Exhibit 10
Execution Copy
CREDIT AGREEMENT

effective as of September 27, 2004

by and among

M/I HOMES, INC.,
as Borrower

and

the Lenders Party Hereto

and

BANK ONE, NA,
as Agent for the Lenders

and

US BANK NATIONAL ASSOCIATION
as Syndication Agent

and

BANK OF AMERICA, N.A.
THE HUNTINGTON NATIONAL BANK
KEYBANK NATIONAL ASSOCIATION
and
WACHOVIA BANK, NATIONAL ASSOCIATION
as Documentation Agents

and

GUARANTY BANK
NATIONAL CITY BANK
and
SUNTRUST BANK
as Co-Agents

with

J.P. MORGAN SECURITIES INC.,
as Lead Arranger and Sole Bookrunner

 

 
TABLE OF CONTENTS
 
 
SECTION 1:  DEFINITIONS
 
1.1  Defined Terms
1.2 Other Definitional Provisions.
 
SECTION 2: AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT LOANS, SWINGLINE
LOANS AND FACILITY L/CS
 
2.1   Commitments.
2.2   Notes
2.3   Procedure for Borrowing.
2.4   Commitment Fee
2.5   Interest; Default Interest.
2.6   Termination, Reduction or Increase of Aggregate Commitment.
2.7   Maturity Date of Commitment; Extension.
2.8   Computation of Interest and Fees
2.9   ncreased Costs
2.10 Use of Proceeds.
2.11 Payments; Pro Rata Treatment.
2.12 Swingline Loans.
2.13 The Facility L/Cs
2.14 Designation or Resignation of LC Issuer.
2.15 Issuance of Facility L/Cs.
2.16 Facility L/C Participations.
2.17 Payments
2.18 Facility L/C Fees
2.19 Letter of Credit Reserves
2.20 Further Assurances
2.21 Obligations Absolute.
2.22 LC Issuer Reporting Requirements
2.23 Indemnification; Nature of LC Issuer’s Duties.
 
SECTION 3: GENERAL PROVISIONS APPLICABLE TO LOANS
 
3.1   Conversion/Continuation Options
3.2   Inability to Determine Interest Rate
3.3   Availability of Eurodollar Rate Loans
3.4   Requirements of Law
3.5   Indemnity
3.6   Taxes.
3.7   Lender Statements; Survival of Indemnity
3.8   Telephonic Notices
3.9   Non-Receipt of Funds by Agent
3.10 Replacement of Certain Lenders
 
SECTION 4: REPRESENTATIONS AND WARRANTIES
 
4.1   Financial Statements
4.2   Existence; Compliance with Law
4.3   Power; Authorization; Enforceable Obligations
4.4   No Legal Bar
4.5   No Material Litigation
4.6   Regulation U
4.7   Investment Company Act
4.8   ERISA
4.9   Disclosure
4.10 Subsidiary Information
4.11 MI Ancillary Businesses Information
4.12 Schedules
4.13 Environment
4.14 Force Majeure Events
4.15 Other Agreements
4.16 No Defaults on Outstanding Judgments or Orders
4.17 Ownership and Liens
4.18 Operation of Business
4.19 Taxes
 
SECTION 5:  CONDITIONS PRECEDENT
 
5.1  Conditions to Initial Loan(s)
5.2  Conditions to All Loans
 
SECTION 6:  AFFIRMATIVE COVENANTS
 
6.1    Financial Statements
6.2    Certificates; Other Information
6.3    Borrowing Base Certificate
6.4    Compliance with Borrowing Base Requirements
6.5    Interest Rate Protection
6.6    Payment of Obligations
6.7    Maintenance of Existence; Compliance
6.8    Maintenance of Property, Insurance
6.9    Inspection of Property; Books and Records; Discussions
6.10  Notices
6.11  Maintenance of Consolidated Tangible Net Worth
6.12  Maintenance of Debt to Worth
6.13  Maintenance of Interest Coverage Ratio
6.14  Guaranties of Wholly-Owned M/I Ancillary Businesses
6.15  Subsidiary Guarantors
6.16  Environment
 
SECTION 7:   NEGATIVE COVENANTS
 
7.1   Limitation on Secured Indebtedness
7.2   Limitation on Liens
7.3   Limitation on Fundamental Changes
7.4   Limitation on Acquisitions
7.5   Land Inventory
7.6   Limitation on Investments
7.7   Transactions with Affiliates and Officers.
7.8   Sale and Leaseback
7.9   Limitation on Payments of Subordinated Indebtedness and Modification of
Subordination Agreements.
7.10 Sale of Guarantor Securities
7.11 Intentionally Omitted.
7.12 Limitation on Negative Pledges
7.13 Housing Inventory
 
SECTION 8:   CASH COLLATERAL
 
8.1   Facility L/C Collateral Account
8.2   Event of Default under Paragraph (5) of Section 9
8.3   Other Events of Default
8.4   Cure; Termination.
 
SECTION 9:   DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF PROCEEDS AFTER EVENT
OF DEFAULT
 
 
SECTION 10:   THE AGENT
 
10.1    Appointment
10.2    Delegation of Duties
10.3    Exculpatory Provisions
10.4    Reliance by Agent
10.5    Notice of Default
10.6    Non-Reliance on Agent and Other Lenders
10.7    Indemnification
10.8    Agent in Its Individual Capacity
10.9    Delegation to Affiliates
10.10  Successor Agent
10.11   Syndication Agent, Documentation Agent and Co-Agent
 
SECTION 11:   MISCELLANEOUS
 
11.1    Amendments and Waivers
11.2    Notices
11.3    No Waiver; Cumulative Remedies
11.4    Participants.
11.5    Survival of Representations and Warranties
11.6    Payment of Expenses and Taxes
11.7    Successors and Assigns; Assignment.
11.8    Adjustments; Set-off.
11.9    WAIVER OF JURY TRIAL
11.10  Confidentiality
11.11  Counterparts; Effective Date
11.12  Governing Law
11.13  Integration
11.14  Indemnity
11.15  Severability of Provisions
11.16  Submission to Jurisdiction
11.17  Governmental Regulation
11.18  No Fiduciary Duty
11.19  Headings
11.20  FIN 46
11.21  USA Patriot Act

SCHEDULES
1 --    Commitments of Lenders
 
2 --    Existing L/Cs
 
3 --    Principal Places of Business, etc. of All Subsidiaries
 
4 --    Principal Places of Business, etc. of M/I Ancillary Businesses
 
EXHIBITS
 
A    --    Form of Borrowing Base Certificate
 
B    --    Form of Guaranty Agreement
 
C    --    Form of Note
 
D    --    Form of Commitment and Acceptance
 
E    --    Form of Opinion of J. Thomas Mason, Esq.
 
F    --    Form of Responsible Officer’s Certificate
 
G    --    Form of Chief Financial Officer’s Certificate
 
H    --    Form of Assignment Agreement
 

 

     

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CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT (this “Agreement”) is made to be effective as of September
27, 2004, by and among M/I HOMES, INC. (formerly M/I SCHOTTENSTEIN HOMES, INC.),
an Ohio corporation (“Borrower”), the Lenders party hereto and BANK ONE, NA, a
national banking association having its main office in Chicago, Illinois, as
agent for Lenders (“Agent”). For valuable consideration, the receipt of which is
hereby acknowledged, Borrower, Lenders and Agent, each intending to be legally
bound, hereby recite and agree as follows:
 
BACKGROUND INFORMATION

A    Borrower, certain of the Lenders and Agent are parties to a certain Credit
Agreement effective as of March 6, 2002 (the “Existing Credit Agreement”).
 
B.    Borrower, Lenders and Agent wish to renew the Existing Credit Agreement as
set forth herein by, among other things, (i) adding certain Lenders, (ii)
increasing the Aggregate Commitment, (iii) reallocating the Commitments, (iv)
extending the Maturity Date and (v) modifying certain covenants and other
provisions of the Existing Credit Agreement.
 
Accordingly, Borrower, Lenders and Agent hereby agree as follows:
 
AGREEMENT

SECTION 1:    DEFINITIONS

 
1.1  Defined Terms. As used in this Agreement, the following terms have the
following respective meanings:
 
“ABR Loan” shall mean any Loan when and to the extent that the interest rate
thereon is determined by reference to the Alternate Base Rate.
 
“Acquisition” shall mean any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which Borrower or any of
its Subsidiaries (i) acquires any going concern or all or substantially all of
the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes or by percentage of voting
power) of the Common Equity of another Person.
 
“Additional Lender” shall have the meaning set forth in subsection 2.6(b)(i)
hereof.
 
“Adjusted Land Value” means, at any date, (i) the book value of all Land, less
(ii) the sum of (a) the book value of all Lots under Contract and (b) the lesser
of (1) the product of (x) the number of Housing Units with respect to which
Borrower and its Subsidiaries entered into bona fide contracts of sale with
Persons that are not Subsidiaries or Affiliates during the six-month period
ending on such date and (y) the average book value of all Finished Lots and Lots
under Contract at such date and (2) twenty-five percent (25%) of Consolidated
Tangible Net Worth at such date.
 
“Affected Lender” shall have the meaning set forth in subsection 3.10 hereof.
 
“Affiliate” shall mean (a) any Person (other than a Subsidiary of Borrower)
which, directly or indirectly, controls, is controlled by or is under common
control with Borrower or (b) any Person who is a director, officer or key
employee of Borrower, any Subsidiary of Borrower or any Person described in
clause (a) of this definition. For purposes of this definition, “control” of a
Person means the power, direct or indirect, to vote twenty percent (20%) or more
of the securities having voting power for the election of directors of such
Person or otherwise to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
 
“Agent” shall have the meaning set forth in the preamble hereof.
 
“Agent’s Fee Letter” shall mean that certain fee letter from the Agent and
Arranger to Borrower dated and accepted by Borrower on August 17, 2004.
 
“Aggregate Commitment” shall mean the aggregate Commitments of all the Lenders,
as reduced or increased from time to time pursuant to the terms of this
Agreement. As of the date of this Agreement, the Aggregate Commitment is
$500,000,000.
 
“Agreement” shall mean this Agreement, as the same may be amended, supplemented
or otherwise modified from time to time.
 
“Alternate Base Rate” shall mean a fluctuating rate per annum equal to the
higher of (i) the Prime Rate, changing when and as said rate changes (without
notice), or (ii) the sum of 1/2 of 1% plus the Federal Funds Rate then in
effect.
 
“Applicable ABR Margin” shall mean, as at any date of determination, the margin
indicated in subsection 2.5(b) hereof as then applicable to ABR Loans (under
subsection 2.5(a) hereof).
 
“Applicable Commitment Rate” shall mean, as at any date of determination, the
rate per annum indicated in subsection 2.5(b) hereof as then applicable in the
determination of the Commitment Fee (under subsection 2.4 hereof).
 
“Applicable Eurodollar Margin” shall mean, as at any date of determination, the
margin indicated in subsection 2.5(b) hereof as then applicable to Eurodollar
Rate Loans (under subsection 2.5(a) hereof). The Applicable Eurodollar Margin is
also the Applicable Facility L/C Rate.
 
“Applicable Facility L/C Rate” shall mean, as at any date of determination, the
rate per annum indicated in subsection 2.5(b) hereof as then applicable in the
determination of the Facility L/C Fee (under subsection 2.18 hereof). The
Applicable Facility L/C Rate is also the Applicable Eurodollar Margin.
 
“Applicable Margin(s)” shall mean the Applicable ABR Margin and/or the
Applicable Eurodollar Margin, as the case may be.
 
“Arranger” shall mean J.P. Morgan Securities Inc., as Lead Arranger and Sole
Bookrunner.
 
“Bank One” shall mean Bank One, NA, having its main office in Chicago, Illinois.
 
“Bankruptcy Code” shall mean Title 11, U.S.C. as amended from time to time.
 
“Borrower” shall mean M/I Homes, Inc. (formerly known as M/I Schottenstein
Homes, Inc.), an Ohio corporation.
 
“Borrowing Base” shall mean, at any date of determination, an amount equal to
the sum of the following unencumbered assets of the Borrower and the Guarantors:
 

  (i) one hundred percent (100%) of the Receivables, plus

 

  (ii) ninety percent (90%) of the book value of Housing Units under Contract
and Lots under Contract, plus

 

  (iii) seventy-five percent (75%) of the book value of Speculative Housing
Units, plus

 

  (iv) seventy percent (70%) of the book value of Finished Lots (subject to the
limitation set forth below), plus

 

  (v) fifty percent (50%) of the book value of Lots under Development (subject
to the limitation set forth below), plus

 

  (vi) thirty percent (30%) of the book value of Unimproved Entitled Land
(subject to the limitation set forth below).

 
Notwithstanding the foregoing, the Borrowing Base shall not include any amounts
under clauses (iv), (v) and (vi) above to the extent that the sum of such
amounts exceeds forty-five percent (45%) of the total Borrowing Base. The term
“unencumbered” means that such asset is not subject to any Lien (except for
Liens permitted under subsections 7.2(c) and (d) hereof).
 
“Borrowing Base Certificate” shall mean a certificate in the form of Exhibit A
hereto, certified by a Responsible Officer of Borrower.
 
“Borrowing Base Indebtedness” shall mean at any date (i) the sum of (a)
Consolidated Indebtedness and (b) an amount equal to ten percent (10%) of the
aggregate commitment under the M/I Financial Corp. Loan Agreement, less (ii) the
sum of (a) Secured Indebtedness, (b) Subordinated Indebtedness and (c)
Indebtedness under the M/I Financial Corp. Loan Agreement, all as of such date.
 
“Borrowing Date” shall mean any Business Day specified pursuant to (a)
subsection 2.3 hereof as a date on which Lenders make a disbursement of the
Revolving Credit Loans hereunder, (b) subsection 2.12 hereof as a date on which
Swingline Lender makes, at Borrower’s request, a disbursement of the Swingline
Loans hereunder, or (c) subsection 2.13 hereof as a date on which an LC Issuer
issues, at Borrower’s request, a Facility L/C hereunder.
 
“Business Day” shall mean (a) with respect to any borrowing, payment or rate
selection of Eurodollar Rate Loans, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (b)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
 
“Capital Lease” shall mean all leases which have been or should be capitalized
on the books of the lessee in accordance with GAAP.
 
“Cash Equivalents” shall mean (a) securities with maturities of 180 days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
bankers’ acceptances, each issued by a Lender hereunder and each with a maturity
of 180 days or less from the date of acquisition, and (c) commercial paper of a
domestic issuer rated at least A-l by S&P or P-l by Moody’s with a maturity of
not more than 180 days.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended or superseded
from time to time. Any reference to a specific provision of the Code shall be
construed to include any comparable provision of the Code as hereafter amended
or superseded.
 
“Collateral Shortfall Amount” shall have the meaning set forth in subsection 8.2
hereof.
 
“Commitment” shall have the meaning set forth in subsection 2.1(a) hereof.
 
“Commitment Fee” shall have the meaning set forth in subsection 2.4 hereof.
 
“Commitment and Acceptance” shall have the meaning set forth in subsection
2.6(b)(i) hereof.
 
“Commitment Period” shall mean the period from and including the date hereof to
the Maturity Date, or such earlier or later date as the Aggregate Commitment
shall terminate as provided herein.
 
“Common Equity” of any Person shall mean any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participations, or
other equivalents of or interests in (however designated) the equity (which
includes, but is not limited to, common stock, preferred stock and partnership
and joint venture interests) of such Person (excluding any debt securities
convertible into, or exchangeable for, such equity) to the extent that the
foregoing is entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or other persons that will
control the management and policies of such Person.
 
“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which is under common control with Borrower within the meaning of Section 414(b)
or (c) of the Code.
 
“Consolidated Earnings” shall mean, at any date, the amount which would be set
forth opposite the caption “net income” (or any like caption) in a consolidated
statement of income or operations of Borrower and Borrower’s Subsidiaries at
such date prepared in accordance with GAAP.
 
“Consolidated Indebtedness” shall mean, at any date, the Indebtedness of the
Borrower and its Subsidiaries determined on a consolidated basis, including
Borrower’s and its Subsidiaries’ pro rata share of Indebtedness of any Joint
Venture in respect of which Borrower or any of its Subsidiaries has made an
Investment in Joint Venture, all determined as of such date.
 
“Consolidated Interest Expense” shall mean, for any period, interest expense on
Indebtedness of Borrower and Borrower’s Subsidiaries for such period, in each
case determined on a consolidated basis in accordance with GAAP.
 
“Consolidated Interest Incurred” shall mean, for any rolling twelve (12)-month
period, all interest incurred during such period on outstanding Indebtedness of
Borrower and Borrower’s Subsidiaries irrespective of whether such interest is
expensed or capitalized by Borrower or Borrower’s Subsidiaries, in each case
determined on a consolidated basis.
 
“Consolidated Tangible Net Worth” shall mean, at any date, the consolidated
stockholders equity of Borrower determined in accordance with GAAP, less
Intangible Assets, all determined as of such date.
 
“Construction Bonds” shall mean bonds issued by surety bond companies for the
benefit of, and as required by, municipalities or other political subdivisions
to secure the performance by Borrower or any Subsidiary of its obligations
relating to lot improvements and subdivision development and completion.
 
“Contingent Obligation” shall mean, as to any Person, any reimbursement
obligations (including, in the case of Borrower, the Reimbursement Obligations)
of such Person in respect of drafts that may be drawn under Letters of Credit,
any reimbursement obligations of such Person in respect of surety bonds
(including reimbursement obligations in respect of Construction Bonds), and any
obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations primarily to pay money
(“primary obligations”) of any other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including without limitation any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation, or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the obligee under any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof; provided, however, that the term
“Contingent Obligation” shall not include (A) endorsements of instruments for
deposit or collection in the ordinary course of business, (B) Mortgage Loan
Repurchase Obligations and (C) obligations (including indemnity obligations)
under land purchase contracts entered into in the ordinary course of business.
 
“Contractual Obligation” shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
 
“Default” shall mean any of the events specified in Section 9 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
 
“Dollars” and “$” shall mean dollars in lawful currency of the United States of
America.
 
“EBITDA” shall mean, for any rolling twelve (12)-month period, on a consolidated
basis for Borrower and its Subsidiaries, the sum of the amounts for such period
of (a) Consolidated Earnings, plus (b) charges against income for federal, state
and local income taxes, plus (c) Consolidated Interest Expense, plus (d)
depreciation and amortization expense, plus (e) extraordinary losses exclusive
of any such losses that are attributable to the write-down or other downward
revaluation of assets (including the establishment of reserves), minus (x)
interest income, minus (y) all extraordinary gains. EBIDTA shall include net
income from Joint Ventures only to the extent distributed to Borrower or a
Subsidiary.
 
“Eligible Assignee” shall mean (a) any Lender or any affiliate of a Lender and
(b) any other commercial bank, financial institution, institutional lender or
“accredited investor” (as defined in Regulation D promulgated under the
Securities Act of 1933 by the Securities and Exchange Commission) with capital
of at least $500,000,000 and with an office in the United States.
 
“Eligible Mortgage Loan” shall mean at any date an original (not a rewritten or
renewed) loan evidenced by a note and secured by a first mortgage on residential
real property which (a) M/I Financial Corp. has made to enable a natural person
or persons to purchase a home from Borrower, any Subsidiary of Borrower or
another Person that is substantially completed, (b) is not more than sixty (60)
days old as determined by the date of the note which evidences such loan, and
(c) is subject, or M/I Financial Corp. reasonably believes is subject, to a
Purchase Commitment; provided, however, that the amount of Eligible Mortgage
Loans consisting of loans made by M/I Financial Corp. for the purchase of homes
from any Person other than Borrower or any Subsidiary of Borrower shall not, in
the aggregate at any one time outstanding, exceed the amount of $5,000,000.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
 
“Eurocurrency Reserve Requirements” shall mean, for any day as applied to a
Eurodollar Rate Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Board of
Governors of the Federal Reserve System) maintained by a member bank of the
Federal Reserve System.
 
“Eurodollar Base Rate” shall mean, with respect to each Eurodollar Rate Loan for
the relevant Interest Period, the applicable British Bankers’ Association London
interbank offered rate for deposits in Dollars as reported by any generally
recognized financial information service selected by the Agent as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
and having a maturity equal to such Interest Period.
 
“Eurodollar Rate” shall mean, with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
 
       Eurodollar Base Rate       
 
1.00 - Eurocurrency Reserve Requirements
 
“Eurodollar Rate Loans” shall mean any Revolving Credit Loan when and to the
extent that the interest rate thereon is determined by reference to the
Eurodollar Rate.
 
“Event of Default” shall mean any of the events specified in Section 9 hereof,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
 
“Excluded Taxes” shall mean, in the case of each Lender or applicable Lending
Installation and Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it, by (i) the jurisdiction under the laws of which such
Lender, Lending Installation or Agent is incorporated or organized, (ii) the
jurisdiction in which Agent’s or such Lender’s principal executive office or
such Lender’s applicable Lending Installation is located, or (iii) reason of any
connection between the jurisdiction imposing such tax and such Lender,
applicable Lending Installation or Agent other than a connection arising
principally from such Lender having executed, delivered or performed its
obligations under, or received payment under or enforced, this Agreement.
 
“Existing Credit Agreement” shall have the meaning set forth in paragraph A of
the “Background Information” on page 1 of this Agreement.
 
“Existing L/Cs” shall mean those certain Letters of Credit issued by Bank One or
SunTrust for the account of Borrower prior to the date hereof and listed on
Schedule 2 hereto.
 
“Extension Request” shall have the meaning set forth in subsection 2.7(b)
hereof.
 
“Facility Increase Request” shall have the meaning set forth in subsection
2.6(b)(i) hereof.
 
“Facility L/C” shall mean an irrevocable standby Letter of Credit, including any
extensions or renewals, (a) issued by an LC Issuer pursuant to this Agreement or
(b) in the case of the Existing L/Cs, previously issued by Bank One or SunTrust
and which will remain in place as of the first Borrowing Date, in which each
Lender agrees to purchase a participation equal to its Ratable Share and the LC
Issuer agrees to make payments in Dollars for the account of Borrower, on behalf
of Borrower or any Subsidiary thereof in respect of obligations of Borrower or
such Subsidiary incurred pursuant to contracts made or performances undertaken
or to be undertaken or like matters relating to contracts to which Borrower or
such Subsidiary is or proposes to become a party in the ordinary course of
Borrower’s or such Subsidiary’s business. The term “Facility L/C” shall include
the Existing LCs, but shall not include any Letters of Credit issued (x)
pursuant to the HNB Joint Ventures Letter of Credit Agreement or (y) by any
Lender other than pursuant to this Agreement or as provided in clause (b) of
this definition.
 
“Facility L/C Application” shall have the meaning set forth in subsection
2.15(a) hereof and shall also include each reimbursement agreement delivered to
an LC Issuer prior to the date hereof with respect to any Existing L/C.
 
“Facility L/C Collateral Account” shall have the meaning set forth in subsection
8.1 hereof.
 
“Facility L/C Fee” shall mean a fee, payable with respect to each Facility L/C
issued by an LC Issuer, in an amount per annum equal to the product of the face
amount of such Facility L/C and the Applicable Facility L/C Rate, in each case
as such Applicable Facility L/C Rate is determined on a daily basis during the
period in respect of which such fee is payable hereunder.
 
“Facility L/C Obligations” shall mean, at any date, the sum of (i) the aggregate
undrawn face amount of all outstanding Facility L/Cs on such date, plus (ii) the
aggregate unpaid amount of all Reimbursement Obligations on such date.
 
“Fannie Mae” shall mean the Federal National Mortgage Association, or any
successor thereto.
 
“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided, however, that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to the Agent on such Business Day on such
transactions as determined by the Agent.
 
“Financial Letter of Credit” means a Letter of Credit that is not a Performance
Letter of Credit.
 
“Finished Lots” shall mean all Lots (excluding Lots under Contract) owned by
Borrower or any Guarantor with respect to which (i) development has been
completed to such an extent that permits that allow use and construction,
including building, sanitary sewer and water, could be obtained for a Housing
Unit on each such Lot, and (ii) Start of Construction has not occurred. The book
value of Finished Lots shall be calculated in accordance with GAAP and shall
include all associated costs required to be capitalized under GAAP.
 
“Fitch” shall mean Fitch, Inc.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America as in effect at the time any determination is made or financial
statement is required hereunder as promulgated by the American Institute of
Certified Public Accountants, the Accounting Principles Board, the Financial
Accounting Standards Board or any other body existing from time to time which is
authorized to establish or interpret such principles, applied on a consistent
basis throughout any applicable period, subject to any change required by a
change in GAAP; provided, however, that if any change in generally accepted
accounting principles from those applied in preparing the financial statements
referred to in subsection 4.1 hereof affects the calculation of any financial
covenant contained herein, Borrower, Lenders and Agent hereby agree to amend the
Agreement to the effect that each such financial covenant is not more or less
restrictive than such covenant as in effect on the date hereof using generally
accepted accounting principles consistent with those reflected in such financial
statements.
 
“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
 
“Guarantor” shall mean each of Borrower’s Subsidiaries listed on Schedule 3
hereto and each M/I Ancillary Business and Subsidiary of Borrower which becomes
a “Guarantor” pursuant to a Supplemental Guaranty as provided in subsections
6.14 and 6.15 hereof.
 
“Guaranty Agreement” shall mean the Guaranty Agreement substantially in the form
of Exhibit B attached to this Agreement, executed by one or more Guarantors in
favor of Agent (for the benefit of the Lenders), as the same shall be modified
and supplemented and in effect from time to time.
 
“HNB” shall mean The Huntington National Bank.
 
“HNB Joint Ventures Letter of Credit Agreement” shall mean the Agreement to
Issue Letters of Credit dated as of June 8, 1994, between Borrower and HNB, as
heretofore or hereafter from time to time amended, with respect to standby
Letters of Credit issued or to be issued by HNB for the account of certain joint
ventures of which Borrower is a partner.
 
“Housing Unit” shall mean a detached or attached (including townhouse
condominium or condominium) single-family house (but excluding mobile homes)
owned by Borrower or a Guarantor (i) which is completed or for which there has
been a Start of Construction and (ii) which has been or is being constructed on
Land which immediately prior to the Start of Construction constituted a Lot
hereunder. The book value of Housing Units shall be calculated in accordance
with GAAP and shall include all associated costs (including the applicable Lot
costs) required to be capitalized under GAAP, provided that the cost of
obtaining commitments for financing terms to be provided to the buyers of
Housing Units shall be excluded.
 
“Housing Unit Closing” shall mean a closing of the sale of a Housing Unit by the
Borrower or a Guarantor to a bona fide purchaser for value that is not a
Subsidiary or Affiliate.
 
“Housing Unit under Contract” shall mean, at any date, a Housing Unit owned by
the Borrower or a Guarantor as to which the Borrower or such Guarantor has
entered into a bona fide contract of sale (a) in a form customarily employed by
the Borrower or such Guarantor, (b) not more than fifteen (15) months prior to
such date, (c) with a Person who is not a Subsidiary or Affiliate, (d) which
provides for closing on or before the later of thirty (30) days after completion
of such Housing Unit or sixty (60) days after the date of such Contract, and (e)
under which no defaults then exist; provided, however, that in the case of any
Housing Unit the purchase of which is to be financed in whole or in part by a
loan insured by the Federal Housing Administration or guaranteed by the Veterans
Administration, the required minimum down payment shall be the amount (if any)
required under the rules of the relevant agency. A Housing Unit shall not
constitute a Housing Unit under Contract, at any date of determination, if (i)
such Housing Unit is not completed and (ii) the Start of Construction thereof
occurred more than nine (9) months prior to such date.
 
“Increase Date” shall have the meaning set forth in subsection 2.6(b)(ii)
hereof.
 
“Indebtedness” shall mean, without duplication, with respect to any Person (1)
indebtedness or liability for borrowed money, including, without limitation,
subordinated indebtedness (other than trade accounts payable and accruals
incurred in the ordinary course of business); (2) obligations evidenced by
debentures, notes, bonds, or other similar instruments; (3) obligations for the
deferred purchase price of property (including, without limitation, seller
financing of any inventory) or services, provided, however, that “Indebtedness”
shall not include obligations with respect to options to purchase real property
that have not been exercised; (4) obligations as lessee under Capital Leases to
the extent that the same would, in accordance with GAAP, appear as liabilities
in such Person’s consolidated balance sheet; (5) current liabilities in respect
of unfunded vested benefits under Plans and incurred withdrawal liability under
any Multiemployer Plan; (6) obligations under acceptance facilities; (7) all
Contingent Obligations, provided, however, that “Indebtedness” shall not include
reimbursement obligations in respect of Performance Letters of Credit or
guaranties of performance obligations (such as bid or performance surety bonds)
except to the extent that any such reimbursement obligations or guaranties of
performance obligations have been drawn or called upon; (8) obligations secured
by any Liens on any property of such Person, whether or not the obligations have
been assumed; and (9) net liabilities under interest rate swap, exchange or cap
agreements (valued as the termination value thereof, computed in accordance with
a method approved by the International Swaps and Derivatives Association and
agreed to by such Person in the applicable agreement).
 
“Intangible Assets” shall mean, at any time, the amount (to the extent reflected
in determining consolidated stockholders equity of Borrower) of all unamortized
debt discount and expense, unamortized deferred charges, good will, patents,
trademarks, service marks, trade names, copyrights and all other items which
would be treated as intangibles on a consolidated balance sheet of Borrower
prepared in accordance with GAAP.
 
“Interest Coverage Ratio” shall mean, for any period, the ratio of (a) EBITDA to
(b) Consolidated Interest Incurred.
 
“Interest Payment Date” shall mean, (a) with respect to any ABR Loan (whether a
Revolving Credit Loan or a Swingline Loan), the first day of each calendar
month, commencing on the first of such days to occur after the first Borrowing
Date, (b) with respect to any Eurodollar Rate Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) with respect
to any Eurodollar Rate Loan having an Interest Period longer than three months,
(x) each day which is three months, or a whole multiple thereof, after the first
day of such Interest Period, and (y) the last day of such Interest Period.
 
“Interest Period” shall mean with respect to any Eurodollar Rate Loan:
 
(i)    initially, the period commencing on the Borrowing Date or conversion
date, as the case may be, with respect to such Eurodollar Rate Loan and ending
one, two, three or six months thereafter, as selected by Borrower in Borrower’s
Notice of Conversion/Continuation, as the case may be, given with respect
thereto; and
 
(ii)    thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Rate Loan and ending one, two,
three or six months thereafter, as selected by Borrower by irrevocable notice to
the Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
 
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
 
(1)    if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
 
(2)    any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
 
(3)    no Interest Period shall be for less than one month, and Borrower shall
not select an Interest Period for a Eurodollar Rate Loan as a Revolving Credit
Loan if the last day of such Interest Period would be after the last day of the
Commitment Period.
 
“Interest Rate Contract” shall mean any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest rate insurance
arrangement, or any other agreement or arrangement designed to provide
protection against fluctuation in interest rates.
 
“Inventory Valuation Date” shall mean (a) the last day of the most recent fiscal
month of Borrower with respect to which the Borrower is required to have
delivered a Borrowing Base Certificate pursuant to subsection 6.3 hereof or (b)
if Borrower elects, pursuant to subsection 6.4, to deliver a Borrowing Base
Certificate as of a later date, such later date.
 
“Investments” shall have the meaning set forth in subsection 7.6 hereof.
 
“Investment in Joint Venture” shall mean any Investment in a Joint Venture that
is formed for the purpose of acquiring land, the majority of which land is zoned
residential and is to be developed into residential lots for attached or
detached single family housing (including a townhouse condominium building or
condominium building), and/or performing such development. The value of
Investments in Joint Ventures shall be calculated in accordance with GAAP.
 
“Joint Venture” shall mean any Person (other than a Subsidiary) in which the
Borrower or a Subsidiary holds any stock, partnership interest, joint venture
interest, limited liability company interest or other equity interest.
 
“Land” shall mean land owned by Borrower or a Guarantor, which land is being
developed or is held for future development or sale.
 
“LC Issuer” shall mean Bank One (or any Subsidiary or affiliate of Bank One
designated by Bank One) in its capacity as issuer of Facility L/Cs hereunder,
SunTrust in its capacity as issuer of those Existing L/Cs identified in Schedule
2 hereto as having been issued by SunTrust and any other Lender that may from
time to time be designated as an LC Issuer in accordance with the provisions of
subsection 2.14 hereof.
 
“Lenders” shall have the meaning set forth in the preamble hereof.
 
“Lending Installation” shall mean with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent identified
on the signature pages hereof or otherwise selected by such Lender or the Agent
pursuant to subsection 2.3 hereof.
 
“Letter of Credit” of a Person shall mean a letter of credit or similar
instrument which is issued by a financial institution upon the application of
such Person or upon which such Person is an account party or for which such
Person is in any way liable.
 
“Level” shall mean the level of the Senior Debt Rating, Applicable Margin or
Applicable Commitment Rate (as applicable) as designated in the Table set forth
in subsection 2.5(b) hereof. The five Levels in such Table are identified as
Levels I through V, and Level I shall constitute the highest Level and Level V
shall constitute the lowest Level.
 
“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, charge, encumbrance, lien (statutory or other),
preference, priority or other security agreement or similar preferential
arrangement of any kind or nature whatsoever (including without limitation any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
authorized filing by or against a Person of any financing statement as debtor
under the Uniform Commercial Code or comparable law of any jurisdiction). A
restriction, covenant, easement, right of way, or similar encumbrance affecting
any interest in real property owned by Borrower and which does not secure an
obligation to pay money is not a Lien.
 
“Loan Documents” shall mean this Agreement, the Notes, the Guaranty Agreements
and the Facility L/C Applications and all other documents (if any) from time to
time executed and delivered by Borrower or a Guarantor that evidence, secure or
guaranty any of the Obligations.
 
“Loans” shall mean the Revolving Credit Loans and the Swingline Loans.
 
“Lot Closing” shall mean the closing of the sale of a Lot under Contract by
Borrower or a Guarantor to a bona fide purchaser for value that is not a
Subsidiary or Affiliate.
 
“Lots” shall mean all Land owned by Borrower or a Guarantor which is zoned, by
the applicable Governmental Authority having jurisdiction, for construction and
use as Housing Units and with respect to which Borrower or such Guarantor has
obtained all necessary approvals for its subdivision for construction thereon of
Housing Units; provided, however, that the term “Lots” shall not include any
Land upon which the Start of Construction has occurred. The value of Lots shall
be calculated in accordance with GAAP and shall include all associated costs
required to be capitalized in accordance with GAAP.
 
“Lots under Contract” shall mean all Lots owned by Borrower or a Guarantor as to
which Borrower or such Guarantor has entered into a bona fide contract of sale
with a Person who is not a Subsidiary or Affiliate.
 
“Lots under Development” shall mean all Lots owned by Borrower or a Guarantor
with respect to which construction of streets or other subdivision improvements
has commenced but which are not Finished Lots or Lots under Contract. The value
of Lots under Development shall be calculated in accordance with GAAP and shall
include all associated costs required to be capitalized in accordance with GAAP.
 
“Mandatory Borrowing” shall have the meaning set forth in subsection 2.12(d)
hereof.
 
“Maturity Date” shall mean September 26, 2008.
 
“Maximum Swingline Amount” shall mean Twenty Million Dollars ($20,000,000).
 
“M/I Ancillary Businesses” shall mean the businesses listed as M/I Ancillary
Businesses on Schedule 4 hereto and each business in which investments are made
as permitted under subsection 7.6(k) hereof and (unless already an M/I Ancillary
Business) which are at such time designated as an “M/I Ancillary Business” by
Borrower, each of which shall be a corporation, limited partnership, limited
liability partnership or limited liability company which is engaged solely in
activities reasonably related to the sale of single family housing, provided
that such investment or other ownership interest shall be as (a) a shareholder
if the business is a corporation, (b) a limited partner if the business is a
limited partnership, (c) a limited liability partner if the business is a
limited liability partnership, or (d) a limited liability member if the business
is a limited liability company. As used herein, the term “Subsidiary” shall not
include any M/I Ancillary Business.
 
“M/I Financial Corp.” shall mean M/I Financial Corp., an Ohio corporation and
wholly-owned Subsidiary of Borrower.
 
“M/I Financial Corp. Liens” shall have the meaning set forth in subsection 7.1
hereof.
 
“M/I Financial Corp. Loan Agreement” shall mean the Revolving Credit Agreement
by and among M/I Financial Corp., Borrower and Guaranty Bank, effective as of
May 3, 2001, as the same has been and may be amended, extended, renewed or
replaced from time to time.
 
“Model Houses” shall mean (a) all Housing Units owned by Borrower or any
Guarantor which are being used as sales models and (b) all Housing Units owned
by Borrower or any Guarantor for which there has been a Start of Construction
which upon completion will be used as sales models.
 
“Moody’s” shall mean Moody’s Investors Service, Inc.
 
“Mortgage Loan Repurchase Obligations” shall mean those obligations (as more
particularly described in this definition) of M/I Financial Corp. under a
Purchase Commitment to repurchase (a) Eligible Mortgage Loans, (b) first
mortgage loans that are not Eligible Mortgage Loans solely because either (i)
the mortgagor did not purchase from Borrower the home subject to such mortgage
loan, or (ii) such mortgage loan is more than sixty (60) days old as determined
by the date of the note which evidences such loan, (c) those second mortgage
loans permitted by subsection 7.6(g) hereof, and (d) those first mortgage
refinancing loans permitted by subsection 7.6(h) hereof; provided, the
obligations to repurchase the mortgage loans described in clauses (a) through
(d) of this definition shall exist only if (A) such mortgage loans do not meet
for any reason the investor guidelines regarding loan origination, loan
processing or loan closing and regarding underwriting criteria for such Purchase
Commitment or defects are noted in origination, processing or closing of
mortgage loans by the investor, (B) M/I Financial Corp. or its employees engage
in any fraudulent conduct or misrepresentation, (C) the mortgagor fails to make
timely payment of any of the first, second, third or fourth installments due
under such mortgage loan, and such delinquency remains uncured for a period of
more than 30 days or results in a foreclosure action, (D) the mortgagor fails to
make timely payment of two or more monthly installments within six months from
the date such mortgage loan is purchased by such secondary market lender, (E)
the mortgagor engages in fraudulent conduct or misrepresentation or (F) with
respect to mortgage loans issued pursuant to the North Carolina Housing Finance
Authority bond programs, the mortgagor fails to make timely payment of the first
installment due under such mortgage loans.
 
“Multiemployer Plan” means a Plan covered by Title IV of ERISA which is a
multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
 
“New Lender” shall have the meaning set forth in subsection 2.6(b)(i) hereof.
 
“Note” or “Notes” shall mean a promissory note or notes substantially in the
form of Exhibit C hereto, executed and delivered by Borrower payable to the
order of a Lender, and delivered pursuant to subsection 2.2, subsection 2.6(b)
or subsection 11.7(b) hereof, as the same may be modified, amended, supplemented
or replaced from time to time.
 
“Notice of Borrowing” shall have the meaning set forth in subsection 2.3(a)
hereof.
 
“Notice of Conversion/Continuation” shall have the meaning set forth in
subsection 3.1 hereof.
 
“Obligations” shall mean all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of Borrower to the
Lenders or to any Lender, Agent, LC Issuer or any indemnified party arising
under the Loan Documents.
 
“Other Taxes” shall have the meaning set forth in subsection 3.6(b) hereof.
 
“Participants” shall have the meaning set forth in subsection 11.4 hereof.
 
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
 
“Performance Letter of Credit” shall mean any Letter of Credit of the Borrower
or a Guarantor that is issued for the benefit of a municipality, other
governmental authority, utility, water or sewer authority, or other similar
entity for the purpose of assuring such beneficiary of the Letter of Credit of
the proper and timely completion of construction work.
 
“Permitted Acquisition” means any Acquisition (other than by means of a hostile
takeover, hostile tender offer or other similar hostile transaction) of a
business or entity engaged primarily in the business of home building, land
acquisition or land development, provided, that, immediately before and after
giving effect to such Acquisition, no Default or Event of Default has occurred
and is continuing and that Borrower delivers to Agent not less than ten (10)
days prior to the consummation of such Acquisition, a certificate so stating
(which notice shall be promptly forwarded by Agent to each Lender).
 
“Person” shall mean an individual, a partnership (including without limitation a
joint venture), a limited liability company (including without limitation a
joint venture), a corporation (including without limitation a joint venture), a
business trust, a joint stock company, a trust, an unincorporated association, a
Governmental Authority or any other entity of whatever nature (including without
limitation a joint venture).
 
“Plan” shall mean any pension plan which is covered by Title IV of ERISA and in
respect of which Borrower or a Commonly Controlled Entity is an “employer” as
defined in Section 3(5) of ERISA.
 
“Prime Rate” shall mean the rate of interest per annum equal to the prime rate
of interest announced from time to time by Agent or its parent (which is not
necessarily the lowest rate charged to any customer), with any change thereto
effective as of the opening of business on the day of the change.
 
“Proceeds after Default” shall have the meaning set forth in Section 9 hereof.
 
“Purchase Commitment” shall mean a commitment from a secondary market lender,
pursuant to an agreement with M/I Financial Corp., either with respect to a
particular mortgage loan or with respect to mortgage loans meeting specified
criteria, to purchase such mortgage loan or loans without recourse (except for
Mortgage Loan Repurchase Obligations) for an amount not less than the difference
of (a) the face amount of the note evidencing such mortgage loan(s), minus (b)
the sum of (i) the points agreed upon between M/I Financial Corp. and such
secondary market lender, and (ii) the amount of funds (for example, without
limitation, escrow funds and origination fees), other than points, received by
M/I Financial Corp. at the loan closing from the mortgagor.
 
“Quarterly Payment Date” shall have the meaning set forth in Section 2.18
hereof.
 
“Ratable Share” shall mean, with respect to any Lender on any date, (a) the
ratio of (i) the amount of the Commitment of such Lender to (ii) the Aggregate
Commitment or (b) if the Aggregate Commitment has terminated, the ratio of (i)
the outstanding Revolving Credit Loans of such Lender to (ii) all outstanding
Revolving Credit Loans.
 
“Rating” shall mean, with respect to a Rating Agency, (a) such Rating Agency’s
publicly-announced rating of Borrower’s senior unsecured bank credit facility or
(b) if such Rating Agency does not publicly announce the rating described in
clause (a) above, such Rating Agency’s publicly-announced rating of Borrower’s
senior unsecured long-term debt or (c) if such Rating Agency does not publicly
announce either of the ratings described in clauses (a) or (b) above, such
Rating Agency’s publicly announced corporate rating of Borrower.
 
“Rating Agency” shall mean each of Fitch, Moody’s or S&P.
 
“Receivables” shall mean the net proceeds payable to, but not yet received by,
Borrower or a Guarantor following a Housing Unit Closing or Lot Closing.
“Receivables” shall not include amounts payable to Borrower or a Guarantor under
a mortgage loan.
 
“Reimbursement Obligations” shall mean Borrower’s obligations to reimburse an LC
Issuer as a result of draws on one or more Facility L/Cs.
 
“Rejecting Lenders” shall have the meaning set forth in subsection 2.7(c)
hereof.
 
“Replacement Lender” shall have the meaning set forth in subsection 3.10 hereof.
 
“Reportable Event” shall mean any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
 
“Required Lenders” shall mean, at any particular time, Lenders having at least
66-2/3% of the aggregate amount of the Revolving Credit Loans then outstanding
or, if no Revolving Credit Loans are then outstanding, Lenders having at least
66-2/3% of the Aggregate Commitment.
 
“Requirement of Law” shall mean as to any Person, the Certificate (or Articles)
of Incorporation, By-Laws (or Code of Regulations), Close Corporation Agreement
(where applicable) or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination, including
without limitation all environmental laws, rules, regulations and
determinations, of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
 
“Responsible Officer” shall mean as to Borrower or any of Borrower’s
Subsidiaries, the Chairman, President, Chief Operating Officer, Chief Executive
Officer or a Senior Vice President of such Person and, with respect to financial
matters and matters described in subsection 3.8 hereof, the Chief Financial
Officer, Treasurer or Controller of such Person, in each case acting in his or
her capacity as such.
 
“Revolving Credit Loans” shall mean the revolving credit loans made pursuant to
this Agreement that are more particularly described in subsection 2.1 hereof.
 
“S&P” shall mean Standard & Poor’s Rating Services.
 
“S Corporation” shall have the meaning set forth in Section 1361(a)(l) of the
Code.
 
“Secured Indebtedness” shall mean all Indebtedness of Borrower or any of its
Subsidiaries (excluding Indebtedness owing to Borrower or any of its
Subsidiaries) that is secured by a Lien on assets of Borrower or any of its
Subsidiaries (including without limitation purchase money Indebtedness,
non-recourse Indebtedness and Capital Lease obligations).
 
“Senior Debt Rating” shall mean (a) at any time at which each of Moody’s, Fitch
and S&P publicly announces a Rating, the second highest of such three Ratings;
(b) at any time at which Moody’s and S&P publicly announce Ratings but Fitch
does not, the higher of such Ratings; and (c) at any time at which Moody’s or
S&P (but not both) publicly announces a Rating (and regardless of whether Fitch
publicly announces a Rating), the Rating so publicly announced by Moody’s or
S&P. At any time at which neither Moody’s nor S&P publicly announces a Rating,
no Senior Debt Rating shall be deemed to exist. The Senior Debt Rating shall
change if and when such Rating(s) change, and such change in the Senior Debt
Rating shall have the effect provided for in subsection 2.5 and elsewhere in
this Agreement.
 
“Single Employer Plan” shall mean any Plan which is not a Multiemployer Plan (as
defined in ERISA).
 
“Speculative Housing Unit” shall mean any Housing Unit owned by the Borrower or
a Guarantor that is not a Housing Unit under Contract and shall include, without
limitation, all Model Houses.
 
“Start of Construction” shall mean the commencement of the digging of the
foundation or footer for a detached or attached single family house (including a
townhouse condominium building or condominium building) on Land that immediately
prior thereto constituted a Lot hereunder.
 
“Subordinated Indebtedness” shall mean, at any date, all unsecured subordinated
Indebtedness of Borrower, the terms and manner (including without limitation the
terms and manner with respect to subordination) of which are satisfactory to
Required Lenders in their sole discretion and approved in writing by Required
Lenders and which is subordinate to (a) the Obligations and (b) Borrower’s
obligations, if any, as a guarantor or otherwise of the obligations of M/I
Financial Corp. (including without limitation the obligations with respect to
the M/I Financial Corp. Loan Agreement).
 
“Subsidiary” shall mean, as to any Person, a corporation, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
limited liability company or other entity are at the time owned, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by such Person, and with respect to Borrower
shall include all Subsidiaries of Subsidiaries of Borrower. Unless otherwise
specified, “Subsidiary” means a Subsidiary of Borrower (including Subsidiaries
of Subsidiaries); provided that “Subsidiary” shall not include any M/I Ancillary
Business.
 
“SunTrust” shall mean SunTrust Bank.
 
“Supplemental Guaranty” shall have the meaning set forth in the Guaranty
Agreement.
 
“Swingline Expiry Date” shall mean the date which is ten (10) Business Days
prior to the Maturity Date.
 
“Swingline Lender” means Bank One in its capacity as lender of Swingline Loans.
 
“Swingline Loan” shall have the meaning set forth in subsection 2.12 hereof.
 
“Taxes” shall mean any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
 
“Tranche” shall mean the collective reference to those Eurodollar Rate Loans,
the then current Interest Periods with respect to all of which begin on the same
date and end on the same date (whether or not such Eurodollar Rate Loans shall
originally have been made on the same day).
 
“Uniform Customs” shall mean the Uniform Customs and Practice for Documentary
Credits, 1993 revision, ICC Publication No. 500, or amendment thereof or
successor thereto referenced in any LC Issuer’s issued Letters of Credit.
 
“Unimproved Entitled Land” shall mean all Lots that are neither Lots under
Development, Finished Lots or Lots under Contract.
 
1.2  Other Definitional Provisions.
 
(a)  All terms defined in this Agreement shall have the defined meanings when
used in the Notes or any certificate or other document made or delivered
pursuant hereto or thereto unless otherwise defined therein.
 
(b)  As used herein, in the Notes or in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms relating to Borrower
and Borrower’s Subsidiaries not defined in subsection 1.1 hereof, to the extent
not defined, shall have the respective meanings given to them under GAAP.
 
(c)  Any reference to “value” of property shall mean the lower of cost or market
value of such property, determined in accordance with GAAP.
 
(d)  The definition of any document or instrument includes all schedules,
attachments and exhibits thereto and all renewals, extensions, supplements and
amendments thereof; terms otherwise defined herein have the same meanings
throughout this Agreement.
 
(e)  “Hereunder,” “herein,” “hereto,” “this Agreement” and words of similar
import refer to this entire document; “including” is used by way of illustration
and not by way of limitation, unless the context clearly indicates the contrary;
and the singular includes the plural and conversely.
 

SECTION 2:    AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT LOANS, SWINGLINE
LOANS AND FACILITY L/CS

 
2.1  Commitments. 
 
(a)  Each Lender severally agrees, on the terms and conditions hereinafter set
forth, to make Revolving Credit Loans to the Borrower from time to time during
the Commitment Period, and to purchase undivided interests and participations in
Facility LCs in accordance with subsection 2.16 hereof, in an aggregate
principal amount of Loans made by such Lender and of such Lender’s Ratable Share
of the Facility L/C Obligations not to exceed at any time outstanding the amount
set forth in Schedule 1 hereto (such Lender’s obligations to make Revolving
Credit Loans and to purchase undivided interests and participations in Facility
L/Cs in accordance with subsection 2.16 hereof in such amounts, as reduced,
increased or otherwise modified from time to time pursuant to the terms of this
Agreement, being herein referred to as such Lender’s “Commitment”), subject to
the limitations set forth in subsection 2.1(b) hereof.
 
(b)  The aggregate amount of Borrowing Base Indebtedness at any one time
outstanding may not exceed the Borrowing Base, and no Revolving Credit Loan (or
Swingline Loan) shall be made, nor shall any Facility L/C be issued, that would
have the effect of increasing the then outstanding amount of the Borrowing Base
Indebtedness to an amount exceeding such Borrowing Base, provided that a
Revolving Credit Loan shall not be deemed to have increased the amount of the
Borrowing Base Indebtedness if, and only to the extent that, the proceeds of
such Revolving Credit Loan are immediately used to repay a Swingline Loan.
 
(c)  No Revolving Credit Loans shall be made at any time that any Swingline Loan
is outstanding, except for Revolving Credit Loans that are used, on the day on
which made, to repay in full the outstanding principal balance of the Swingline
Loans. During the Commitment Period and as long as no Default or Event of
Default exists, Borrower may borrow, prepay in whole or in part and reborrow
Revolving Credit Loans, all in accordance with the terms and conditions hereof.
 
(d)  Subject to the terms and conditions of this Agreement (including the
limitations on the availability of Eurodollar Rate Loans and including the
termination of the Aggregate Commitment as set forth in Section 9 hereof), the
Revolving Credit Loans may from time to time be (i) Eurodollar Rate Loans, (ii)
ABR Loans, or (iii) a combination thereof, as determined by Borrower and
notified to Agent in accordance with subsection 2.3 hereof, provided (a) that no
Revolving Credit Loan shall be made as a Eurodollar Rate Loan after the day that
is one month prior to the last day of the Commitment Period, and (b) that the
maximum number of Tranches that may be outstanding at any one time as Revolving
Credit Loans may not exceed eight in the aggregate.
 
2.2  Notes. The Revolving Credit Loans made by Lenders pursuant hereto shall be
evidenced by Notes, payable to the order of each Lender in the amount of its
Commitment and evidencing the obligation of Borrower to pay the aggregate unpaid
principal amount of the Revolving Credit Loans made by such Lender, with
interest thereon as prescribed in subsection 2.5 hereof. Each Lender is hereby
authorized to record electronically or otherwise the date and amount of each
Revolving Credit Loan disbursement made by such Lender, and the date and amount
of each payment or prepayment of principal thereof, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided, however, the failure of such Lender to make, or any error in
making, any such recordation(s) shall not affect the obligation of Borrower to
repay outstanding principal, interest, or any other Obligation due hereunder or
under the Notes in accordance with the terms hereof and thereof. Each Note shall
(a) be dated as of the date hereof, (b) be stated to mature on the Maturity
Date, which Maturity Date may be extended as provided in subsection 2.7 hereof,
and (c) bear interest for the period from and including the date thereof on the
unpaid principal amount thereof from time to time outstanding at the applicable
interest rate per annum determined as provided in subsection 2.5 hereof.
Interest on each Revolving Credit Loan shall be payable as specified in
subsection 2.5 hereof.
 
2.3  Procedure for Borrowing. 
 
(a)  Borrower may borrow under the Commitments (subject to the limitations on
the availability of Eurodollar Rate Loans), during the Commitment Period,
provided Borrower shall give Agent written (which may be by electronic mail)
notice (the “Notice of Borrowing”), which Notice of Borrowing must be received
(i) prior to 11:00 a.m., Chicago time, at least three (3) Business Days prior to
the requested Borrowing Date for that part of the requested borrowing that is to
be Eurodollar Rate Loans, or (ii) prior to 10:00 a.m., Chicago time on or before
the requested Borrowing Date for that part of the requested borrowing that is to
be ABR Loans which Notice of Borrowing, in the case of ABR Loan(s), shall be
irrevocable. Each Notice of Borrowing shall specify (A) the Borrowing Date
(which shall be a Business Day), (B) the amount of the requested borrowing, (C)
whether the borrowing is to be of Eurodollar Rate Loans, ABR Loans or a
combination thereof and (D) if the borrowing is to be entirely or partly of
Eurodollar Rate Loans, the amount of each ABR Loan, if any, and the respective
amounts of each such Eurodollar Rate Loan and the respective lengths of the
initial Interest Periods therefor. Each borrowing pursuant to the Commitments
shall be in the principal amount (1) in the case of ABR Loans, of $1,000,000 or
any larger amount which is an even multiple of $100,000, and (2) in the case of
Eurodollar Rate Loans, of $10,000,000 or any larger amount which is an even
multiple of $1,000,000.
 
(b)  After the Borrower gives Notice of Borrowing with respect to Eurodollar
Rate Loans, Agent, by 9:00 a.m., Chicago time, two Business Days prior to the
requested Borrowing Date, shall advise the Borrower of the applicable interest
rate(s) (which is the sum of the applicable Eurodollar Rate(s) and the
Applicable Eurodollar Margin) for the Eurodollar Rate Loan(s) and Interest
Period(s) requested in the Notice of Borrowing. Not more than two hours
thereafter, the Borrower shall give Agent written irrevocable confirmation of
whether or not the Borrower selects Eurodollar Rate Loan(s) on such Borrowing
Date and, if so, the amount(s) and Interest Period(s) of such Eurodollar Rate
Loan(s). If the Borrower’s written confirmation is timely made, the Borrower
shall be deemed to be requesting borrowing(s) of Eurodollar Rate Loan(s) in the
amount(s) and for the Interest Period(s) stated in the confirmation. If the
Borrower’s confirmation is not timely made, the Borrower shall be deemed to have
requested a borrowing entirely as an ABR Loan in the aggregate amount and on the
Borrowing Date specified in the Notice of Borrowing.
 
(c)  By noon, Chicago time, (i) with respect to any ABR Loan, on the requested
Borrowing Date and (ii) with respect to any Eurodollar Rate Loan, two Business
Days prior to the requested Borrowing Date, Agent shall give notice by facsimile
to each Lender of such request, specifying (A) the Borrowing Date (which shall
be a Business Day), (B) the amount of the requested borrowing, (C) whether the
borrowing is to be of Eurodollar Rate Loans, ABR Loans or a combination thereof,
and (D) if the borrowing is to be entirely or partly of Eurodollar Rate Loans,
the amount of each ABR Loan, if any, and the respective amounts of each such
Eurodollar Rate Loan, the applicable Eurodollar Rate for each such Eurodollar
Rate Loan and the respective lengths of the initial Interest Periods therefor.
Subject to satisfaction of the terms and conditions of this Agreement, each
Lender shall deposit funds with Agent for the account of Borrower by 2:00 p.m.
Chicago time on the Borrowing Date by wire transfer or other immediately
available funds equal to its Ratable Share of the Revolving Credit Loans to be
made on the Borrowing Date. The Loan(s) will then be made available to Borrower
by Agent crediting the account of Borrower on the books of Agent with the
aggregate amounts made available to Agent by Lenders, and in like funds as
received by Agent.
 
(d)  Each Lender may book its Loans and its participations in Facility L/Cs at
any Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Loans and the Notes issued hereunder shall be
deemed held by each Lender for the benefit of any such Lending Installation.
Each Lender and LC Issuer may, by written notice to the Agent and Borrower in
accordance with subsection 11.2 hereof, designate replacement or additional
Lending Installations through which Loans will be made by it or Facility L/Cs
will be issued by it and for whose account Loan payments or a payment with
respect to Facility L/Cs are to be made.
 
(e)  Each ABR Loan shall continue as an ABR Loan unless and until such ABR Loan
is converted into a Eurodollar Rate Loan pursuant to subsection 3.1 or is repaid
in accordance with subsection 2.11. Each Eurodollar Rate Loan shall continue as
a Eurodollar Rate Loan until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Rate Loan shall be automatically
converted into an ABR Loan unless (x) such Eurodollar Loan is or was repaid in
accordance with subsection 2.11 or (y) such Eurodollar Rate Loan is continued as
a Eurodollar Rate Loan in accordance with subsection 3.1.
 
2.4  Commitment Fee. Borrower agrees to pay to Agent for the benefit of each
Lender a commitment fee (the “Commitment Fee”) for the Commitment Period,
computed at the Applicable Commitment Rate per annum on the average daily unused
amount of each Lender’s Commitment during the Commitment Period, payable
quarterly in arrears and due on each Quarterly Payment Date and on the last day
of the Commitment Period, commencing on the first of such dates to occur after
the date hereof. For purposes of determining the unused portion of the Aggregate
Commitment and the unused portion of a Lender’s Commitment hereunder, (a) the
Aggregate Commitment shall be deemed used to the extent of the aggregate face
amount of the outstanding Facility L/Cs and such Lender’s Commitment shall be
deemed used to the extent of such Lender’s Ratable Share of the aggregate face
amount of the outstanding Facility L/Cs and (b) Swingline Loans shall constitute
usage of the Swingline Lender’s Commitment only.
 
2.5  Interest; Default Interest.
 
(a)  Except as provided in subsection 2.5(d) hereof, (i) the Revolving Credit
Loans shall bear interest on the unpaid principal amount thereof at a rate per
annum equal to (y) in the case of ABR Loans, the Alternate Base Rate in effect
from time to time, plus the Applicable ABR Margin in effect for such day, and
(z) in the case of Eurodollar Rate Loans, if permitted hereunder at such time,
the Eurodollar Rate determined for such day, plus the Applicable Eurodollar
Margin in effect for such day, and (ii) the Swingline Loans shall bear interest
on the unpaid principal amount thereof at a rate per annum equal to the
Alternate Base Rate in effect from time to time, plus the Applicable ABR Margin
in effect for such day.
 
(b)  The Applicable Margins and the Applicable Commitment Rate shall be
determined by reference to the Senior Debt Rating in accordance with the
following table and the provisions of this subsection 2.5(b):
 

 
 
Level I
 
Level II
 
Level III
 
Level IV
 
Level V
 
Senior Debt Rating
 
BBB-/Baa3
or higher
 
BB+/Ba1
 
BB/Ba2
 
BB-/Ba3
B+/B1 or lower or no Senior Debt Rating
Applicable Eurodollar Margin and Applicable Facility L/C Rate
1.00%
1.25%
1.50%
1.75%
2.00%
Applicable ABR Margin
0
0
0
0.125%
0.375%
Applicable Commitment Rate
0.20%
0.225%
0.25%
0.30%
0.375%

(c)  The Applicable Margins and the Applicable Commitment Rate shall be
adjusted, from time to time, effective (as applicable) on the first Business Day
after any change in the Senior Debt Ratings that results in any change in the
Applicable Margins or Applicable Commitment Rate, provided, however, that any
change in the Applicable Eurodollar Margin shall only apply to Eurodollar Rate
Loans for Interest Periods commencing after such change in the Applicable
Eurodollar Margin is effective.
 
(d)  As of the date hereof, the Applicable Margins and Applicable Commitment
Rate are at Level III.
 
(e)  If all or a portion of the principal amount of any of the Revolving Credit
Loans made hereunder (whether as ABR Loans or Eurodollar Rate Loans or a
combination thereof) or the Swingline Loans or any installment of interest on
any Revolving Credit Loan or Swingline Loan or any Commitment Fee or Facility
L/C Fees shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), any such overdue principal amount and, to the extent
permitted by applicable law, any overdue installment of interest on any
Revolving Credit Loan or Swingline Loan or any overdue payment of Commitment
Fees or Facility L/C Fees hereunder shall, without limiting any other rights of
Lenders, bear interest at a rate per annum which is the sum of the Alternate
Base Rate in effect from time to time, plus the Applicable ABR Margin, plus one
percent (1%), from the date of such non-payment until paid in full (before, as
well as after, judgment); provided, however, if all or any portion of any
principal on any Revolving Credit Loan made as a Eurodollar Rate Loan hereunder
shall not be paid when due and the then current Interest Period for such
Eurodollar Rate Loan has not yet expired, the entire principal amount of such
Eurodollar Rate Loan and, to the extent permitted by applicable law, any overdue
installment of interest on such Eurodollar Rate Loan shall, without limiting any
other rights of Lenders, bear interest at a rate per annum which is the sum of
one percent (1%) plus the applicable non-default interest rate (which is the sum
of the applicable Eurodollar Rate and the Applicable Eurodollar Margin) on such
Eurodollar Rate Loan then in effect from the date of such non-payment until the
expiration of the then current Interest Period with respect to such Eurodollar
Rate Loan (before, as well as after, judgment); thereafter, the entire principal
amount of such Eurodollar Rate Loan and, to the extent permitted by applicable
law, any overdue installment of interest on such Eurodollar Rate Loan shall,
without limiting any other rights of Lenders, bear interest at a rate per annum
which is the sum of the Alternate Base Rate in effect from time to time, plus
the Applicable ABR Margin, plus one percent (1%), until paid in full (before, as
well as after, judgment).
 
(f)  Interest shall be payable in arrears and shall be due on each Interest
Payment Date.
 
2.6  Termination, Reduction or Increase of Aggregate Commitment.
 
(a)  (i)Borrower shall have the right to terminate the Aggregate Commitment or,
from time to time (and so long as no Default or Event of Default exists), reduce
the amount of the Aggregate Commitment, upon not less than five (5) Business
Days’ written notice to each Lender specifying (A) either a reduction or
termination and (B) in the case of a reduction, whether any prepayment, if
required by this Agreement, shall be of ABR Loans, Eurodollar Rate Loans or a
combination thereof, and, in each case if a combination thereof, the principal
allocable to each.
 
(ii)  Any such reduction of the Aggregate Commitment shall be in the amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently the amount of the Aggregate Commitment then in effect. Any such
reduction shall be accompanied by (A) prepayment of the Revolving Credit Loans
made hereunder to the extent, if any, that the sum of the amount of such
Revolving Credit Loans and the Facility L/C Obligations then outstanding exceeds
the amount of the Aggregate Commitment, as then reduced, together with accrued
interest on the amount so prepaid to the date of such prepayment, and (B) if a
Revolving Credit Loan is a Eurodollar Rate Loan that is prepaid other than at
the end of the Interest Period applicable thereto, by any amounts payable
pursuant to subsection 3.5 hereof.
 
(iii)  Any such termination of the Commitment shall be accompanied (A) by
prepayment in full of the Revolving Credit Loans then outstanding hereunder,
together with accrued interest thereon to the date of such prepayment, and the
payment of any unpaid Commitment Fee then accrued hereunder; (B) with respect to
Facility L/Cs, by Borrower’s compliance with the terms of subsection 2.15
hereof; and (C) if a Revolving Credit Loan is a Eurodollar Rate Loan that is
prepaid other than at the end of the Interest Period applicable thereto, by any
amounts payable pursuant to subsection 3.5 hereof.
 
(iv)  Any such reduction or termination of the Aggregate Commitment shall be
allocated to each Lender’s Commitment ratably in proportion to its Ratable
Share.
 
(b)  (i)Subject to the provisions of this subsection 2.6(b), Borrower may, at
any time and from time to time, request (“Facility Increase Request”), by notice
to Agent, Agent’s approval of an increase of the Aggregate Commitment within the
limitations hereinafter set forth, which Facility Increase Request shall set
forth the amount of such requested increase. Within twenty (20) days of such
Facility Increase Request, Agent shall advise Borrower of its approval or
disapproval thereof; failure to so advise Borrower shall constitute disapproval.
Upon approval of Agent, the Aggregate Commitment may be so increased either by
having one or more Eligible Assignees (other than Lenders then holding a
Commitment hereunder) approved by Borrower and Agent (each a “New Lender”)
become Lenders hereunder and/or by having any one or more Lenders then holding a
Commitment hereunder (at their respective election in their sole discretion)
that have been approved by Borrower and Agent increase the amount of their
Commitments (any such Lender that elects to increase its Commitment and any New
Lender being hereinafter referred to as an “Additional Lender”), provided that
(A) unless otherwise agreed by Borrower and Agent, the Commitment of any New
Lender shall not be less than $10,000,000 and (B) unless otherwise agreed by
Borrower and Agent, the increase in the Commitment of any Lender shall be not
less than $5,000,000; (C) the Aggregate Commitment shall not exceed
$750,000,000; (D) Borrower and each Additional Lender shall have executed and
delivered a commitment and acceptance (the “Commitment and Acceptance”)
substantially in the form of Exhibit D hereto and Agent shall have accepted and
executed the same; (E) Borrower shall have executed and delivered to Agent a
Note or Notes payable to the order of each Additional Lender, each such Note to
be in the amount of such Additional Lender’s Commitment or increased Commitment
(as applicable); (F) Borrower shall have delivered to Agent an opinion of
counsel (substantially similar to the form of opinion attached hereto as Exhibit
E, modified to apply to the increase in the Aggregate Commitment and each Note
and Commitment and Acceptance executed and delivered in connection therewith);
(G) the Guarantors shall have delivered to Agent a written instrument confirming
their consent to the new Commitments or increases in Commitments (as applicable)
and that their Guaranty Agreements continue in full force and effect; and (H)
Borrower and each Additional Lender shall otherwise have executed and delivered
such other instruments and documents as Agent shall have reasonably requested in
connection with such new Commitment or increase in a Commitment (as applicable).
The form and substance of the documents required under clauses (D) through (H)
above shall be fully acceptable to Agent. Agent shall provide written notice to
Lenders following any such increase in the Aggregate Commitment hereunder and
shall furnish to Lenders copies of the Commitment and Acceptance.
 
(ii)  On the effective date of any increase in the Aggregate Commitment pursuant
to the provisions hereof (“Increase Date”), which Increase Date shall be
mutually agreed upon by Borrower, each Additional Lender and Agent, each
Additional Lender shall make a payment to Agent in an amount sufficient, upon
the application of such payments by all Additional Lenders to the reduction of
the outstanding ABR Loans (other than Swingline Loans) held by Lenders, to cause
the principal amount outstanding under such ABR Loans made by all Lenders
(including any Additional Lender) to be in the proportion of their respective
Commitments (as of such Increase Date). Borrower hereby irrevocably authorizes
each Additional Lender to fund to Agent the payment required to be made pursuant
to the immediately preceding sentence for application to the reduction of the
outstanding ABR Loans held by each Lender, and each such payment shall
constitute a ABR Loan hereunder. Such Additional Lender shall not participate in
any Eurodollar Rate Loans that are outstanding on the Increase Date, but, if
Borrower shall, at any time on or after such Increase Date, convert or continue
any Eurodollar Rate Loans outstanding on such Increase Date, Borrower shall be
deemed to repay such Eurodollar Rate Loans on the date of the conversion or
continuation thereof and then to reborrow as a Eurodollar Rate Loan a like
amount on such date so that each Additional Lender shall make a Eurodollar Rate
Loan on such date in its Ratable Share of such Eurodollar Rate Loans. Each
Additional Lender shall also advance its Ratable Share of all Revolving Credit
Loans made on or after such Increase Date and shall otherwise have all of the
rights and obligations of a Lender hereunder on and after such Increase Date.
Notwithstanding the foregoing, upon the occurrence of an Event of Default prior
to the date on which an Additional Lender is holding Revolving Credit Loans
equal to its Ratable Share of all Revolving Credit Loans hereunder, such
Additional Lender shall, upon notice from Agent, on or after the date on which
the Obligations are accelerated or become due following such Event of Default,
pay to Agent (for the account of the other Lenders, to which the Agent shall pay
their pro rata shares upon receipt) a sum equal to such Additional Lender’s
Ratable Share of each Revolving Credit Loan then outstanding with respect to
which such Additional Lender does not then hold its Ratable Share thereof.
 
(iii)  On the Increase Date and the making of the Loans by an Additional Lender
in accordance with the provisions of the first sentence of subsection 2.6(b)(ii)
hereof, such Additional Lender shall also be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, from
Lenders party to this Agreement immediately prior to the Increase Date, an
undivided interest and participation in any Facility L/C then outstanding,
ratably, such that all Lenders (including each Additional Lender) hold
participation interests in each such Facility L/C in the proportion of their
respective Commitments (taking into account the increase in the Aggregate
Commitment that is effective on such Increase Date).
 
(iv)  Nothing contained herein shall constitute, or otherwise be deemed to be, a
commitment or agreement on the part of any Lender to increase its Commitment
hereunder at any time or a commitment or agreement on the part of Borrower or
Agent to give or grant any Lender the right to increase its Commitment hereunder
at any time.
 
2.7  Maturity Date of Commitment; Extension. 
 
(a)  Unless earlier terminated pursuant to the terms of this Agreement, the
Aggregate Commitment shall terminate on the Maturity Date, and the unpaid
balance of the Revolving Credit Loans and Swingline Loans outstanding shall be
paid on the Maturity Date.
 
(b)  Not more than once in any fiscal year of Borrower, Borrower may request an
extension of the Maturity Date to the first anniversary of the then scheduled
Maturity Date (but in no event to a date that is later than the fourth
anniversary of the date of such request) by submitting a request for an
extension to Agent not less than 180 days prior to the then scheduled Maturity
Date. Prior to the delivery by Agent to the Lenders of such request for
extension, Borrower shall propose to Agent the amount of the fees that Borrower
would agree to pay with respect to such extension if approved by the Lenders.
Promptly upon (but not later than five (5) Business Days after) Agent’s receipt
and approval of both the extension request and fee proposal (as so approved, the
“Extension Request”), Agent shall deliver to each Lender a copy of, and shall
request each Lender to approve, the Extension Request. Each Lender approving the
Extension Request shall deliver its written approval no later than 60 days after
such Lender’s receipt of the Extension Request. Except as otherwise provided in
subsection 2.7(c) below, if and only if the written approval of the Extension
Request by all Lenders is received by Agent within such 60-day period, the
Maturity Date shall be extended to the first anniversary of the then scheduled
Maturity Date (as specified in the Extension Request).
 
(c)  If (i) any Lender or Lenders whose pro rata shares (in the aggregate) of
the Aggregate Commitment do not exceed 33S% of the Aggregate Commitment
(“Rejecting Lenders”) shall not approve an Extension Request, (ii) all rights
and obligations of such Rejecting Lenders under this Agreement and under the
other Loan Documents (including, without limitation, their Commitment and all
Loans owing to them) shall have been assigned, within ninety (90) days following
such Extension Request, in accordance with subsection 3.10, to one or more
Replacement Lenders who shall have approved in writing such Extension Request at
the time of such assignment, and (iii) no other Lender shall have given written
notice to Agent of such Lender’s withdrawal of its approval of the Extension
Request, Agent shall promptly so notify Borrower and each Lender, and the
Maturity Date shall be extended by one (1) year.
 
(d)  Within ten (10) days of Agent’s notice to Borrower that all Lenders have
approved an Extension Request (whether pursuant to subsection 2.7(b) or 2.7(c)),
Borrower shall pay to Agent for the account of the Lenders the applicable
extension fees specified in the Extension Request, and Agent shall promptly
remit to each Lender its Ratable Share thereof.
 
2.8  Computation of Interest and Fees. Commitment Fees on the Commitment and
interest in respect of the Revolving Credit Loans shall be calculated on the
basis of a 360-day year for the actual days elapsed. Any change in the interest
rate on the Loans and the Notes resulting from a change in the Alternate Base
Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business of the day on which such change in the Alternate Base Rate
or the Eurocurrency Reserve Requirements shall become effective, without notice
to Lenders or Borrower. However, Agent shall give Borrower and Lenders prompt
notice of all changes in the Alternate Base Rate or the Eurocurrency Reserve
Requirements. Each determination of an interest rate by Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Lenders and
Borrower in the absence of manifest error.
 
2.9  Increased Costs. If a Lender or an LC Issuer determines that the amount of
capital required or expected to be maintained by such Lender or such LC Issuer,
any Lending Installation of such Lender or an LC Issuer, or any corporation
controlling such Lender or LC Issuer is increased as a result of a Change, then,
within fifteen (15) days of written notice by such Lender or LC Issuer (which
notice shall be given not later than 180 days after the Change resulting in such
increase), Borrower shall pay such Lender or LC Issuer the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender or LC Issuer determines is attributable to
this Agreement, its Loans or its issuance of or participation in Facility L/Cs
or its Commitment to make Loans or to issue or to participate in Facility L/Cs,
as the case may be, hereunder (after taking into account such Lender’s or LC
Issuer’s policies as to capital adequacy). “Change” means (i) any change after
the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or LC
Issuer or any Lending Installation or any corporation controlling any Lender or
LC Issuer. “Risk-Based Capital Guidelines” means (a) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (b) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled “International Convergence of Capital
Measurements and Capital Standards,” including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement. Such
Lender’s written notice to Borrower for compensation hereunder shall set forth
in reasonable detail the computation of any additional amounts payable to such
Lender by Borrower, and such request and computation shall be conclusive and
binding in the absence of manifest error. This provision shall remain in full
force and effect with respect to the Loans until the later of (1) the
termination of this Agreement or (2) the payment in full of all Notes (provided
that before accepting final payment on the Notes, a Lender shall calculate any
amounts due it in accordance with this subsection 2.9 and give notice to
Borrower of such amounts as stated herein, and Borrower shall include such
amounts in Borrower’s final payment). This provision shall survive the
termination of all Facility L/Cs and, with respect to Facility L/Cs, shall
remain in full force and effect until there is no existing or future obligation
of Agent or any Lender under any Facility L/C. The provisions of this subsection
2.9 shall be supplemented by the provisions of Section 3 hereof.
 
2.10  Use of Proceeds. 
 
(a)  The proceeds of the initial Revolving Credit Loans made hereunder shall be
used by Borrower to pay in full the outstanding principal of and all accrued and
unpaid interest on the Revolving Credit Loans and Swingline Loans (both as
defined in the Existing Credit Agreement) under the Existing Credit Agreement
and all accrued and unpaid fees, expenses and other amounts payable thereunder.
Upon Borrower’s irrevocable payment in full of such outstanding amounts under
the Existing Credit Agreement, the Existing Credit Agreement shall be terminated
(except as provided in subsection 2.10(b) below in respect of the Existing L/Cs)
and the Lenders party thereto shall cancel all promissory notes and guaranties
executed pursuant to the Existing Credit Agreement. Thereafter, the proceeds of
the Revolving Credit Loans made hereunder shall be used by Borrower for lawful
purposes in Borrower’s business.
 
(b)  The termination of the Existing Credit Agreement as provided in subsection
2.10(a) above shall not terminate the Existing L/Cs or the reimbursement
agreements relating thereto, all of which shall remain in full force and effect.
The termination of the Existing Credit Agreement shall terminate the
participation interests in the Existing L/Cs under the Existing Credit
Agreement, and, immediately upon such termination, each LC Issuer shall grant
and does hereby grant to each Lender hereunder, and each Lender shall accept and
does hereby accept from such LC Issuer, an undivided interest in the Existing
L/Cs equal to such Lender’s Ratable Share of the Existing L/Cs, all on the terms
set forth in subsection 2.16 hereof.
 
2.11  Payments; Pro Rata Treatment.
 
(a)  Each borrowing by Borrower from Lenders hereunder, each payment (including
each prepayment) by Borrower on account of principal of and interest on the
Revolving Credit Loans, each payment by Borrower on account of any Commitment
Fee hereunder and any reduction of the Commitments shall be made pro rata
according to the respective Lenders’ Ratable Shares. All payments (including
prepayments) to be made by Borrower hereunder and under the Notes, whether on
account of principal, interest, fees or otherwise, shall be made without set-off
or counterclaim and shall be made prior to 11:00 a.m., Chicago, Illinois time,
on the due date thereof to Agent, for the account of Lenders, at Agent’s office
at One Bank One Plaza, Chicago, Illinois, in Dollars and in immediately
available funds. Agent shall distribute such payments to Lenders upon receipt in
like funds as received, which distributions shall be made by Agent on the day
that it receives such funds if received by 11:00 a.m. Chicago time and otherwise
not later than the next succeeding Business Day. If the Agent does not
distribute such payments to Lenders when required, each Lender shall be entitled
to recover from Agent interest on such corresponding amount in respect of each
day from the date such payments were required to be distributed to such Lender
to the date such corresponding amount is actually delivered to such Lender by
Agent, at a rate per annum equal to the Federal Funds Rate for the first three
days and thereafter at the Alternate Base Rate. If any payment hereunder on an
ABR Loan becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment hereunder on a Eurodollar
Rate Loan becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day (and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
 
(b)  Borrower may from time to time pay, without penalty or premium, all
outstanding ABR Loans, or, in a minimum aggregate amount of $500,000 or any
integral multiple of $100,000 in excess thereof, any portion of the outstanding
ABR Loans upon notice to Agent not later than 11:00 a.m. Chicago time on the
date of payment. Borrower may from time to time pay, subject to the payment of
any funding indemnification amounts required by subsection 3.5 but without
penalty or premium, all outstanding Eurodollar Rate Loans, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Eurodollar Rate Loans upon notice to
Agent not later than 10:00 a.m. Chicago time on the date of payment.
 
2.12  Swingline Loans.
 
(a)  Subject to the terms and conditions of this Agreement, Swingline Lender
agrees to make at any time and from time to time after the initial Borrowing
Date and prior to the Swingline Expiry Date swingline loans to Borrower
(“Swingline Loans”), which Swingline Loans (i) shall be made and maintained as
ABR Loans, (ii) shall be denominated in Dollars, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (iv) shall not exceed, in
aggregate principal amount at any one time outstanding, the lesser of (A) the
Maximum Swingline Amount and (B) the amount by which Swingline Lender’s
Commitment exceeds its share of the sum of all Revolving Credit Loans and
Facility L/C Obligations and (v) shall be subject to the limitations set forth
in subsection 2.1(b) hereof. Swingline Lender will not make a Swingline Loan
after it has received written notice from Borrower or the Required Lenders
stating that a Default or an Event of Default exists until such time as
Swingline Lender shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default, as required by this Agreement.
 
(b)  Borrower shall give Swingline Lender irrevocable telephonic or written
notice prior to 2:00 p.m., Chicago time on the requested Borrowing Date
specifying the amount of the requested Swingline Loan which shall be in a
minimum amount of $500,000 or whole multiples of $100,000 in excess thereof. The
Swingline Loans will then be made available to Borrower by Swingline Lender by
crediting the account of Borrower on the books of Swingline Lender.
 
(c)  The Swingline Loans shall be evidenced by the Note held by Swingline
Lender. Swingline Lender is hereby authorized to record electronically or
otherwise the date and amount of each Swingline Loan, and the date and amount of
each payment or prepayment of principal thereof, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded,
provided, however, the failure of Swingline Lender to make, or any error in
making, any such recordation(s) shall not affect the obligation of Borrower to
repay outstanding principal, interest, or any other amount due hereunder in
accordance with the terms hereof and thereof. The Swingline Loan shall (i)
mature on the Swingline Expiry Date, and (ii) bear interest for the period from
and including the date thereof on the unpaid principal amount thereof from time
to time outstanding at the applicable interest rate per annum determined as
provided in subsection 2.5 hereof. Interest on each Swingline Loan shall be
payable as specified in subsection 2.5 hereof.
 
(d)  Swingline Lender, at any time and in its sole and absolute discretion, may
(and, not later than three (3) Business Days after the making of a Swing Line
Loan, shall), on behalf of Borrower (which hereby irrevocably directs Swingline
Lender to act on Borrower’s behalf), request each Lender, including Swingline
Lender, to make a Revolving Credit Loan (each, a “Mandatory Borrowing”) in an
amount equal to such Lender’s Ratable Share of the amount of the Swingline Loans
(provided that each such request shall be deemed to have been automatically
given upon the occurrence of a Default or an Event of Default under Section 9 or
upon the exercise of any of the remedies provided in the last paragraph of
Section 9), in which case each Lender shall make the proceeds of its Revolving
Credit Loan available to Swingline Lender, on the Business Day immediately
following Agent’s notice to the Lenders, in its Ratable Share thereof, and the
proceeds thereof shall be applied directly to repay Swingline Lender for such
outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make ABR
Loans upon one Business Day’s notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified by Swingline Lender notwithstanding (i) that the amount of the
Mandatory Borrowing may not comply with the minimum borrowing amount otherwise
required hereunder, (ii) whether any conditions specified in Section 5 are then
satisfied, (iii) whether a Default or an Event of Default has occurred and is
continuing, (iv) the date of such Mandatory Borrowing, (v) any reduction in the
Commitments after any such Swingline Loans were made, (vi) Borrower’s compliance
with Borrowing Base requirements, (vii) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Swingline Lender,
Borrower or any other Person for any reason whatsoever, or (viii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. In the event that any Mandatory Borrowing cannot for any reason
be made on the date otherwise required above (including, without limitation, as
a result of the commencement of a proceeding under the Bankruptcy Code in
respect of Borrower), each Lender (other than Swingline Lender) hereby agrees
that it shall forthwith purchase from Swingline Lender (without recourse or
warranty) a participation interest in such outstanding Swingline Loans as shall
be necessary to cause the Lenders to hold participation interests in such
Swingline Loans in the proportion of their respective Ratable Shares thereof,
provided that all interest payable on the Swingline Loans shall be for the
account of Swingline Lender until the date the Mandatory Borrowing is made, and,
to the extent attributable to the Mandatory Borrowing, shall be payable to the
Lender making such Mandatory Borrowing from and after the date such Mandatory
Borrowing is made.
 
(e)  Whenever, at any time after Swingline Lender has received from any Lender
such Lender’s assigned interest in a Swingline Loan and Swingline Lender
receives any payment on account thereof Swingline Lender will distribute to such
Lender its assigned interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Lender’s
assigned interest was outstanding and funded); provided, however, that in the
event that such payment received by Swingline Lender is required to be returned,
such Lender will return to Swingline Lender any portion thereof previously
distributed by Swingline Lender to it.
 
2.13  The Facility L/Cs. So long as no Default or Event of Default exists, Bank
One and each other Lender that is designated as an LC Issuer in accordance with
subsection 2.14(a) hereof, agree to issue Facility L/Cs, on the terms and
conditions hereof, provided that (a) the aggregate of all Facility L/C
Obligations at any one time outstanding shall not exceed One Hundred Million
Dollars ($100,000,000) and (b) the sum of the aggregate amount of all Loans and
the aggregate amount of all Facility L/C Obligations at any one time outstanding
shall not exceed the Aggregate Commitment.
 
2.14  Designation or Resignation of LC Issuer. 
 
(a)  Upon request by Borrower and approval by Agent, a Lender may at any time
agree to be designated as an LC Issuer hereunder, which designation shall be set
forth in a written instrument or instruments delivered by Borrower, Agent and
such Lender. Agent shall promptly notify the other Lenders of such designation.
From and after such designation and unless and until such Lender resigns as an
LC Issuer in accordance with subsection 2.14(b) below, such Lender shall have
all of the rights and obligations of an LC Issuer hereunder.
 
(b)  An LC Issuer shall continue to be an LC Issuer unless and until (i) it
shall have given Borrower and Agent notice that it has elected to resign as LC
Issuer and (ii) unless there is, at the time of such notice, at least one other
LC Issuer, another Lender shall have agreed to be the replacement LC Issuer and
shall have been approved in writing by Agent and Borrower. A resigning LC Issuer
shall continue to have the rights and obligations of the LC Issuer hereunder
solely with respect to Facility L/Cs theretofore issued by it, notwithstanding
the designation of a replacement LC Issuer hereunder, but upon its notice of
resignation (or, if at the time of such notice, there is not at least one other
LC Issuer, then upon such designation of a replacement LC Issuer), the resigning
LC Issuer shall not thereafter issue any Facility L/C (unless it shall again
thereafter be designated as an LC Issuer in accordance with the provisions of
this subsection 2.14). The assignment of, or grant of a participation interest
in, all or any part of its Commitment or Loans by a Lender that is also an LC
Issuer shall not constitute an assignment or transfer of any of its rights or
obligations as an LC Issuer.
 
2.15  Issuance of Facility L/Cs.
 
(a)  Borrower may request an LC Issuer to issue a Facility L/C by delivering to
such LC Issuer (with a copy to Agent if Agent is not the LC Issuer), no later
than 11:00 a.m. (local time at the LC Issuer’s office designated herein) two (2)
Business Days prior to the date on which issuance of the Facility L/C is
requested by Borrower, a standby letter of credit application and reimbursement
agreement in LC Issuer’s then customary form (the “Facility L/C Application”)
completed to the satisfaction of LC Issuer, together with the proposed form of
such letter of credit (which shall comply with the applicable requirements of
subsection 2.15(b) below) and such other certificates, documents and other
papers and information as LC Issuer may reasonably request.
 
(b)  Each Facility L/C issued hereunder shall, among other things, (i) be in
such form requested by Borrower as shall be acceptable to the LC Issuer in its
sole discretion, and (ii) have an expiry date (taking into account any automatic
renewal provisions thereof) occurring not later than thirty (30) days prior to
the Maturity Date. If the Aggregate Commitment is terminated (whether by
acceleration, demand, or otherwise), then, not later than simultaneously with
such termination, all outstanding Facility L/Cs shall be returned to the LC
Issuer thereof or Borrower shall cash collateralize all outstanding Facility
L/Cs in accordance with Section 8 hereof. Each Facility L/C Application and each
Facility L/C shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the state in which is located the LC
Issuer’s office from which such Facility L/C is issued.
 
(c)  An LC Issuer shall not issue, amend or extend, at any time, any Facility
L/C:
 
(i)    if the aggregate maximum amount then available for drawing under Letters
of Credit issued by such LC Issuer, after giving effect to the Facility L/C or
amendment or extension thereof requested hereunder, shall exceed any limit
imposed by law or regulation upon such LC Issuer;
 
(ii)    if, after giving effect to the issuance, amendment or extension of the
Facility L/C requested hereunder, the aggregate principal amount of the Facility
L/C Obligations would exceed One Hundred Million Dollars ($100,000,000);
 
(iii)    if, after giving effect to the issuance, amendment or extension of the
Facility L/C requested hereunder, Borrowing Base Indebtedness would exceed the
Borrowing Base as of the most recent Inventory Valuation Date;
 
(iv)    if, after giving effect to the issuance, amendment or extension of the
Facility L/C requested hereunder, the sum of (A) the outstanding and unpaid
principal amount of the Loans and (B) the Facility L/C Obligations would exceed
the Aggregate Commitment;
 
(v)    if such LC Issuer receives written notice from the Agent at or before
11:00 a.m. Chicago time on the proposed date of issuance, amendment or extension
of such Facility L/C that one or more of the conditions precedent contained in
subsection 2.15(d) below would not on such date be satisfied, unless such
conditions are thereafter satisfied or waived and written notice of such
satisfaction is given to such LC Issuer by the Agent; or
 
(vi)    that is in a currency other than Dollars.
 
(d)  The issuance, amendment or extension of any Facility L/C is subject to the
satisfaction in full of the following conditions on the date of such issuance,
amendment or extension:
 
(i)    the conditions of subsection 5.2 hereof are satisfied; and
 
(ii)    no order, judgment or decree of any court, arbitrator or governmental
authority shall enjoin or restrain such LC Issuer from issuing the Facility L/C
and no law, rule or regulation applicable to the LC Issuer and no directive from
any governmental authority with jurisdiction over the LC Issuer shall prohibit
such LC Issuer from issuing Letters of Credit generally or from issuing that
Facility L/C.
 
(e)  Upon receipt of any Facility L/C Application from Borrower, the LC Issuer
will process such Facility L/C Application, and the other certificates,
documents and other papers delivered to such LC Issuer in connection therewith,
in accordance with its customary procedures and, upon satisfaction of all
conditions contained in this Agreement, shall promptly issue the original of
such Facility L/C and deliver it to the beneficiary thereof, or to Borrower
which shall deliver such original Facility L/C to the beneficiary, and furnish a
copy thereof to Borrower. The LC Issuer shall give Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of the issuance of a
Facility L/C, and Agent shall promptly thereafter so notify all Lenders.
 
(f)  No LC Issuer shall extend or amend any Facility L/C unless the requirements
of this subsection 2.15 are met as though a new Facility L/C were being
requested and issued.
 
(g)  Any Lender may, but shall not be obligated to, issue to Borrower or any of
its Subsidiaries Letters of Credit (that are not Facility L/Cs) for its own
account, and at its own risk.
 
2.16  Facility L/C Participations. 
 
(a)  Each LC Issuer irrevocably agrees to grant and hereby grants to each
Lender, and, to induce the LC Issuers to issue Facility L/Cs hereunder, each
Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from the applicable LC Issuer, on the terms and conditions hereinafter
stated, for such Lender’s own account and risk, an undivided interest equal to
such Lender’s Ratable Share in such LC Issuer’s obligations and rights under
each Facility L/C (including, as provided in Section 2.10(b) hereof, the
Existing L/Cs) and the amount of each draft paid by such LC Issuer.
 
(b)  Upon receipt from the beneficiary of any Facility L/C of any demand for
payment under such Facility L/C, the LC Issuer shall notify Agent and Agent
shall promptly notify Borrower and each other Lender as to the amount to be paid
by such LC Issuer as a result of such demand and the proposed payment date. The
responsibility of the LC Issuer to Borrower and each Lender shall be only to
determine that the documents (including each demand for payment) delivered under
each Facility L/C in connection with such presentment shall be in conformity in
all material respects with such Facility L/C. The LC Issuer shall exercise the
same care in the issuance and administration of the Facility L/Cs as it does
with respect to Letters of Credit in which no participations are granted, it
being understood that, in the absence of any gross negligence or willful
misconduct by the LC Issuer, each Lender shall be unconditionally and
irrevocably liable without regard to the occurrence of an Event of Default or
any condition precedent whatsoever, to reimburse the LC Issuer on demand for (i)
such Lender’s Ratable Share of the amount of each payment made by the LC Issuer
on each Facility L/C to the extent such amount is not reimbursed by Borrower
pursuant to subsection 2.17 hereof, plus interest thereon to the extent provided
in subsection 2.16(c) below.
 
(c)  If any amount required to be paid by any Lender to an LC Issuer in respect
of any unreimbursed portion of any payment made by such LC Issuer under any
Facility L/C is not paid to such LC Issuer on the date such payment is due but
is paid within three (3) Business Days after such payment is due, such Lender
shall pay to such LC Issuer on demand an amount equal to the product of (i) such
amount, multiplied by (ii) the daily average Federal Funds Rate during the
period from and including the date such payment is required to the date on which
such payment is immediately available to such LC Issuer, multiplied by (iii) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any Lender pursuant to this subsection 2.16 is not paid to such LC
Issuer by such Lender within three (3) Business Days after the date such payment
is due, such LC Issuer shall be entitled to recover from such Lender, on demand,
such amount with interest thereon calculated from the fourth Business Day after
such due date until paid at the rate per annum applicable to Loans made as ABR
Loans hereunder. A certificate of such LC Issuer submitted to any Lender with
respect to any amounts owing under this subsection 2.16 shall be conclusive in
the absence of manifest error.
 
(d)  Whenever, at any time after such LC Issuer has made payment under any
Facility L/C and has received from any Lender its Ratable Share of such payment,
such LC Issuer receives any payment related to such Facility L/C (whether
directly from Borrower or otherwise, including proceeds of collateral applied
thereto by such LC Issuer), or any payment of interest on account thereof, such
LC Issuer will distribute to such Lender its Ratable Share thereof; provided,
however, that in the event that any such payment received by such LC Issuer
shall be required to be returned by such LC Issuer, such Lender shall return to
such LC Issuer the portion thereof previously distributed by such LC Issuer to
it.
 
2.17  Payments. Borrower agrees (a) to reimburse each LC Issuer, for the pro
rata benefit of the Lenders in accordance with each Lender’s respective Ratable
Share, forthwith upon its or Agent’s demand and otherwise in accordance with the
terms of the L/C Application relating thereto, for any expenditure or payment
made by such LC Issuer under any Facility L/C, and (b) to pay interest on any
unreimbursed portion of any such payments from the date of such payment until
reimbursement in full thereof at a rate per annum equal to (i) prior to the
date which is (A) one (1) Business Day after the day on which such LC Issuer
demands reimbursement from Borrower for such payment if such demand is made
prior to 10:00 a.m., Chicago time or (B) two (2) Business Days after the day on
which such LC Issuer or Agent demands reimbursement if such demand is made at or
after 10:00 a.m. Chicago time, the rate which would then be payable on any
outstanding ABR Loan which is not in default, and (ii) thereafter, the rate
which would then be payable on any outstanding ABR Loan which is in default.
 
2.18  Facility L/C Fees. In lieu of any letter of credit commissions and fees
provided for in any Facility L/C Application (other than standard issuance,
amendment, negotiation and administration fees and expenses), Borrower agrees to
pay Agent, in the case of each Facility L/C, for the account of the Lenders and
LC Issuer (as hereinafter provided), the Facility L/C Fee therefor, on the
average daily undrawn stated amount under such Facility L/C. The Facility L/C
Fees shall be due and payable quarterly in arrears not later than the day
(“Quarterly Payment Date”) that is five (5) Business Days following Agent’s
delivery to Borrower of the quarterly statement of Facility L/C Fees and, to the
extent any such fees are then accrued and unpaid, on the Maturity Date. Facility
L/C Fees shall be calculated, for the period to which such payment applies, for
actual days on which such Facility L/C was outstanding during such period
(excluding, in the case of the Existing L/Cs, the portion of such period prior
to the date of this Agreement), on the basis of a 360-day year. Agent shall
promptly remit such Facility L/C Fees, when paid, as follows: (i) to each LC
Issuer, solely for its own account, with respect to each Facility L/C issued by
such LC Issuer, an amount per annum equal to the product of (A) 0.125% per annum
and (B) the face amount of such Facility L/C and (ii) to all Lenders, their
Ratable Shares of the balance of such Facility L/C Fees. In addition, an LC
Issuer may charge and retain for its own account, and Borrower agrees to pay,
such LC Issuer’s usual and customary charges with respect to the issuance,
amendment, negotiation and administration of the Facility L/C.
 
2.19  Letter of Credit Reserves. If any change in any law or regulation or in
the interpretation or application thereof by any court or other governmental
authority charged with the administration thereof shall either (a) impose,
modify, deem or make applicable any reserve, special deposit, assessment or
similar requirement against letters of credit issued by an LC Issuer, or (b)
impose on an LC Issuer or any Lender any other condition regarding this
Agreement or any Facility L/C, and the result of any event referred to in clause
(a) or (b) above shall be to increase the cost to an LC Issuer or any Lender of
issuing or maintaining any Facility L/C (which increase in cost shall be the
result of an LC Issuer’s or any Lender’s reasonable allocation of the aggregate
of such cost increases resulting from such events), then, upon demand by an LC
Issuer or any Lender, Borrower shall immediately pay to Agent, for the pro rata
benefit of such Lender(s), from time to time as specified by Agent or such
Lender(s), additional amounts which shall be sufficient to compensate Agent or
such Lender(s) for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the then applicable interest rate on ABR Loans. A certificate as to
such increased cost incurred by an LC Issuer or such Lender(s), submitted by an
LC Issuer or such Lender(s) to Borrower, shall be conclusive, absent manifest
error, as to the amount thereof. This provision shall survive the termination of
this Agreement and shall remain in full force and effect until there is no
existing or future obligation of any LC Issuer or any Lender under any Facility
L/C.
 
2.20  Further Assurances. Borrower hereby agrees to do and perform any and all
acts and to execute any and all further instruments reasonably requested by
Agent or an LC Issuer more fully to effect the purposes of this Agreement and
the issuance of Facility L/Cs hereunder, and further agrees to execute any and
all instruments reasonably requested by an LC Issuer in connection with the
obtaining and/or maintaining of any insurance coverage applicable to any
Facility L/C.
 
2.21  Obligations Absolute. 
 
(a)  The obligations of the other Lenders to an LC Issuer with respect to
Facility L/Cs issued by such LC Issuer, and the Reimbursement Obligations of
Borrower with respect to Facility L/Cs, under this Agreement shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including without limitation
the following:
 
(i)  the existence of any claim, set-off, defense or other right which Borrower
may have at any time against any beneficiary, or any transferee, of any Facility
L/C (or any Persons for whom any such beneficiary or any such transferee may be
acting), any LC Issuer or any other Person, whether in connection with this
Agreement, the transaction contemplated herein, or any unrelated transaction
(including any underlying transaction between Borrower or any Subsidiary and the
beneficiary of such Facility L/C);
 
(ii)  any draft, certificate, statement or any other document presented under
any Facility L/C proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
 
(iii)  payment by an LC Issuer under any Facility L/C against presentation of a
draft or certificate which does not comply with the terms of such Facility L/C,
provided that LC Issuer has made such payment to the beneficiary set forth on
the face of such Facility L/C;
 
(iv)  the occurrence or any Default or Event of Default; or
 
(v)  any other circumstances or happening whatsoever, whether or not similar to
any of the foregoing.
 
(b)  Each LC Issuer shall be entitled to rely, and shall be fully protected in
relying, upon any Facility L/C, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by such LC Issuer. Each LC Issuer shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first have received such advice or concurrence of the Required Lenders
as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take such
action. Notwithstanding any other provision of this subsection 2.21, each LC
Issuer shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and any future holders of a
participation in any Facility L/Cs.
 
2.22  LC Issuer Reporting Requirements. Each LC Issuer shall, no later than the
third (3rd) Business Day following the last day of each month, provide to Agent
a schedule of the Facility L/Cs issued by it showing the issuance date, account
party, original face amount, amount (if any) paid thereunder, expiration date
and the reference number of each Facility L/C outstanding at any time during
such month (and whether it is a Financial Letter of Credit or Performance Letter
of Credit) and the aggregate amount (if any) payable by the Borrower to such LC
Issuer during the month pursuant to subsection 2.19 hereof. Copies of such
reports shall be provided promptly to each Lender by the Agent. The Agent shall,
with reasonable promptness following receipt from all LC Issuers of the reports
provided for in this subsection 2.22 for the months of March, June, September
and December, respectively, deliver to the Borrower (with a copy to each Lender)
a quarterly statement of the Facility L/C Fees and Commitment Fees then due and
payable.
 
2.23  Indemnification; Nature of LC Issuer’s Duties.
 
(a)  In addition to amounts payable as elsewhere provided in this Agreement,
Borrower hereby agrees to protect, indemnify, pay and save Agent, each LC Issuer
and each Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) arising from the claims of third parties against Agent, any LC
Issuer or any Lender as a consequence, direct or indirect, of (i) the issuance
of any Facility L/C other than, in the case of an LC Issuer, as a result of its
willful misconduct or gross negligence, or (ii) the failure of an LC Issuer to
honor a drawing under a Facility L/C Credit as a result of any act or omission,
whether rightful or wrongful, of any court or other Governmental Authority.
 
(b)  As among Borrower, Lenders, Agent and each LC Issuer, Borrower assumes all
risks of the acts and omissions of, or misuse of Facility L/Cs by, the
respective beneficiaries of such Facility L/Cs. In furtherance and not in
limitation of the foregoing, neither an LC Issuer nor Agent nor any Lender shall
be responsible (other than, in the case of an LC Issuer, as a result of its
gross negligence or willful misconduct): (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of the Facility
L/Cs, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Facility L/C or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of a Facility
L/C to comply fully with conditions required in order to draw upon such Facility
L/C; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, facsimile
transmission or otherwise; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Facility L/C or of the proceeds
thereof; (vii) for the misapplication by the beneficiary of a Facility L/C of
the proceeds of any drawing under such Facility L/C; or (viii) for any
consequences arising from causes beyond the control of Agent, such LC Issuer and
the Lenders including, without limitation, any act or omission, whether rightful
or wrongful, of any government, court or other governmental agency or authority.
None of the above shall affect, impair, or prevent the vesting of any of such LC
Issuer’s rights or powers under this subsection 2.23.
 
(c)  In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by an LC Issuer
under or in connection with the Facility L/Cs issued by it or any related
certificates, if taken or omitted in good faith, shall not put such LC Issuer,
Agent or any Lender under any resulting liability to Borrower or relieve
Borrower of any of its Obligations hereunder to any such Person.
 
(d)  Notwithstanding anything to the contrary contained in this subsection 2.23,
Borrower shall have no obligation to indemnify an LC Issuer under this
subsection 2.23 in respect of any liability incurred by an LC Issuer arising out
of the wrongful dishonor by such LC Issuer of a proper demand for payment made
under the Facility L/Cs issued by such LC Issuer, unless such dishonor was made
at the request of Borrower.
 

SECTION 3:    GENERAL PROVISIONS APPLICABLE TO LOANS

 
3.1  Conversion/Continuation Options. Subject to the limitations on the
availability of Eurodollar Rate Loans, Borrower may elect from time to time to
convert outstanding Revolving Credit Loans from ABR Loans to Eurodollar Rate
Loans or to continue any Eurodollar Rate Loan as such upon the expiration of the
then current Interest Period thereof by giving the Agent telephonic or written
(which may be by electronic mail) notice (the “Notice of
Conversion/Continuation”), which Notice of Conversion/Continuation must be
received prior to 11:00 a.m., Chicago time, at least three (3) Business Days
prior to the requested date for the conversion or continuation, which notice
shall specify (i) the date for the conversion or continuation (which shall be a
Business Day); (ii) the aggregate amount of ABR Loans to be converted or
Eurodollar Rate Loans to be continued; and (iii) for each such ABR Loan to be
converted to a Eurodollar Rate Loan and Eurodollar Rate Loan to be continued as
a Eurodollar Rate Loan, the respective amount and the respective length of the
initial Interest Period. Each conversion from ABR Loans to Eurodollar Rate Loans
and each continuation of Eurodollar Rate Loans shall be in the principal amount
of $10,000,000 or any larger amount which is an even multiple of
$1,000,000. After Borrower gives the Notice of Conversion/Continuation
requesting continuation of a Eurodollar Rate Loan, Agent, by 9:00 a.m., Chicago
time, two Business Days prior to the end of the Interest Period, shall advise
Borrower of the applicable interest rate(s) (which is the sum of the applicable
Eurodollar Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate
Loan(s) and Interest Period(s) requested in such notice. Not more than two hours
thereafter, Borrower shall give Agent written irrevocable confirmation of
whether or not Borrower wants to continue the Eurodollar Rate Loan(s) as such
and, if so, the amount and the Interest Period for each such Eurodollar Rate
Loan. If Borrower’s confirmation is not timely made, Borrower shall be deemed to
have withdrawn Borrower’s notice for a continuation and the Eurodollar Rate
Loan(s) that were the subject of such request shall convert automatically to an
ABR Loan upon the expiration of the then current Interest Period. If Borrower’s
written confirmation is timely made, Borrower shall be deemed to be requesting a
continuation of the Eurodollar Rate Loan(s) in the amount(s) and for the
Interest Period(s) stated in such notice. Agent shall give prompt telephonic or
written notice to each Lender of Borrower’s request for conversion or
continuation, specifying (i) the date for the conversion or continuation; (ii)
the aggregate amount of ABR Loans to be converted or Eurodollar Rate Loan to be
continued; and (iii) for each such ABR Loan to be converted to a Eurodollar Rate
Loan and each continuation of any Eurodollar Rate Loan, the respective amount,
the respective Eurodollar Rate, and the respective length of the initial
Interest Period applicable thereto. All or any part of outstanding ABR Loans may
be converted or Eurodollar Rate Loans continued as provided herein, provided
that (i) (unless the Required Lenders otherwise consent) no ABR Loan may be
converted into a Eurodollar Rate Loan nor any Eurodollar Rate Loan continued as
a Eurodollar Rate Loan upon the expiration of the current Interest Period
therefor when any Default or Event of Default has occurred and is continuing and
(ii) no ABR Loan may be converted into a Eurodollar Rate Loan nor any Eurodollar
Rate Loan continued as a Eurodollar Rate Loan upon the expiration of the
current Interest Period therefor after the date that is one month prior to the
last day of the Commitment Period.
 
3.2  Inability to Determine Interest Rate. If prior to the first day of any
Interest Period, the Agent or the Required Lenders shall have determined (which
determination shall be conclusive and binding upon Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, the
Agent shall give telecopy, telephonic or written notice thereof to Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Rate Loans requested to be made on the first day of such Interest
Period shall be made as ABR Loans and (y) any Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Rate Loans shall be converted to or continued as ABR Loans. Until such notice
has been withdrawn by the Agent, no further Eurodollar Rate Loans shall be made
or continued as such, nor shall Borrower have the right to convert ABR Loans to
Eurodollar Rate Loans.
 
3.3  Availability of Eurodollar Rate Loans. If any Lender determines that
maintenance of its Eurodollar Rate Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Rate Loans are not
available or (ii) the interest rate applicable to Eurodollar Rate Loans does not
accurately reflect the cost of making or maintaining Eurodollar Rate Loans, then
the Agent shall suspend the availability of Eurodollar Rate Loans and require
any affected Eurodollar Rate Loans to be repaid or converted to ABR Loans at the
end of the applicable Interest Period.
 
3.4  Requirements of Law. If the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof applicable to any Lender, or
its applicable Lending Installation, branch or any affiliate thereof, or any LC
Issuer or compliance by any Lender, or its applicable Lending Installation,
branch or any affiliate thereof, or any LC Issuer with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, in each case made subsequent to the date hereof (or, if
later, the date on which such Lender becomes a Lender hereunder pursuant to any
permitted assignment or pursuant to subsection 2.6(b) hereof):
 
(a)  shall subject such Lender, or its applicable Lending Installation, branch
or any affiliate thereof, or any LC Issuer to any tax of any kind whatsoever
with respect to any Eurodollar Rate Loans made by it or its obligation to make
Eurodollar Rate Loans, or to issue or to participate in Facility L/Cs, or change
the basis of taxation of payments to such Lender or LC Issuer in respect thereof
and changes in taxes measured by or imposed upon the overall net income, or
franchise taxes, or taxes measured by or imposed upon overall capital or net
worth, or branch taxes (in the case of such capital, net worth or branch taxes,
imposed in lieu of such net income tax), of such Lender or its applicable
Lending Installation, branch, or any affiliate thereof or any LC Issuer;
 
(b)  shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender or
any LC Issuer which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
 
(c)  shall impose any other condition the result of which is or would be to
increase the cost to the Lender or any applicable Lending Installation or LC
Issuer of making, funding or maintaining its Eurodollar Rate Loans or issuing or
participating in Facility L/Cs or shall reduce any amount receivable by any
Lender or any applicable Lending Installation or LC Issuer in connection with
its Eurodollar Rate Loans or Facility L/Cs or participations therein, or shall
require any Lender or any applicable Lending Installation or LC Issuer to make
any payment calculated by reference to the amount of Eurodollar Rate Loans or
Facility L/Cs or participations therein held or interest received by it, by an
amount deemed material by such Lender;
 
and the result of any of the foregoing is or would be to increase the cost to
such Lender or LC Issuer, by an amount which such Lender or LC Issuer, or its
applicable Lending Installation, branch or any affiliate thereof, deems to be
material, of making, converting into, continuing or maintaining Eurodollar Rate
Loans or its Commitment or of issuing or participations in any Facility L/Cs or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, upon notice to Borrower from such Lender, through the Agent, in accordance
herewith, Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender or LC Issuer for such
increased cost or reduced amount receivable. If any Lender becomes entitled to
claim any additional amounts pursuant to this subsection, it shall provide
prompt notice thereof to Borrower, through the Agent, certifying (x) that one of
the events described in this subsection has occurred and describing in
reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount receivable hereunder resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the Agent,
to Borrower shall be conclusive and binding upon the Borrower in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
 
3.5  Indemnity. Borrower agrees to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender’s gross negligence or willful misconduct) as a
consequence of (a) default by Borrower in making a borrowing of, conversion into
or continuation of Eurodollar Rate Loans after Borrower has given Agent written
irrevocable confirmation that Borrower selects such Eurodollar Rate Loans in
accordance with subsection 2.3 or subsection 3.1 hereof, as appropriate, of this
Agreement, (b) default by Borrower in making any prepayment or conversion of a
Eurodollar Rate Loan after Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Rate Loans on a day which is not the last day of an Interest Period
with respect thereto (whether by acceleration, demand or otherwise). Such
indemnification may include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or converted, or not so borrowed, converted or continued, for the
period from the date of such prepayment or conversion or of such failure to
borrow, convert or continue to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Rate Loans provided for
herein over (ii) the amount of interest (as reasonably determined by such
Lender, which determination shall be conclusive and binding upon Borrower,
absent manifest error) which would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
 
3.6  Taxes. 
 
(a)  All payments by Borrower to or for the account of any Lender, any LC Issuer
or Agent hereunder or under any Note or Facility L/C Application shall be made
free and clear of and without deduction for any and all Taxes. If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender, any LC Issuer or Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this subsection 3.6) such
Lender, LC Issuer or Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) Borrower shall
make such deductions, (iii) Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law and (iv)
Borrower shall furnish to the Agent the original copy of a receipt evidencing
payment thereof within 30 days after such payment is made.
 
(b)  In addition, Borrower hereby agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any Note or Facility
L/C Application or from the execution or delivery of, or otherwise with respect
to, this Agreement or any Note or Facility L/C Application (“Other Taxes”).
 
(c)  Borrower hereby agrees to indemnify each Lender, LC Issuer and Agent for
the full amount of Taxes or Other Taxes as set forth in subsections 3.6(a) and
(b) (including, without limitation, any Taxes or Other Taxes imposed on amounts
payable under this subsection 3.6) paid by such Lender, LC Issuer or Agent and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. Payments due under this indemnification shall be made
within thirty (30) days of the date such Lender, LC Issuer or Agent makes demand
therefor pursuant to subsection 3.7, which demand shall be made not later than
180 days after such Lender, Agent or LC Issuer incurs the Taxes, Other Taxes or
other liability so arising.
 
(d)  Each Lender that is not incorporated (or otherwise formed or established)
under the laws of the United States of America or a state thereof (each a
“Non-U.S. Lender”) agrees that it will, not more than ten (10) Business Days
after the date of this Agreement or such later date on which it becomes a party
to this Agreement (but in no event later than the first date on which any
payment for the account of such Non-U.S. Lender is made hereunder), (i) deliver
to each of Borrower and Agent two duly completed copies of United States
Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that
such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, and (ii)
deliver to each of Borrower and Agent a United States Internal Revenue Form W-8
or W-9, as the case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. Each Non-U.S. Lender further undertakes to
deliver to each of Borrower and Agent (x) renewals or additional copies of such
form (or any successor form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any event requiring a change
in the most recent forms so delivered by it, such additional forms or amendments
thereto as may be reasonably requested by Borrower or Agent. All forms or
amendments described in the preceding sentence shall certify that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred subsequent to the date such Lender became a party to this Agreement but
prior to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form or amendment with respect to it and such
Lender advises the Borrower and Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
 
(e)  For any period during which a Non-U.S. Lender has failed to provide the
Borrower with an appropriate form pursuant to subsection 3.6(d) above (unless
such failure is due to a change in treaty, law or regulation, or any change in
the interpretation or administration thereof by any Governmental Authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this subsection 3.6 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under subsection 3.6(d) above, Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such
Non-U.S. Lender to recover such Taxes.
 
(f)  Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
Borrower (with a copy to Agent), at the time or times prescribed by applicable
law and prior to the date of any applicable payment, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate of withholding.
 
(g)  If the U.S. Internal Revenue Service or any other Governmental Authority of
the United States or any other country or any political subdivision thereof
asserts a claim that Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered or
properly completed, because such Lender failed to notify Agent of a change in
circumstances which rendered its exemption from withholding ineffective, or for
any other reason), such Lender shall indemnify Agent fully for all amounts paid,
directly or indirectly, by Agent as tax, withholding therefor, or otherwise,
including penalties and interest, and including taxes imposed by any
jurisdiction on amounts payable to Agent under this subsection, together with
all costs and expenses related thereto (including attorneys fees and time
charges of attorneys for Agent, which attorneys may be employees of Agent). The
obligations of the Lenders under this subsection 3.6(g) shall survive the
payment of the Obligations and termination of this Agreement.
 
3.7  Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of Borrower to such
Lender under subsections 2.9 and 3.4 or to avoid the unavailability of
Eurodollar Advances under subsection 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to Borrower (with a copy to Agent) as
to the amount due, if any, under subsection 2.9, 3.4, 3.5 or 3.6. Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on
Borrower in the absence of manifest error. Determination of amounts payable
under such subsections in connection with a Eurodollar Rate Loan shall be
calculated as though each Lender funded its Eurodollar Rate Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the Eurodollar Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by Borrower of such written statement. The obligations of
the Borrower under subsections 2.9, 3.4, 3.5 and 3.6 shall survive payment of
the Obligations and termination of this Agreement.
 
3.8  Telephonic Notices. Borrower hereby authorizes the Lenders and Agent to
extend, convert or continue Loans, to effect selections of Eurodollar Rate Loans
and the Interest Period thereof and ABR Loans and to transfer funds, in each
case based on telephonic notices made by any Person or Persons who Agent or any
Lender in good faith believes to be acting on behalf of Borrower, it being
understood that the foregoing authorization is specifically intended to allow
Notices of Borrowing and Notices of Conversion to be given telephonically.
Borrower agrees to deliver promptly to Agent a written confirmation, if such
confirmation is requested by Agent or any Lender, of each telephonic notice
signed by a Responsible Officer. If the written confirmation differs in any
material respect from the action taken by Agent and Lenders, the records of
Agent and Lenders shall govern, absent manifest error.
 
3.9  Non-Receipt of Funds by Agent. Unless Borrower or a Lender, as the case may
be, notifies Agent prior to the date on which it is scheduled to make payment to
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of Borrower, a payment of principal, interest or fees to Agent for the account
of the Lenders, that it does not intend to make such payment, Agent may assume
that such payment has been made. Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance upon
such assumption. If such Lender or Borrower, as the case may be, has not in fact
made such payment to Agent, the recipient of such payment shall, on demand by
Agent, repay to Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by Agent until the date Agent recovers such amount
at a rate per annum equal to (x) in the case of payment by a Lender, the Federal
Funds Rate for such day for the first three days and, thereafter, the interest
rate applicable to the relevant Loan or (y) in the case of payment by Borrower,
the interest rate applicable to the relevant Loan.
 
3.10  Replacement of Certain Lenders. In the event a Lender (“Affected Lender”):
(i) shall have requested compensation from Borrower under subsections 2.9 or 3.4
hereof to recover additional costs incurred by such Lender that are not being
incurred generally by the other Lenders, (ii) shall have delivered a notice
pursuant to subsection 3.3 hereof claiming that such Lender is unable to extend
Eurodollar Rate Loans to Borrower for reasons not generally applicable to the
other Lenders, (iii) shall have invoked subsection 11.17 hereof or (iv) is a
Rejecting Lender, then, in any such case, Borrower or Agent may make written
demand on such Affected Lender (with a copy to Agent in the case of a demand by
Borrower and a copy to Borrower in the case of a demand by Agent) for the
Affected Lender to assign, and, if a Replacement Lender (as hereinafter defined)
notifies the Affected Lender of its willingness to purchase the Affected
Lender’s interest and Agent and Borrower consent thereto in writing, then such
Affected Lender shall assign pursuant to one or more duly executed assignment
and assumption agreements in substantially and in all material respects in the
form and substance of Exhibit H five (5) Business Days after the date of such
demand, to one or more Lenders or Eligible Assignees that Borrower or Agent, as
the case may be, shall have engaged for such purpose (“Replacement Lender”), all
of such Affected Lender’s rights and obligations (from and after the date of
such assignment) under this Agreement and the other Loan Documents (including,
without limitation, its Commitment and all Loans owing to it) in accordance
with subsection 11.7(b) hereof. As a condition to any such assignment, the
Affected Lender shall concurrently receive in cash or by wire transfer, all
amounts due and owing to the Affected Lender hereunder or under any other Loan
Document, including, without limitation, the aggregate outstanding principal
amount of the Loans owed to such Lender, together with accrued interest thereon
through the date of such assignment, amounts payable under subsections 2.9, 3.4,
3.5, 3.6, 11.6 or 11.14 hereof with respect to such Affected Lender and the fees
payable to such Affected Lender under subsections 2.4 and 2.18 hereof; provided
that, upon such Affected Lender’s replacement, such Affected Lender shall cease
to be a party hereto but shall continue to be entitled to the benefits of
subsections 2.9, 3.4, 3.5, 3.6, 11.6 and 11.14 hereof, as well as to any other
fees accrued for its account hereunder and not yet paid, and shall continue to
be obligated under subsection 10.7 with respect to obligations and liabilities
accruing prior to the replacement of such Affected Lender. If the Affected
Lender is an LC Issuer, Borrower shall, at the time of or prior to replacement
of such Affected Lender hereunder, cause all Facility L/Cs issued by such
Affected Lender to be canceled and returned to such Affected Lender or, to the
extent any one or more of such Facility L/Cs is not so canceled and returned,
provide to such Affected Lender, as security for the Reimbursement Obligations
in respect of such Facility L/Cs, cash collateral or a Letter of Credit issued
by a Lender, and in form and substance, reasonably satisfactory to such Affected
Lender. If and for as long as any Facility L/C issued by an Affected Lender
remains outstanding after the replacement of such Affected Lender, such Affected
Lender shall continue to have (but solely with respect to such outstanding
Facility L/Cs issued by it prior to its replacement) the rights and obligations
of an LC Issuer hereunder (including the right to receive the portion of the
Facility L/C Fees payable to the LC Issuer in respect of such Facility L/Cs
under clause (i) of subsection 2.18 hereof). Any Facility L/Cs that remain
outstanding and have been issued by an Affected Lender that is replaced
hereunder shall not be extended, modified or amended (other than to reduce the
amount thereof).
 

SECTION 4:    REPRESENTATIONS AND WARRANTIES

 
In order to induce Lenders, the LC Issuers and Agent to enter into this
Agreement and to make the Revolving Credit Loans and Swingline Loans and to
issue the Facility L/Cs herein provided for, Borrower hereby covenants,
represents and warrants to each Lender, LC Issuer and Agent that on the date
hereof:
 
4.1  Financial Statements. Borrower has heretofore furnished to each Lender (a)
the consolidated balance sheet of Borrower and its Subsidiaries as of December
31, 2003, and the related consolidated statements of income, of stockholders’
equity and of cash flows for the fiscal year of Borrower then ended, certified
by an independent public accountant of recognized national standing and (b) the
consolidated unaudited balance sheet and income statement of Borrower and its
Subsidiaries as of June 30, 2004. Each of the foregoing financial statements
fairly presents, in all material respects, the financial condition of Borrower
and its Subsidiaries as of the date thereof and the results of the operations of
Borrower and its Subsidiaries for the period then ended (subject, in the case of
the June 30, 2004 statements, to year-end audit adjustments) and, from the
respective dates of the foregoing financial statements to the date hereof, there
has been no material adverse change in such condition.
 
4.2  Existence; Compliance with Law. Each of Borrower and Borrower’s
Subsidiaries (a) is duly organized or formed, as appropriate, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
formation or organization, as appropriate, (b) has the requisite corporate,
partnership or limited liability company power and authority to conduct the
business in which it is currently engaged, (c) is qualified as a foreign entity
to do business under the laws of any jurisdiction where the failure to so
qualify would have a material adverse effect on the business of Borrower and
Borrower’s Subsidiaries taken as a whole, and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
would not, in the aggregate, have a material adverse effect on the business,
operations, property or financial or other condition of Borrower and Borrower’s
Subsidiaries taken as a whole and would not materially adversely affect the
ability of Borrower or the Guarantors to perform their obligations under the
Loan Documents.
 
4.3  Power; Authorization; Enforceable Obligations. Borrower and each Guarantor
has the corporate, partnership or limited liability company (as applicable)
power and authority to make, deliver and perform the Loan Documents to which it
is a party and (in the case of Borrower) to borrow hereunder, and has taken all
corporate or other action necessary to be taken by it to authorize (a) (in the
case of Borrower) the borrowings on the terms and conditions of this Agreement
and the Notes, and (b) the execution, delivery and performance of the Loan
Documents to which it is a party. No consent, waiver or authorization of, or
filing with any Person (including without limitation any Governmental Authority)
is required to be made or obtained by Borrower in connection with the borrowings
hereunder or by Borrower or any Guarantor in connection with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
it is a party. This Agreement has been, and each Note and Guaranty Agreement
will be, duly executed and delivered on behalf of Borrower or each Guarantor (as
the case may be), and this Agreement constitutes, and each Note and Guaranty
Agreement when executed and delivered hereunder will constitute, a legal, valid
and binding obligation of Borrower or the Guarantors (as the case may be),
enforceable against Borrower or the Guarantors (as the case may be), in
accordance with its terms, subject to the effect, if any, of bankruptcy,
insolvency, reorganization, arrangement or other similar laws relating to or
affecting the rights of creditors generally and the limitations, if any, imposed
by the general principles of equity and public policy.
 
4.4  No Legal Bar. The execution, delivery and performance of this Agreement and
the Notes, the borrowings hereunder and the use of the proceeds thereof and
the execution, delivery and performance by the Guarantors of the Guaranty
Agreement (a) do not and will not violate any Requirement of Law or Contractual
Obligation of Borrower or any of Borrower’s Subsidiaries, (b) do not contravene
the articles of incorporation, charter, bylaws, partnership agreement, articles
or certificate of formation, operating agreement or other organizational
documents of Borrower or any of Borrower’s Subsidiaries and (c) do not and will
not result in, or require, the creation or imposition of any Lien on any of its
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation.
 
4.5  No Material Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of Borrower, threatened by or against Borrower or any of Borrower’s Subsidiaries
or against any of their respective properties or revenues (a) with respect to
this Agreement, the Notes or any Guaranty Agreement or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a material adverse effect on the business, operations, property or
financial or other condition of Borrower and Borrower’s Subsidiaries taken as a
whole.
 
4.6  Regulation U. Neither Borrower nor any of Borrower’s Subsidiaries is
engaged, nor will either of them engage, principally or as one of its important
activities, in the business of extending credit for the purpose of “purchasing”
or “carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any loans hereunder will be used for “purchasing” or “carrying” “margin
stock” as so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of such Board of Governors.
If requested by Agent, Borrower and each of Borrower’s Subsidiaries will furnish
to Agent a statement in conformity with the requirements of Federal Reserve Form
U-l referred to in said Regulation U to the foregoing effect.
 
4.7  Investment Company Act. Neither Borrower nor any of Borrower’s Subsidiaries
is an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.
 
4.8  ERISA. Borrower and Borrower’s Subsidiaries are in compliance in all
material respects with ERISA. There has been no Reportable Event with respect to
any Plan. There has been no institution of proceedings or any other action by
PBGC or Borrower or any Commonly Controlled Entity to terminate or withdraw or
partially withdraw from any Plan under any circumstances which could lead to
material liabilities to PBGC or, with respect to a Multiemployer Plan, the
Reorganization or Insolvency (as each such term is defined in ERISA) of the
Plan.
 
4.9  Disclosure. No representations or warranties made by Borrower or any
Guarantor in this Agreement or any other Loan Document or in any other document
furnished from time to time in connection herewith or therewith (as such other
documents may be supplemented from time to time) contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
 
4.10  Subsidiary Information. Schedule 3 attached hereto contains the name,
principal place of business, all other places of business and percentage of
ownership of all of the Subsidiaries of Borrower.
 
4.11  M/I Ancillary Businesses Information. Schedule 4 attached hereto contains
the name, principal place of business, all other places of business and
percentage of ownership of all of the M/I Ancillary Businesses.
 
4.12  Schedules. Each of the Schedules to this Agreement contains true, complete
and correct information in all material respects.
 
4.13  Environment. Borrower and Borrower’s Subsidiaries have been issued and
will maintain all required federal, state, and local permits, licenses,
certificates and approvals relating to (a) emissions; (b) discharges to service
water or groundwater; (c) noise emissions; (d) solid or liquid waste disposal;
(e) the use, generation, storage, transportation or disposal of toxic or
hazardous substances or hazardous wastes; or (f) other environmental, health or
safety matters, except to the extent the failure to have any such permit,
license, certificate or approval would not have a material adverse effect on
Borrower’s consolidated operations, business or financial condition. Neither
Borrower nor any of Borrower’s Subsidiaries have received notice of, or has
actual knowledge of any material violations of any federal, state or local
environmental, health or safety laws, codes or ordinances or any rules or
regulations promulgated thereunder. Except in accordance with a valid
governmental permit, license, certificate or approval, there has been no
material emission, spill, release or discharge into or upon (i) the air; (ii)
soils; (iii) service water or groundwater; (iv) the sewer, septic system or
waste treatment, storage or disposal system servicing any property of Borrower
or any of its Subsidiaries of any toxic or hazardous substances or hazardous
wastes at or from such property; and accordingly no such property has been
adversely affected, in any material respect, by any toxic or hazardous
substances or wastes. There has been no complaint, order, directive, claim,
citation or notice by any Governmental Authority or any person or entity with
respect to material violations of law or damages by reason of Borrower or
Borrower’s Subsidiaries (1) air emissions; (2) spills, releases or discharges to
soils or improvements located thereon, surface water, groundwater or the sewer,
septic system or waste treatment, storage or disposal system servicing the
premises; (3) noise emissions; (4) solid or liquid waste disposal; (5) use,
generation, storage, transportation or disposal of toxic or hazardous substances
or hazardous wastes; or (6) other environmental, health or safety matters
affecting Borrower or any of Borrower’s Subsidiaries. Neither Borrower nor any
of Borrower’s Subsidiaries have any material indebtedness, obligation or
liability, absolute or contingent, matured or unmatured, with respect to the
storage, treatment, cleanup or disposal of any solid waste, hazardous wastes, or
other toxic or hazardous substances. For purposes of this subsection 4.13, a
violation, emission, spill, release, discharge, damage, adverse effect,
indebtedness, obligation or liability shall be deemed material if, and only if,
such violation, emission, spill, release, discharge, damage, adverse effect,
indebtedness, obligation or liability, in any one case or in the aggregate,
would have a material adverse effect on Borrower’s consolidated operations,
business or financial condition.
 
4.14  Force Majeure Events. Neither the business nor the properties of Borrower
or any Subsidiary are affected by any fire, explosion, accident, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), materially and adversely affecting such
business or properties or the operation of Borrower and its Subsidiaries taken
as a whole. 
 
4.15  Other Agreements. Neither Borrower nor any Subsidiary is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument or subject to any charter, corporate or other restriction which could
have a material adverse effect on the business, properties, assets, operations,
or conditions, financial or otherwise, of Borrower and its Subsidiaries, taken
as a whole, or the ability of Borrower or any Subsidiary to carry out its
obligations under the Loan Documents to which it is a party. Neither Borrower
nor any Subsidiary is in default in any material respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to the business of Borrower
and its Subsidiaries, taken as a whole.
 
4.16  No Defaults on Outstanding Judgments or Orders. Except for judgments with
respect to which the liability of Borrower and each Subsidiary does not exceed
$5,000,000 in the aggregate for all such judgments, (a) Borrower and each
Subsidiary have satisfied all unstayed and unappealed judgments, and (b) neither
Borrower nor any Subsidiary is in default with respect to any judgment, or any
material writ, injunction, decree, rule, or regulation of any court, arbitrator,
or federal, state, municipal, or other governmental authority, commission,
board, bureau, agency, or instrumentality, domestic or foreign applicable to
Borrower or any Subsidiary.
 
4.17  Ownership and Liens. Borrower and each Subsidiary have title to, or valid
leasehold interests in, all of their respective properties and assets, real and
personal, including the properties and assets and leasehold interests reflected
in the financial statements referred to in subsection 4.1 (other than any
properties or assets disposed of in the ordinary course of business), and none
of the properties and assets owned by Borrower or any Subsidiary and none of
their leasehold interests is subject to any Lien, except such as may be
permitted pursuant to subsection 7.2 of this Agreement.
 
4.18  Operation of Business. Borrower and each Subsidiary possess all material
licenses, permits, franchises, patents, copyrights, trademarks, and trade names,
or rights thereto, required to conduct their respective businesses substantially
as now conducted and as presently proposed to be conducted and neither Borrower
nor any of its Subsidiaries is in violation of any valid rights of others with
respect to any of the foregoing where the failure to possess such licenses,
permits, franchises, patents, copyrights, trademarks, trade names or rights
thereto or the violation of the valid rights of others with respect thereto may,
in any one case or in the aggregate, adversely affect in any material respect
the financial condition, operations, properties, or business of Borrower or any
Subsidiary or the ability of Borrower and its Subsidiaries, taken as a whole, to
perform their obligations under the Loan Documents to which they are a party.
 
4.19  Taxes. All income tax liabilities or income tax obligations of Borrower
and each Subsidiary (other than those being contested in good faith by
appropriate proceedings) have been paid or have been accrued by or reserved for
by Borrower. Borrower constitutes the parent or an affiliated group of
corporations for filing a consolidated United States federal income tax return.
 

SECTION 5:    CONDITIONS PRECEDENT

 
5.1  Conditions to Initial Loan(s). The obligation of the Lenders to make the
initial Loan(s), of the Swingline Lender to make Swingline Loans and of any LC
Issuer to issue, amend or extend any Facility L/C hereunder on the first
Borrowing Date is subject to the satisfaction of the following conditions
precedent on or prior to such date:
 
(a)  Notes. Each Lender shall have received its respective Note, conforming to
the requirements hereof and duly executed and delivered by a duly authorized
officer of Borrower.
 
(b)  Guaranty Agreement. The Guaranty Agreement shall have been duly executed
and delivered by all Guarantors to Agent.
 
(c)  Borrowing Base Compliance. Borrower shall have delivered to each Lender and
Agent a Borrowing Base Certificate, certified by a Responsible Officer of
Borrower, which shows compliance with the provisions of subsection 2.1(b) hereof
as of August 31, 2004.
 
(d)  Legal Opinion of Counsel to Borrower. Agent shall have received an executed
legal opinion of J. Thomas Mason, Esq., counsel to Borrower and Borrower’s
Subsidiaries, dated as of the date hereof and addressed to Lenders and Agent,
substantially in the form of Exhibit E attached hereto, and otherwise in form
and substance reasonably satisfactory to each Lender and Agent and covering such
other matters incident to the transactions contemplated hereby as each Lender
and Agent or their respective counsel may reasonably require.
 
(e)  Corporate Proceedings of Borrower. Agent shall have received a copy of the
resolutions (in form and substance satisfactory to Agent) of the board of
directors of Borrower authorizing (i) the execution, delivery and performance,
of this Agreement, (ii) the consummation of the transactions contemplated
hereby, (iii) the borrowings herein provided for, and (iv) the execution,
delivery and performance of the Notes and the other documents provided for in
this Agreement, all certified by the Secretary or the Assistant Secretary of
Borrower as of the date hereof. Such certificate shall state that the
resolutions set forth therein have not been amended, modified, revoked or
rescinded as of the date hereof.
 
(f)  Proceedings of Guarantors. Agent shall have received a copy of the
respective resolutions (in form and substance reasonably satisfactory to Agent)
of the board of directors, management committee or other governing body of each
of the Guarantors (or of Borrower or another Subsidiary of Borrower as the sole
shareholder or sole member of the applicable Guarantor), each resolution
authorizing the execution, delivery and performance of the Guaranty Agreement,
all certified by the Secretary or Assistant Secretary (or other person in a
comparable position) of the respective Guarantor (or Borrower or Subsidiary) as
of the date hereof. Such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded as of the date
hereof.
 
(g)  Incumbency Certificate of Borrower. Agent shall have received a certificate
of the Secretary or an Assistant Secretary of Borrower, dated the date hereof,
as to the incumbency and signature of the officer(s) of each executing this
Agreement, the Notes and any certificate or other documents to be delivered
pursuant hereto or thereto.
 
(h)  Incumbency Certificates of Guarantors. Agent shall have received a
certificate of the Secretary (or other person in a comparable position) of each
of the Guarantors, dated the date hereof, as to the incumbency and signatures of
the officer(s) (or other person(s) in a comparable position) of each executing
the Guaranty Agreement.
 
(i)  Articles of Incorporation of Borrower. Agent shall have received copies of
(i) the articles of incorporation of Borrower, together with all amendments, and
a certificate of good standing, all certified by the appropriate governmental
officer in its jurisdiction of incorporation and (ii) the bylaws or code of
regulations of Borrower certified by the Secretary or Assistant Secretary of
Borrower.
 
(j)  Organizational Documents of Guarantors. Agent shall have received (i) with
respect to each Guarantor that is a corporation (A) copies of its articles or
certificates of incorporation, including all amendments thereto, and a
certificate of good standing, all certified by the appropriate governmental
officer in its jurisdiction of incorporation and (B) the bylaws or code of
regulations of such Guarantor certified by the Secretary (or other person in a
comparable position) of each Guarantor, (ii) with respect to any Guarantor that
is a partnership, a true copy of its partnership agreement, including all
amendments thereto, certified by an officer of such partnership or of its
general partner, together with (in the case of any limited partnership) copies
of the certificates of limited partnerships and a certificate of good standing,
all certified by the appropriate governmental officer in its jurisdiction of
organization, and (iii) with respect to each Guarantor that is a limited
liability company, a copy of its operating agreement, including all amendments
thereto, certified by an officer of such limited liability company or of its
managing member, and a copy of its articles or certificate of formation and a
certificate of good standing, all certified by the appropriate officer of the
state of its formation.
 
(k)  No Proceeding or Litigation; No Injunctive Relief. No action, suit or
proceeding before any arbitrator or any Governmental Authority shall have been
commenced, no investigation by any Governmental Authority shall have been
commenced and no action, suit, proceeding or investigation by any Governmental
Authority shall have been threatened, against Borrower or any Subsidiary of
Borrower or any of the officers, directors or managers of Borrower or any
Subsidiary of Borrower, seeking to restrain, prevent or change the transactions
contemplated by this Agreement in whole or in part or questioning the validity
or legality of the transactions contemplated by this Agreement or seeking
damages in connection with such transactions.
 
(l)  Consents, Licenses, Approvals, etc. Agent shall have received true copies
(certified to be such by Borrower or other appropriate party) of all consents,
licenses and approvals required in accordance with applicable law in connection
with the execution, delivery, performance, validity and enforceability of the
Loan Documents, if the failure to obtain such consents, licenses or approvals,
individually or in the aggregate, would have a material adverse effect on
Borrower and Borrower’s Subsidiaries taken as a whole, or would adversely affect
the validity or enforceability of any of the foregoing documents, and approvals
obtained shall be in full force and effect and be satisfactory in form and
substance to Agent.
 
(m)  Compliance with Law. Neither Borrower nor any of Borrower’s Subsidiaries
shall be in violation in any material respect of any applicable statute,
regulation or ordinance, including without limitation statutes, regulations or
ordinances relating to environmental matters, of any governmental entity, or any
agency thereof, in any respect materially and adversely affecting the business,
property, assets, operations or condition, financial or otherwise, of Borrower
and Borrower’s Subsidiaries taken as a whole.
 
(n)  No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing hereunder prior to or after giving effect to the
making of the initial Loans (including the issuance of Facility L/Cs) or the
purchase by Lenders of participation interests in the Existing L/Cs on the first
Borrowing Date hereunder.
 
(o)  No Material Adverse Change. There shall have been no material adverse
change in the consolidated financial condition or business or operations of
Borrower and Borrower’s Subsidiaries from the date of Borrower’s June 30, 2004
unaudited consolidated financial statements to the first Borrowing Date.
 
(p)  Fees. Borrower shall have paid to Agent the fees provided for in the
Agent’s Fee Letter (which fees (except for any paid for the account of Agent or
Arranger) shall be paid by the Agent to the Lenders).
 
(q)  Facility L/C Application. If the issuance of any Facility L/C is part of
the initial loan(s), Borrower shall have delivered to the applicable LC Issuer a
Facility L/C Application in accordance with subsection 2.15 hereof for each
Facility L/C that Borrower has requested such LC Issuer to issue on the first
Borrowing Date.
 
(r)  Additional Matters. All corporate and other proceedings and all other
documents and legal matters in connection with the transactions contemplated by
the Loan Documents shall be reasonably satisfactory in form and substance to
each Lender and Agent and their respective counsel.
 
Agent shall furnish to each Lender copies of all documents received by Agent in
satisfaction of the foregoing conditions.

5.2  Conditions to All Loans. In addition to the other terms and conditions of
this Agreement with respect to the making of Loans and the issuance of Facility
L/Cs, the obligation of each Lender to make any Loan and of the LC Issuers to
issue, amend or extend any Facility L/C hereunder on any date (including without
limitation the first Borrowing Date) is subject to the satisfaction of the
following conditions precedent as of such date:
 
(a)  Representations and Warranties. The representations and warranties made by
Borrower in this Agreement and any representations and warranties made by
Borrower or any Subsidiary of Borrower which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, shall be true and correct in all material
respects on and as of the date of such Loan or issuance of such Facility L/C as
if made on and as of such date unless stated to relate to a specific earlier
date.
 
(b)  No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Loan to be
made or Facility L/C to be issued, amended or extended on such date.
 
(c)  Facility L/C Application. In the case of the issuance, amendment or
extension of any Facility L/C, Borrower shall have delivered to the applicable
LC Issuer a Facility L/C Application in accordance with subsection 2.15 hereof
for each Facility L/C that Borrower has requested such LC Issuer to issue, amend
or extend.
 
(d)  Borrowing Base. Such borrowing or the issuance, amendment or extension of
such Facility L/C shall not violate the provisions of subsection 2.1(b) hereof.
 
Each borrowing by Borrower and each submission of a Facility L/C Application
under this Agreement shall constitute a representation and warranty by Borrower
as of the date of such borrowing or submission of such Facility L/C Application
that the conditions contained in the foregoing paragraphs (a), (b), (c), (d) and
(e) of this subsection 5.2 have been satisfied.
 

SECTION 6:    AFFIRMATIVE COVENANTS

 
Borrower hereby agrees that, from the date hereof and so long as any Commitment
remains in effect, any portion of any Note or Reimbursement Obligation remains
outstanding and unpaid, any Facility L/C remains outstanding that is not fully
collateralized with cash in a manner satisfactory to the LC Issuer thereof and
to Agent, or any other amount is owing to Agent or any Lender hereunder,
Borrower shall, and in the case of subsections 6.6, 6.7, 6.8, 6.9 and 6.16
hereof, shall cause each of its Subsidiaries to:
 
6.1  Financial Statements. Furnish to Agent (with sufficient copies for each
Lender and which Agent shall promptly furnish to each Lender):
 
(a)  as soon as available, but in any event within 90 days after the end of each
fiscal year of Borrower, a copy of the audited consolidated balance sheet of
Borrower and its consolidated Subsidiaries as of the end of such year and the
related audited consolidated statements of income, of stockholders’ equity and
of cash flows for such year, setting forth in each case in comparative form the
figures for the previous year, together with the opinion of independent
certified public accountants of nationally recognized standing, which opinion
shall not contain a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit or qualification which would
affect the computation of financial covenants contained herein other than a
qualification for consistency due to a change in the application of GAAP with
which Borrower’s independent certified public accountants concur; and
 
(b)  as soon as available, but in any event not later than 60 days after the end
of each quarterly accounting period (excluding the quarterly accounting period
for the last quarter of each fiscal year of the Commitment Period), the
unaudited consolidated balance sheet of Borrower and its consolidated
Subsidiaries as of the end of each such quarter and the related unaudited
consolidated statements of income and of stockholders’ equity of Borrower and
its consolidated Subsidiaries for such quarter and the portion of the fiscal
year through such date setting forth in each case in comparative form the
figures for the previous year, and including in each case: (i) the relevant
figures broken down with respect to each division of Borrower and its
Subsidiaries and (ii) a summary of all Land, Lots, Lots under Development,
Finished Lots and Lots under Contract;
 
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP (except,
in the case of the financial statements referred to in subparagraph (b) of this
subsection 6.1, that such financial statements need not contain footnotes and
may be subject to year-end audit adjustments).
 
6.2  Certificates; Other Information. Furnish to each Lender and Agent:
 
(a)  concurrently with the delivery of each financial statement referred to in
subsection 6.1 (a) above and each financial statement referred to in subsection
6.1(b) above, a certificate of a Responsible Officer of Borrower (in the form of
Exhibit F attached hereto or such other form as shall be reasonably acceptable
to each Lender and Agent) stated to have been made after due examination by such
Responsible Officer (i) stating that, to the best of such officer’s knowledge,
Borrower and each of its Subsidiaries during such period has observed or
performed in all material respects all of its covenants and other agreements,
and satisfied every condition contained in this Agreement and the Notes to be
observed, performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate, and (ii) showing in detail the calculations supporting such
statement in respect of subsections 6.11, 6.12, 6.13, 7.1, 7.5, 7.6(b), 7.6(e)
and 7.13 hereof;
 
(b)  not later than March 31 of each year, comprehensive projections for that
year, setting forth projected income and cash flow for each quarter of that
year, and the projected balance sheet as of the end of each quarter of that
year, together with a summary of the assumptions upon which such projections are
based and a certificate in the form of Exhibit G hereto of the chief financial
officer or the controller of Borrower with respect to such projections;
 
(c)  promptly after the same are sent, copies of all financial statements,
reports and notices which Borrower or any of its Subsidiaries sends to its
stockholders as stockholders and, so long as Borrower is a reporting company
under the Securities Exchange Act of 1934, promptly after the same are filed,
copies of all financial statements which Borrower may make to, or file with, and
copies of all material notices it receives from, the Securities and Exchange
Commission or any public body succeeding to any or all of the functions of the
Securities and Exchange Commission;
 
(d)  promptly upon receipt thereof, copies of all final reports submitted to
Borrower by independent certified public accountants in connection with each
annual, interim or special audit of the books of Borrower or any of its
Subsidiaries made by such accountants, including without limitation any final
comment letter submitted by such accountants to management in connection with
their annual audit; and
 
(e)  promptly, on reasonable notice to Borrower, such additional financial and
other information as any Lender may from time to time reasonably request.
 
6.3  Borrowing Base Certificate. Furnish to Agent as soon as available, but in
any event within twenty-five (25) days after the end of each calendar month, a
Borrowing Base Certificate, certified by the chief financial officer or the
controller of Borrower, showing the calculation of the Borrowing Base as of the
last day of such month (which certificate Agent shall promptly furnish to the
Lenders).
 
6.4  Compliance with Borrowing Base Requirements. At any time any Borrowing Base
Certificate required to be furnished to Agent in accordance with subsection 6.3
hereof indicates that the Borrower is not in compliance with the provisions of
subsection 2.1(b) hereof, within five (5) calendar days after the delivery of
such Borrowing Base Certificate to Agent, (a) reduce the principal amount of the
Loans and undrawn and drawn Facility L/Cs or other Borrowing Base Indebtedness
then outstanding by an amount sufficient to bring the Borrower in compliance
with the provisions of subsection 2.1(b) hereof, or (b) deliver to Agent a more
current Borrowing Base Certificate that demonstrates that the Borrower is in
compliance with the provisions of subsection 2.1(b) hereof.
 
6.5  Interest Rate Protection. At any time the Eurodollar Base Rate for an
Interest Period of one month shall equal or exceed seven percent (7%) per annum
and Borrower shall not have in effect an Interest Rate Contract or series of
Interest Rate Contracts that provide to Borrower an effective fixed rate of
interest on a total of the lesser of (a) the aggregate amount of Loans and
Facility L/Cs outstanding at such time and (b) fifty percent (50%) of the
Aggregate Commitment, the Required Lenders, by written notice from the Agent to
Borrower, may require Borrower to enter into an Interest Rate Contract or series
of Interest Rate Contracts satisfactory to the Required Lenders that provide to
Borrower, when combined with all other Interest Rate Contracts then in effect,
an effective fixed rate of interest on a total of the lesser of (a) the
aggregate amount of Loans and Facility L/Cs outstanding at such time and (b)
fifty percent (50%) of the Aggregate Commitment. In such event, Borrower, within
30 days of receipt of such notice from Agent, shall enter into an Interest Rate
Contract or series of Interest Rate Contracts, and provide a copy or copies
thereof to each Lender and Agent, which Interest Rate Contract or series of
Interest Rate Contracts shall, when combined with all other Interest
Rate Contracts then in effect, (i) provide interest rate protection to Borrower
on a total of the lesser of (a) the aggregate amount of Loans and Facility L/Cs
outstanding at such time and (b)fifty percent (50%) of the Aggregate Commitment
by providing to Borrower an effective fixed rate of interest on a total of the
lesser of (a) the aggregate amount of Loans and Facility L/Cs outstanding at
such time and (b) fifty percent (50%) of the Aggregate Commitment, (ii) be in
effect for a period of at least two years from the later of (A) the date of
acquisition of such Interest Rate Contract or series of Interest Rate Contracts
or (B) the date of Agent’s notice to Borrower hereunder (provided that if such
period extends beyond the Maturity Date, the Interest Rate Contract(s) need only
be in effect until the Maturity Date), and (iii) be entered into with (A) any
Lender, or (B) a Lender or other financial institution that has unsecured,
uninsured and unguaranteed long-term debt which is rated at least A-3 by Moody’s
or at least A- by S&P.
 
6.6  Payment of Obligations. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its
Indebtedness and other material obligations of whatever nature, except (a)
without prejudice to the effectiveness of paragraph (5) of Section 9 hereof, any
Indebtedness or other obligations (including any obligations for taxes), when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of Borrower or its Subsidiaries, as the
case may be, and (b) any Indebtedness secured by a mortgage on real estate if
such Indebtedness is, by its terms, non-recourse to Borrower and its
Subsidiaries.
 
6.7  Maintenance of Existence; Compliance. Except as may be permitted under
subsection 7.3 hereof, preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges, contracts, copyrights, patents, trademarks, trade names and
franchises necessary or desirable in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law except to the
extent that the failure to take such actions or comply with such Contractual
Obligations and Requirements of Law would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower or of Borrower and its Subsidiaries, taken as a whole.
Borrower and its Subsidiaries have no duty to renew or extend contracts which
expire by their terms.
 
6.8  Maintenance of Property, Insurance. Keep all property useful in and
necessary to its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, general liability and business interruption
insurance) as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to Agent, upon written
request, full information as to the insurance carried.
 
6.9  Inspection of Property; Books and Records; Discussions. Keep proper books
of record and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities, subject in the case of interim
statements to year-end audit adjustments; and permit representatives of each
Lender and Agent to visit and inspect any of its properties, and examine and
make abstracts from any of its books and records at any reasonable time and as
often as may reasonably be requested, and to discuss the business, operations,
properties and financial and other condition of Borrower and its Subsidiaries
with officers and employees of Borrower and its Subsidiaries and, if notice
thereof is given to Borrower prior to the date of such discussions, with its
independent certified public accountants.
 
6.10  Notices. Promptly give notice to Agent (which notice Agent shall promptly
furnish to the Lenders):
 
(a)  of the occurrence of any Default or Event of Default;
 
(b)  of any (i) default or event of default under any loan or Letter of Credit
agreement binding upon Borrower or any of its Subsidiaries, (ii) default under
any other Contractual Obligation that would enable the obligee of the
Contractual Obligations to compel Borrower or any of its Subsidiaries to
immediately pay all amounts owing thereunder or otherwise accelerate payments
thereunder and would have a material adverse effect on Borrower and its
Subsidiaries taken as a whole, or (iii) litigation, investigation or proceeding
which may exist at any time between Borrower or any Subsidiary and any
Governmental Authority, which, if adversely determined, would have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower and its Subsidiaries taken as a whole;
 
(c)  of any litigation or proceeding affecting Borrower or any of its
Subsidiaries (i) (A) in which the amount involved is $2,000,000 or more and not
covered by insurance, or (B) which, in the reasonable opinion of a Responsible
Officer of Borrower, would, if adversely determined, have a material adverse
effect on Borrower and its Subsidiaries taken as a whole, or (ii) in which
injunctive or similar relief is sought and which, in the reasonable opinion of a
Responsible Officer of Borrower, would, if adversely determined, have a material
adverse effect on Borrower and its Subsidiaries taken as a whole;
 
(d)  of the following events, as soon as possible and in any event within 30
days after Borrower knows or has reason to know thereof: (i) the occurrence of
any Reportable Event with respect to any Plan with respect to which the PBGC has
not waived the 30 day reporting requirement, or (ii) the institution of
proceedings or the taking or expected taking of any other action by PBGC or
Borrower or any Commonly Controlled Entity to terminate or withdraw or partially
withdraw from any Plan under circumstances which could lead to material
liability to the PBGC or, with respect to a Multiemployer Plan, the
Reorganization or Insolvency (as each such term is defined in ERISA) of the Plan
and in addition to such notice, deliver to each Lender and Agent whichever of
the following may be applicable: (A) a certificate of a Responsible Officer of
Borrower setting forth details as to such Reportable Event and the action that
Borrower or Commonly Controlled Entity proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that may be required
to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent
to institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be; and
 
(e)  of a material adverse change in the business, operations, property or
financial or other condition of Borrower and its Subsidiaries taken as a whole.
 
Each notice pursuant to this subsection 6.10 shall be accompanied by a statement
of the chief executive officer or chief financial officer or other Responsible
Officer of Borrower setting forth details of the occurrence referred to therein
and stating what action Borrower proposes to take with respect thereto. For all
purposes of clause (d) of this subsection 6.10, Borrower shall be deemed to have
all knowledge or knowledge of all facts attributable to the administrator of
such Plan if such Plan is a Single Employer Plan.
 
6.11  Maintenance of Consolidated Tangible Net Worth. Maintain at all times
during the Commitment Period Consolidated Tangible Net Worth in amounts at all
times equal to or exceeding (i) $351,500,000, plus (ii) fifty percent (50%) of
the Consolidated Earnings for each quarter after June 30, 2004 (excluding any
quarter in which Consolidated Earnings are less than zero (0)), plus (iii) fifty
percent (50%) of the net proceeds or other consideration received by Borrower
for any capital stock issued or sold after June 30, 2004.
 
6.12  Maintenance of Debt to Worth. Maintain during the Commitment Period a
ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth not in
excess of (a) 2.25 to 1.0 at all times that Borrower maintains an Interest
Coverage Ratio equal to or exceeding 2.50 to 1.00 and (b) 2.00 to 1.00 at all
other times.
 
6.13  Maintenance of Interest Coverage Ratio. Maintain during the Commitment
Period an Interest Coverage Ratio of not less than 2.00 to 1.00 (as determined
on the last day of each fiscal quarter for the four-quarter period ending on the
last day of such fiscal quarter).
 
6.14  Guaranties of Wholly-Owned M/I Ancillary Businesses. Upon the request of
the Agent on behalf of the Required Lenders, cause each of the M/I Ancillary
Businesses that is wholly-owned by Borrower or by any Subsidiary, that has total
assets of at least $200,000 and that is not precluded by law from executing the
Guaranty Agreement to become a “Guarantor” by execution and delivery of a
Supplemental Guaranty by such M/I Ancillary Business to Agent, and to deliver
such proof of corporate or other appropriate action, incumbency of officers,
opinions of counsel and other documents delivered by the Guarantors pursuant to
subsection 5.1 hereof or as the Agent shall have requested.
 
6.15  Subsidiary Guarantors. Cause each new wholly-owned Subsidiary of Borrower
or any Subsidiary of Borrower formed or acquired after the date hereof, to
become a “Guarantor” by execution and delivery of a Supplemental Guaranty by
such Subsidiary to Agent, and to deliver such proof of corporate or other
appropriate action, incumbency of officers, opinions of counsel and other
documents delivered by the Guarantors pursuant to subsection 5.1 hereof or as
the Agent shall have requested.
 
6.16  Environment. (a) Comply with all federal, state and local environmental,
health and safety laws, codes and ordinances and all rules and regulations
issued thereunder except to the extent the failure to do so would not have a
material adverse effect on the consolidated operations, business or financial
condition of Borrower and its Subsidiaries; (b) notify the Agent promptly of any
notice of a hazardous discharge or environmental complaint received from any
Governmental Authority or any other Person (and the Agent shall notify the
Lenders promptly following its receipt of any such notice) that, if adversely
determined, could have a material adverse effect on the consolidated operations,
business or financial condition of Borrower and its Subsidiaries; and (c) notify
the Agent promptly of any hazardous discharge from or affecting its premises
(and the Agent shall notify the Lenders promptly following its receipt of any
such notice) that could have a material adverse effect on the consolidated
operations, business or financial condition of Borrower and its Subsidiaries. In
the case of clauses (b) and (c) above, (i) promptly contain and remove any such
hazardous discharge, in compliance with all applicable laws; (ii) promptly pay
any fine or penalty assessed in connection therewith; (iii) permit the Agent to
inspect the premises, to conduct tests thereon and to inspect all books,
correspondence and records pertaining thereto; and (iv) at the Agent’s request,
and at Borrower’s expense, provide a report of a qualified environmental
engineer, satisfactory in scope, form and content to the Required Lenders, that
the condition has been corrected,
 

SECTION 7:    NEGATIVE COVENANTS

 
Borrower hereby agrees that, from the date hereof and so long as the Commitment
remains in effect, any portion of any Note or Reimbursement Obligation remains
outstanding and unpaid, any Facility L/C remains outstanding that is not fully
collateralized with cash in accordance with the provision of Section 8 hereof,
or any other amount is owing to Agent, any LC Issuer or any Lender hereunder,
Borrower shall not, nor shall it permit any of its Subsidiaries and, in the case
of subsections 7.1, 7.2 and 7.3 hereof, permit any M/I Ancillary Business that
is wholly owned by Borrower or any Subsidiary to, directly or indirectly:
 
7.1  Limitation on Secured Indebtedness. Create, incur or suffer to exist any
Secured Indebtedness exceeding $50,000,000 at any time outstanding, provided,
however, that, for purposes of this subsection 7.1, Secured Indebtedness shall
not include Indebtedness incurred by M/I Financial Corp. to finance the
origination and/or warehousing of residential mortgage loans in the ordinary
course of business and secured by Liens on such mortgage loans (“M/I Financial
Corp. Liens”) except to the extent that Borrower is an obligor under or
guarantor of such Indebtedness, provided, however, that in the event that the
lender under the M/I Financial Corp. Loan Agreement shall exercise its right to
require M/I Financial Corp. to grant to such lender M/I Financial Corp. Liens as
security for the Indebtedness under the M/I Financial Corp. Loan Agreement and
Borrower is an obligor or guarantor of such Indebtedness, such Indebtedness
shall continue to be excluded from Secured Indebtedness under this subsection
7.1 for a period of sixty (60) days after the lender’s exercise of such rights.
 
7.2  Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether owned or hereafter acquired,
except:
 
(a)  Liens in favor of Agent, for the ratable benefit of Lenders;
 
(b)  Liens securing Indebtedness permitted under subsection 7.1 hereof and M/I
Financial Corp. Liens;
 
(c)  Liens for taxes and special assessments not yet due or which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of Borrower and Borrower’s
Subsidiaries in accordance with GAAP;
 
(d)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 30 days or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the books of Borrower and Borrower’s Subsidiaries in accordance with GAAP;
 
(e)  pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;
 
(f)  (i) deposits to secure the performance of: bids; trade contracts (other
than for borrowed money or the purchase price of property or services); leases;
statutory and other obligations required by law; surety, appeal and performance
bonds (including Construction Bonds); and other obligations of a like nature
incurred in the ordinary course of business; and (ii) Liens in favor of surety
bond companies pursuant to indemnity agreements to secure the reimbursement
obligations of Borrower or any Subsidiary on Construction Bonds, provided (A)
the Liens securing Construction Bonds shall be limited to the assets of, as
appropriate, Borrower or such Subsidiary at, and the rights of, as appropriate,
Borrower or such Subsidiary arising out of, the projects that are the subject of
the Construction Bonds, (B) the Liens shall not attach to any real estate and
(C) the aggregate amount of such Liens at any time shall not exceed the dollar
amount of Construction Bonds then outstanding;
 
(g)  Liens of landlords, arising solely by operation of law, on fixtures and
moveable property located on premises leased in the ordinary course of business;
provided, however, that the rental payments secured thereby are not yet due;
 
(h)  Liens arising as a result of a judgment or judgments against Borrower or
any of its Subsidiaries which do not in the aggregate exceed $2,500,000 at any
one time outstanding, which are being diligently contested in good faith, which
are not the subject of any attachment, levy or enforcement proceeding, and as to
which appropriate reserves have been established in accordance with GAAP; and
 
(i)  Liens securing community development district bonds or similar bonds issued
by Governmental Authorities to accomplish similar purposes.
 
7.3  Limitation on Fundamental Changes. Except for (a) any Investments permitted
pursuant to subsection 7.6(d) hereof and (b) any Permitted Acquisition, enter
into any transaction of merger, consolidation, amalgamation or reorganization
(including without limitation any election to be taxed as an S Corporation), or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or, except for the sale of land, lots and houses from inventory in
the ordinary course of business, convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, whether now owned or hereafter
acquired, or make any material change in the method by which it conducts
business, except any Subsidiary of Borrower may be (i) merged, amalgamated or
consolidated with or into Borrower or any wholly-owned Subsidiary of Borrower,
or (ii) liquidated, wound up or dissolved into, or all or substantially all of
its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to
Borrower or any wholly-owned Subsidiary of Borrower; provided, however, that, in
the case of such a merger, liquidation or consolidation, Borrower or such
wholly-owned Subsidiary, as the case may be, shall be the continuing or
surviving corporation.
 
7.4  Limitation on Acquisitions. Except for any Permitted Acquisition and the
acquisition of land, lots and houses in the ordinary course of business to the
extent not otherwise prohibited hereunder, enter into any Acquisition without
the prior written consent of the Required Lenders.
 
7.5  Land Inventory. Permit at any time Adjusted Land Value to exceed the sum of
(a) Consolidated Tangible Net Worth plus (b) fifty percent (50%) of Subordinated
Indebtedness.
 
7.6  Limitation on Investments. Make or commit to make any advance, loan,
extension of credit or capital contribution to, or purchase of any stock, bonds,
note, debenture or other security of, or make any other investment in, any
Person (all such transactions being herein called “Investments”), except (to the
extent not otherwise prohibited hereunder):
 
(a)  Investments in Cash Equivalents;
 
(b)  extensions of credit in connection with the sale of land which do not
exceed in the aggregate at any one time outstanding an amount equal to two and
one-half percent (2.5%) of Consolidated Tangible Net Worth, and which have a
maximum maturity of five years;
 
(c)  loans and advances to officers and employees of Borrower or Borrower’s
Subsidiaries, to other Persons in the ordinary course of business or as
permitted by the code of regulations of Borrower, which do not exceed in the
aggregate $2,000,000 at any one time outstanding;
 
(d)  any Investments in the Subsidiaries identified in Schedule 3 hereto or any
other Subsidiary that becomes a Guarantor in accordance with the terms hereof;
 
(e)  any Investment in Joint Venture, the aggregate cost of which, as determined
in accordance with GAAP excluding, however, Borrower’s or Borrower’s
Subsidiaries’ equity in the undistributed earnings or losses in each such Joint
Venture, does not at any one time outstanding exceed fifteen percent (15%) of
Consolidated Tangible Net Worth; provided, however, that with respect to each
such Joint Venture, Borrower shall have at least a 20% ownership interest in
such Joint Venture and all decisions with respect to the management and control
of each such Joint Venture’s business (other than decisions with respect to
development of undeveloped land owned by such Joint Venture) shall require the
consent and approval of Borrower; and provided, further, however, that no such
Investment may be made if it causes or results (singly or with other actions or
events) in (i) any violation of any other covenant or condition hereof or (ii)
any other Default or Event of Default;
 
(f)  first mortgage loans made in the ordinary course of M/I Financial Corp.’s
business to natural persons for the purchase of residential real property;
 
(g)  second mortgage loans made in the ordinary course of M/I Financial Corp.’s
business to natural persons for the purchase of residential real property,
provided that such second mortgage loans shall be made only in connection with a
specific financing program to natural persons who have a first mortgage loan
from M/I Financial Corp. with respect to the same real property;
 
(h)  any first mortgage loan made in the ordinary course of M/I Financial
Corp.’s business to natural persons for the purpose of refinancing an existing
first mortgage loan;
 
(i)  Investments by M/I Financial Corp. in the stock of Fannie Mae to the extent
required for M/I Financial Corp. to sell mortgages to Fannie Mae;
 
(j)  Investments by M/I Financial Corp. in the ordinary course of its business
in standard instruments hedging against interest rate risk incurred in the
origination and sale of mortgage loans, in each case matching a hedging
instrument or instruments to specific mortgages or specific groups of mortgages,
but in no event including investments in futures contracts, options contracts or
other derivative investment vehicles acquired as independent investments;
 
(k)  Investments in, advances to, and Contingent Obligations related to the
obligations of, the M/I Ancillary Businesses; and
 
(l)  other Investments, not specifically listed in items (a) through (k) of this
subsection 7.6, directly related to the Borrower’s business.
 
7.7  Transactions with Affiliates and Officers.
 
(a)  Except for (i) any consulting agreements or employment agreements to which
Borrower is a party and which were in effect as of August 9, 1994, as amended
November 14, 2001, and (ii) compensation arrangements in the ordinary course of
business with the officers, directors, and employees of Borrower and Borrower’s
Subsidiaries, enter into any transaction, including without limitation the
purchase, sale or exchange of property or the rendering of any services, with
any Affiliate or any officer or director thereof, or enter into, assume or
suffer to exist any employment or consulting contract with any Affiliate or an
officer or director thereof, except any transaction or contract which is in the
ordinary course of Borrower’s or any of Borrower’s Subsidiaries’ business and
which is upon fair and reasonable terms no less favorable to Borrower or
Borrower’s Subsidiaries than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate;
 
(b)  make any advance or loan to any Affiliate or any director or officer
thereof or of Borrower or any Subsidiary of Borrower or to any trust of which
any of the foregoing is a beneficiary, or to any Person on the guarantee of any
of the foregoing, except as expressly permitted by subsection 7.6(c) hereof; or
 
(c)  pay any fees or expenses to, or reimburse or assume any obligation for the
reimbursement of any expenses incurred by, any Affiliate or any officer or
director thereof, except as may be permitted in accordance with clauses (a) and
(b) of this subsection 7.7.
 
7.8  Sale and Leaseback. Enter into any arrangement with any Person providing
for the leasing by Borrower or any of Borrower’s Subsidiaries of real or
personal property which has been or is to be sold or transferred by Borrower or
any of Borrower’s Subsidiaries to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of Borrower or any of Borrower’s Subsidiaries;
provided, however, that such arrangements shall be permitted with respect to
Model Houses, so long as any such arrangement with respect to Model Houses does
not result in: (a) the creation of a lease which is required to be capitalized
in accordance with GAAP; (b) the initial term of such arrangement plus any
options or renewals exercisable by lessor or lessee exceeding four years; or (c)
the violation of any term, condition or covenant hereof.
 
7.9  Limitation on Payments of Subordinated Indebtedness and Modification
of Subordination Agreements.
 
Without the prior written consent of the Required Lenders,
 
(a)  repay, prepay, purchase, redeem, or otherwise acquire any Subordinated
Indebtedness; or
 
(b)  make any other payments, including without limitation payment of interest,
on any Subordinated Indebtedness if an Event of Default exists or if such
payment would cause an Event of Default to occur; or
 
(c)  permit the modification, waiver or amendment of any of the terms of any
Subordinated Indebtedness, except for modifications, waivers or amendments that
do not (i) increase the interest rate or change the maturity date of such
Subordinated Indebtedness or (ii) change the subordination provisions of such
Subordinated Indebtedness; or
 
(d)  permit (whether or not within the control of Borrower or any of Borrower’s
Subsidiaries) the modification, waiver, or amendment of, or release of any
parties to, any subordination agreement with respect to any Subordinated
Indebtedness;
 
provided, however, nothing contained in this subsection 7.9 shall prevent
Borrower from making regularly scheduled payments on any Subordinated
Indebtedness if no Event of Default exists and the payment would not cause an
Event of Default to occur.

7.10  Sale of Guarantor Securities. Sell any security or equity of any
Guarantor, or permit any Guarantor to sell or issue any security or equity to
any Person other than security or equity sold or issued to Borrower. The
provisions of this subsection 7.10 shall not restrict the sale of mortgage loans
in the ordinary course of business.
 
7.11  Intentionally Omitted. 
 
7.12  Limitation on Negative Pledges. Enter into any agreement (other than (a)
this Agreement, (b) any indenture or other agreement (i) governing any notes or
bonds issued by the Borrower evidencing Indebtedness of the Borrower that is
permitted under this Agreement and that does not constitute Subordinated
Indebtedness and (ii) that provides that the Borrower or any Subsidiary may not
create or incur any Lien upon any of its assets, rights, revenues or property,
unless the Lien also secures, on a pari passu basis such Indebtedness and (c)
any document evidencing or securing Secured Indebtedness (i) that is permitted
under this Agreement or (ii) that prohibits other Liens against the property
that secures such Secured Indebtedness) which prohibits or limits the ability of
Borrower, any of Borrower’s Subsidiaries or any of the M/I Ancillary Businesses
that are wholly-owned by the Borrower or by any Subsidiary to create, incur,
assume or suffer to exist any Lien upon any of its assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether now owned or
hereafter acquired.
 
7.13  Housing Inventory. Permit the number of Speculative Housing Units, as at
the end of any fiscal quarter, to exceed the greater of (a) the number of
Housing Unit Closings occurring during the period of twelve (12) months ending
on the last day of such fiscal quarter, multiplied by twenty-five percent (25%)
or (b) the number of Housing Unit Closings occurring during the period of six
(6) months ending on the last day of such fiscal quarter, multiplied by fifty
percent (50%).
 

SECTION 8:    CASH COLLATERAL

 
8.1  Facility L/C Collateral Account. Borrower agrees that it will, upon the
request of Agent or the Required Lenders and until the final expiration date of
any Facility L/C and thereafter as long as any amount is payable to any LC
Issuer or the Lenders in respect of any Facility L/C, maintain a special
collateral account pursuant to arrangements satisfactory to Agent (the “Facility
L/C Collateral Account”) at Agent’s office in the name of Borrower but under the
sole dominion and control of Agent, for the benefit of the Lenders and LC
Issuers and in which Borrower shall have no interest other than set forth in
subsections 8.2, 8.3 or 8.4 hereof. Borrower hereby pledges, assigns and grants
to Agent, on behalf of and for the ratable benefit of the Lenders and LC
Issuers, a security interest in all of Borrower’s right, title and interest in
and to all funds which may from time to time be on deposit in the Facility L/C
Collateral Account to secure the prompt and complete payment and performance of
the Obligations. Agent will invest any funds on deposit from time to time in the
Facility L/C Collateral Account in certificates of deposit of Agent having a
maturity not exceeding 30 days. Nothing in this subsection 8.1 shall either
require Borrower to deposit any funds in the Facility L/C Collateral Account,
obligate Agent to require Borrower to deposit any funds in the Facility L/C
Collateral Account or limit the right of Agent to release any funds held in the
Facility L/C Collateral Account, in each case other than as required by
subsections 8.2, 8.3 or 8.4 hereof.
 
8.2  Event of Default under Paragraph (5) of Section 9. Upon the occurrence of
an Event of Default specified in paragraph (5) of Section 9, Borrower will be
and become thereby unconditionally obligated, without any further notice, act or
demand, to pay to Agent an amount in immediately available funds, which funds
shall be held in the Facility L/C Collateral Account, equal to the difference of
(x) the amount of Facility L/C Obligations at such time, less (y) the amount on
deposit in the Facility L/C Collateral Account at such time which is free and
clear of all rights and claims of third parties and has not been applied against
the Obligations (such difference, the “Collateral Shortfall Amount”). 
 
8.3  Other Events of Default. If any Event of Default (other than an Event of
Default specified in paragraph (5) of Section 9) occurs, the Required Lenders
(or Agent with the consent of the Required Lenders) may, upon notice to Borrower
and in addition to the continuing right to demand payment of all amounts payable
under the Loan Documents, make demand on Borrower to pay, and Borrower will,
forthwith upon such demand and without any further notice or act, pay to Agent
the Collateral Shortfall Amount, which funds shall be deposited in the Facility
L/C Collateral Account.
 
8.4  Cure; Termination. 
 
(a)  If the Event of Default that resulted in the requirement for deposit of
funds in the Facility L/C Collateral Account is cured, and provided no other
Event of Default has occurred that is then continuing, Agent shall, promptly
upon request from Borrower, pay to or as directed by Borrower the amount on
deposit in the Facility L/C Collateral Account. Nothing contained in this
paragraph shall waive, limit or otherwise affect the rights of Agent or the
Lenders or the obligations of Borrower under this Section 8 if any other Event
of Default shall occur.
 
(b)  If the Aggregate Commitment is terminated (whether by acceleration, demand
or otherwise), then, not later than simultaneously with such termination, and
without limitation of Agent’s and each Lender’s right to demand payment of all
amounts payable under the Loan Documents, Borrower shall pay to Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility L/C
Collateral Account; provided, however, that (i) if all Obligations of Borrower
(other than Facility L/C Obligations in respect of issued and outstanding
Facility L/Cs that have not been drawn upon) have been paid in full, and (ii)
Borrower shall have provided to Agent and the LC Issuers, as security for the
remaining Facility L/C Obligations, one or more Letters of Credit, in an
aggregate amount at least equal to such remaining Facility L/C Obligations,
issued by a Lender or Lenders, and in form and substance, reasonably
satisfactory to Agent and the LC Issuers, the foregoing requirement for deposit
of funds in the Facility L/C Collateral Account shall not apply.
 

 

SECTION 9:    DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF PROCEEDS AFTER EVENT
OF DEFAULT

 
Upon the occurrence of any of the following events:
 
(1)  Borrower shall fail to pay any principal of any Note or make any
reimbursement (including payment of Reimbursement Obligations) in connection
with any Facility L/C when due in accordance with the terms thereof; or
 
(2)  Borrower shall fail to pay (a) any interest on any Note or in connection
with any Facility L/C, or (b) any fee, charge or other amount payable hereunder,
within three (3) days after Agent or any Lender notifies Borrower that such
interest, fee or amount has become due in accordance with the terms thereof or
hereof and has not been paid; or Borrower shall fail to comply with the
provisions of any one or more of subsections 6.4, 6.5, 6.10(e), 6.15, 6.17, 7.3,
7.4, 7.8, 7.9, 7.10 or 7.12; or
 
(3)  any representation or warranty made or deemed made by Borrower, herein or
which is contained in any certificate, document or financial or other statement
furnished at any time under or in connection herewith or therewith, shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or
 
(4)  Borrower shall default in the observance or performance of any covenant or
agreement contained in (a) subsection 6.3 hereof and such default remains
uncured for five (5) days (notice to Borrower from Agent or any Lender of such
default is not required), (b) subsections 6.2(c), 6.2(d), 6.6, 6.10 (other than
subsection 6.10(e)), 6.11, 6.12, 6.13, 6.14, 6.16, 7.1, 7.2, 7.6 or 7.7 hereof
and such default remains uncured ten days after Agent or any Lender notifies
Borrower that such default has occurred, (c) subsection 6.9 hereof and such
default remains uncured for ten (10) days after Agent or any Lender notifies
Borrower that such default has occurred, provided, that for any default under
subsection 6.9 hereof for which cure cannot reasonably be accomplished within
ten days, if cure is commenced within such ten (10)-day period, Borrower may
have an additional period of up to thirty (30) days after notice to cure such
default before it is an Event of Default, (d) any one or more of subsections
6.1(b), 6.2(a) or 6.2(b) hereof and such default remains uncured fifteen (15)
days after Agent or any Lender notifies Borrower that such default has occurred,
or (e) any other provision of this Agreement (including without limitation
subsections 6.1(a), 6.2(e), 6.7 and 6.8 hereof) which default shall remain
uncured thirty (30) days after Agent or any Lender notifies Borrower that such a
default has occurred, which notice shall specify the nature of the default; or
 
(5)  (a) Borrower or any of Borrower’s Subsidiaries shall commence any case,
proceeding or other action (i) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(ii) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or Borrower or
any of Borrower’s Subsidiaries shall make a general assignment for the benefit
of its creditors; or (b) there shall be commenced against Borrower or any of
Borrower’s Subsidiaries any case, proceeding or other action of a nature
referred to in clause (a) above which (i) results in the entry of an order for
relief of any such adjudication or appointment, and (ii) remains undismissed,
undischarged or unbonded for a period of 60 days; or (c) there shall be
commenced against Borrower or any of Borrower’s Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (d) Borrower or any of Borrower’s
Subsidiaries shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clauses (a),
(b) or (c) above; or (e) Borrower or any of Borrower’s Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
 
(6)  Borrower or any Subsidiary of Borrower shall (a) default in any payment of
principal of or interest on any Indebtedness (other than the Obligations) or in
the payment of any Contingent Obligation beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Contingent Obligation was created, and the aggregate principal amount then
outstanding of all such Indebtedness and Contingent Obligations of Borrower and
all Subsidiaries exceeds $5,000,000, or (b) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Contingent Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Contingent Obligation to become payable;
provided, however, that it shall not constitute a Default or Event of Default if
(x) Borrower or any Subsidiary of Borrower defaults on Indebtedness secured by a
mortgage on real estate if such Indebtedness is by its terms non-recourse to
Borrower and Borrower’s Subsidiaries, or (y) a draw is made on a standby Letter
of Credit or payment is made on a performance bond, so long as any reimbursement
obligation of Borrower with respect to such Letter of Credit or performance bond
is made within the time required by the document creating the reimbursement
obligation; or
 
(7)  (a) any party in interest (as defined in Section 3(14) of ERISA) affiliated
with Borrower or any of Borrower’s Subsidiaries shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (b) any “accumulated funding deficiency” (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan, (c) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA, and,
in the case of a Reportable Event, the continuance of such Reportable Event
unremedied for thirty (30) days after notice of such Reportable Event pursuant
to Section 4043 (a), (c) or (d) of ERISA is given or, in the case of institution
of proceedings, the continuance of such proceedings for thirty (30) days after
commencement thereof, (d) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, or (e) any other event or condition shall occur or exist
with respect to a Single Employer Plan and in each case in clauses (a) through
(e) above, such event or condition, together with all other such events or
conditions, if any, could subject Borrower or any of Borrower’s Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of Borrower
or of Borrower and Borrower’s Subsidiaries taken as a whole; or
 
(8)  one or more judgments or decrees shall be entered against Borrower, or any
of Borrower’s Subsidiaries involving in the aggregate a liability (not covered
by insurance) of $5,000,000 or more and all such judgments or decrees in excess
of $5,000,000 shall not have been vacated, satisfied, discharged, or stayed or
bonded pending appeal within 30 days from the entry thereof; or
 
(9)  the occurrence of any of the following: (a) any Person or group (as that
term is understood under Section 13(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and the rules and regulations thereunder) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of a percentage (based on voting power, in the event different
classes of stock shall have different voting powers) of the voting stock of
Borrower equal to at least fifty percent (50%); or (b) as of any date a majority
of the Board of Directors of Borrower consists of individuals who were not
either (i) directors of Borrower as of the corresponding date of the previous
year, (ii) selected or nominated to become directors by the Board of Directors
of Borrower of which a majority consisted of individuals described in clause
(b)(i) above or (iii) selected or nominated to become directors by the Board of
Directors of Borrower of which a majority consisted of individuals described in
clause (b)(i) above and individuals described in clause (b)(ii) above; or
 
(10)  any subordination agreement that evidences any Subordinated Indebtedness
(i) ceases to be the legal, valid and binding agreement of any Person party
thereto, enforceable against such Person in accordance with its terms or a
payment is made by Borrower in violation of any provision thereof, or (ii) shall
be terminated, invalidated or set aside, or be declared ineffective or
inoperative or the Indebtedness related thereto is in any way not fully
subordinate to all of Borrower’s Indebtedness and other liabilities to Lenders
and Agent under this Agreement and the Notes (subject to subsection 7.9 hereof)
and to Borrower’s obligations, if any, as a guarantor or otherwise of the
Indebtedness and other liabilities of M/I Financial Corp. (including without
limitation the obligations with respect to the M/I Financial Corp. Loan
Agreement);
 
then, and in any such event, (a) if such event is an Event of Default specified
in paragraph (5) above, the Commitments, if still outstanding, shall
automatically and immediately terminate and all Obligations shall immediately
become due and payable and Borrower shall immediately cash collateralize all
outstanding Facility L/Cs in accordance with Section 8 hereof, and (b) if such
event is any other Event of Default and is continuing, either or both of the
following actions may be taken: (i) with the consent of the Required Lenders,
Agent may, or upon the request of the Required Lenders, Agent shall, by notice
to Borrower, declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate and, upon demand by Agent, Borrower
shall fully cash collateralize all outstanding Facility L/Cs in accordance with
Section 8 hereof; and (ii) with the consent of the Required Lenders, Agent may,
or upon the request of the Required Lenders, Agent shall, by notice of default
to Borrower, declare the full amount of all outstanding Obligations to be due
and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 9, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Additionally, Agent and each Lender may exercise any and all other rights and
remedies available to Agent and each Lender at law or in equity to the extent
not inconsistent with the rights specifically granted to Agent and each Lender
hereunder.
 
Notwithstanding any provisions concerning distribution of payments to the
contrary in this Agreement, so long as any Event of Default exists that has not
been waived by all Lenders, each Lender shall share in any payments or proceeds,
including proceeds of any collateral, received by Agent or any Lender made or
received at any time from and after any Event of Default (“Proceeds after
Default”) in an amount equal to such Lender’s Ratable Share of the Proceeds
after Default; provided, however, if any one or more of the Lender(s) has not
made any funding when required hereunder, the distribution of Proceeds after
Default shall be adjusted so that each Lender shall receive Proceeds after
Default in an amount equal to (a) the Proceeds after Default multiplied by (b)
the percentage (rounded to five decimal places) of the total amount outstanding
funded by all Lenders that such Lender has actually funded (including the amount
of such Lender’s participation in outstanding Facility L/Cs). If necessary,
Agent and each Lender shall use the adjustments procedure set forth in
subsection 11.8(a) hereof to make the appropriate distributions to Lenders as
set forth in this paragraph of this Section 9.
 

SECTION 10:    THE AGENT

 
10.1  Appointment. Each Lender hereby irrevocably designates and appoints Bank
One, as Agent of such Lender under this Agreement and each of the Notes and
the Guaranty Agreement, and each Lender hereby irrevocably authorizes Bank One,
as Agent for such Lender, to take such action on its behalf under the provisions
of this Agreement, the Notes and the Guaranty Agreement and to exercise such
powers and perform such duties as are expressly delegated to Agent by the terms
of this Agreement, the Notes and the Guaranty Agreement, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or any Note or the Guaranty
Agreement, Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any Note or the Guaranty
Agreement or otherwise exist against Agent.
 
10.2  Delegation of Duties. Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
 
10.3  Exculpatory Provisions. Neither Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any Note or the Guaranty Agreement (except for
its or such Person’s own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by Borrower or any of Borrower’s Subsidiaries
or any office thereof contained in this Agreement or any Note or the Guaranty
Agreement or in any certificate report, statement or other document referred to
or provided for in, or received by Agent under connection with, this Agreement
or any Note or the Guaranty Agreement or for the value, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, the Note Guaranty
Agreement, or for any failure of Borrower or any of Borrower’s Subsidiaries its
obligations hereunder or thereunder. Agent shall be under no obligation to any
Lender to inquire as to the observance or performance of any of the agreements
or conditions of, this Agreement, the Notes, or the Guaranty Agreement, or to
inspect books or records of Borrower or any of Borrower’s Subsidiaries.
 
10.4  Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, the Guaranty Agreement, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to Borrower or any of Borrower’s Subsidiaries), independent accountants and
other experts selected by Agent. Agent may deem and treat the payee of any Note
as the owner thereof for all purposes. Agent shall be fully justified in failing
or refusing to take any action under this Agreement, the Notes or the Guaranty
Agreement unless it shall first receive such advice or concurrence of the
Required Lenders or, in the case of items set forth in subsection 11.1 hereof
that require written consent of all Lenders, all Lenders as it deems appropriate
or it shall first be indemnified to its satisfaction by all Lenders against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement, the Notes and the
Guaranty Agreement in accordance with a request of the Required Lenders or, in
the case of items set forth in subsection 11.1 hereof that require written
consent of all Lenders, all Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all Lenders and all future
holders of the Notes.
 
10.5  Notice of Default. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder (other than any
failure of Borrower to pay amounts payable under this Agreement or the other
Loan Documents) unless Agent has received notice from any Lender or Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. If Agent receives such a
notice, Agent shall give notice thereof to Lenders. Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders or, in the case of items set forth in subsection 11.1
hereof that require written consent of all Lenders, all Lenders; provided that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall reasonably deem
advisable in the best interests of Lenders.
 
10.6  Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower and Borrower’s Subsidiaries shall be deemed to
constitute any representation or warranty by Agent to any Lender. Each Lender
represents to Agent that it has, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of Borrower and Borrower’s Subsidiaries and made its own
decision to make its extensions of credit hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, the Notes and the Guaranty Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
Borrower and Borrower’s Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by Agent hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of Borrower or any of
Borrower’s Subsidiaries which may come into the possession of Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.
 
10.7  Indemnification. Each Lender agrees to indemnify Agent in its capacity as
such (to the extent not reimbursed by Borrower and any of Borrower’s
Subsidiaries and without limiting the obligation of Borrower and Borrower’s
Subsidiaries to do so), ratably according to its Ratable Share, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following
the payment of the Notes) be imposed on, incurred by or asserted against Agent
in any way relating to or arising out of this Agreement, the Notes, the Guaranty
Agreement or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent’s gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
 
10.8  Agent in Its Individual Capacity. Agent (in its individual capacity) and
its affiliates may make loans to, accept deposits from and generally engage in
any kind of business with Borrower or any of Borrower’s Subsidiaries as though
Agent were not the Agent hereunder. With respect to its loans made or renewed by
it and any Note issued to it and with respect to any Facility L/C issued by it,
Agent (in its individual capacity) shall have the same rights and powers under
this Agreement as any Lender and may exercise the same as though it were not the
Agent, and the terms “Lender” and “Lenders” shall include Agent in its
individual capacity.
 
10.9  Delegation to Affiliates. Borrower and Lenders agree that the Agent may
delegate any of its duties under this Agreement to any of its affiliates. Any
such affiliate (and such affiliate’s directors, officers, agents and employees)
which performs duties in connection with this Agreement shall be entitled to the
same benefits of the indemnification, waiver and other protective provisions to
which the Agent is entitled under Sections 10 and 11 hereof.
 
10.10  Successor Agent. Agent (a) may resign as agent upon 30 days’ notice to
the Lenders and (b) may be removed at any time with or without cause by the
Required Lenders, provided, however, that, as long as no Event of Default has
occurred that is continuing, such removal of the Agent shall be subject to
Borrower’s written approval, which shall not be unreasonably withheld,
conditioned or delayed. Upon any such resignation or removal, the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
provided, however, that, as long as no Event of Default has occurred that is
continuing, such appointment of a successor agent shall be subject to Borrower’s
written approval, which shall not be unreasonably withheld, conditioned or
delayed. Any successor agent appointed as herein provided shall succeed to the
rights, powers and duties of Agent, and the term “Agent” shall mean such
successor agent effective upon its appointment, and the former Agent’s rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent’s resignation hereunder as
agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
 
10.11  Syndication Agent, Documentation Agent and Co-Agent. None of the Lenders
identified in this Agreement as a “Syndication Agent,” “Documentation Agent” or
“Co-Agent” shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of such Lenders shall have or be deemed to
have a fiduciary relationship with any Lender. Each Lender hereby makes the same
acknowledgements with respect to such Lenders as it makes with respect to the
Agent in subsection 10.6.
 

SECTION 11:    MISCELLANEOUS

 
11.1  Amendments and Waivers. Agent and Borrower may, from time to time, with
the written consent of the Required Lenders, enter into written amendments,
supplements or modifications for the purpose of adding any provisions to this
Agreement or the Notes or changing in any manner the rights of Lenders or
Borrower hereunder or thereunder, and with the consent of the Required Lenders,
Agent on behalf of Lenders may execute and deliver to Borrower a written
instrument waiving, on such terms and conditions as Agent may specify in such
instrument, any of the requirements of this Agreement, the Notes or any Default
or Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall extend the final
maturity of any Note, or reduce the rate or extend the time of payment of
interest or fees thereon or reduce the principal amount thereof, or change the
amount or terms of any Lender’s Revolving Credit Loan or Ratable Share or the
amount of any Lender’s Commitment (except for (i) changes resulting from an
assignment permitted hereunder or (ii) as provided in subsection 2.6(b) or 3.10
hereof), or change the Borrowing Base, or amend, modify, change any provision of
the Guaranty Agreement, or release the guaranties provided under the Guaranty
Agreement, or amend, modify, change or waive any provision of this subsection,
or reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by Borrower of any of its rights and
obligations under this Agreement, or consent to the modification or termination
of any subordination agreement or provisions that evidence Subordinated
Indebtedness (except as otherwise provided in subsection 7.9), or consent to the
release of any collateral, or amend, modify or change any other provision of
this Agreement that requires the consent of all Lenders, in each case
without the written consent of all Lenders; and provided, further, that no such
waiver and no such amendment, supplement or modification shall alter in any way
Swingline Lender’s rights or obligations with respect to Swingline Loans without
the consent of Swingline Lender; and provided, further, that no such waiver and
no such amendment, supplement or modification shall amend, modify, change or
waive any provision relating to the rights or obligations of Agent without the
consent of Agent. Any such waiver and any such amendment, supplement or
modification shall be binding upon Borrower, Agent and each Lender, and all
future holders of the Notes. In the case of any waiver, Borrower, Agent and each
Lender shall be restored to their former position and rights hereunder and under
the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
 
11.2  Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing or by telecopy or other
electronic facsimile and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or when deposited
in the United States mail, Registered or Certified, Return Receipt Requested,
postage prepaid, or, in the case of telecopy or other electronic facsimile
notice, when receipt confirmed by sender’s electronic facsimile machine,
addressed as follows in the case of Borrower, as set forth below its signature
on the signature pages hereof in the case of Agent and as set forth in its
administrative questionnaire furnished to Agent in the case of each Lender, or
to such other address as may be hereafter notified by the respective parties
hereto and any future holders of any Note:
 

 
Borrower:
 
M/I Homes, Inc.
 
3 Easton Oval
 
Columbus, Ohio 43219
 
Attention: Phillip G. Creek
 
Facsimile: (614) 418-8080
 
with a copy to: J. Thomas Mason, Esq.
 
Facsimile: (614) 418-8030
 

11.3  No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of Agent or any Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and, except for rights the exercise of which require consent of
the Required Lenders or all Lenders, as appropriate, under this Agreement, not
exclusive of any rights, remedies, powers and privileges provided by law.
 
11.4  Participants.
 
(a)  Any Lender may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time sell to one or more Lenders
or other financial institutions (“Participants”) participating interests in any
Revolving Credit Loan owing to such Lender, any Note held by such Lender, any
interest (including any Reimbursement Obligation) in any Facility L/C with
respect to such Lender, any Commitment of such Lender, or any other interest of
such Lender hereunder; provided, however, that upon the sale of any
participating interest the selling Lender shall provide promptly to Borrower and
Agent notice of such sale; and provided further, however, that (except as
otherwise provided in subsection (c) below) no Participant’s consent shall be
required to approve any amendments, waivers or other modifications of this
Agreement or of any document contemplated by this Agreement, and no
participation agreement shall provide any Participant with such rights. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, and such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and, except as provided in the
immediately following sentence, Borrower, the other Lenders, and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. However, any Participant
that is an affiliate of any Lender shall have the right to deal directly with
any other Lender and Borrower with respect to any matter that is the subject of
this Agreement, and Lenders and Borrower agree to deal directly with such
affiliate Participant(s); provided, however, that each Lender needs to deal only
with other Lenders (and not such other Lenders’ affiliate Participant(s)), in
those matters in which the consent of any one or more Lenders is required. The
rights set forth in the immediately preceding sentence shall apply only to
Participants that are affiliates of any Lender, and such rights do not apply to
any Participants that are not affiliates of any Lender. Borrower agrees that if
amounts outstanding under this Agreement or the Notes are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of a Default or an Event of Default, each Participant shall be deemed
to have the right of set-off provided to Lenders in this Agreement in respect of
its participating interest in amounts owing under this Agreement or any Note or
Reimbursement Obligation to the same extent as if the amount of its
participating interests were owing directly to it as a Lender under this
Agreement, any Note or any Facility L/C or participation in any Facility L/C.
 
(b)  Borrower authorizes each Lender and Agent to disclose to any Participant
and any prospective Participant any and all financial information in such
Lender’s or Agent’s possession concerning Borrower and any of Borrower’s
Subsidiaries which has been delivered to such Lender or Agent by Borrower or
Borrower’s Subsidiaries pursuant to this Agreement or which has been delivered
to such Lender or Agent by Borrower or Borrower’s Subsidiaries in connection
with such Lender’s or Agent’s credit evaluation of Borrower and Borrower’s
Subsidiaries prior to entering into this Agreement. Any Participant or
prospective Participant shall be subject to the confidentiality provisions of
this Agreement.
 
(c)  Each Lender shall with respect to its Participants, if any, retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than any
amendment, modification or waiver with respect to any Loan or Commitment in
which such Participant has an interest which forgives principal, interest or
fees (other than Agent’s fees) or reduces the interest rate or fees (other than
Agent’s fees) payable with respect to any such Loan or Commitment, postpones any
date fixed for any regularly scheduled payment of principal of, or interest or
fees (other than Agent’s fees) on, any such Loan or Commitment or releases any
Guarantor.
 
(d)  Borrower agrees that each Participant shall be deemed to have the rights of
set-off provided in subsection 11.8 hereof in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of set-off
provided in subsection 11.8 hereof with respect to the amount of participating
interests sold to each Participant. Lenders agree to share with each
Participant, and each Participant, by exercising the right of set-off provided
in subsection 11.8 hereof, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of set-off, such amounts to be shared in
accordance with subsection 11.8 hereof as if each Participant were a Lender.
 
(e)  Except for the sale of participating interests as described in this
subsection 11.4 and the assignments as described in subsection 11.7 hereof, no
Lender may sell or assign its rights and interests under this Agreement without
the written consent of each Lender and Borrower, provided that after the
occurrence of a Default or an Event of Default that has not been waived by all
Lenders, Borrower’s consent to such sale or assignment shall not be required.
 
11.5  Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes and shall remain in full force and
effect until this Agreement is terminated, all Facility L/Cs are cancelled or
are fully collateralized with cash in accordance with Section 8 hereof and all
Obligations (including Facility L/C Obligations that are not fully
collateralized with cash) are paid in full.
 
11.6  Payment of Expenses and Taxes. Borrower agrees:
 
(a)  to pay or reimburse Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes, the
Guaranty Agreement, the Facility L/Cs and any other documents prepared in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby, including without limitation the reasonable fees and
disbursements of counsel to Agent; and
 
(b)  to pay or reimburse Agent and each Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Notes, the Guaranty Agreement, the Facility L/Cs and any
such other documents, including without limitation the reasonable fees and
disbursements of counsel to Agent and each Lender.
 
11.7  Successors and Assigns; Assignment.
 
(a)  This Agreement shall be binding upon and inure to the benefit of Borrower,
Agent and each Lender, all future holders of the Notes and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of all Lenders, which consent may be withheld by any Lender in its sole
discretion; and provided further that the rights of each Lender to transfer or
assign its rights and/or obligations hereunder shall be limited as set forth
below in part (b) of this subsection 11.7. Notwithstanding the above (including
anything set forth in part (b) of this subsection 11.7), nothing herein shall
restrict, prevent or prohibit any Lender from (A) pledging its Loans hereunder
to a Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, (B) granting assignments in such Lender’s Loans and/or
Commitment hereunder to its parent company and/or to any affiliate of such
Lender or to any existing Lender or affiliate thereof and (C) selling
participations as set forth in subsection 11.4 hereof.
 
(b)  In addition to the assignments permitted by subsection 11.7(a) hereof, each
Lender may, with the prior written consent of the Borrower and the Agent
(provided that no consent of the Borrower shall be required during the existence
and continuation of an Event of Default), which consents shall not be
unreasonably withheld, conditioned or delayed, assign all or a portion of its
rights and obligations hereunder pursuant to an assignment agreement
substantially in the form of Exhibit H attached hereto and made a part hereof
(the “Assignment Agreement”) to one or more Eligible Assignees; provided that
(A) any such assignment shall be in a minimum aggregate amount of the lesser of
(1) $5,000,000 or any larger amount which is an even multiple of $1,000,000 or
(2) the remaining amount of the Commitment held by such Lender, and (B) each
such assignment shall be of a constant, not varying, percentage of all of the
assigning Lender’s rights and obligations under the Commitment being assigned.
Any assignment under this subsection 11.7(b) shall be effective upon
satisfaction of the conditions set forth above and delivery to the Agent of a
duly executed Assignment Agreement together with a transfer fee of $4,000
payable by the Assignee to the Agent for its own account. Upon the effectiveness
of any such assignment, the assignee shall become a “Lender” for all purposes of
this Agreement and the other documents contemplated hereby and, to the extent of
such assignment, the assigning Lender shall be relieved of its obligations
hereunder to the extent of the Loans and Commitment components being assigned.
The Borrower agrees that upon notice of any such assignment and surrender of the
appropriate Note, it will promptly provide to the assigning Lender and to the
assignee separate promissory notes in the amount of their respective interests
substantially in the form of the original Note (but with notation thereon that
it is given in substitution for and replacement of the original Note or any
replacement notes thereof).
 
By executing and delivering an Assignment Agreement in accordance with this
subsection 11.7(b), the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim and the assignee warrants that it is an Eligible Assignee; (ii)
except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, any of the other documents contemplated hereby or any other
instrument or document furnished pursuant hereto or thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any of the other documents contemplated hereby or any other
instrument or document furnished pursuant hereto or thereto or the financial
condition of Borrower or the performance or observance by Borrower of any of its
obligations under this Agreement, any of the other documents contemplated hereby
or any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment Agreement; (iv) such assignee confirms that it has received
a copy of this Agreement, the other documents contemplated hereby and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment Agreement; (v) such assignee
will independently and without reliance upon the Agent, such assigning Lender or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and other documents contemplated hereby;
(vi) such assignee appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under this Agreement or any other document
contemplated thereby as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement and the other documents
contemplated hereby are required to be performed by it as a Lender.
 
11.8  Adjustments; Set-off.
 
(a)  If any Lender (a “benefited Lender”) shall at any time receive any payment
of all or part of its Loans or Reimbursement Obligations owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in paragraph (5) of Section 9 hereof, or otherwise) in a
greater proportion than any such payment to any other Lender in respect of such
other Lender’s Loans or Reimbursement Obligations owing to it, or interest
thereon, such benefited Lender shall purchase for cash from the other Lenders
such portion of each such other Lender’s Loans or Reimbursement Obligations
owing to it, as shall be necessary to cause such benefited Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. Borrower agrees that each
Lender so purchasing a portion of another Lender’s Loans or Reimbursement
Obligations owing to it may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
 
(b)  In addition to those rights and remedies of each Lender provided by law,
subject to the terms and conditions of this Agreement, upon the occurrence of an
Event of Default and acceleration of the Obligations, each Lender shall have the
right, without prior notice to Borrower or Borrower’s Subsidiaries, any such
notice being expressly waived by Borrower and Borrower’s Subsidiaries to the
extent permitted by applicable law, to set-off and apply against any
indebtedness, whether matured or unmatured, of Borrower to such Lender, any
amount held by or owing from such Lender to or for the credit or the account of
Borrower or Borrower’s Subsidiaries at, or at any time after, the happening of
any of the above-mentioned events, and the aforesaid right of set-off may be
exercised by each Lender against Borrower and Borrower’s Subsidiaries or against
any trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, receiver, custodian or execution, judgment or attachment creditor of
Borrower and Borrower’s Subsidiaries, or against anyone else claiming through or
against Borrower and Borrower’s Subsidiaries or such trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, receiver, custodian
or execution, judgment or attachment creditor, notwithstanding the fact that
such right of set-off shall not have been exercised by such Lender prior to the
making, filing or issuance of, or service upon such Lender of, or of notice of,
any such petition; assignment for the benefit of creditors; appointment or
application for the appointment of a receiver; or issuance of execution,
subpoena, order or warrant. Each Lender agrees promptly to notify Borrower and,
if set-off is made against Borrower’s Subsidiaries, Borrower’s Subsidiaries
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
 
11.9  WAIVER OF JURY TRIAL. EACH LENDER AND BORROWER, AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED UPON OR ARISING OUT OF THE AGREEMENT OR ANY RELATED INSTRUMENT
OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THE AGREEMENT OR ANY
COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY OF THEM. NONE OF AGENT, ANY LENDER OR BORROWER SHALL SEEK TO CONSOLIDATE, BY
COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY ANY OF AGENT, ANY LENDER OR BORROWER EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY ALL OF THEM. THIS PROVISION IS A MATERIAL INDUCEMENT TO
THE LENDERS TO PROVIDE THE COMMITMENT HEREUNDER.
 
11.10  Confidentiality. Agent and each Lender shall hold all confidential
information obtained pursuant to the requirements of the Agreement which has
been identified as such by Borrower in accordance with Agent’s or such Lender’s
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with the Agreement or as reasonably required
by any bona fide Participant or assignee or prospective Participant or assignee
in connection with any contemplated assignment thereof or participation therein
or as required or requested by any governmental agency or representative thereof
or pursuant to legal process. Without limiting the foregoing, it is expressly
understood that such confidential information which, at the time of disclosure
is in the public domain or which, after disclosure, other than disclosure by
Agent or any Lender, becomes part of the public domain or information which is
obtained by Agent or any Lender prior to the time of disclosure and
identification by Borrower under this subsection, or information received by
Agent or any Lender from a third party shall not be subject to the
confidentiality requirements of this subsection 11.10. Nothing in this
subsection or otherwise shall prohibit Agent or any Lender from disclosing any
confidential information to any other Lender in connection with the Loans
contemplated by this Agreement or render it liable in connection with any such
disclosure.
 
11.11  Counterparts; Effective Date. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. This Agreement shall become effective upon the receipt by
Agent and each Lender of executed counterparts of this Agreement by each of the
parties hereto.
 
11.12  Governing Law. This Agreement, the Notes and the rights and obligations
of the parties under this Agreement and the Notes shall be governed by, and
construed and interpreted in accordance with the internal laws (including
§735ILCS 105/5-1 et seq., but otherwise without regard to principles of conflict
of law) of the State of Illinois but giving effect to federal laws applicable to
national banks.
 
11.13  Integration. This Agreement (including Borrower’s obligation to pay the
fees as provided in the Agent’s Fee Letter referred to herein) and the Loan
Documents contain the entire agreement between the parties relating to the
subject matter hereof and supersede all oral statements and prior writings with
respect thereto.
 
11.14  Indemnity. Borrower hereby agrees to defend, indemnify, and hold Agent,
Arranger, each LC Issuer and each Lender and their respective directors,
officers, employees and agents harmless from and against all claims,
damages, judgments, penalties, costs, and expenses (including attorney fees and
court costs now or hereafter arising from the aforesaid enforcement of this
clause) which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification. This indemnity shall survive the termination of this Agreement.
 
11.15  Severability of Provisions. Any provision of any Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
 
11.16  Submission to Jurisdiction. Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Northern District of
Illinois and of any Illinois State court sitting in The City of Chicago for
purposes of all legal proceedings which may arise hereunder or under the Notes.
Borrower irrevocably waives to the fullest extent permitted by law, any
objection which it may have or hereafter have to the laying of the venue of any
such proceeding brought in such a court, and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Borrower
consents to process being served in any such proceeding by the mailing of a copy
thereof by registered or certified mail, postage prepaid, to its address
specified in subsection 11.2 hereof or in any other manner permitted by law.
 
11.17  Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
 
11.18  No Fiduciary Duty. The relationship between Borrower and Lenders and
Agent shall be solely that of borrower and lender. Neither Agent nor any Lender
shall have any fiduciary responsibilities to Borrower. Neither Agent nor any
Lender undertakes any responsibility to Borrower to review or inform the
Borrower of any matter in connection with any phase of Borrower’s business or
operations.
 
11.19  Headings. The headings of the Sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
 
11.20  FIN 46. For purposes of determining compliance with the financial
covenants in this Agreement, the application of Financial Accounting Standards
Board Interpretation No. 46 shall be disregarded with respect to financial
consolidation of any entity that is not a subsidiary of the Borrower.
 
11.21  USA Patriot Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56) (signed into law October 26,
2001)) (the “Act”) hereby notifies Borrower that pursuant to the requirements of
the Act, it is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender to identify Borrower in accordance with
the Act.
 
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
 
M/I HOMES, INC.

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief
Financial Officer and Treasurer

 

82

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

LENDERS
 

 
BANK ONE, NA,
 
as Agent and as a Lender
 
By:    
Name:    
Title:    

Address:
Bank One, NA
131 South Dearborn Street
Mail Code IL1-0135
Chicago, Illinois 60670
Attention: Ken Nelson
Facsimile: (312) 325-3122

82

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

THE HUNTINGTON NATIONAL BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

US BANK NATIONAL ASSOCIATION

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

BANK OF AMERICA, N.A.

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

WACHOVIA BANK, NATIONAL ASSOCIATION

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

KEYBANK NATIONAL ASSOCIATION

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

NATIONAL CITY BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

GUARANTY BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

SUNTRUST BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

AMSOUTH BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

COMERICA BANK

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

FIFTH THIRD BANK, CENTRAL OHIO

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

PNC BANK, N.A.

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

WASHINGTON MUTUAL BANK, FA

By:    
Name:    
Title:    

 
24

     

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SIGNATURE PAGE TO CREDIT AGREEMENT WITH M/I HOMES, INC.

BANK UNITED, FSB

By:    
Name:    
Title:    

 

 

82

     

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SCHEDULE 1
 
 

 
 
COMMITMENTS
 

Lender
 
Commitment
 
Ratable Share
Bank One, NA
 
$
 
47,500,000
 
9.5%
The Huntington National Bank
 
$
 
45,000,000
 
9.0%
US Bank National Association
 
$
 
45,000,000
 
9.0%
Bank of America, N.A.
 
$
 
45,000,000
 
9.0%
Wachovia Bank, National Association
 
$
 
45,000,000
 
9.0%
KeyBank National Association
 
$
 
45,000,000
 
9.0%
National City Bank
 
$
 
32,500,000
 
6.5%
Guaranty Bank
 
$
 
30,000,000
 
6.0%
SunTrust Bank
 
$
 
30,000,000
 
6.0%
AmSouth Bank
 
$
 
25,000,000
 
5.0%
Comerica Bank
 
$
 
25,000,000
 
5.0%
Fifth Third Bank, Central Ohio
 
$
 
25,000,000
 
5.0%
PNC Bank, National Association
 
$
 
25,000,000
 
5.0%
Washington Mutual Bank, FA
 
$
 
20,000,000
 
4.0%
Bank United, FSB
$
15,000,000
  3.0%
Total
 
$
 
500,000,000
 
100%

 

     

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SCHEDULE 2
 
 

 
 
EXISTING L/CS
 

        

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SCHEDULE 3
 

 
SUBSIDIARIES OF BORROWER
 
Name of Subsidiary:
 
M/I Financial Corp., an Ohio corporation
 
Principal Place of Business:
 
3 Easton Oval, Suite 210
 
Columbus, Ohio 43219
 
 
OHIO
 
3 Easton Oval, Suite 140
 
Columbus, Ohio 43219
 
6279 Tri-Ridge Blvd., Suite 207
 
Loveland, Ohio 45140
 
 
INDIANA
 
8500 Keystone Crossing, Suite 190
 
Indianapolis, Indiana 46240
 
8606 Allisonville Road, Suite 138C
 
Indianapolis, Indiana 46150
 
 
NORTH CAROLINA
 
1043 East Morehead Street, Suite 109
 
Charlotte, North Carolina 28204
 
1500 Sunday Drive, Suite 113
 
Raleigh, North Carolina 27607
 
 
FLORIDA
 
4904 Eisenhower Boulevard, Suite 125
 
Tampa, Florida 33634
 
237 Westmonte Drive, Suite 245
 
Altamonte Springs, Florida 32714
 
4 Harvard Circle, Suite 950
 
West Palm Beach, Florida 33409
 

     

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SCHEDULE 3
SUBSIDIARIES OF BORROWER (CONTINUED)
Name of Subsidiary: M/I Homes of Central Ohio, LLC, an Ohio limited liability
 
company
 
Principal Place of Business: 3 Easton Oval, Suite 500
 
Columbus, Ohio 43219
 
Name of Subsidiary: M/I Homes of Cincinnati, LLC, an Ohio limited liability
 
company
 
Principal Place of Business: 6279 Tri-Ridge Blvd.
Suite 207                        
Loveland, Ohio 45140
Name of Subsidiary:
 
M/I Homes Construction, Inc., an Arizona corporation
 
Principal Place of Business:
 
3 Easton Oval, Suite 500
 
Columbus, Ohio 43219
 
Name of Subsidiary:
 
M/I Homes Service Corp., an Ohio corporation
 
Principal Place of Business:
 
3 Easton Oval, Suite 500
 
Columbus, Ohio 43219
 
Name of Subsidiary:
 
M/I Properties LLC, an Ohio limited liability company
 
Principal Place of Business:
 
3 Easton Oval, Suite 500
 
Columbus, Ohio 43219
 
Name of Subsidiary:
 
Northeast Office Venture, LLC, a Delaware limited liability company
 
Principal Place of Business:
 
3 Easton Oval, Suite 500
 
Columbus, Ohio 43219
 

        

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SCHEDULE 3
SUBSIDIARIES OF BORROWER (CONTINUED)

Name of Subsidiary:
 
M/I Homes of Raleigh, LLC, a Delaware limited liability company
 
Principal Place of Business:
 
1500 Sunday Drive, Suite 113
 
Raleigh, North Carolina 27607
 

Name of Subsidiary:
 
M/I Homes of Charlotte, LLC, a Delaware limited liability company
 
Principal Place of Business:
 
1043 East Morehead Street, Suite 105
 
Charlotte, North Carolina 28204
 

Name of Subsidiary:
 
M/I Homes of DC, LLC, a Delaware limited liability company
 
Principal Place of Business:
 
21355 Ridgetop Circle, Suite 160
 
Sterling, Virginia 20166
 
The following Subsidiaries are 100% owned by M/I Homes of DC, LLC:
 
 
Name of Subsidiary:
 
The Fields at Perry Hall, L.L.C., a Maryland limited liability company
 
Principal Place of Business:
 
21355 Ridgetop Circle, Suite 160
 
Sterling, Virginia 20166
 
Name of Subsidiary:
 
Wilson Farm, L.L.C., a Maryland limited liability company
 
Principal Place of Business:
 
21355 Ridgetop Circle, Suite 160
 
Sterling, Virginia 20166
 
   

        

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SCHEDULE 3
SUBSIDIARIES OF BORROWER (CONTINUED)

Name of Subsidiary:
 
M/I Homes Second Indiana, LLC, an Indiana limited liability company
 
Principal Place of Business:
 
8500 Keystone Crossing, Suite 190
 
Indianapolis, Indiana 46240
 
Name of Subsidiary:
 
M/I Homes First Indiana LLC, an Indiana limited liability company
 
Principal Place of Business:
 
8500 Keystone Crossing, Suite 190
 
Indianapolis, Indiana 46240
 
The following Subsidiary is owned 99% by M/I Homes Second Indiana, LLC (as
limited partner) and 1% by M/I Homes First Indiana LLC (as general partner)
 
 
Name of Subsidiary:
 
M/I Homes of Indiana, L.P., an Indiana limited partnership
 
Principal Place of Business:
 
8500 Keystone Crossing, Suite 190
 
Indianapolis, Indiana 46240
 

        

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SCHEDULE 3
SUBSIDIARIES OF BORROWER (CONTINUED)

Name of Subsidiary:
 
M/I Homes of Florida, LLC, a Florida limited liability company
 
Principal Place of Business:
 
4904 Eisenhower Boulevard, Suite 150
 
Tampa, Florida 33634-6329
 
The following Subsidiaries are each 100% owned by M/I Homes of Florida, LLC:
 
 
Name of Subsidiary:
 
M/I Homes of Tampa, LLC, a Florida limited liability company
 
Principal Place of Business:
 
4904 Eisenhower Boulevard, Suite 150
 
Tampa, Florida 33634-6329
 
Name of Subsidiary:
 
M/I Homes of Orlando, LLC, a Florida limited liability company
 
Principal Place of Business:
 
237 South Westmonte Drive, Suite 111
 
Altamonte Springs, Florida 32714
 
Name of Subsidiary:
 
M/I Homes of West Palm Beach, LLC, a Florida limited liability company
 
Principal Place of Business:
 
4 Harvard Circle, Suite 950
 
West Palm Beach, Florida 33409
 
Name of Subsidiary:
 
MHO Holdings, LLC, a Florida limited liability company
 
Principal Place of Business:
 
4904 Eisenhower Boulevard, Suite 150
 
Tampa, Florida 33634-6329
 
The following Subsidiary is 100% owned by MHO Holdings, LLC
 
 
Name of Subsidiary:
 
MHO, LLC, a Florida limited liability company
 
Principal Place of Business:
 
4904 Eisenhower Boulevard, Suite 150
 
Tampa, Florida 33634-6329
 
The following Subsidiary is 50% owned by M/I Homes of Tampa, LLC and M/I Homes
of Tampa, LLC has control of this Subsidiary for most purposes
 
 
Name of Subsidiary:
 
K-Tampa, LLC, a Florida limited liability company
 
Principal Place of Business
 
4904 Eisenhower Boulevard, Suite 150
Tampa, Florida 33634-6329
 

 

     

--------------------------------------------------------------------------------

 
SCHEDULE 4
 
 

 
 
M/I ANCILLARY BUSINESSES
 
 
Limited Liability Corp.
 
 
Partners
 
 
% of
 
 
Ownership
 
 
Principal Address
 
 
Business Conducted at Address
 
TransOhio Residential Title Agency Ltd.
 
M/I Homes, Inc.
 
Lawyers Title Insurance Corp.
 
80.0
 
20.0
 
3 Easton Oval, Suite 230
 
Columbus, Ohio 43219
 
3 Easton Oval, Suite 230
 
Columbus, Ohio 43219
 
M/I Title Agency Ltd.
 
M/I Homes, Inc.
 
Lawyers Title Insurance Corp.
 
90
 
10
 
14802 North Dale Mabry Highway
 
Tampa, Florida 33618
 
4904 Eisenhower Boulevard
 
Tampa, Florida 33634
 
       
237 South Westmonte Drive
 
Altamonte Springs, Florida 32714
 
Washington/Metro Residential
 
Title Agency, LLC
 
M/I Homes, Inc.
 
Potomac Settlement Services, Inc.
 
70
 
30
 
4311 Ridgewood Center Drive
 
Woodbridge, Virginia 22192
 
4311 Ridgewood Center Drive
 
Woodbridge, Virginia 22192
 
STMI Title Agency, LLC
 
M/I Homes, Inc.
 
Lawyers Title Insurance Corp.
 
49.9
 
50.1
 
2800 Corporate Exchange Drive
 
Suite 160
 
Columbus, Ohio 43231
 
2800 Corporate Exchange Drive
 
Suite 160
 
Columbus, Ohio 43231
 

     

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EXHIBIT A

 
FORM OF BORROWING BASE CERTIFICATE
 
__________ __, ____
 

 
To: Agent and each Lender
 
Ladies and Gentlemen:
 
This letter is to comply with subsection 6.3 of the Credit Agreement dated
September 27, 2004 (the “Credit Agreement”), among M/I Homes, Inc., as Borrower,
the Lenders party thereto and Bank One, NA as Agent and is for the monthly
accounting period ended _______ __, ____. Capitalized terms used but not defined
herein have the meanings given to such terms in the Credit Agreement.
 
Attached hereto is the calculation of the Borrowing Base. All figures in this
calculation are as at the end of the monthly accounting period set forth in the
first paragraph of this letter. The undersigned certifies that the calculation
set forth herein is true and accurate in all material respects.
 

 
Certified by:
 
__________________________________
[Chief Financial Officer or Controller] of
M/I Homes, Inc.

Attachment

     

--------------------------------------------------------------------------------

Attachment to
M/I Homes, Inc.
Borrowing Base Certificate
____________, 200_
Book Value:
 
$ 000’s
 
Receivables
$
 
Housing Units under Contract and Lots under Contract
$
 
Speculative Housing Units
$
 
Finished Lots
$
 
Lots under Development
$
 
Unimproved Entitled Land
$
     
Total:
 
$_________
     
Borrowing Base Percentages:
     
Receivables
100%
 
Housing Units under Contract and Lots under Contract
90%
 
Speculative Housing Units
75%
 
Finished Lots
70%
 
Lots under Development
50%
 
Unimproved Entitled Land
30%
   
Borrowing Base:
   
Receivables
$
 
Housing Units under Contract and Lots under Contract
$
 
Speculative Housing Units
$
 
Finished Lots
$
 
Lots under Development
$
 
Unimproved Entitled Land
$___________
     
Less
   
The amount (if any) by which Finished Lots, Lots under Development and
Unimproved Entitled Land exceed 45% of Borrowing Base
$__________
Maximum Borrowing Base Indebtedness:
$__________
   
Total Borrowing Base Indebtedness (see (i) below)
$__________
   
Additional amount that could be borrowed
$__________
Amount borrowed on revolver *
$__________
Maximum revolver borrowings allowed*
$__________

______________________________________________________________________________
 
*Includes Revolving Credit Loans, Swingline Loans, Facility L/Cs (excluding
Performance Letters of Credit) and all Reimbursement Obligations.
 

 

        

--------------------------------------------------------------------------------

 

(i)
Total Borrowing Base Indebtedness
   
Amount borrowed on revolver*
$
 
Other Consolidated Indebtedness
$__________
$
       
Plus
   
10% of commitment under M/I Financial Corp. Loan Agreement
 
Less
Secured Indebtedness
Subordinated Indebtedness
M/I Financial Corp. Agreement Indebtedness
$__________
$
 
$__________
$__________
$__________
       
Total
$__________

______________________________________________________________________________
*Includes Revolving Credit Loans, Swingline Loans, Facility L/Cs (excluding
Performance Letters of Credit) and all Reimbursement Obligations.

 

     

--------------------------------------------------------------------------------

EXHIBIT B

GUARANTY AGREEMENT
(GUARANTY, SUBORDINATION AND SUBROGATION AGREEMENT)

THIS GUARANTY AGREEMENT, effective as of September 27, 2004 between: the
corporations and other entities identified under the caption “GUARANTORS” on the
signature pages hereto (the “Guarantors”) and BANK ONE, NA, as agent (the
“Agent”) for the Lenders or other financial institutions that are parties as
lenders (collectively, the “Lenders”), to the Credit Agreement referred to
below.
 
RECITALS

A. M/I HOMES, INC. (“Borrower”), the Agent and the Lenders are parties to a
Credit Agreement effective as of September 27, 2004 (such agreement, together
with any amendments, supplements or other modifications thereto from time to
time, collectively, the “Credit Agreement”) providing, subject to the terms and
conditions thereof, for extensions of credit (by making of loans and issuing
letters of credit) to be made by the Lenders to Borrower in an aggregate
principal or face amount not exceeding $500,000,000 (subject to increases
thereof to an amount not to exceed $750,000,000 as provided in the Credit
Agreement).

 

B. Under and pursuant to the Credit Agreement, Borrower and each Guarantor
desire to utilize their borrowing potential on a consolidated basis to the same
extent possible as if they were to merge into a single corporate entity.

 

C. Each of the Guarantors has determined that it will benefit specifically and
materially from the borrowings contemplated by the Credit Agreement.

 

D. It is both a condition precedent to the obligations of the Lenders to make
the loans and take other actions contemplated by the Credit Agreement and a
desire of each Guarantor that each other Guarantor execute and deliver to the
Agent for the benefit of the Lenders a counterpart of this Guaranty Agreement.

 

E. Borrower and the Guarantors have requested and bargained for the structure
and terms of the borrowings contemplated by the Credit Agreement.

 
Therefore, in consideration of the mutual covenants and agreements contained in
the Credit Agreement and to induce Lenders and Agent to make the extensions of
credit thereunder, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Guarantors have agreed to
enter into this Guaranty Agreement. Accordingly, the parties hereto agree as
follows:
 
1.    Incorporation; Definitions, Construction; Terms. The Credit Agreement,
including defined terms (unless otherwise defined herein), rules of construction
and terms and conditions, is hereby incorporated herein and made a part hereof.
 
2.    Guaranteed Obligations. The term “Guaranteed Obligations” shall mean (i)
the unpaid principal of and interest on (including, without limitation, interest
accruing after the maturity of the Loans and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Borrower, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) the
Notes, the Reimbursement Obligations and all other obligations (including the
Obligations) and liabilities of Borrower to the Lenders or Agent, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Credit Agreement, the Notes, the Facility L/Cs or any other document made,
delivered or given in connection therewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including, without limitation, all
fees and expenses of counsel to the Lenders and to Agent and all disbursements)
or otherwise and (ii) all amounts from time to time owing to the Lenders or the
Agent by any Guarantor hereunder or under the Credit Agreement, the Notes, the
Facility L/Cs or any other document made, delivered or given in connection
therewith.
 
3.    Payment Guaranty. The Guarantors hereby jointly and severally
unconditionally and absolutely guarantee to each Lender and the Agent, for the
benefit of each Lender, and their successors and assigns, the due and punctual
payment when due (whether at the stated maturity, by acceleration or otherwise)
of the Guaranteed Obligations, without deduction for any claim, setoff or
counterclaim of Borrower or any of the Guarantors or for the loss of
contribution of any Guarantor, and the due and punctual performance and
observance by Borrower of all the terms, covenants and conditions of the Credit
Agreement and the Notes, whether according to the present terms thereof, at any
earlier or accelerated date or dates as provided therein, or pursuant to any
extension of time, whether one or more, or to any change or changes in the
terms, covenants and conditions thereof, now or at any time hereafter made or
granted. The obligations of each of the Guarantors are joint and several,
primary, continuing and absolute and unconditional obligations of payment and
performance, enforceable with or without proceeding against Borrower, any
Guarantor or any security and/or before, after or contemporaneously with
proceeding against Borrower, any Guarantor or any security. This Guaranty
Agreement shall be effective regardless of the solvency or insolvency of
Borrower or any Guarantor at any time, the extension or modification of the
Guaranteed Obligations by operation of law or otherwise, or the subsequent
incorporation, reorganization, merger or consolidation of Borrower or any
Guarantor, or any other change in composition, nature, personnel, ownership or
location of Borrower or any Guarantor.
 
4.    Waiver, Notice, Amendments to Guaranteed Obligations. In regard to any of
the Guaranteed Obligations, or any evidence thereof, each of the Guarantors
hereby expressly jointly and severally waive diligence, presentment, protest,
notice of dishonor, demand for payment, extension of time for payment (whether
one or more), notice of acceptance of this Guaranty Agreement, notice of
nonpayment at maturity, notice of indulgences, notice of Borrower or any
Guarantor incurring at any time any additional obligation to the Lenders or
Agent which will be guaranteed hereunder, notice of any defaults or disputes
involving Borrower or any Guarantor, of any settlement or adjustment of such
defaults or disputes and of any settlement with or release of any Guarantor and
notices of any other kind, and consents to any and all forbearances and
extensions, whether one or more, of the time for payments set forth in the
Credit Agreement and the Notes, and to any and all changes in the terms,
covenants and conditions thereof hereafter made or granted and to any and all
substitutions, exchanges or releases of any or all collateral therefor. The
Guarantors also hereby jointly and severally consent to and waive notice of any
arrangements or settlements made in or out of court in the event of
receivership, liquidation, readjustment, reorganization, arrangement or
assignment for the benefit of creditors of Borrower or any Guarantor, any
proceeding or case under the Bankruptcy Code, or in which a custodian (as
defined in the Bankruptcy Code) is appointed or existing, and anything
whatsoever, whether or not herein specified, which may be done or waived by or
between or among Agent, the Lenders and Borrower and/or Agent, the Lenders and
any Guarantor. Each of the Guarantors shall remain jointly and severally liable
under this Guaranty until all of the Guaranteed Obligations shall have been
fully paid and all of the terms, covenants and conditions of the Credit
Agreement and the Notes shall have been fully performed and observed by Borrower
and the Commitments have terminated, notwithstanding any act, commission or
thing which might otherwise operate as a legal or equitable discharge of such
Guarantor.
 
5.    Collection Costs. If any of the Guarantors fails to pay any of the
Guaranteed Obligations to Agent for the account and benefit of the Lenders
promptly upon demand therefor and any Lender or Agent on behalf of any Lender
subsequently files one or more suits against such Guarantor to collect on and
enforce this Guaranty Agreement, each Guarantor hereby jointly and severally
agrees to pay all of such Lender’s and Agent’s costs related thereto, including
without limitation all reasonable attorneys’ fees, court costs and other legal
expenses. If, by other than the express agreement of the Lenders and Agent, the
accrual of fees and/or interest, or the payment thereof by Borrower, as a part
of the Guaranteed Obligations is at any time delayed or precluded as to
Borrower, the Guaranteed Obligations, for purposes of this Guaranty Agreement
and the obligations of each of the Guarantors hereunder, shall be calculated
without regard to such delay or preclusion.
 
6.    No Conditions to Enforcement. The Guarantors agree that this Guaranty may
be enforced by any Lender or Agent for the benefit of the Lenders without first
resorting to or exhausting any other security or collateral or without first
having recourse to any property through foreclosure proceedings or otherwise;
however, nothing contained herein shall prevent any Lender or Agent for the
benefit of the Lenders from instituting and maintaining suit on, foreclosing or
causing to be foreclosed any lien(s) or from exercising any other rights
thereunder, and if such foreclosure or other remedy is availed of, only the net
proceeds therefrom, after deduction of all charges and expenses of every kind
and nature whatsoever, shall be applied to the reduction of the Guaranteed
Obligations, and no Lender or Agent shall be required to institute or prosecute
proceedings to recover any deficiency as a condition of payment hereunder or of
enforcement hereof. At any sale or other disposition of any or all of any
security or collateral for any or all of the Guaranteed Obligations, whether by
trustee’s sale, sale by a court of competent jurisdiction, foreclosure or
otherwise, any Lender or Agent for the benefit of any Lender may at its
discretion purchase all or any part of such collateral so sold or offered for
sale or other disposition for its own account(s) and may apply the amount bid
therefor, and any proceeds of sale or other disposition against the Guaranteed
Obligations or any part(s) thereof in any order(s) or amount(s) as such Lender
or Agent for the benefit of the Lenders sees fit in its sole judgment.
 
7.    No Assignment. The obligations of each of the Guarantors hereunder cannot
be assigned or transferred in any manner whatever, directly or indirectly, by
operation of law or otherwise, without the prior written consent of all of the
Lenders, which consent may be withheld in any circumstances. However, each of
the Guarantors agrees that this Guaranty shall inure to the benefit of and may
be enforced by any Lender and/or Agent for the benefit of the Lenders and by any
subsequent holder or assignee of any or all of the Guaranteed Obligations and
shall be binding upon and enforceable against such Guarantor and upon its legal
representatives, successors and permitted assigns.
 
8.    Waiver of Subrogation. The Guarantors hereby irrevocably waive any and all
rights they may now or hereafter have under any agreement or at law or in equity
(including without limitation any law subrogating such Guarantor to the rights
of the Lenders and/or Agent for the benefit of the Lenders) to assert any claim
against or seek contribution, indemnification or any other form of reimbursement
from the Borrower or any other Guarantor for any payment made by such Guarantor
under or in connection with this Guaranty or otherwise.
 
9.    Subordination. All indebtedness and obligations of Borrower or any other
Guarantor to any of the Guarantors (collectively, the “Claims”), whether secured
or unsecured, now existing or hereafter arising, direct or indirect, absolute or
contingent, are hereby subordinated to the priority of all of the Guaranteed
Obligations. The Guarantors agree that, until all of the Guaranteed Obligations
have been paid and satisfied in full and the Commitments have terminated, (a)
except on behalf of and pursuant to instructions of Agent for the benefit of the
Lenders, the Guarantors will not ask, demand, sue for, take or receive all or
any part of the Claims or any security therefor, whether or not upon any
distribution of assets or readjustment of indebtedness of Borrower or any
Guarantor, and (b) the Guarantors will deliver to Agent for the benefit of the
Lenders from time to time such instruments, assignments, evidences of
indebtedness and such other things as, in the judgment of Agent, are necessary
or appropriate to effect the objectives of this Section 9.
 
10.    Successive Actions. Any one or more successive and/or concurrent actions
may be brought hereon against any of the Guarantors, whether in the same action,
if any, brought against Borrower, the then owner of any collateral securing
Borrower’s obligations and/or any other party, or in separate actions, as often
as the Lenders or Agent for the benefit of the Lenders or the legal holder or
holders of or assigns of the Lenders or Agent for the benefit of the Lenders in
their sole discretion, may deem advisable.
 
11.    Acceleration; Default. All or any part of the Guaranteed Obligations
shall be immediately due and payable, and all liabilities shall mature
immediately, at the option of Agent for the benefit of the Lenders and without
notice or demand, upon the occurrence of any one or more of the following: (a)
any Event of Default under the Credit Agreement or the Notes; or (b) any default
by any of the Guarantors hereunder; or (c) any warranty, representation or
statement made or furnished to the Lenders or Agent by or on behalf of any of
the Guarantors proves to have been false in any material respect when made or
furnished; or (d) the transfer by any of the Guarantors of a substantial portion
of its property not in the ordinary course of its business as constituted on the
date hereof to any party or entity other than Borrower, provided that any such
transfer to Borrower is not otherwise prohibited by the provisions of any other
document or agreement executed by and binding upon such Guarantor.
 
12.    Limitation on Obligations. (a) The provisions of this Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any
Guarantor under this Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Guarantor’s
liability under this Guaranty, then, notwithstanding any other provision of this
Guaranty to the contrary, the amount of such liability shall, without any
further action by the Guarantors, Agent or any Lender, be automatically limited
and reduced to the highest amount that is valid and enforceable as determined in
such action or proceeding (such highest amount determined hereunder being the
relevant Guarantor’s “Maximum Liability”). This Section 12(a) with respect to
the Maximum Liability of the Guarantors is intended solely to preserve the
rights of Agent and Lenders hereunder to the maximum extent not subject to
avoidance under applicable law, and neither the Guarantors nor any other Person
shall have any right or claim under this Section 12(a) with respect to the
Maximum Liability, except to the extent necessary so that the obligations of the
Guarantors hereunder shall not be rendered voidable under applicable law.
 
(b)    Each of the Guarantors agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of each Guarantor, and
may exceed the aggregate Maximum Liability of all other Guarantors, without
impairing this Guaranty or affecting the rights and remedies of the Agent
hereunder. Nothing in this Section 12(b) shall be construed to increase any
Guarantor’s obligations hereunder beyond its Maximum Liability.
 
(c)    In the event any Guarantor (a “Paying Guarantor”) shall make any payment
or payments under this Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under
this Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying
Guarantor’s “Pro Rata Share” of such payment or payments made, or losses
suffered, by such Paying Guarantor. For the purposes hereof, each Non-Paying
Guarantor’s “Pro Rata Share” with respect to any such payment or loss by a
Paying Guarantor shall be determined as of the date on which such payment or
loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s
Maximum Liability as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) or, if such
Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate
amount of all monies received by such Non-Paying Guarantor from Borrower after
the date hereof (whether by loan, capital infusion or by other means) to (ii)
the aggregate Maximum Liability of all Guarantors hereunder (including such
Paying Guarantor) as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder), or to the extent
that a Maximum Liability has not been determined for any Guarantors, the
aggregate amount of all monies received by such Guarantors from Borrower after
the date hereof (whether by loan, capital infusion or by other means). Nothing
in this Section 12(c) shall affect any Guarantor’s several liability for the
entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum
Liability). Each of the Guarantors covenants and agrees that its right to
receive any contribution under this Guaranty from a Non-Paying Guarantor shall
be subordinate and junior in right of payment to all the Guaranteed Obligations.
The provisions of this Section 12(c) are for the benefit of both Agent (and
Lenders) and the Guarantors and may be enforced by any one, or more, or all of
them in accordance with the terms hereof.
 
13.    Records. Nothing herein shall be construed as an obligation on any
Lender’s or Agent’s part to continue to extend credit to Borrower in any manner
whatsoever. Each Lender’s and Agent’s records showing the account(s) between
Borrower and the Lenders and/or Agent shall be admissible in evidence in any
action or proceeding involving this Guaranty Agreement, and such records shall
be prima facie proof of the items therein set forth.
 
14.    Warranties. As an inducement for and in consideration of the Guaranteed
Obligations, each of the Guarantors warrants and represents to the Lenders and
Agent for the benefit of the Lenders, which warranties and representations shall
expressly survive the execution and delivery hereof, that: (a) the Obligations
guaranteed hereby were, and are being, incurred for purposes permitted by all
applicable laws and by the articles, bylaws, code of regulations and other
corporate legislation of such Guarantor; (b) this Guaranty Agreement has been
duly and validly authorized, executed and delivered by such Guarantor; and (c)
this Guaranty Agreement constitutes the valid and binding obligation of such
Guarantor, enforceable in accordance with its terms against such Guarantor.
 
15.    Laws; Entire Agreement. Each of the Guarantors agrees that this Guaranty
Agreement shall be governed by, and construed and interpreted in accordance with
the internal laws (including §735ILCS 105/5-1 et seq., but otherwise without
regard to principles of conflict of law) of the State of Illinois but giving
effect to federal laws applicable to national banks. However, if any provision
hereof is or becomes invalid or unenforceable under any law of mandatory
application, it is the intent of each of the Guarantors, the Lenders and Agent
that such provision shall be deemed severed and omitted herefrom, the remaining
portions hereof to remain in full force and effect as written. This Guaranty
Agreement sets forth the entire agreement of the parties in regard to the
subject matter hereof, and no representations, warranties or agreements of any
kind have been made by the Lenders or Agent except as specifically set forth
herein and in the Credit Agreement. No amendment hereto shall be effective
against the Lenders and Agent unless in writing, agreed to by all Lenders and
signed by all Lenders. No express or implied waiver by the Lenders or Agent of
any default or the exercise of any right or remedy hereunder shall in any way
be, or be deemed to be, a waiver of any future or subsequent default, right or
remedy, whether similar in kind or otherwise. Any provision hereof which becomes
unenforceable by reason of the commencement of a case under the Bankruptcy Code
shall again be valid and enforceable at the termination of that case. The rights
and remedies provided herein for the Lenders and Agent for the benefit of the
Lenders are cumulative and may be exercised singly or concurrently with, and are
not exclusive of, any rights or remedies provided at law or in equity.
 
16.    Jurisdiction; Service. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE
LENDERS AND AGENT TO EXTEND CREDIT GIVING RISE TO THE GUARANTEED OBLIGATIONS,
EACH OF THE GUARANTORS HAS AGREED THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT
OF OR ARISING FROM OR OUT OF THIS GUARANTY, ITS VALIDITY OR PERFORMANCE, AT THE
SOLE OPTION OF THE LENDERS OR AGENT, THEIR RESPECTIVE SUCCESSORS OR ASSIGNS,
SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND
ASSIGNS AT CHICAGO, ILLINOIS. EACH OF THE LENDERS, AGENT AND EACH OF THE
GUARANTORS CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS
PERSON BY ANY COURT SITUATED AT CHICAGO, ILLINOIS, AND HAVING JURISDICTION OVER
THE SUBJECT MATTER.
 
17.    Notices. Any notice required or permitted to be given to or by any of the
Guarantors hereunder shall be deemed to have been given (a) to such Guarantor by
the Agent, when addressed to Borrower (whether or not specifically identifying
such Guarantor), and (b) to any Lender and Agent when given by Borrower (and
specifically identifying such Guarantor), and in each instance delivered in
compliance with the Credit Agreement.
 
18.    Waiver of Jury Trial. THE LENDERS, AGENT AND EACH OF THE GUARANTORS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS GUARANTY
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS GUARANTY AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NONE OF THE
LENDERS, AGENT OR ANY OF THE GUARANTORS SHALL SEEK TO CONSOLIDATE, BY
COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY ANY OF THE LENDERS, AGENT OR ANY OF THE GUARANTORS EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
 
19.    Effectiveness. This Guaranty is intended to be made and to be effective
at and only when delivered and accepted at Chicago, Illinois and shall become
effective only upon such delivery and upon acceptance by the Agent at such time
and place. Each of the Guarantors hereby waives notice of such acceptance.
 
20.    Counterparts. This Guaranty may be executed by one or more of the parties
on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
 
21.    Supplemental Guaranties. Pursuant to Subsections 6.14 and 6.15 of the
Credit Agreement, additional Subsidiaries or M/I Ancillary Businesses shall
become obligated as Guarantors hereunder (each as fully as though an original
signatory hereto) by executing and delivering to the Agent a supplemental
guaranty in the form of Exhibit A attached hereto (with blanks appropriately
filled in) (each, a “Supplemental Guaranty”), together with such additional
supporting documentation required pursuant to the Credit Agreement.
 

        

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the Guarantors has caused these presents to be
executed by its duly authorized representative as of the day and year first
above written.
 

GUARANTORS:

M/I FINANCIAL CORP., an Ohio corporation

By:    
Name:    Phillip G. Creek
Title:    Chief Financial Officer and Treasurer

M/I HOMES CONSTRUCTION, INC.,
an Arizona corporation

By:    
Name:    Phillip G. Creek
Title:    Treasurer and Assistant Secretary

NORTHEAST OFFICE VENTURE,
LIMITED LIABILITY COMPANY, a
Delaware limited liability company, by M/I
Homes, Inc., its sole member

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES SERVICE CORP., an Ohio corporation

By:    
Name:    Phillip G. Creek
Title:    Treasurer

        

--------------------------------------------------------------------------------

 

MHO, LLC, a Florida limited liability company

By:    
Name:    J. Thomas Mason
Title:    President and Assistant Secretary

MHO HOLDINGS, LLC, a Florida limited liability
company
By:    
Name:    J. Thomas Mason
Title:    Senior Vice President, General Counsel and Secretary

M/I PROPERTIES LLC, an Ohio limited liability company, by M/I Homes, Inc., its
sole member

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF FLORIDA, LLC, a Florida limited liability company, by M/I Homes,
Inc., its sole member

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF ORLANDO, LLC, a Florida limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

        

--------------------------------------------------------------------------------

 

M/I HOMES OF TAMPA, LLC, a Florida limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF WEST PALM BEACH, LLC, a Florida limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

K-TAMPA, LLC, a Florida limited liability company, by M/I Homes of Tampa, LLC,
its manager

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF DC, LLC, a Delaware limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF CHARLOTTE, LLC, a Delaware limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF RALEIGH, LLC, a Delaware limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

        

--------------------------------------------------------------------------------

 

THE FIELDS AT PERRY HALL, L.L.C., a Maryland limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

WILSON FARM, L.L.C., a Maryland limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF CENTRAL OHIO, LLC, an Ohio limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

M/I HOMES OF CINCINNATI, LLC, an Ohio limited liability company

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

        

--------------------------------------------------------------------------------

 

M/I HOMES OF INDIANA, L.P., an Indiana limited partnership, by M/I Homes First
Indiana LLC, its sole general partner

By:    
Name:    Phillip G. Creek
Title:    Chief Financial Officer and
Assistant Secretary

M/I HOMES FIRST INDIANA LLC, an Indiana limited liability company

By:    
Name:    Phillip G. Creek
Title:    Chief Financial Officer and
Assistant Secretary

M/I HOMES SECOND INDIANA LLC,
an Indiana limited liability company, by M/I Homes, Inc., its sole member

By:    
Name:    Phillip G. Creek
Title:    Senior Vice President, Chief Financial
Officer and Treasurer

 

     

--------------------------------------------------------------------------------

 
EXHIBIT A TO GUARANTY
 
 

 
 
SUPPLEMENTAL GUARANTY
 
___________, 200_
Bank One, NA, as Agent
 
for the Lenders under the Credit Agreement
 
Ladies and Gentlemen:
 
Reference is hereby made to (i) that certain Credit Agreement, dated as of
September 27, 2004, among M/I Homes, Inc., the Lenders from time to time party
thereto, and Bank One, NA, as agent (“Agent”) for the Lenders (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) and (ii) that certain Guaranty Agreement, dated as of September 27,
2004 executed and delivered by the Guarantors parties thereto in favor of Agent,
for the benefit of the Lenders (as amended, restated, supplemented or otherwise
modified from time to time, the “Guaranty”). Terms not defined herein which are
defined in the Credit Agreement shall have for the purposes hereof the
respective meanings provided therein.
 
In accordance with subsection [6.14/6.15] of the Credit Agreement and Section 21
of the Guaranty, the undersigned, __________________, a corporation [limited
partnership/limited liability company] organized under the laws of
_________________, hereby agrees to be a “Guarantor” for all purposes of the
Credit Agreement and the Guaranty, respectively, effective from the date hereof.
 
Without limiting the generality of the foregoing, the undersigned hereby agrees
to perform all the obligations of a Guarantor under, and to be bound in all
respects by the terms of, the Guaranty, to the same extent and with the same
force and effect as if the undersigned were a direct signatory thereto.
 
This Supplemental Guaranty shall be governed by, in construed and interpreted in
accordance with the internal laws (including §735 ILCS 105/5-1 at et seq., but
otherwise without regard to principles of conflict of law) of the State of
Illinois but giving effect to federal laws applicable to national banks.
 
IN WITNESS WHEREOF, this Supplemental Guaranty has been duly executed by the
undersigned as of the date set forth above.
 
[GUARANTOR]
 
By:    __________________________________
 
Name:
 
Title:
 

 

     

--------------------------------------------------------------------------------

EXHIBIT C

NOTE

$«1»
 
Chicago, Illinois
 
_______________, 2004
 

FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to the order of
«2» (“Lender”), at the office of Bank One, NA, as Agent (“Agent”) for Lender, at
Bank One Plaza, Chicago, Illinois 60670, or at such other place as the holder
hereof may, from time to time, in writing designate, the principal sum of «3»
Dollars ($«1»), or so much thereof as may be disbursed to, or for the benefit
of, the undersigned and remain unpaid, together with interest and payable at
such interest rates and for such periods and in such manner, time(s) and
place(s) as are specified in the Credit Agreement hereinafter defined.
 
This note (“Note”) is the Note to Lender identified in the Credit Agreement
dated as of September 27, 2004 (such agreement, together with any amendments,
supplements or other modifications thereto from time to time, collectively, the
“Credit Agreement”), between Borrower, Lender, the other Lenders party thereto,
and Agent, as agent for the Lenders, as the same may hereafter be amended,
modified, or supplemented from time to time, and said Credit Agreement is hereby
incorporated into this Note and made a part hereof. Capitalized terms used but
not defined herein shall have the meanings set forth in the Credit Agreement.
 
Interest and principal shall be calculated and be payable as set forth in the
Credit Agreement, and:
 
Lender’s records of the principal, accrued interest and other charges due
hereunder, as well as applicable interest rates and periods are, absent manifest
error, conclusive as to and binding upon all Persons.
 
The entire unpaid principal balance evidenced by this Note plus any accrued but
unpaid interest thereon and any other indebtedness with respect to Loans owing
by Borrower to Lender under the Credit Agreement shall be paid in full on or
before September 26, 2008, unless such maturity date is extended beyond
September 26, 2008, pursuant to subsection 2.7 of the Credit Agreement; in which
case the maturity date shall be the date to which maturity of the Obligations is
extended pursuant to subsection 2.7 of the Credit Agreement.
 
The indebtedness evidenced hereby may be prepaid in whole or in part without
penalty subject to the terms of the Credit Agreement. All payments (including
prepayments) received by Agent for the account of Lender (a) shall be applied to
the payment of all costs and expenses incurred by Lender in accordance with the
Credit Agreement, (b) shall, with respect to scheduled payments, be applied,
first, to accrued interest, and second, to principal; (c) shall, with respect to
prepayment, be applied to principal; (d) shall be in lawful money of the United
States; and (e) shall be credited as of the time received by Agent for the
account of Lender in cash or equivalent or when finally collected. Pursuant to
the terms of the Credit Agreement, repayments of principal shall be eligible for
reborrowing by Borrower. Lender shall not be obligated to extend any credit
after the expiration of the term of this Note or the occurrence of a Default or
an Event of Default. Any part of the indebtedness evidenced by this Note
outstanding at September __, 2008, shall be repaid on that date, unless all
Lenders, in their sole discretion, elect to extend the Maturity Date of this
Note pursuant to subsection 2.7(b) of the Credit Agreement.
 
Upon occurrence of an Event of Default, the whole or any part of the unpaid
indebtedness evidenced hereby shall, at once or at any time thereafter, at the
option of the holder or holders hereof, become due and payable without notice or
demand therefor, the same being expressly waived. A failure of the holder
thereof to insist upon strict compliance with the terms hereof or to assert any
right hereunder shall not be a waiver of any default and shall not be deemed to
constitute a modification of the terms hereof or to establish any claim or
defense.
 
No delay or omission on the part of the holder in exercising any right hereunder
shall operate as a waiver of such right or of any other right under this Note. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
such right and/or remedy on any future occasion.
 
All persons now or hereafter liable, primarily or secondarily, for the payment
of the indebtedness evidenced hereby or any part thereof, do hereby expressly
waive presentment for payment, notice of dishonor, protest and notice of
protest, and agree that the time for payment or payments of any part of the
indebtedness evidenced hereby may be extended without releasing or otherwise
affecting their liability hereon.
 
Borrower agrees that this Note shall be governed by, and construed and
interpreted in accordance with the internal laws (including §735ILCS 105/5-1 et
seq., but otherwise without regard to principles of conflict of law) of the
State of Illinois but giving effect to federal laws applicable to national
banks. However, if any provision hereof is or becomes invalid or unenforceable
under any law of mandatory application, it is the intent of Borrower, Lender and
all parties primarily or secondarily liable hereunder, that such provision will
be deemed severed and omitted herefrom, the remaining portions hereof to remain
in full force and effect as written.
 
To the extent that the terms and provisions of this Note are inconsistent with
the terms and provisions of the Credit Agreement, the terms and provisions of
this Note shall control.
 
As a specifically bargained inducement for Lender to extend credit giving rise
to the indebtedness evidenced hereby, the undersigned and Lender agree that: ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS NOTE,
ITS MAKING, VALIDITY OR PERFORMANCE, AT THE SOLE OPTION OF LENDER OR AGENT FOR
THE BENEFIT OF LENDER OR LEGAL HOLDER HEREOF, SHALL BE PROSECUTED AS TO ALL
PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT CHICAGO, ILLINOIS. THE BORROWER,
LENDER AND AGENT EACH CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION
OVER ITS PERSON BY ANY COURT SITUATED AT CHICAGO, ILLINOIS, AND HAVING
JURISDICTION OVER THE SUBJECT MATTER.
 
BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE
CREDIT AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS NOTE OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF LENDER. BORROWER SHALL NOT
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY LENDER EXCEPT BY A WRITTEN INSTRUMENT
EXECUTED BY IT AND THE HOLDER OF THE NOTE.
 
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as of
the day and year first above written at Chicago, Illinois.
 
M/I HOMES, INC.
 
By:    ___________________________________
 
Name: Phillip G. Creek
 
Title: Senior Vice President, Chief Financial Officer and Treasurer
 

 

 

     

--------------------------------------------------------------------------------

 
EXHIBIT D
 
COMMITMENT AND ACCEPTANCE

 
This Commitment and Acceptance (this “Commitment and Acceptance”) dated as of
____________ , 200_, is entered into among the parties listed on the signature
pages hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement (as defined
below).
 
PRELIMINARY STATEMENTS
 
Reference is made to that certain Credit Agreement dated September 27, 2004 by
and among M/I Homes, Inc., Bank One, NA, as Agent, and the Lenders party thereto
(as amended, modified, supplemented or restated from time to time, the “Credit
Agreement”).
 
Pursuant to subsection 2.6(b) of the Credit Agreement, Borrower has requested an
increase in the Aggregate Commitment from $_______________ to
$__________________. Such increase in the Aggregate Commitment is to become
effective on _______________ __, ____ (the “Increase Date”).*  In connection
with such requested increase in the Aggregate Commitment, Borrower, Agent and
_________________ (“Accepting Lender”) hereby agree as follows:
 
1.    ACCEPTING LENDER’S COMMITMENT. Effective as of the Increase Date,
[Accepting Lender shall become a party to the Credit Agreement as a Lender,
shall have (subject to the provisions of subsection 2.6(b) of the Credit
Agreement) all of the rights and obligations of a Lender thereunder, shall agree
to be bound by the terms and provisions thereof and shall thereupon have a
Commitment under and for purposes of the Credit Agreement in the] [the
Commitment of Accepting Lender under the Credit Agreement shall be increased
from $___________________ to the] amount set forth opposite Accepting Lender’s
name on the signature pages hereof.
 
2.    REPRESENTATIONS AND AGREEMENTS OF ACCEPTING LENDER. [Accepting Lender (a)
represents and warrants that (i) it has full power and authority, and has taken
all action necessary, to execute and deliver this Commitment and Acceptance and
to consummate the transactions contemplated hereby] and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any, specified in
the Credit Agreement that are required to be satisfied by it in order to become
a Lender, (iii) from and after the Increase Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
its Commitment, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to subsection 6.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Commitment and Acceptance on the basis
of which it has made such analysis and decision independently and without
reliance on the Agent or any other Lender, and (v) if it is a Non-U.S. Lender,
attached to this Commitment and Acceptance is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Accepting Lender; and (b) agrees that (i) it will,
independently and without reliance on the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.*
 
*If the Accepting Lender is already a party to the Credit Agreement prior to the
Increase Date, only the bracketed provision needs to be included.
 
3.    REPRESENTATIONS OF BORROWER. Borrower hereby represents and warrants that,
as of the date hereof and as of the Increase Date, (a) no event or condition
shall have occurred and then be continuing which constitutes a Default or Event
of Default and (b) the representations and warranties contained in Section 4 of
the Credit Agreement are true and correct in all material respects (except to
the extent any such representation or warranty is stated to relate solely to an
earlier date).
 
4.    AGENT’S FEE. On or before the Increase Date, Borrower shall pay to Agent
an administrative fee in the amount of $4,000.
 
5.    GOVERNING LAW. This Commitment and Acceptance shall be governed by the
internal laws (including §735ILCS 105/5-1 et seq., but otherwise without regard
to principles of conflict of law) of the State of Illinois but giving effect to
federal laws applicable to national banks.
 

 

 

--------------------------------------------------------------------------------

*    This date is to be agreed upon by Borrower, Agent and Accepting Lender. See
subsection 2.6(b)(ii) of the Credit Agreement.

     

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have executed this Commitment and
Acceptance by their duly authorized officers as of the date first above written.
 
M/I HOMES, INC.
 
By:     
 
Name:     
 
Title:     
 

 
BANK ONE, NA, as Agent
 
By:     
 
Name:     
 
Title:     
 

 
$____________________    [NAME OF ACCEPTING LENDER]

By:     
 
Name:     
 
Title:     
 

 

 

     

--------------------------------------------------------------------------------

EXHIBIT E
 
OPINION OF COUNSEL
 

[Letterhead of M/I Homes, Inc.]

 

September 27, 2004

 
To the Lenders party to the
 
Credit Agreement referred to below and
 
Bank One, NA, as Agent for the Lenders
 
Ladies and Gentlemen:
 
I have acted as counsel to M/I Homes, Inc. (“Borrower”) and the guarantors
listed on Schedule I, attached hereto (each a “Guarantor” and, collectively, the
“Guarantors”). The Guarantors and Borrower are collectively referred to herein
as the “Obligors.” I have been requested by the Obligors to give this opinion in
connection with the Credit Agreement (the “Credit Agreement”) made to be
effective as of September 27, 2004, by and among Borrower, the Lenders party
thereto, and Bank One, NA, as agent for the Lenders (“Agent”). Pursuant to the
Credit Agreement and subject to its terms and conditions, the Lenders have
agreed to make available to Borrower Revolving Credit Loans, and to participate
in Facility L/Cs issued or to be issued by Bank One, NA and other Issuing
Lenders thereunder, and Bank One, NA has agreed to make available to Borrower
Swingline Loans in a maximum principal amount not to exceed $20,000,000, which
Revolving Credit Loans, Facility L/C Obligations and Swingline Loans shall be in
an aggregate maximum principal amount at any time outstanding not to exceed
$500,000,000, subject to increase of such maximum principal amount up to
$750,000,000 in accordance with the provisions of the Credit Agreement (the
“Transaction”). Terms defined in the Credit Agreement are used herein as defined
therein. The Transaction is evidenced by the following documents:
 
1. the Credit Agreement;
 
2. the Notes; and
 
3. the Guaranty Agreement.
 
The documents listed in subparagraphs (1) through (3) above shall be
collectively referred to herein as the “Transaction Documents.”
 
In this connection, I have examined such records, certificates, corporate or
other proceedings and other documents as I have considered necessary or
appropriate for the purposes of rendering this opinion, including an executed
counterpart of each of the Transaction Documents and the certificates of good
standing for each of the Obligors as such certificates are more particularly
described on Schedule II attached hereto (each a “Good Standing Certificate” and
collectively, the “Good Standing Certificates”).
 
Please be advised that I have not assumed any responsibility for making any
independent investigation or verification of any factual matters stated in or
represented by any of the foregoing documents or any other factual matters.
 
Please be advised that, when used in this letter, the phrases “knowledge” and
“to the best of my knowledge” and phrases having equivalent wording relate only
to my conscious awareness of information. Whenever I assert knowledge in stating
facts or expressing an opinion which involves a question of fact, my knowledge
is based solely on the inquiry and review described herein.
 
I have assumed (i) the genuineness of all signatures on documents reviewed by me
(other than those of the Obligors); (ii) the authenticity of all documents
submitted to me as originals and the conformity to authentic originals of all
documents submitted to me as certified, conformed or photocopies, and that none
of such documents has been amended, altered, revoked or otherwise modified; and
(iii) that the laws of any jurisdiction other than the State of Ohio (except for
the federal laws of the United States of America) which may govern any one or
more of the Transaction Documents are not inconsistent with the laws of Ohio in
any matter material to this opinion.
 
Based on such review and upon such further investigation as I have deemed
necessary and such other considerations of law and fact as I believe to be
relevant, I am of the opinion, as of the date hereof or as of the date of any
certificate stated to have been relied on by me, that:
 
1.    Each of the Obligors is duly organized or formed, and, as appropriate,
validly existing and, based solely on the Good Standing Certificates, in good
standing in the jurisdiction of its incorporation or formation.
 
2.    Each of the Obligors has all necessary corporate, limited liability
company, or limited partnership power and authority to execute, deliver and
perform the obligations to be performed by it under the Transaction Documents to
which it is a party, to carry on its business as now conducted and as presently
proposed to be conducted and to own, lease and operate its property.
 
3.    The execution and delivery of, and due performance of its obligations
under, the Transaction Documents to which it is a party have been duly
authorized by all necessary corporate, limited liability company, or limited
partnership action by each of the Obligors.
 
4.    The Transaction Documents have been duly and validly executed and
delivered by each Obligor party thereto.
 
5.    Each of the Transaction Documents constitutes the legal, valid and binding
obligation of each Obligor party thereto in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other similar laws relating to or affecting the rights
of creditors generally and except as the enforceability of the Transaction
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing. In addition, I express
no opinion with respect to the enforceability of provisions for the award of
attorneys’ fees to an opposing party. I call your attention to the provisions of
§1301.21 of the Ohio Revised Code, which became effective on May 1, 2000. This
statute provides that a commitment to pay attorneys’ fees in a “contract of
indebtedness” is enforceable under certain circumstances. This statute purports
to change over a century of the Supreme Court of Ohio’s precedent and public
policy of the State of Ohio. To date, this statute has not been interpreted in a
reported case. However, I feel that it is more likely than not that the statute
will be upheld.
 
6.    The execution, delivery and compliance by each of the Obligors with the
terms of the Transaction Documents will not conflict with, or result in a breach
of the provisions of, or constitute a default under, the provisions of their
respective constituent documents or any material agreement to which any of the
Obligors is a party, and will not contravene any provision of existing law or
regulation applicable to such Obligor.
 
7.    All licenses, permits, authorizations, consents or approvals or orders of,
or registrations or filings with, any court or governmental or public agency,
authority or body, if any, required of any Obligor or any of its Subsidiaries in
order to enter into and carry out such Obligor’s obligations under the
Transaction Documents have been obtained by such Obligor as of the date hereof
and remain in full force and effect.
 
8.    None of the Obligors is an “investment company” or a company “controlled”
by an “investment company”, as such terms are defined in the Investment Company
Act of 1940, as amended.
 
I hereby confirm to you, that, to the best of my knowledge, there are no actions
or proceedings against the Obligors pending or overtly threatened in writing
before any court, governmental agency or arbitrator which may, individually or
in the aggregate, materially and adversely affect (a) the business, operations,
property or financial or other condition of such Obligor, or (b) the ability of
such Obligor to perform its obligations under the Transaction Documents to which
it is a party, or (c) the enforceability of the Transaction Documents.
 
This opinion constitutes my professional opinion as to certain legal
consequences of, and the applicability of certain laws to, the various
documents, instruments and other matters specifically referred to herein. It is
not, however, a guaranty and should not be construed as such. I am qualified to
practice law in the State of and do not purport to express any opinion herein
concerning any law other than the law of the State of Ohio and the federal laws
of the United States of America as of the date of this letter.
 
This opinion is limited to, and no opinion is implied or may be inferred beyond,
the matters expressly stated herein. This letter is intended for the benefit of
the Lenders (including any entity that becomes a “Lender” after the date
hereof), the Agent and any Participant as defined in subsection 11.4 of the
Credit Agreement. No other person or entity is entitled to rely upon anything
contained herein, and no reproduction or further distribution of, and no
reference to or reliance upon this opinion may be made, without my prior written
consent, to or for any person or entity other than the parties to whom it is
addressed. This opinion is rendered as of the date hereof, and I undertake no,
and hereby disclaim any, obligation to advise you of any changes in, or new
developments that might affect, any matters or opinions set forth herein.
 
Respectfully submitted,
 
______________________________________
 
J. Thomas Mason, Senior Vice President and General Counsel of M/I Homes, Inc.
 

        

--------------------------------------------------------------------------------

 

 
SCHEDULE I (Guarantors)
 

1.   M/I FINANCIAL CORP., an Ohio corporation

2.   M/I HOMES CONSTRUCTION, INC., an Arizona corporation

3.   NORTHEAST OFFICE VENTURE, LIMITED LIABILITY COMPANY, a Delaware limited
liability company

4.   M/I HOMES SERVICE CORP., an Ohio corporation

5.   MHO, LLC, a Florida limited liability company

6.   MHO HOLDINGS, LLC, a Florida limited liability company

7.   M/I PROPERTIES LLC, an Ohio limited liability company

8.   M/I HOMES OF FLORIDA, LLC, a Florida limited liability company

9.   M/I HOMES OF ORLANDO, LLC, a Florida limited liability company

10.   M/I HOMES OF TAMPA, LLC, a Florida limited liability company

11.   M/I HOMES OF WEST PALM BEACH, LLC, a Florida limited liability company

12.   K-TAMPA, LLC, a Florida limited liability company

13.   M/I HOMES OF DC, LLC, a Delaware limited liability company

14.   M/I HOMES OF CHARLOTTE, LLC, a Delaware limited liability company

15.   M/I HOMES OF RALEIGH, LLC, a Delaware limited liability company

16.   THE FIELDS AT PERRY HALL, L.L.C., a Maryland limited liability company

17.   WILSON FARM, L.L.C., a Maryland limited liability company

18.   M/I HOMES OF CENTRAL OHIO, LLC, an Ohio limited liability company

19.   M/I HOMES OF CINCINNATI, LLC, an Ohio limited liability company

20.   M/I HOMES OF INDIANA, L.P., an Indiana limited partnership

21.   M/I HOMES FIRST INDIANA LLC, an Indiana limited liability company

22.   M/I HOMES SECOND INDIANA LLC, an Indiana limited liability company

        

--------------------------------------------------------------------------------

 

 
SCHEDULE II
 
 
Good Standing Certificates
 

 
Obligor
State of Incorporation or Organization
 
Certificate Date
M/I HOMES, INC.
Ohio
 
M/I FINANCIAL CORP.
Ohio
 
M/I HOMES CONSTRUCTION, INC.
Arizona
 
NORTHEAST OFFICE VENTURE, LIMITED LIABILITY COMPANY
Delaware
 
M/I HOMES SERVICE CORP.
Ohio
 
MHO, LLC
Florida
 
MHO HOLDINGS, LLC
Florida
 
M/I PROPERTIES LLC
Ohio
 
M/I HOMES OF FLORIDA, LLC
Florida
 
M/I HOMES OF ORLANDO, LLC
Florida
 
M/I HOMES OF TAMPA, LLC
Florida
 
M/I HOMES OF WEST PALM BEACH, LLC
Florida
 
K-TAMPA, LLC
Florida
 
M/I HOMES OF DC, LLC
Delaware
 
M/I HOMES OF CHARLOTTE, LLC
Delaware
 
M/I HOMES OF RALEIGH, LLC
Delaware
 
THE FIELDS AT PERRY HALL
Maryland
 
WILSON FARM, L.L.C.
Maryland
 
M/I HOMES OF CENTRAL OHIO, LLC
Ohio
 
M/I HOMES OF CINCINNATI, LLC
Ohio
 
M/I HOMES OF INDIANA, L.P.
Indiana
 
M/I HOMES FIRST INDIANA LLC
Indiana
 
M/I HOMES SECOND INDIANA LLC
Indiana
 

 

 

 

 

     

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EXHIBIT F

[LETTERHEAD OF M/I HOMES, INC.]

[DATE]
To:    Agent and each Lender
 
Ladies and Gentlemen:
 
This letter is being sent to you to comply with subsection 6.2 of the Credit
Agreement effective as of September 27, 2004 (the “Credit Agreement”) and is
being delivered to you for the period of [insert yearly or quarterly period as
appropriate] for which period the undersigned has heretofore delivered, or is
herewith delivering, the financial statements provided for in subsection 6.1 of
the Credit Agreement (the “Financial Statements”). [The undersigned hereby
certifies that such Financial Statements are true and accurate in all material
respects, subject to normal year-end audit adjustments (Note: only required with
delivery of unaudited Financial Statements)]. Capitalized terms used but not
defined herein have the meanings given to such terms in the Credit Agreement.
 
The undersigned certifies that, after due examination by the undersigned and to
the best of the knowledge of the undersigned, M/I Homes, Inc. and each of its
Subsidiaries during the period stated above has observed or performed in all
material respects all of its covenants and other agreements, and satisfied every
condition, contained in the Credit Agreement, the Notes and the Guaranty
Agreement to be observed, performed or satisfied by it, and that the undersigned
has no knowledge of any Default or Event of Default except [list any Defaults or
Events of Default; if none, end sentence before “except”].
 
Additionally, I have enclosed a statement showing in detail the calculation of
ratios and other covenants, in accordance with corresponding subsections of the
Credit Agreement, as required by the Credit Agreement.
 
Yours very truly,
 

 

 
By:    ____________________________________
 
Printed Name:    ______________________________
 
Title:    ____________________________________
 
Enclosure
 

 

     

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CONFIDENTIAL
 
 

 
 
STATEMENT OF CALCULATION OF CERTAIN COVENANTS
 
[Date]
Subsection No.
Covenant
1.    6.11 - page __
 
Maintain Consolidated Tangible Net Worth of: (i) $351,500,00 plus (ii) fifty
percent (50%) of the Consolidated Earnings for each quarter after June 30, 2004
(excluding any quarter in which Consolidated Earnings are less than zero (0))
plus (iii) fifty percent (50%) of the net proceeds or other consideration
received by Borrower for any capital stock issued or sold after June 30, 2004
 
 
(i) above:
 
$351,500,000
 
 
Plus (ii) above:
 
$__________
 
 
Plus (iii) above:
 
$__________
 
 
Minimum Required
 
   
Consolidated Tangible
 
  Net Worth:
 
$__________
 
 
Consolidated Tangible Net Worth =
 
$__________
 
2.    6.12 - page __
 
Maintain a ratio of (1) Consolidated Indebtedness to (2) Consolidated Tangible
Net Worth not in excess of (a) 2.25 to 1.00 at all times that Borrower maintains
an Interest Coverage Ratio equal to or exceeding 2.50 to 1.00 and (b) 2.00 to
1.00 at all other times.
 
 
(1) Consolidated Indebtedness:
 
$__________
 
 
(2) Consolidated Tangible Net Worth:
 
$__________
 
 
Ratio of (1) to (2) = ________ to 1.00
 
 
3.    6.13 - page __
 
Maintain an Interest Coverage Ratio of not less than 2.00 to 1.00
 
 
EBIDTA:
 
$__________
 
 
Consolidated Interest Incurred:
 
$__________
 
 
Interest Coverage Ratio = _______ to 1.00
 
4.    7.1 - page __
 
Secured Indebtedness not to exceed $50,000,000
 
 
Secured Indebtedness =
 
$_________
 
5.    7.5 - page __
 
Adjusted Land Value not to exceed the sum of (a) Consolidated Tangible Net Worth
plus (b) 50% of Subordinated Indebtedness
 
 
Adjusted Land Value
 
   
(i) book value of all Land:
 
less (ii) the sum of
 
$_________
 
       
(a) book value of Lots under Contract:
 
and (b) lesser of (i) the product of (x) number
 
of Housing Units contracted for during the last
 
six months:
 
$_________
 
 
 
 
 
$_________
 
 
and (y) average book value of all Finished Lots and Lots under Contract:
 
$_________
 
 
(ii) 25% of Consolidated Tangible Net Worth:
 
$_________
 
 
Adjusted Land Value =
 
$_________
 
 
(a) Consolidated Tangible Net Worth:
 
$_________
 
 
Plus (b) 50% of Subordinated Indebtedness:
 
$_________
 
 
Total [(a) + (b)] =
 
$_________
 
6.    7.6(b) - page __
 
Limit on extension of credit in connection with the sale of land of 2.5% of
Consolidated Tangible Net Worth
 
$_________
 
 
2.5% of Consolidated Tangible Net Worth:
 
$_________
 
 
Aggregate amount of extensions of credit in connection with the sale of land:
 
$_________
 
 
Maximum maturity of any such extensions of credit not to exceed five years:
 
___________________
 
 

     

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7.    7.6(e) - page __
 
Limit on Investments in Joint Ventures of fifteen percent (15%) of Consolidated
Tangible Net Worth, provided that Borrower has no less than a 20% interest in
each such joint venture and that management and control decisions for each such
joint venture require Borrower’s consent and approval.
 
 
15% of Consolidated Tangible Net Worth:
 
$_________
 
 
Investments in Joint Ventures:
 
$_________
 
 
Lowest percentage interest of Borrower in a joint venture:
 
________________________%
 
8.    7.13 -- page __
 
The number of Speculative Housing Units, as at the end of any fiscal quarter,
not to exceed the greater of (a) the number of Housing Unit Closings occurring
during the period of twelve (12) months ending on the last day of such fiscal
quarter, multiplied by twenty-five percent (25%) or (b) the number of Housing
Unit closings occurring during the period of six (6) months ending on the last
day of such fiscal quarter, multiplied by fifty percent (50%).
 
   
Speculative Housing Units:
 
   
(a) Housing Unit Closings in last 12
 
months: _________ x 25% =
 
   
(b) Housing Unit Closings in last 6 months: _________ x 50% =
 
 

 

 

 

     

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EXHIBIT G

CERTIFICATE CONCERNING PROJECTIONS
[Date]
TO:    Agent and each Lender
 
The undersigned certifies to Agent and each Lender, the following:
 
The attached financial projections of M/I Homes, Inc. (the “Company”) present,
to the best knowledge and belief of the undersigned, the Company’s expected
results for the projected periods. The projections reflect the Company’s
management’s judgment as of the date of the projections of the expected
conditions and expected course of action. The projections state all of the
principal assumptions on which the projections are predicated, and the
projections, in fact, have been made on the basis of the stated principal
assumptions.
 
The undersigned makes no representation that the Company’s actual results will
conform to the projections.
 
This certificate is provided pursuant to subsection 6.2(b) of the Credit
Agreement effective as of September 27, 2004 among the Company as borrower and
the Lenders and Agent defined therein.
 
______________________________________
 
[Chief Financial Officer or
 
Controller] of M/I Homes, Inc.
 

 
Date:_____________________________________
 
Attachment (Projections)
 

 

     

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EXHIBIT H
 

 
 
ASSIGNMENT AND ASSUMPTION AGREEMENT
 
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor (including any letters of credit, guarantees, and
swingline loans included therein) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

1.    Assignor:        ______________________________

2.    Assignee:        ______________________________
[and is an Affiliate of [identify Lender]1 ]

3.    Borrower(s):        ______________________________

4.    Agent:    ______________________, as the agent under the Credit Agreement

5.    Credit Agreement:    [The [amount] Credit Agreement dated as of _______
among [name of Borrower(s)], the Lenders parties thereto, [name of Agent], as
Agent, and the other agents parties thereto]

6.     Assigned Interest:
------------------------
Aggregate Amount of Commitment/Loans for all Lenders
Amount of Commitment/Loans Assigned
Percentage Assigned of Commitment/Loans2 
$
$
%
$
$
%
$
$
%

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:______________________________
Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:______________________________
Title:

 
2

     

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[Consented to and]3  Accepted:

[NAME OF AGENT], as Agent

By_________________________________
Title:

[Consented to:]4  

[NAME OF RELEVANT PARTY]

By________________________________
Title:

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1 Select as applicable.
2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
3 To be added only if the consent of the Agent is required by the terms of the
Credit Agreement.
4 To be added only if the consent of the Borrower and/or other parties is
required by the terms of the Credit Agreement.

     

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ANNEX 1

[__________________]5 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to subsection 6.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Agent or any other
Lender, and (v) if it is a Non-U.S. Lender, attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the Agent,
the Assignor or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Documents, and (ii) it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Illinois.

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5 Describe Credit Agreement at option of Agent.
2

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