCLP and Executive regarding the services to be rendered by Executive to CDCLP and the compensation to be paid by CDCLP to Executive. E. CDCLP desires to employ Executive and Executive desires to be employed by and to serve CDCLP in the capacities and for the term and compensation and upon and subject to the terms and conditions set forth in this Agreement. F. In addition to the terms of employment described in this Agreement, Executive will be employed by Centex Service Company ("CSC"), an affiliate of Centex-Vista, as more particularly described in a Dual Employment Agreement dated as of January 1, 2001 (the "Dual Employment Agreement"), by and among CDCLP, CSC and Executive. AGREEMENT NOW, THEREFORE, CDCLP and Executive mutually undertake and agree as follows: 1. Employment of Executive. A. Executive's employment with Centex-Vista commenced effective as of July 26, 1996 (the "Original Commencement Date") and ended effective as of March 31, 2001. Executive's employment with CSC under the terms of the Dual Employment Agreement, commenced effective January 1, 2001. B. Effective as of April 1, 2001 (the "Commencement Date"), CDCLP agrees to employ Executive and Executive accepts employment with CDCLP and agrees to serve CDCLP in the capacities, for the term and compensation, and upon and subject to the terms and conditions set forth in this Agreement. -1- 2 C. Executive's tenure with Centex Corporation ("Centex") and its related entities (including CDCLP) (individually, a "Centex Company"; collectively, the "Centex Companies") will be measured for all purposes (including vesting of incentive and benefit plans) from the Original Commencement Date. 2. Duties of Executive. A. Executive will serve as President of the Centex Commercial Development division of 3333 Development Corporation and President of Centex Commercial Development, LLC. In those capacities, Executive will oversee the real estate activities of certain other Centex Companies, including Centex-Vista, EFO Land, L.P. ("EFO"), Nomas Corp. ("Nomas"), and their subsidiaries, and such other real estate operations as the Chief Executive Officer of CDCLP (the "CEO") may from time to time designate. Executive will be responsible for providing the strategic direction and directing and supervising the day-to-day management and operation of the business. B. Executive's employment will be subject to the direction of the CEO and will be performed within the policies and guidelines established from time to time by the CEO. Executive will, as the CEO may from time to time direct, render such services of an executive and administrative character to CDCLP as are usual and customary in the case of an executive of Centex Companies. C. Executive agrees that, subject to Section 5.A., during and throughout the term of this Agreement, he will devote substantially all of his business time and efforts to the performance of his duties and responsibilities to be performed by him under the terms of this Agreement, and that during such time he will not undertake any activities, business or otherwise, which would interfere with or limit, in any material respect, his responsibilities under this Agreement. CDCLP agrees, however, that Executive may spend a portion of his business time working on issues related to partnerships that were, at one time, affiliated with Trammell Crow Company in which Executive had involvement prior to the Original Commencement Date, so long as such personal activities do not interfere with Executive's performance of his duties under this Agreement. 3. Compensation. A. Salary. As compensation for the services rendered by Executive to CDCLP, CDCLP will pay Executive an annual salary of $315,000 for fiscal year 2002. The salary will be payable in accordance with the payroll policies of CDCLP or as may otherwise be mutually agreed upon. The salary will be prorated as to any period of service that is less than a full fiscal year. By determination of the CEO, CDCLP may, in subsequent fiscal years and in its sole and absolute discretion, increase the Executive's annual salary. B. Expense Reimbursement. In addition to such salary, Executive will be reimbursed for all actual, normal out-of-pocket expenses incurred by him in connection with his duties under this Agreement. C. Fringe Benefits. CDCLP will provide to Executive, during his employment under this Agreement, all so-called "fringe benefits", including, but not limited to, health and dental insurance, disability insurance, profit sharing plan, supplemental executive retirement plan, salary continuation plan, life insurance, and the like, that are currently granted to or provided for executives of companies that are related to Centex in similar capacities or that may be granted to or provided for such executives during the term of Executive's employment under this Agreement. In addition, Executive will be entitled to a $700 per month car allowance and the opportunity to join a luncheon club at CDCLP expense. Fringe benefits are at all times subject to revision by CDCLP, in its sole and absolute discretion. -2- 3 D. Bonus. Within 45 days after the end of each fiscal year (the fiscal year ends on March 31) during the term of this Agreement, CDCLP will pay to Executive an annual bonus payment (the "Annual Bonus") in the amount determined in accordance with Exhibit 1--Part 1, which is attached to this Agreement and incorporated herein by reference. The Annual Bonus will be prorated as to any period of service that is less than a full fiscal year. E. Stock Options. (1) On the Original Commencement Date, subject to the terms of the Original Agreement, Executive was granted employee stock options to purchase 35,000 shares of common stock of Centex ("Centex Common Stock") at an exercise price equal to the market value of Centex Common Stock on the close of business on the Original Commencement Date, with a vesting period of 20% per year beginning on the second anniversary of the date of grant. (2) Within 60 days after the end of each fiscal year during the term of this Agreement, beginning with the fiscal year ending March 31, 1997, Executive may also be granted stock options to purchase Centex Common Stock subject to and in accordance with the terms and conditions of an Executive Option Grant Agreement executed by Executive and Centex under the terms of the Original Agreement. 4. Term and Termination. A. Executive's employment with CDCLP will begin on the Commencement Date and will continue until terminated in accordance with Section 4.B. B. Executive's employment by CDCLP may be terminated in the following ways: (1) Resignation. Executive may resign at any time for any reason. The effective date of the resignation will be not less than 30 days from the date of Executive's written resignation. (2) Resignation for CDCLP's Breach. Executive may resign if CDCLP commits a material breach of the terms and conditions of this Agreement and fails to cure the breach prior to the expiration of 20 days after the delivery to CDCLP of written notice from Executive setting forth the nature and extent of such breach. Executive may seek to recover damages for CDCLP's breach through an action at law or in equity. (3) Termination Without Cause. CDCLP may terminate Executive's employment with CDCLP for any reason or no reason at all, with or without cause. The effective date of this termination will be 30 days from the date of notice of termination. (4) Termination for Executive's Breach. CDCLP may terminate Executive's employment with CDCLP if Executive commits a material breach of the terms and conditions of this Agreement and fails to cure the breach prior to the expiration of 20 days after the delivery to Executive of written notice from CDCLP setting forth the nature and extent of such breach. CDCLP may seek to recover damages for Executive's breach through an action at law or in equity. (5) Termination for Bad Acts. CDCLP may terminate Executive's employment with CDCLP immediately, and without advance notice, if Executive commits acts of theft, embezzlement, fraud, dishonesty or acts involving moral turpitude. CDCLP may seek to recover damages for Executive's actions through an action at law or in equity. -3- 4 (6) Termination Due to Death of Executive. Executive's employment with CDCLP will terminate immediately and automatically upon Executive's death. The failure by CDCLP to terminate Executive's employment or Executive to resign with respect to any one or more of the matters referred to in this Section 4.B. above will not be taken or held to be a waiver by CDCLP of its right to terminate Executive's employment or Executive to resign based on that matter or any subsequent matter. C. CDCLP will have different compensation obligations to Executive under the different scenarios by which Executive's employment is terminated: (1) If Executive resigns, as described in Section 4.B.(1) or (2) above, then CDCLP will be obligated to pay to Executive the following: (i) all salary accrued through the effective date of the resignation; (ii) reimbursement for all expenses incurred by Executive through the effective date of the resignation; (iii) within 45 days after the end of the fiscal year, any Annual Bonus accrued through the effective date of the resignation; and (iv) the Post-Employment Bonus (described in Section 4.D.). (2) If CDCLP terminates Executive's employment under Sections 4.B.(3) or (4) above, then CDCLP will be obligated to pay to Executive the following: (i) all salary accrued through the effective date of the termination; (ii) a lump sum payment equal to the annual salary in effect on the effective date of the termination, as described in Section 3.A. above; (iii) reimbursement for all expenses incurred by Executive through the effective date of the termination; (iv) within 45 days after the end of the fiscal year, any Annual Bonus accrued through the effective date of termination; and (v) the Post-Employment Bonus. (3) If CDCLP terminates Executive's employment under Section 4.B.(5) above, CDCLP will pay to Executive only the following: (i) within 10 days of the effective date of the termination, all salary accrued through the effective date of the termination; (ii) within 10 days of the effective date of the termination, reimbursement for all expenses incurred by Executive through the effective date of the termination; and (iii) within 45 days after the end of the fiscal year, any Annual Bonus accrued through the effective date of the termination. CDCLP will be entitled to reduce the amounts to be paid to Executive by the liquidated amounts owing to CDCLP by Executive for acts of theft, embezzlement, fraud or dishonesty. (4) If Executive's employment terminates due to Executive's death, as described in Section 4.B.(6), all obligations of CDCLP under this Agreement will terminate, except that CDCLP will pay to the heirs of Executive the following: (i) all salary accrued through the effective date of the termination; (ii) reimbursement for all expenses incurred by Executive through the effective date of the termination; (iii) any Annual Bonus accrued through the effective date of termination; and (iv) the Post-Employment Bonus, as if Executive had resigned immediately prior to his death. Under any termination, resignation or non-renewal scenario, the amounts described in this Section 4.C. will constitute the entire compensation to Executive. After the date of termination, resignation or expiration of the employment term, CDCLP will not be obligated to compensate Executive under Sections 3.A., B., C., D. or E. with respect to periods of time after the date of termination, resignation or expiration of the employment term. Any obligations of CDCLP set forth in any other agreement or plan (e.g., any stock option agreement, profit sharing plan, supplemental executive retirement plan, salary continuation plan, etc.) will not be affected by the terms of this Section 4.C., but rather will continue to the extent that the terms of such other agreements and plans provide for continuation of such agreements or plans following termination or expiration of employment. -4- 5 D. In the circumstances specifically stated in Section 4.C. above, CDCLP will pay to Executive the a lump sum payment or ongoing payments (the "Post-Employment Bonus") determined in the manner set forth in Exhibit 1--Part 2. 5. Confidentiality and Non-Competition. A. Executive recognizes and acknowledges that the relationship created between Executive and CDCLP is one of trust, and Executive agrees that during the period of time commencing with the Commencement Date and ending on the earlier of the death of Executive or 1 year after the cessation of Executive's employment with CDCLP or any other Centex Companies for any reason other than a default under this Agreement by CDCLP, Executive will not directly or indirectly (including, without limitation, as an advisor, principal, partner, stockholder, consultant, officer, director, employee or otherwise), through one or more intermediaries, corporate or otherwise, individually or in concert with others, be or become interested in, connected with, or engaged in any business which is competitive with any business in which CDCLP (or any of its subsidiaries) engages during the term of this Agreement. The prohibition of this Section 5.A. will extend to the product type (which will be the product relating to the business of CDCLP) in any geographic area in which CDCLP or any other Centex Companies are conducting or engaging in any business at the time Executive's employment is terminated. Notwithstanding the prohibition contained in this Section 5.A., Executive will be entitled to make passive investments (i) in any such competitive enterprise if Executive's investment constitutes less than 1% of the equity ownership of such enterprise and (ii) in any real estate matter or transaction so long as such investment does not compete with the business of CDCLP or any other Centex Companies. Additionally, notwithstanding the foregoing prohibition contained in this Section 5.A., upon cessation of Executive's employment with CDCLP or any other Centex Companies, Executive will be entitled to operate a small real estate development company of the size and nature that he operated before he entered into the Original Agreement. B. Executive further agrees that during the term of this Agreement and for a period of 2 years after the cessation of Executive's employment with CDCLP or any other Centex Companies for any reason, Executive will not, without the prior written consent of CDCLP, directly or indirectly, solicit or otherwise induce any of the employees of CDCLP or any other Centex Companies to leave the employment of CDCLP or any other Centex Companies. Executive further agrees that during the term of this Agreement and for a period of 2 years after the cessation of Executive's employment with CDCLP or any other Centex Companies for any reason, Executive will not, without the prior written consent of CDCLP, directly or indirectly, hire or employ any employees of CDCLP or any other Centex Companies. C. Executive acknowledges and agrees that the names of the customers of CDCLP, the methods of operation of CDCLP, sales, marketing, and other trade secrets, as they may exist from time to time, are valuable, special, and unique assets of CDCLP. Executive will not, during and after the term of his employment under this Agreement, disclose any such names or trade secrets, or any part of such names or trade secrets, that Executive becomes aware of during his employment under this Agreement, to any person, firm, corporation, association or other entity. D. Executive recognizes and acknowledges that CDCLP will suffer irreparable harm if Executive violates any of the terms or provisions of this Section 5. Accordingly, Executive agrees that CDCLP will be entitled to an injunction restraining Executive from violating this Section 5, which relief will be in addition to, and not in lieu of, CDCLP's right to seek all other remedies which CDCLP may have at law and in equity. E. Executive and CDCLP agree that if the non-competition covenants contained in this Agreement should be held by any court or other constituted legal authority to be void or unenforceable in any particular area or jurisdiction, then the parties to this Agreement will consider this Agreement to be amended -5- 6 and modified so as to eliminate the particular area or jurisdiction as to which the non-competition covenants are held to be void or otherwise unenforceable, and as to all other areas and jurisdictions covered by this Agreement, the terms and provisions of this Agreement will remain in full force and effect as originally written. F. Executive and CDCLP further agree that if the non-competition covenants contained in this Agreement should be held by any court or other constituted legal authority to be effective in any particular area or jurisdiction only if said covenants are modified to limit their duration or scope, then the parties to this Agreement will consider such non-competition covenants to be amended and modified with respect to that particular area or jurisdiction so as to comply with the order of any court or other constituted legal authority, and as to all other political subdivisions of the United States, the non-competition covenants contained in this Agreement will remain in full force and effect as originally written. G. Executive and CDCLP agree that the covenants set forth in this Agreement are appropriate and reasonable when considered in light of the nature and extent of the Business conducted by CDCLP. Executive acknowledges that CDCLP has a legitimate interest in protecting its business, the restrictive covenants set forth above are not oppressive to Executive, and are reasonable in limitations as to time, scope, geographical area and activity, the restrictive covenants do not harm in any manner whatsoever the public interest and Executive has received substantial consideration for agreeing to the non-compete and non-solicitation covenants. 6. Miscellaneous. A. This Agreement will 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 another jurisdiction. B. All covenants and agreements set forth in this Agreement by or on behalf of either party will bind its or his successors and assigns, and all covenants and agreements set forth in this Agreement by or on behalf of either party will inure to the benefit of and be enforceable by the other party and its or his heirs, devisees, personal representatives, successors and assigns. Executive may not assign any rights or delegate any duties under this Agreement without the prior written consent of CDCLP and any assignment of rights or delegation of duties without CDCLP's prior written consent will be of no force or effect, and will constitute a default under this Agreement. Executive acknowledges that CDCLP may, at any time, delegate any or all of its obligations under this Agreement or assign any or all of its interest under this Agreement to another Centex Company provided that such delegation or assignment is approved by Executive, whose approval will not be unreasonably withheld, conditioned or delayed. Following said delegation or assignment this Agreement will remain fully enforceable against Executive. C. Effective as of April 1, 2001, this Agreement supersedes and replaces, in their entirety, the Original Agreement and the Memorandum. This Agreement expresses the entire agreement between Executive and CDCLP with reference to the subject matter of this Agreement and supersedes all prior written or oral and all contemporaneous oral discussions, arrangements, negotiations, and agreements with respect to the subject matter of this Agreement. No waiver, modification, or amendment of this Agreement or of any covenant, condition or limitation in this Agreement will be valid, unless it is in a written document signed by the party most detrimentally affected by the waiver or modification. The parties further agree that the provisions of this paragraph may not be waived except as in the manner described in this paragraph. D. Any notice or other communication required, permitted, or contemplated by this Agreement must be in writing, and delivered to the other party (i) in person, (ii) by facsimile transmission (with the original following in the United States mail), (iii) by overnight delivery service (including Federal Express), -6- 7 or (iv) by certified mail, return receipt requested. If such notice is given in person or via facsimile transmission, such notice will be deemed given when received or transmitted. If such notice is given by overnight delivery service (including Federal Express), such notice is deemed received the business day following delivery to the delivery service of such notice. If such notice is given by certified mail, such notice will be deemed received 3 business days after a certified letter containing such notice, properly addressed with postage prepaid, is deposited in the United States mail. Notice must go to the parties at the following addresses: If to CDCLP: with a copy to: Centex Development Company, L.P. Centex Development Company, L.P. 2728 North Harwood 2728 North Harwood Dallas, Texas 75201 Dallas, Texas 75201 Attn: Stephen M. Weinberg, Attn: Joel S. Reed, President and Chief Executive Officer General Counsel Phone: (214) 981-6700 Phone: (214) 981-6997 Fax: (214) 981-6909 Fax: (214) 981-6180 If to Executive: Richard C. Decker Centex Development Company, L.P. 2728 North Harwood Dallas, Texas 75201 Phone: (214) 981-6712 Fax: (214) 981-6909 Any party may change its address, facsimile number or telephone number for the purpose of this paragraph by giving written notice of such change to each of the other parties in the manner described in this Agreement. To be effective, such notice of change must expressly state that it is given for the purpose of changing the notice provisions of this Agreement. E. In the event that attorneys' fees or other costs and expenses are incurred to secure performance of any of the obligations described in this Agreement, or to establish damages for the breach or default under this Agreement or to obtain any other appropriate relief, whether by way of prosecution or defense, the prevailing party (which will be the party who receives the substance of the relief sought) will be entitled to recover reasonable attorneys' fees and costs incurred in such action. IN WITNESS WHEREOF, the parties to this Agreement have executed and delivered this Agreement in Dallas, Texas as of the day and year first above written. EXECUTIVE: CDCLP: CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited partnership /s/ RICHARD C. DECKER By: 3333 Development Corporation, - --------------------------- a Nevada corporation Richard C. Decker By: /s/ STEPHEN M. WEINBERG ----------------------------------------- Stephen M. Weinberg President and Chief Executive Officer -7- 8 By signing below, Centex-Vista Properties, a division of Centex Homes, assumes the obligation to pay to Executive any sums due from CDCLP under this Agreement that are not paid by CDCLP. Other than the obligation set forth in this paragraph, Centex-Vista Properties is not a party to this Agreement. CENTEX-VISTA PROPERTIES, a division of Centex Homes By: /s/ STEPHEN M. WEINBERG -------------------------------- Stephen M. Weinberg Chairman -8- 9 Exhibit 1 Bonus Calculation Part 1--Annual Bonus A. The Annual Bonus to be paid to Executive pursuant to Section 3.D. of the Agreement is an amount equal to the following: 1. 6% of the Operating Earnings generated by CCD Operations from the Existing Projects; plus 2. 5% of the Operating Earnings generated by CCD Operations from the New Projects. B. For purposes of calculating the bonus to be paid to Executive, the following defined terms apply: 1. "Operating Earnings" means the "consolidated operating earnings (pre-tax)" generated by CCD Operations, as shown in the financial statements of CDCLP and of Centex for the applicable fiscal year, adjusted downward by a Cash Charge or upward by a Cash Credit, as appropriate. "Operating Earnings" includes any Deferred Earnings Realized (as defined below). 2. "CCD Operations" means the activities (including land acquisition, financing, development, leasing, operation and/or sale) of the following companies and partnerships (and their subsidiary entities, whether owned in whole or in part): (a) The "Commercial Development" business segment of CDCLP, including Centex Commercial Development, L.P. (collectively referred to as "CCD") (b) Centex-Vista, including EFO and Nomas projects described on Exhibit 2 (c) Any other entities that may be formed or acquired for purposes of the CCD business segment's commercial real estate activities 3. "Deferred Earnings" means the difference between the value at which land is transferred from Centex-Vista to CDCLP and the basis at which the land is carried on the books of Centex-Vista. 4. "Deferred Earnings Realized" means the Deferred Earnings realized by Centex-Vista when the land transferred by Centex-Vista to CDCLP is transferred to a third party not related to Centex. 5. "Existing Projects" means the real estate projects listed on Exhibit 2 attached to this Agreement. 6. "New Projects" means the real estate projects now or hereafter owned by CDCLP or any other Centex Companies that are acquired, developed or sold by or under the direction of CCD during Executive's employment with CDCLP. "New Projects" includes any land owned by CDCLP, Centex-Vista, EFO or Nomas that has not been developed as an operating project as of March 31, 2001. "New Projects" specifically excludes any Existing Projects. -9- 10 7. "Cash Charge" or "Cash Credit", for a particular Measuring Period, means the following amount: Days in Cost of Average CCD Measuring Liquidity ( Funds x Cash Position x Period ) + Adjustment ------- 365 A positive number generated by this formula is a Cash Charge and a negative number is a Cash Credit. The Cash Charge or Cash Credit will be determined for each Measuring Period during a fiscal year and then added together for purposes of calculating Operating Earnings. 8. "Cost of Funds" means the prime rate of interest quoted to CDCLP by its primary banking institution (which, on April 1, 2001, is Bank of America) on the first day of the Measuring Period, plus the prime rate of interest quoted on the last day of the Measuring Period, divided by two. 9. "Average CCD Cash Position " means the CCD Cash Position on the first day of the Measuring Period, plus the CCD Cash Position on the last day of the Measuring Period, divided by two. 10. "CCD Cash Position" means, at any point in time, the following: (a) The fair market value of land transferred by Centex-Vista, EFO or Nomas to CDCLP (or its subsidiaries) after March 31, 2001, for development or sale by CCD, reduced by any debt assumed by CDCLP (the value of land owned by Centex-Vista, EFO or Nomas will not be included in the CCD Cash Position while such land remains undeveloped or owned by Centex-Vista, EFO or Nomas, as the case may be); plus (b) Any cash funded by CDCLP (or its subsidiaries) or CCD to acquire land after March 31, 2001, for development or sale by CCD; plus (c) Any additional cash funded by CDCLP after March 31, 2001, for CCD Operations; minus (d) The net cash proceeds generated by the sale, after March 31, 2001, of "nominally-valued" assets owned by Centex-Vista or EFO, after deducting (i) the "nominal" basis at which such assets are booked by Centex, and (ii) the closing costs associated with the sale; minus (e) The net cash proceeds generated by the sale, after March 31, 2001, of any other CCD properties (other than those described in clause (d) above), after deducting (i) loan repayment obligations, (ii) distributions to partners, and (iii) the closing costs associated with the sale; minus (f) Any other cash revenues (e.g. rent, management fees) generated by CCD Operations; minus (g) Deferred Earnings Realized. -10- 11 11. "Measuring Period" means the period of time beginning on the first day of a fiscal quarter and ending on the last day of that same fiscal quarter. At the election of CDCLP, the Measuring Period may be reduced or lengthened. 12. "Liquidity Adjustment", for a particular Measuring Period, means the following: Liquidity Cost of Funds x Liquidity x Maintenance Period ------------------ Requirement 365 The "Liquidity Requirement" means the maximum liquidity requirement imposed by any of CCD's lenders. The "Liquidity Maintenance Period" means the number of days that CDCLP is required to maintain the Liquidity Requirement. The Liquidity Maintenance Period will be deemed to be 5 days, unless Executive and CDCLP enter into an agreement to the contrary. Part 2--Post-Employment Bonus A. The Post-Employment Bonus to be paid to Executive pursuant to Section 4.D. of this Agreement will be either: 1. the Lump-Sum Bonus Payment, which will be paid in a lump sum on the effective date of termination of Executive's employment, or 2. the Continuing Bonus Payment, which will be paid on an on-going basis after the effective date of termination of Executive's employment. CDCLP will have the right to choose whether to make a Lump-Sum Bonus Payment or Continuing Bonus Payments. B. In addition to the defined terms set forth in Part 1 above, for purposes of calculating the Post-Employment Bonus to be paid to Executive, the following additional defined terms apply: 1. "Lump-Sum Bonus Payment" means an amount equal to the sum of Lump-Sum Bonus Payment (Existing Projects) and Lump-Sum Bonus Payment (New Projects). 2. "Continuing Bonus Payment" means an amount equal to the sum of the Continuing Bonus Payment (Existing Projects) and the Continuing Bonus Payment (New Projects). For the fiscal year in which Executive is terminated, the Continuing Bonus Payment will be prorated from the effective date of the termination through the end of the fiscal year. 3. "Lump-Sum Bonus Payment (Existing Projects)" is equal to 6% of the sum of: (a) the difference between: (i) the Aggregate Fair Market Value of all of the Existing Projects, and (ii) the cost book basis of CDCLP or Centex, as the case may be, in all of such Existing Projects; plus (b) the Deferred Earnings relating to Existing Projects. -11- 12 4. "Lump-Sum Bonus Payment (New Projects)" is equal to 5% of the sum of: (a) the difference between: (i) the Aggregate Fair Market Value of all of the New Projects that are completed or are Substantially Complete as operating real estate properties as of the effective date of termination of Executive's employment, and (ii) the cost book basis of CDCLP or Centex, as the case may be, in all of such Existing Projects; plus (b) the Deferred Earnings relating to New Projects. 5. "Aggregate Fair Market Value" means the total fair market value of the Existing Projects or the New Projects, as mutually agreed upon by CDCLP and Executive at the time of termination of Executive's employment. If CDCLP and Executive are unable to each an agreement, the Aggregate Fair Market Value will be determined by an appraiser mutually acceptable to CDCLP and Executive. 6. "Substantially Complete" means the following: (a) If Executive resigns his employment (as described in Section 4.B.(1) or (2)), "Substantially Complete" means that a certificate of occupancy (or its equivalent in the particular jurisdiction) has been issued for the shell of the building. (b) If CDCLP terminates Executive's employment (as described in Section 4.B.(3), (4) or (5)) or Executive dies (as described in Section 4.B.(6)), "Substantially Complete" means that a financial package for the proposed project has been approved by the Board of Directors of 3333 Development Corporation. 7. "Continuing Bonus Payment (Existing Projects)" is equal to 6% of the sum of: (a) the book gain earned by CDCLP or Centex on the sale of Existing Projects, as such Existing Projects are sold; plus (b) at the end of each fiscal year, any Operating Earnings (as defined in Part 1, above) generated by any Existing Projects that have not been sold. 8. "Continuing Bonus Payment (New Projects)" is equal to 5% of the sum of: (a) the book gain earned by CDCLP or Centex on the sale of New Projects, as such New Projects are sold; plus (b) at the end of each fiscal year, any Operating Earnings generated by any New Projects that have not been sold. 9. Adjustments to Operating Earnings. For purposes of calculating the Continuing Bonus Payment, Operating Earnings will be determined in the same manner as such Operating Earnings are determined for purposes of the Annual Bonus, with the following adjustments: (a) The CCD Cash Position will be reduced by the fair market value of any undeveloped land held by or on behalf of CCD on the effective date of termination of Executive's -12- 13 employment, with the result that Executive will not bear any Cash Charge for the value of the undeveloped land. The earnings from the later development or sale of such undeveloped land will not be included in Operating Earnings. (b) After the effective date of termination of Executive's employment, the CCD Cash Position will only be affected by cash funded to operate the Existing Projects and New Projects and by cash proceeds generated from the operation or sale of the Existing Projects and New Projects. (c) After the effective date of termination of Executive's employment, the charge for overhead that is assessed against Operating Earnings attributable to the Existing Projects and New Projects will be modified to reflect the fact that Executive will not be participating in any new development projects. Executive will be assessed a proportionate portion of 50% of the total overhead of CCD Operations, such proportionate share to be the ratio of the Operating Earnings generated by the projects in which Executive participates in earnings (that is, the Existing Projects and the New Projects) to the total Operating Earnings generated by all operating projects that are included in CCD Operations. -13- 14 Exhibit 2 Existing Projects -14- -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

   1

                                                                    EXHIBIT 10.1

                              MANAGEMENT AGREEMENT

       This MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of 1
April 2001 by and between CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited
partnership (the "Partnership"), and CENTEX HOMES, a Nevada general partnership
("Manager").

                                   WITNESSETH

       The Partnership desires to engage the services of Manager to oversee,
manage and increase in value the investment of Centex Development Company (UK)
Limited, a subsidiary of the Partnership, in Fairclough Homes Group Limited, a
United Kingdom house building company ("Fairclough"). Manager desires to accept
such engagement, upon the terms and subject to the conditions set forth in this
Agreement.

       NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partnership and Manager do
hereby agree as follows:

1.     Term of Agreement. The initial term of this Agreement shall extend from
       the date hereof to the close of business on 31 March 2002, provided that
       this Agreement shall continue thereafter for successive one-year terms
       unless either the Manager or the Partnership elects to terminate this
       Agreement upon at least thirty (30) days' written notice to the other
       party prior to 31 March of any year, and, provided further, that this
       Agreement may be sooner terminated in accordance with the provisions of
       Section 13 hereof.

2.     Management Services. Unless the Partnership shall instruct it otherwise,
       Manager shall perform the services hereinafter described in this Section
       2 with respect to Fairclough.

       a.     Oversight of the Operations of Fairclough.

              i.     Enhancement of Value of the Assets of Fairclough. Manager
                     shall use reasonable efforts, working in concert with the
                     employees of Fairclough and of Centex Development Holding
                     Company UK Limited (together the "European Management"), to
                     protect and enhance the value of all assets of Fairclough,
                     including real property, show homes, work in progress,
                     homes under construction, equipment, cash and accounts
                     receivable (the "Assets"). Such efforts shall include, but
                     not be limited to, counseling and participating in
                     strategic planning and the development of (procuring) an
                     annual business plan, and providing oversight of Fairclough
                     operations, including land acquisition and development,
                     construction, warranty repair, marketing, sales and
                     completions.

              ii.    Annual Business Plan. During the fourth quarter of each
                     fiscal year while this Agreement is in effect, each fiscal
                     year commencing 1 April and terminating on the following 31
                     March, Manager will submit to, or will cause (procure) the


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                     submission to, the Partnership for its review and approval
                     of an annual business plan for the upcoming fiscal year.
                     Such annual business plan will be mutually agreed by
                     Manager and Partnership prior to the commencement of the
                     upcoming fiscal year.

              iii.   Expansion of Business. Manager shall use reasonable
                     efforts, working in concert with the European Management,
                     to improve and expand the house building operations of
                     Fairclough, and all collateral operations (herein
                     collectively the "Business"). Among other things,
                     management will provide oversight and strategic planning
                     aid to Fairclough, working in concert with European
                     Management, in order to enhance and expand the Business.

              iv.    Implementation of Business Plan. The Partnership hereby
                     delegates to Manager full authority, working in concert
                     with European Management, to take all actions necessary to
                     carry out on behalf of the Partnership the annual business
                     plan approved by the Partnership for Fairclough, subject to
                     reacting to unforseen changes in the marketplace and other
                     appropriate business adjustments. Although this Agreement
                     contemplates that Manager will work in concert and in
                     conjunction with European Management, the power delegated
                     to Manager in this Agreement includes the power to direct
                     European Management, within the limits of the delegated
                     power.

       b.     General.

              i.     Reporting. Within forty-five (45) days after the end of
                     each calendar quarter, beginning with the quarter ending 30
                     June 2001, Manager shall prepare and deliver to, or shall
                     cause (procure) to be prepared and delivered to, the
                     Partnership a detailed statement of revenues received and
                     expenditures incurred or paid during the calendar quarter
                     by Fairclough.

                     Within ninety (90) days after the end of each calendar
                     year, Manager shall prepare and deliver to, or shall cause
                     (procure) to be prepared and delivered to, the Partnership
                     a detailed statement of revenues received and expenditures
                     incurred or paid during the calendar year by Fairclough.

                     Manager shall furnish, or shall cause (procure) the
                     furnishing, of such additional information as may be
                     reasonably requested by the Partnership from time to time
                     with respect to the financial, physical or operational
                     condition of Fairclough, the Assets and the Business,
                     including quarterly reports on operations and a comparison
                     of the annual business plan to results actually achieved
                     during each quarter. The foregoing reporting requirements
                     will not alter in any material respect the accounting
                     reporting processes which occur typically within ten (10)
                     working days following the close of each quarter under
                     which Fairclough provides its financial results for
                     inclusion within the financial statements of the
                     Partnership.


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              ii.    Bookkeeping. All bookkeeping, clerical and other general
                     and administrative expenses (including but not limited to
                     costs of office supplies and equipment, data processing
                     services, postage, transportation for managerial personnel,
                     telephone services, hotel accommodation, travel,
                     subsistence, entertaining and other communication services)
                     shall be borne by Manager out of its own funds.
                     Notwithstanding the foregoing, the portion of the
                     bookkeeping, clerical and other general and administrative
                     expenses that is reasonably allocable to the performance by
                     Manager of its duties and obligations under this Agreement
                     shall be borne by the Partnership and shall be paid to
                     Manager upon demand, but not more frequently than every
                     three (3) months. Compensation for such services performed
                     by the Manager, including insurance costs described in
                     Section 11 below, shall be paid directly to Manager from
                     the resources of the Partnership.

              iii.   Statutory Compliance. Manager shall perform its duties
                     hereunder in full compliance with all applicable laws and
                     regulations of the United Kingdom and all subparts thereof.

3.     Additional Services. Manager shall provide such additional tax,
       accounting, bookkeeping, clerical, financial reporting, legal and similar
       services to the Partnership relative to Fairclough as may from time to
       time be reasonably requested by the Partnership.

4.     Authority of Manager to Act on General Instructions. The authority
       granted to Manager, working in conjunction with the European Management,
       by the terms of this Agreement shall be deemed to include the authority
       to take, without further authorization from the Partnership, such
       specific actions as may be reasonably necessary or appropriate in
       connection with the performance by Manager of its duties and obligations
       under this Agreement and the carrying out of the instructions given to it
       by the Partnership in accordance with this Agreement, notwithstanding the
       fact that such actions may not have been specifically authorized by the
       provisions of this Agreement or by the Partnership. However, unless
       contemplated in the current business plan, Manager may not take any of
       the following actions without the prior written consent of Partnership:

       a.     sell or transfer all or a substantial part of any of the business,
              assets or undertaking of Fairclough;

       b.     resolve that Fairclough be wound up voluntarily in circumstances
              where such winding up would be a voluntary winding up under the
              United Kingdom Insolvency Act 1986;

       c.     require the employees of Fairclough to devote significant time or
              attention otherwise than to the business of Fairclough;

       d.     allow any goods and/or services purchased by Fairclough to be used
              otherwise than exclusively for the benefit of Fairclough;


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       e.     consolidate or merge the businesses carried on by Fairclough with
              any other entity;

       f.     change the Auditors of Fairclough;

       g.     allow Fairclough to incur or enter into any agreement or
              commitment involving any capital expenditure in excess
              of(pound)500,000 per item and(pound)1,500,000 in aggregate in any
              one financial year;

       h.     increase the indebtedness of Fairclough in excess of(pound)2
              million per transaction and in excess of(pound)5 million in
              aggregate in any one financial year;

       i.     allow Fairclough to acquire or agree to acquire or dispose of or
              agree to dispose of any material asset or material stocks or enter
              into or amend any material contract or arrangement which in
              aggregate or per item involves consideration, expenditure or
              liabilities in excess of (pound)5 million in any one financial
              year.

       j.     allow Fairclough to acquire or agree to acquire any share, shares
              or other interest in any company, partnership or joint venture
              (other than the establishment of joint venture management
              companies) which would have a material impact on Fairclough's
              business;

       k.     except in the ordinary course of its business including, without
              limitation, normal debt recovery actions, allow Fairclough to
              initiate, compromise, settle, release, discharge or compound
              litigation or arbitration proceedings or a liability, claim,
              action, demand or dispute or waive all rights in relation to
              litigation or arbitration proceedings in excess of (pound)350,000
              per action and in excess of (pound)750,000 in aggregate in any one
              fiscal year;

       l.     take any steps directly or indirectly to cause Fairclough to cease
              carrying on its business or to change the nature of its business
              in a manner which its directors should reasonably have been aware
              would have a material adverse effect on the operating profits of
              the business;

       m.     take or omit to take any steps directly or indirectly which would
              affect (or by omission would affect) adversely the ability of
              European Management to operate effectively its business during the
              term of this Agreement or its ability to maximize operating
              profits from its business.

5.     Use of Affiliates. Manager shall have the right to hire any affiliate of
       Manager or the European Management to perform any services in connection
       with the operation, management or development of Fairclough, provided,
       however, that the fees paid to any affiliate of Manager or the European
       Management for such services shall be similar to fees charged by
       nonaffiliate entities providing the same or similar services on an arms
       length basis.

6.     Liability of Manager. Manager shall not be liable, responsible or
       accountable in damages or otherwise to the Partnership for any act
       performed by Manager on behalf of the Partnership and


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   5



       in a manner reasonably believed by Manager to be within the scope of the
       authority granted to it by this Agreement and in the best interests of
       the Partnership, provided that Manager was not guilty of gross negligence
       or willful or wanton misconduct with respect to such act.

7.     Indemnification. The Partnership shall indemnify, save harmless and
       defend Manager and each of Manager's partners and its and their
       shareholders, directors, officers, employees, agents, attorneys, insurers
       and any affiliate of Manager hired or authorized by Manager pursuant to
       the terms of this Agreement to perform any services in connection with
       the operation, management or development of the Assets and the Business
       (individually, an "Indemnitee") against any and all losses, damages,
       liabilities, judgments, fines, penalties, amounts paid in settlement and
       expenses (including reasonable attorneys' fees), including losses,
       damages, liabilities, judgments, fines, penalties, amounts paid in
       settlement and expenses (including reasonable attorneys' fees) incurred
       as the result of the NEGLIGENCE OF ANY INDEMNITEE, arising out of or in
       connection with anything done or omitted by such Indemnitee in connection
       with the performance by Manager of its duties and obligations under this
       Agreement, provided that such Indemnitee's conduct did not constitute
       gross negligence or willful or wanton misconduct.

       Manager agrees that if the Partnership defaults under this Agreement, the
       Partnership's liability under this Agreement will be limited to its
       interest in Fairclough. Manager waives any rights it may have to seek
       recourse for such obligations against the partners, members, officers,
       employees, directors, or shareholders of the Partnership or against any
       other assets or interests of the Partnership (other than its interest in
       Fairclough).

       The terms of this Section 7 shall survive, and remain in effect
       following, the termination of this Agreement.

8.     Reimbursement of Manager. Manager shall in no event be required to
       advance any of its own funds for the payment of the costs and expenses
       that it is authorized by this Agreement to pay. If, however, Manager
       shall at any time advance any of its own funds in payment of such costs
       and expenses (which Manager shall have the right but not the obligation
       to do), Manager may submit an invoice to the Partnership for the amount
       of such advance (which invoice shall describe in reasonable detail the
       costs and expenses so paid by Manager and shall be accompanied by the
       receipt(s) for such payment), and the Partnership shall pay such amount
       to Manager within ten (10) days after its receipt of such invoice and
       accompanying receipts. If the Partnership fails to make such payment
       within such ten (10) day period, the amount so owing by the Partnership
       to Manager, if Manager so elects, shall bear interest from and after the
       day on which Manager paid such costs and expenses on behalf of the
       Partnership until such amount has been paid in full at a rate equal to
       the lesser of the prime rate announced or published by Bank of America
       (or its successor) from time to time or the maximum rate of interest
       permitted under applicable law.

9.     Insurance. Manager may (but shall not be obligated to) maintain, at the
       expense of the Partnership, a program of insurance approved by the
       Partnership, which program may include,

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       without limitation, such insurance as Manager shall deem prudent to
       protect against liability of Manager that may be occasioned by its
       activities under this Agreement. Manager shall not make any material
       change in such program of insurance without the prior written consent of
       the Partnership (which consent shall not be unreasonably withheld or
       delayed), unless such change does not result in an increase in the
       potential liability of the Partnership in any respect.

       Unless otherwise specifically authorized by the Partnership, Manager
       shall obtain the insurance authorized by this Section 10 from the
       insurance carriers that currently provide similar types of insurance
       coverage to Centex Corporation and its subsidiary companies, and, to the
       extent practicable, Manager shall, in lieu of obtaining separate
       insurance coverage, be added as an insured under the policies
       constituting the program of insurance maintained by the Partnership
       (which program, as in effect on the date hereof, is hereby approved by
       the Partnership for purposes of this Section 10), whether such policies
       were obtained directly by the Partnership or through Centex Corporation
       or its subsidiary corporations. Manager shall provide to the Partnership,
       promptly after obtaining any insurance policy pursuant to this Section 10
       (other than a policy under which the Partnership is also an insured), a
       description, in reasonable detail, of the terms and provisions of such
       policy.

       Manager shall give written notice to the Partnership of the expiration or
       anticipated termination of any insurance policy maintained by Manager in
       connection with its performance of this Agreement at least fifteen (15)
       days before such expiration or anticipated termination. Manager shall not
       be liable to the Partnership or its general partner or to any other
       person for damages, including consequential damages, for its failure to
       obtain or maintain adequate insurance coverage.

10.    Compensation.

       a.     Management Fee. Manager shall receive a fee for its services under
              this Agreement of $1,000 per month, which shall be paid by the
              Partnership to Manager within five (5) days after the end of each
              month.

       b.     Additional Compensation. It is understood that all actions taken
              by Manager pursuant to the provisions of this Agreement shall be
              on behalf and for the sole benefit of the Partnership and that
              Manager shall not be entitled to any compensation for such actions
              except as expressly provided in this Agreement. Notwithstanding
              the foregoing, the Partnership shall negotiate with Manager from
              time to time in good faith regarding the payment by the
              Partnership to Manager of, and shall pay to Manager, reasonable
              additional compensation for the efforts taken or to be taken by
              Manager pursuant to the provisions of this Agreement that the
              parties agree have resulted or will result in the enhancement of
              the value of the Assets or the Business; provided, however, that
              any such payments shall be approved in advance by the Board of
              Directors of 3333 Development Corporation, General Partner of the
              Partnership.



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   7




11.    Assignment and Subcontracting. This Agreement shall be binding upon and
       inure to the benefit of the parties hereto and their respective
       successors and assigns; provided, however, that this Agreement may not be
       assigned by either party without the prior written consent of the other
       party hereto. Any consent granted by either party to an assignment by the
       other party shall not be deemed a consent to any subsequent assignment.
       Notwithstanding the foregoing, Manager may, without the consent of the
       Partnership, assign and delegate the performance of, and the
       responsibility for, all but not less than all of the duties and
       obligations of Manager hereunder to any corporation, firm, joint venture
       or partnership fifty percent (50%) or more of whose voting stock (or its
       equivalent) is owned directly or indirectly by, or which is otherwise
       controlled by, Centex Corporation. Upon execution of any such assignment
       and delegation, notice thereof in the form of an executed copy of the
       document or instrument effecting such assignment and delegation shall be
       delivered promptly by Manager to the Partnership and Manager shall be
       released from any further obligation or responsibility under this
       Agreement for the performance of the duties and obligations so assigned
       and delegated.

12.    Termination. This Agreement may be terminated by any of the following
       methods:

       a.     By notice of Manager or Partnership, as provided in Section 1
              hereof.

       b.     By written agreement of the parties hereto.

       c.     If the Partnership breaches any of the terms of this Agreement, or
              if Manager breaches any of the terms of this Agreement, then the
              other party hereto shall give the breaching party written notice
              of such breach. If the breaching party fails to remedy the breach
              within thirty (30) days after receiving such notice, the other
              party may terminate this Agreement.

       d.     If either party hereto shall be dissolved and its business
              terminated, this Agreement shall automatically terminate upon the
              effectiveness of such dissolution.

       e.     By Manager if there is a detachment from Centex Corporation common
              stock of the ownership interests in the Partnership and 3333
              Holding Corporation which are presently held by a nominee for and
              on behalf of the holders of Centex Corporation common stock, and
              such stock and ownership interests no longer trade in tandem.

       No termination of this Agreement shall have the effect of terminating
       Manager's right to collect any amounts owed to it under this Agreement.

       Within ninety (90) days following the termination of this Agreement,
       Manager shall deliver to the Partnership the originals of all books,
       accounts and records in its possession or under its control pertaining to
       Fairclough. The Manager may, at its expense, retain copies of any such
       documents.



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   8




13.    Notices. Any notice, statement or demand required or permitted to be
       given under this Agreement shall be in writing and shall be personally
       delivered, sent by mail, or sent by telegram or telex, confirmed by
       letter, addressed to the party in the manner and at the address shown
       below, or at such other address as the party shall have designated in
       writing to the other party:

       To the Partnership:

              Centex Development Company, L.P.
              c/o 3333 Development Corporation
              2728 N. Harwood
              Dallas, Texas 75201
              Attention: President

       To Manager:

              Centex Homes
              2728 N. Harwood
              Dallas, Texas 75201
              Attention: Chairman and CEO

14.    Nature of Relationship. The parties hereto intend that Manager's
       relationship to the Partnership shall be that of an independent
       contractor. Nothing contained in this Agreement shall constitute or be
       construed to be or create a partnership or joint venture between Manager
       and the Partnership or their successors or assigns, and neither Manager
       nor any officer or employee of Manager shall be considered at any time to
       be an employee of the Partnership.

15.    Amendments. This Agreement cannot be amended, changed or modified except
       by another agreement in writing, duly signed by both parties hereto.

16.    Entire Agreement. This Agreement constitutes the entire agreement between
       the parties with respect to the subject matter hereof, and supersedes in
       its entirety the Management Agreement previously made between the parties
       as of 1 October 2000, which agreement is hereby cancelled and terminated.

17.    Headings. The section headings contained herein are for convenience of
       reference only and are not intended to define, limit or describe the
       scope or intent of any provision of this Agreement.

18.    Governing Law. This Agreement shall be construed and interpreted in
       accordance with the laws of the State of Texas.

19.    Severability. Any provision of this Agreement that is prohibited or
       unenforceable under the laws of any jurisdiction shall be ineffective in
       such jurisdiction to the extent necessary to



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   9


       render such provision valid and enforceable, and if such provision cannot
       be rendered valid and enforceable in such jurisdiction by limitation it
       shall be ineffective therein. The invalidity or unenforceability of any
       provision of this Agreement shall not render invalid or unenforceable any
       other provision of this Agreement.

       IN WITNESS WHEREOF, the Partnership and Manager have duly executed this
Agreement as of the day and year first set forth above.

CENTEX DEVELOPMENT COMPANY, L.P.

By 3333 Development Corporation
      General Partner



By: /s/ STEPHEN M. WEINBERG
       Stephen M. Weinberg
       President and CEO


CENTEX HOMES
- ----------

By Centex Real Estate Corporation, General Partner


By: /s/ TIMOTHY R. ELLER
       Timothy R. Eller
       Chairman and CEO


- ----------

Page 9

EX-10.2

   1
                                                                    EXHIBIT 10.2


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
April 1, 2001, by and between CENTEX DEVELOPMENT COMPANY, L.P., a Delaware
limited partnership ("CDCLP"), and RICHARD C. DECKER ("Executive"), an
individual resident of Coppell, Texas.

                                    RECITALS

         A. Vista Properties Company (now known as Centex-Vista Properties), a
division of Centex Homes, a Nevada general partnership ("Centex-Vista"), and
Executive entered into an Employment Agreement dated as of July 26, 1996 (the
"Original Agreement").

         B. Executive and David Quinn, acting on behalf of Centex-Vista and
CDCLP, executed a Memorandum dated July 31, 1998 (the "Memorandum"), to clarify
that the terms of the Original Agreement apply to all activities of Executive
performed on behalf of Centex-Vista and CDCLP. (Because CDCLP is managed by 3333
Development Corporation, a Nevada corporation, its sole general partner, the
term "CDCLP" as used in this Agreement will include both Centex Development
Company, L.P. and 3333 Development Corporation).

         C. Since the signing of the Original Agreement, a number of strategic
and organizational changes have occurred within Centex-Vista, CDCLP and their
related affiliated entities. Although Executive continues to be involved in the
disposition of real estate assets owned or controlled by Centex-Vista,
Executive's duties and responsibilities now primarily relate to CDCLP and its
operations.

         D. CDCLP and Executive desire to terminate the Original Agreement and
enter into this Agreement to reflect the current agreement between CDCLP and
Executive regarding the services to be rendered by Executive to CDCLP and the
compensation to be paid by CDCLP to Executive.

         E. CDCLP desires to employ Executive and Executive desires to be
employed by and to serve CDCLP in the capacities and for the term and
compensation and upon and subject to the terms and conditions set forth in this
Agreement.

         F. In addition to the terms of employment described in this Agreement,
Executive will be employed by Centex Service Company ("CSC"), an affiliate of
Centex-Vista, as more particularly described in a Dual Employment Agreement
dated as of January 1, 2001 (the "Dual Employment Agreement"), by and among
CDCLP, CSC and Executive.

                                    AGREEMENT

         NOW, THEREFORE, CDCLP and Executive mutually undertake and agree as
follows:

1.       Employment of Executive.

         A. Executive's employment with Centex-Vista commenced effective as of
July 26, 1996 (the "Original Commencement Date") and ended effective as of March
31, 2001. Executive's employment with CSC under the terms of the Dual Employment
Agreement, commenced effective January 1, 2001.

         B. Effective as of April 1, 2001 (the "Commencement Date"), CDCLP
agrees to employ Executive and Executive accepts employment with CDCLP and
agrees to serve CDCLP in the capacities, for the term and compensation, and upon
and subject to the terms and conditions set forth in this Agreement.



                                      -1-
   2

         C. Executive's tenure with Centex Corporation ("Centex") and its
related entities (including CDCLP) (individually, a "Centex Company";
collectively, the "Centex Companies") will be measured for all purposes
(including vesting of incentive and benefit plans) from the Original
Commencement Date.

2.       Duties of Executive.

         A. Executive will serve as President of the Centex Commercial
Development division of 3333 Development Corporation and President of Centex
Commercial Development, LLC. In those capacities, Executive will oversee the
real estate activities of certain other Centex Companies, including
Centex-Vista, EFO Land, L.P. ("EFO"), Nomas Corp. ("Nomas"), and their
subsidiaries, and such other real estate operations as the Chief Executive
Officer of CDCLP (the "CEO") may from time to time designate. Executive will be
responsible for providing the strategic direction and directing and supervising
the day-to-day management and operation of the business.

         B. Executive's employment will be subject to the direction of the CEO
and will be performed within the policies and guidelines established from time
to time by the CEO. Executive will, as the CEO may from time to time direct,
render such services of an executive and administrative character to CDCLP as
are usual and customary in the case of an executive of Centex Companies.

         C. Executive agrees that, subject to Section 5.A., during and
throughout the term of this Agreement, he will devote substantially all of his
business time and efforts to the performance of his duties and responsibilities
to be performed by him under the terms of this Agreement, and that during such
time he will not undertake any activities, business or otherwise, which would
interfere with or limit, in any material respect, his responsibilities under
this Agreement. CDCLP agrees, however, that Executive may spend a portion of his
business time working on issues related to partnerships that were, at one time,
affiliated with Trammell Crow Company in which Executive had involvement prior
to the Original Commencement Date, so long as such personal activities do not
interfere with Executive's performance of his duties under this Agreement.

3.       Compensation.

         A. Salary. As compensation for the services rendered by Executive to
CDCLP, CDCLP will pay Executive an annual salary of $315,000 for fiscal year
2002. The salary will be payable in accordance with the payroll policies of
CDCLP or as may otherwise be mutually agreed upon. The salary will be prorated
as to any period of service that is less than a full fiscal year. By
determination of the CEO, CDCLP may, in subsequent fiscal years and in its sole
and absolute discretion, increase the Executive's annual salary.

         B. Expense Reimbursement. In addition to such salary, Executive will be
reimbursed for all actual, normal out-of-pocket expenses incurred by him in
connection with his duties under this Agreement.

         C. Fringe Benefits. CDCLP will provide to Executive, during his
employment under this Agreement, all so-called "fringe benefits", including, but
not limited to, health and dental insurance, disability insurance, profit
sharing plan, supplemental executive retirement plan, salary continuation plan,
life insurance, and the like, that are currently granted to or provided for
executives of companies that are related to Centex in similar capacities or that
may be granted to or provided for such executives during the term of Executive's
employment under this Agreement. In addition, Executive will be entitled to a
$700 per month car allowance and the opportunity to join a luncheon club at
CDCLP expense. Fringe benefits are at all times subject to revision by CDCLP, in
its sole and absolute discretion.




                                      -2-
   3

         D. Bonus. Within 45 days after the end of each fiscal year (the fiscal
year ends on March 31) during the term of this Agreement, CDCLP will pay to
Executive an annual bonus payment (the "Annual Bonus") in the amount determined
in accordance with Exhibit 1--Part 1, which is attached to this Agreement and
incorporated herein by reference. The Annual Bonus will be prorated as to any
period of service that is less than a full fiscal year.

         E. Stock Options.

                  (1) On the Original Commencement Date, subject to the terms of
the Original Agreement, Executive was granted employee stock options to purchase
35,000 shares of common stock of Centex ("Centex Common Stock") at an exercise
price equal to the market value of Centex Common Stock on the close of business
on the Original Commencement Date, with a vesting period of 20% per year
beginning on the second anniversary of the date of grant.

                  (2) Within 60 days after the end of each fiscal year during
the term of this Agreement, beginning with the fiscal year ending March 31,
1997, Executive may also be granted stock options to purchase Centex Common
Stock subject to and in accordance with the terms and conditions of an Executive
Option Grant Agreement executed by Executive and Centex under the terms of the
Original Agreement.

4.       Term and Termination.

         A. Executive's employment with CDCLP will begin on the Commencement
Date and will continue until terminated in accordance with Section 4.B.

         B. Executive's employment by CDCLP may be terminated in the following
ways:

                  (1) Resignation. Executive may resign at any time for any
reason. The effective date of the resignation will be not less than 30 days from
the date of Executive's written resignation.

                  (2) Resignation for CDCLP's Breach. Executive may resign if
CDCLP commits a material breach of the terms and conditions of this Agreement
and fails to cure the breach prior to the expiration of 20 days after the
delivery to CDCLP of written notice from Executive setting forth the nature and
extent of such breach. Executive may seek to recover damages for CDCLP's breach
through an action at law or in equity.

                  (3) Termination Without Cause. CDCLP may terminate Executive's
employment with CDCLP for any reason or no reason at all, with or without cause.
The effective date of this termination will be 30 days from the date of notice
of termination.

                  (4) Termination for Executive's Breach. CDCLP may terminate
Executive's employment with CDCLP if Executive commits a material breach of the
terms and conditions of this Agreement and fails to cure the breach prior to the
expiration of 20 days after the delivery to Executive of written notice from
CDCLP setting forth the nature and extent of such breach. CDCLP may seek to
recover damages for Executive's breach through an action at law or in equity.

                  (5) Termination for Bad Acts. CDCLP may terminate Executive's
employment with CDCLP immediately, and without advance notice, if Executive
commits acts of theft, embezzlement, fraud, dishonesty or acts involving moral
turpitude. CDCLP may seek to recover damages for Executive's actions through an
action at law or in equity.




                                      -3-
   4

                  (6) Termination Due to Death of Executive. Executive's
employment with CDCLP will terminate immediately and automatically upon
Executive's death.

The failure by CDCLP to terminate Executive's employment or Executive to resign
with respect to any one or more of the matters referred to in this Section 4.B.
above will not be taken or held to be a waiver by CDCLP of its right to
terminate Executive's employment or Executive to resign based on that matter or
any subsequent matter.

         C. CDCLP will have different compensation obligations to Executive
under the different scenarios by which Executive's employment is terminated:

                  (1) If Executive resigns, as described in Section 4.B.(1) or
(2) above, then CDCLP will be obligated to pay to Executive the following: (i)
all salary accrued through the effective date of the resignation; (ii)
reimbursement for all expenses incurred by Executive through the effective date
of the resignation; (iii) within 45 days after the end of the fiscal year, any
Annual Bonus accrued through the effective date of the resignation; and (iv) the
Post-Employment Bonus (described in Section 4.D.).

                  (2) If CDCLP terminates Executive's employment under Sections
4.B.(3) or (4) above, then CDCLP will be obligated to pay to Executive the
following: (i) all salary accrued through the effective date of the termination;
(ii) a lump sum payment equal to the annual salary in effect on the effective
date of the termination, as described in Section 3.A. above; (iii) reimbursement
for all expenses incurred by Executive through the effective date of the
termination; (iv) within 45 days after the end of the fiscal year, any Annual
Bonus accrued through the effective date of termination; and (v) the
Post-Employment Bonus.

                  (3) If CDCLP terminates Executive's employment under Section
4.B.(5) above, CDCLP will pay to Executive only the following: (i) within 10
days of the effective date of the termination, all salary accrued through the
effective date of the termination; (ii) within 10 days of the effective date of
the termination, reimbursement for all expenses incurred by Executive through
the effective date of the termination; and (iii) within 45 days after the end of
the fiscal year, any Annual Bonus accrued through the effective date of the
termination. CDCLP will be entitled to reduce the amounts to be paid to
Executive by the liquidated amounts owing to CDCLP by Executive for acts of
theft, embezzlement, fraud or dishonesty.

                  (4) If Executive's employment terminates due to Executive's
death, as described in Section 4.B.(6), all obligations of CDCLP under this
Agreement will terminate, except that CDCLP will pay to the heirs of Executive
the following: (i) all salary accrued through the effective date of the
termination; (ii) reimbursement for all expenses incurred by Executive through
the effective date of the termination; (iii) any Annual Bonus accrued through
the effective date of termination; and (iv) the Post-Employment Bonus, as if
Executive had resigned immediately prior to his death.

Under any termination, resignation or non-renewal scenario, the amounts
described in this Section 4.C. will constitute the entire compensation to
Executive. After the date of termination, resignation or expiration of the
employment term, CDCLP will not be obligated to compensate Executive under
Sections 3.A., B., C., D. or E. with respect to periods of time after the date
of termination, resignation or expiration of the employment term. Any
obligations of CDCLP set forth in any other agreement or plan (e.g., any stock
option agreement, profit sharing plan, supplemental executive retirement plan,
salary continuation plan, etc.) will not be affected by the terms of this
Section 4.C., but rather will continue to the extent that the terms of such
other agreements and plans provide for continuation of such agreements or plans
following termination or expiration of employment.





                                      -4-
   5

         D. In the circumstances specifically stated in Section 4.C. above,
CDCLP will pay to Executive the a lump sum payment or ongoing payments (the
"Post-Employment Bonus") determined in the manner set forth in Exhibit 1--Part
2.

5.       Confidentiality and Non-Competition.

         A. Executive recognizes and acknowledges that the relationship created
between Executive and CDCLP is one of trust, and Executive agrees that during
the period of time commencing with the Commencement Date and ending on the
earlier of the death of Executive or 1 year after the cessation of Executive's
employment with CDCLP or any other Centex Companies for any reason other than a
default under this Agreement by CDCLP, Executive will not directly or indirectly
(including, without limitation, as an advisor, principal, partner, stockholder,
consultant, officer, director, employee or otherwise), through one or more
intermediaries, corporate or otherwise, individually or in concert with others,
be or become interested in, connected with, or engaged in any business which is
competitive with any business in which CDCLP (or any of its subsidiaries)
engages during the term of this Agreement. The prohibition of this Section 5.A.
will extend to the product type (which will be the product relating to the
business of CDCLP) in any geographic area in which CDCLP or any other Centex
Companies are conducting or engaging in any business at the time Executive's
employment is terminated. Notwithstanding the prohibition contained in this
Section 5.A., Executive will be entitled to make passive investments (i) in any
such competitive enterprise if Executive's investment constitutes less than 1%
of the equity ownership of such enterprise and (ii) in any real estate matter or
transaction so long as such investment does not compete with the business of
CDCLP or any other Centex Companies. Additionally, notwithstanding the foregoing
prohibition contained in this Section 5.A., upon cessation of Executive's
employment with CDCLP or any other Centex Companies, Executive will be entitled
to operate a small real estate development company of the size and nature that
he operated before he entered into the Original Agreement.

         B. Executive further agrees that during the term of this Agreement and
for a period of 2 years after the cessation of Executive's employment with CDCLP
or any other Centex Companies for any reason, Executive will not, without the
prior written consent of CDCLP, directly or indirectly, solicit or otherwise
induce any of the employees of CDCLP or any other Centex Companies to leave the
employment of CDCLP or any other Centex Companies. Executive further agrees that
during the term of this Agreement and for a period of 2 years after the
cessation of Executive's employment with CDCLP or any other Centex Companies for
any reason, Executive will not, without the prior written consent of CDCLP,
directly or indirectly, hire or employ any employees of CDCLP or any other
Centex Companies.

         C. Executive acknowledges and agrees that the names of the customers of
CDCLP, the methods of operation of CDCLP, sales, marketing, and other trade
secrets, as they may exist from time to time, are valuable, special, and unique
assets of CDCLP. Executive will not, during and after the term of his employment
under this Agreement, disclose any such names or trade secrets, or any part of
such names or trade secrets, that Executive becomes aware of during his
employment under this Agreement, to any person, firm, corporation, association
or other entity.

         D. Executive recognizes and acknowledges that CDCLP will suffer
irreparable harm if Executive violates any of the terms or provisions of this
Section 5. Accordingly, Executive agrees that CDCLP will be entitled to an
injunction restraining Executive from violating this Section 5, which relief
will be in addition to, and not in lieu of, CDCLP's right to seek all other
remedies which CDCLP may have at law and in equity.

         E. Executive and CDCLP agree that if the non-competition covenants
contained in this Agreement should be held by any court or other constituted
legal authority to be void or unenforceable in any particular area or
jurisdiction, then the parties to this Agreement will consider this Agreement to
be amended




                                      -5-
   6

and modified so as to eliminate the particular area or jurisdiction as to which
the non-competition covenants are held to be void or otherwise unenforceable,
and as to all other areas and jurisdictions covered by this Agreement, the terms
and provisions of this Agreement will remain in full force and effect as
originally written.

         F. Executive and CDCLP further agree that if the non-competition
covenants contained in this Agreement should be held by any court or other
constituted legal authority to be effective in any particular area or
jurisdiction only if said covenants are modified to limit their duration or
scope, then the parties to this Agreement will consider such non-competition
covenants to be amended and modified with respect to that particular area or
jurisdiction so as to comply with the order of any court or other constituted
legal authority, and as to all other political subdivisions of the United
States, the non-competition covenants contained in this Agreement will remain in
full force and effect as originally written.

         G. Executive and CDCLP agree that the covenants set forth in this
Agreement are appropriate and reasonable when considered in light of the nature
and extent of the Business conducted by CDCLP. Executive acknowledges that CDCLP
has a legitimate interest in protecting its business, the restrictive covenants
set forth above are not oppressive to Executive, and are reasonable in
limitations as to time, scope, geographical area and activity, the restrictive
covenants do not harm in any manner whatsoever the public interest and Executive
has received substantial consideration for agreeing to the non-compete and
non-solicitation covenants.

6.       Miscellaneous.

         A. This Agreement will 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 another jurisdiction.

         B. All covenants and agreements set forth in this Agreement by or on
behalf of either party will bind its or his successors and assigns, and all
covenants and agreements set forth in this Agreement by or on behalf of either
party will inure to the benefit of and be enforceable by the other party and its
or his heirs, devisees, personal representatives, successors and assigns.
Executive may not assign any rights or delegate any duties under this Agreement
without the prior written consent of CDCLP and any assignment of rights or
delegation of duties without CDCLP's prior written consent will be of no force
or effect, and will constitute a default under this Agreement. Executive
acknowledges that CDCLP may, at any time, delegate any or all of its obligations
under this Agreement or assign any or all of its interest under this Agreement
to another Centex Company provided that such delegation or assignment is
approved by Executive, whose approval will not be unreasonably withheld,
conditioned or delayed. Following said delegation or assignment this Agreement
will remain fully enforceable against Executive.

         C. Effective as of April 1, 2001, this Agreement supersedes and
replaces, in their entirety, the Original Agreement and the Memorandum. This
Agreement expresses the entire agreement between Executive and CDCLP with
reference to the subject matter of this Agreement and supersedes all prior
written or oral and all contemporaneous oral discussions, arrangements,
negotiations, and agreements with respect to the subject matter of this
Agreement. No waiver, modification, or amendment of this Agreement or of any
covenant, condition or limitation in this Agreement will be valid, unless it is
in a written document signed by the party most detrimentally affected by the
waiver or modification. The parties further agree that the provisions of this
paragraph may not be waived except as in the manner described in this paragraph.

         D. Any notice or other communication required, permitted, or
contemplated by this Agreement must be in writing, and delivered to the other
party (i) in person, (ii) by facsimile transmission (with the original following
in the United States mail), (iii) by overnight delivery service (including
Federal Express),




                                      -6-
   7

or (iv) by certified mail, return receipt requested. If such notice is given in
person or via facsimile transmission, such notice will be deemed given when
received or transmitted. If such notice is given by overnight delivery service
(including Federal Express), such notice is deemed received the business day
following delivery to the delivery service of such notice. If such notice is
given by certified mail, such notice will be deemed received 3 business days
after a certified letter containing such notice, properly addressed with postage
prepaid, is deposited in the United States mail. Notice must go to the parties
at the following addresses:

                                                                   
         If to CDCLP:                                                  with a copy to:

         Centex Development Company, L.P.                              Centex Development Company, L.P.
         2728 North Harwood                                            2728 North Harwood
         Dallas, Texas 75201                                           Dallas, Texas 75201
         Attn:    Stephen M. Weinberg,                                 Attn:    Joel S. Reed,
                  President and Chief Executive Officer                         General Counsel
         Phone:   (214) 981-6700                                       Phone:   (214) 981-6997
         Fax:     (214) 981-6909                                       Fax:     (214) 981-6180

         If to Executive:

         Richard C. Decker
         Centex Development Company, L.P.
         2728 North Harwood
         Dallas, Texas 75201
         Phone:   (214) 981-6712
         Fax:     (214) 981-6909



Any party may change its address, facsimile number or telephone number for the
purpose of this paragraph by giving written notice of such change to each of the
other parties in the manner described in this Agreement. To be effective, such
notice of change must expressly state that it is given for the purpose of
changing the notice provisions of this Agreement.

         E. In the event that attorneys' fees or other costs and expenses are
incurred to secure performance of any of the obligations described in this
Agreement, or to establish damages for the breach or default under this
Agreement or to obtain any other appropriate relief, whether by way of
prosecution or defense, the prevailing party (which will be the party who
receives the substance of the relief sought) will be entitled to recover
reasonable attorneys' fees and costs incurred in such action.

         IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement in Dallas, Texas as of the day and year first above
written.

                              
EXECUTIVE:                                CDCLP:

                                          CENTEX DEVELOPMENT COMPANY, L.P.,
                                          a Delaware limited partnership

/s/ RICHARD C. DECKER            By:      3333 Development Corporation,
- ---------------------------               a Nevada corporation
Richard C. Decker

                                          By:      /s/ STEPHEN M. WEINBERG
                                             -----------------------------------------
                                                   Stephen M. Weinberg
                                                   President and Chief Executive Officer





                                      -7-
   8


By signing below, Centex-Vista Properties, a division of Centex Homes, assumes
the obligation to pay to Executive any sums due from CDCLP under this Agreement
that are not paid by CDCLP. Other than the obligation set forth in this
paragraph, Centex-Vista Properties is not a party to this Agreement.

                                 CENTEX-VISTA PROPERTIES,
                                 a division of Centex Homes

                                 By:      /s/ STEPHEN M. WEINBERG
                                    --------------------------------
                                          Stephen M. Weinberg
                                          Chairman



                                      -8-
   9



                                    Exhibit 1

                                Bonus Calculation

Part 1--Annual Bonus

A.       The Annual Bonus to be paid to Executive pursuant to Section 3.D. of
         the Agreement is an amount equal to the following:

         1.       6% of the Operating Earnings generated by CCD Operations from
                  the Existing Projects; plus

         2.       5% of the Operating Earnings generated by CCD Operations from
                  the New Projects.

B.       For purposes of calculating the bonus to be paid to Executive, the
         following defined terms apply:

         1.       "Operating Earnings" means the "consolidated operating
                  earnings (pre-tax)" generated by CCD Operations, as shown in
                  the financial statements of CDCLP and of Centex for the
                  applicable fiscal year, adjusted downward by a Cash Charge or
                  upward by a Cash Credit, as appropriate. "Operating Earnings"
                  includes any Deferred Earnings Realized (as defined below).

         2.       "CCD Operations" means the activities (including land
                  acquisition, financing, development, leasing, operation and/or
                  sale) of the following companies and partnerships (and their
                  subsidiary entities, whether owned in whole or in part):

                  (a)      The "Commercial Development" business segment of
                           CDCLP, including Centex Commercial Development, L.P.
                           (collectively referred to as "CCD")

                  (b)      Centex-Vista, including EFO and Nomas projects
                           described on Exhibit 2

                  (c)      Any other entities that may be formed or acquired for
                           purposes of the CCD business segment's commercial
                           real estate activities

         3.       "Deferred Earnings" means the difference between the value at
                  which land is transferred from Centex-Vista to CDCLP and the
                  basis at which the land is carried on the books of
                  Centex-Vista.

         4.       "Deferred Earnings Realized" means the Deferred Earnings
                  realized by Centex-Vista when the land transferred by
                  Centex-Vista to CDCLP is transferred to a third party not
                  related to Centex.

         5.       "Existing Projects" means the real estate projects listed on
                  Exhibit 2 attached to this Agreement.

         6.       "New Projects" means the real estate projects now or hereafter
                  owned by CDCLP or any other Centex Companies that are
                  acquired, developed or sold by or under the direction of CCD
                  during Executive's employment with CDCLP. "New Projects"
                  includes any land owned by CDCLP, Centex-Vista, EFO or Nomas
                  that has not been developed as an operating project as of
                  March 31, 2001. "New Projects" specifically excludes any
                  Existing Projects.




                                      -9-
   10

         7.       "Cash Charge" or "Cash Credit", for a particular Measuring
                  Period, means the following amount:

                                                                                      
                                                                        Days in
                                Cost of           Average CCD          Measuring                 Liquidity
                         (       Funds       x   Cash Position  x       Period       )    +     Adjustment
                                                                        -------
                                                                          365



                  A positive number generated by this formula is a Cash Charge
                  and a negative number is a Cash Credit. The Cash Charge or
                  Cash Credit will be determined for each Measuring Period
                  during a fiscal year and then added together for purposes of
                  calculating Operating Earnings.

         8.       "Cost of Funds" means the prime rate of interest quoted to
                  CDCLP by its primary banking institution (which, on April 1,
                  2001, is Bank of America) on the first day of the Measuring
                  Period, plus the prime rate of interest quoted on the last day
                  of the Measuring Period, divided by two.

         9.       "Average CCD Cash Position " means the CCD Cash Position on
                  the first day of the Measuring Period, plus the CCD Cash
                  Position on the last day of the Measuring Period, divided by
                  two.

         10.      "CCD Cash Position" means, at any point in time, the
                  following:

                  (a)      The fair market value of land transferred by
                           Centex-Vista, EFO or Nomas to CDCLP (or its
                           subsidiaries) after March 31, 2001, for development
                           or sale by CCD, reduced by any debt assumed by CDCLP
                           (the value of land owned by Centex-Vista, EFO or
                           Nomas will not be included in the CCD Cash Position
                           while such land remains undeveloped or owned by
                           Centex-Vista, EFO or Nomas, as the case may be); plus

                  (b)      Any cash funded by CDCLP (or its subsidiaries) or CCD
                           to acquire land after March 31, 2001, for development
                           or sale by CCD; plus

                  (c)      Any additional cash funded by CDCLP after March 31,
                           2001, for CCD Operations; minus

                  (d)      The net cash proceeds generated by the sale, after
                           March 31, 2001, of "nominally-valued" assets owned by
                           Centex-Vista or EFO, after deducting (i) the
                           "nominal" basis at which such assets are booked by
                           Centex, and (ii) the closing costs associated with
                           the sale; minus

                  (e)      The net cash proceeds generated by the sale, after
                           March 31, 2001, of any other CCD properties (other
                           than those described in clause (d) above), after
                           deducting (i) loan repayment obligations, (ii)
                           distributions to partners, and (iii) the closing
                           costs associated with the sale; minus

                  (f)      Any other cash revenues (e.g. rent, management fees)
                           generated by CCD Operations; minus

                  (g)      Deferred Earnings Realized.




                                      -10-
   11

         11.      "Measuring Period" means the period of time beginning on the
                  first day of a fiscal quarter and ending on the last day of
                  that same fiscal quarter. At the election of CDCLP, the
                  Measuring Period may be reduced or lengthened.

         12.      "Liquidity Adjustment", for a particular Measuring Period,
                  means the following:

                                                                     
                                                                                  Liquidity
                             Cost of Funds  x       Liquidity        x       Maintenance Period
                                                                             ------------------
                                                   Requirement                       365



                  The "Liquidity Requirement" means the maximum liquidity
                  requirement imposed by any of CCD's lenders. The "Liquidity
                  Maintenance Period" means the number of days that CDCLP is
                  required to maintain the Liquidity Requirement. The Liquidity
                  Maintenance Period will be deemed to be 5 days, unless
                  Executive and CDCLP enter into an agreement to the contrary.


Part 2--Post-Employment Bonus

A.       The Post-Employment Bonus to be paid to Executive pursuant to Section
         4.D. of this Agreement will be either:

         1.       the Lump-Sum Bonus Payment, which will be paid in a lump sum
                  on the effective date of termination of Executive's
                  employment, or

         2.       the Continuing Bonus Payment, which will be paid on an
                  on-going basis after the effective date of termination of
                  Executive's employment.

         CDCLP will have the right to choose whether to make a Lump-Sum Bonus
         Payment or Continuing Bonus Payments.

B.       In addition to the defined terms set forth in Part 1 above, for
         purposes of calculating the Post-Employment Bonus to be paid to
         Executive, the following additional defined terms apply:

         1.       "Lump-Sum Bonus Payment" means an amount equal to the sum of
                  Lump-Sum Bonus Payment (Existing Projects) and Lump-Sum Bonus
                  Payment (New Projects).

         2.       "Continuing Bonus Payment" means an amount equal to the sum of
                  the Continuing Bonus Payment (Existing Projects) and the
                  Continuing Bonus Payment (New Projects). For the fiscal year
                  in which Executive is terminated, the Continuing Bonus Payment
                  will be prorated from the effective date of the termination
                  through the end of the fiscal year.

         3.       "Lump-Sum Bonus Payment (Existing Projects)" is equal to 6% of
                  the sum of:

                  (a)      the difference between:

                           (i)      the Aggregate Fair Market Value of all of
                                    the Existing Projects, and

                           (ii)     the cost book basis of CDCLP or Centex, as
                                    the case may be, in all of such Existing
                                    Projects; plus

                  (b)      the Deferred Earnings relating to Existing Projects.




                                      -11-
   12

         4.       "Lump-Sum Bonus Payment (New Projects)" is equal to 5% of the
                  sum of:

                  (a)      the difference between:

                           (i)      the Aggregate Fair Market Value of all of
                                    the New Projects that are completed or are
                                    Substantially Complete as operating real
                                    estate properties as of the effective date
                                    of termination of Executive's employment,
                                    and

                           (ii)     the cost book basis of CDCLP or Centex, as
                                    the case may be, in all of such Existing
                                    Projects; plus

                  (b)      the Deferred Earnings relating to New Projects.

         5.       "Aggregate Fair Market Value" means the total fair market
                  value of the Existing Projects or the New Projects, as
                  mutually agreed upon by CDCLP and Executive at the time of
                  termination of Executive's employment. If CDCLP and Executive
                  are unable to each an agreement, the Aggregate Fair Market
                  Value will be determined by an appraiser mutually acceptable
                  to CDCLP and Executive.

         6.       "Substantially Complete" means the following:

                  (a)      If Executive resigns his employment (as described in
                           Section 4.B.(1) or (2)), "Substantially Complete"
                           means that a certificate of occupancy (or its
                           equivalent in the particular jurisdiction) has been
                           issued for the shell of the building.

                  (b)      If CDCLP terminates Executive's employment (as
                           described in Section 4.B.(3), (4) or (5)) or
                           Executive dies (as described in Section 4.B.(6)),
                           "Substantially Complete" means that a financial
                           package for the proposed project has been approved by
                           the Board of Directors of 3333 Development
                           Corporation.

         7.       "Continuing Bonus Payment (Existing Projects)" is equal to 6%
                  of the sum of:

                  (a)      the book gain earned by CDCLP or Centex on the sale
                           of Existing Projects, as such Existing Projects are
                           sold; plus

                  (b)      at the end of each fiscal year, any Operating
                           Earnings (as defined in Part 1, above) generated by
                           any Existing Projects that have not been sold.

         8.       "Continuing Bonus Payment (New Projects)" is equal to 5% of
                  the sum of:

                  (a)      the book gain earned by CDCLP or Centex on the sale
                           of New Projects, as such New Projects are sold; plus

                  (b)      at the end of each fiscal year, any Operating
                           Earnings generated by any New Projects that have not
                           been sold.

         9.       Adjustments to Operating Earnings. For purposes of calculating
                  the Continuing Bonus Payment, Operating Earnings will be
                  determined in the same manner as such Operating Earnings are
                  determined for purposes of the Annual Bonus, with the
                  following adjustments:

                  (a)      The CCD Cash Position will be reduced by the fair
                           market value of any undeveloped land held by or on
                           behalf of CCD on the effective date of termination of
                           Executive's




                                      -12-
   13

                           employment, with the result that Executive will not
                           bear any Cash Charge for the value of the undeveloped
                           land. The earnings from the later development or sale
                           of such undeveloped land will not be included in
                           Operating Earnings.

                  (b)      After the effective date of termination of
                           Executive's employment, the CCD Cash Position will
                           only be affected by cash funded to operate the
                           Existing Projects and New Projects and by cash
                           proceeds generated from the operation or sale of the
                           Existing Projects and New Projects.

                  (c)      After the effective date of termination of
                           Executive's employment, the charge for overhead that
                           is assessed against Operating Earnings attributable
                           to the Existing Projects and New Projects will be
                           modified to reflect the fact that Executive will not
                           be participating in any new development projects.
                           Executive will be assessed a proportionate portion of
                           50% of the total overhead of CCD Operations, such
                           proportionate share to be the ratio of the Operating
                           Earnings generated by the projects in which Executive
                           participates in earnings (that is, the Existing
                           Projects and the New Projects) to the total Operating
                           Earnings generated by all operating projects that are
                           included in CCD Operations.






                                      -13-
   14



                                    Exhibit 2

                                Existing Projects




                                      -14-