EXHIBIT 10.7
FIRST AMENDMENT TO CREDIT AGREEMENT
 
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) made as of the 2nd
day of June, 2003, by and among M/I SCHOTTENSTEIN HOMES, INC., an Ohio
corporation (“Borrower”), FLEET NATIONAL BANK (“Fleet”), DEUTSCHE BANK TRUST
COMPANY AMERICAS (f/k/a Bankers Trust Company) (“DBT”; Fleet and DBT are
hereinafter referred to collectively as the “Lenders”), FLEET NATIONAL BANK, as
Agent (the “Agent”) and each of the other entities that are parties to this
Amendment as “Guarantors”.
 
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Fleet entered into that certain Credit Agreement,
dated September 28, 2001 (the “Credit Agreement”), certain terms of which do not
become effective until August 29, 2004 as set forth therein; and
 
WHEREAS, in connection with the Credit Agreement, the Guarantors executed and
delivered that Guaranty Agreement dated September 28, 2001, certain terms of
which do not become effective until August 29, 2004 as set forth therein, in
favor of Agent and the Lenders, as effected by that certain Joinder Agreement
dated as of June 21, 2002 and that certain Joinder Agreement dated as of January
2, 2003 (collectively, the “Guaranty”); and
 
WHEREAS, Borrower has requested that the Lenders modify the Credit Agreement in
certain respects; and
 
WHEREAS, the Agent, the Guarantors and the Lenders have agreed to such
modification to the Credit Agreement subject to the execution and delivery by
Borrower of this Amendment.
 
NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100 DOLLARS
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby covenant and agree
as follows:
 1.  Definitions. All the terms used herein which are not otherwise defined
     herein shall have the meanings set forth in the Credit Agreement.
 2.  Modification of the Credit Agreement. Borrower, the Lenders and Agent do
     hereby modify and amend the Credit Agreement as follows:
     1. By deleting the figure "$2,500,000.00" appearing in the last line of the
        definition of "Developed Lots" appearing in §1.1 of the Credit
        Agreement, appearing on page 5 thereof, and inserting in lieu thereof
        the figure "$5,000,000.00";
     2. By deleting in its entirety the definition of “Guarantors” appearing in
        §1.1 of the Credit Agreement, appearing on page 8 thereof, and inserting
        in lieu thereof the following definition of “Guarantors”:
        
               
        
        --------------------------------------------------------------------------------
        
         
     “Guarantors. Collectively, (i) each of the entities initially a party to
     the Guaranty, (ii) each of the entities initially a party to that certain
     Joinder Agreement dated as of June 21, 2002, (iii) each of the entities
     initially a party to that certain Joinder Agreement dated as of January 2,
     2003, and (iv) and each other Person as shall become a party to the
     Guaranty as provided in this Agreement, and individually any one of them.”
      
     (c) By deleting in its entirety the definition of “Guaranty” appearing in
     §1.1 of the Credit Agreement, appearing on page 8 thereof, and inserting in
     lieu thereof the following definition of “Guaranty”:
      
     “Guaranty. The Guaranty Agreement dated of even date herewith, but
     effective as provided therein, made by the Guarantors in favor of Agent and
     the Lenders, as effected by that certain Joinder Agreement dated as of June
     21, 2002 and that certain Joinder Agreement dated as of January 2, 2003,
     and as each of the same may be modified or amended, such Guaranty to be in
     form and substance satisfactory to the Agent.”
      
     (d)  By deleting the figure "$150,000,000.00" appearing in the last line of
     §6.12 of the Credit Agreement, appearing on page 35 thereof, and inserting
     in lieu thereof the figure "$200,000,000.00"; and
     (e)  By deleting in its entirety §7.6 of the Credit Agreement, appearing on
     page 39 thereof, and inserting in lieu thereof the following §7.6:
      
     “Restriction on Distributions. The Borrower shall not make any
     Distributions; provided that on and after April 1, 2003 and so long as no
     Default or Event of Default has occurred, the Borrower may make
     Distributions in an amount that, when added to the amount of all other
     Distributions paid on or after June 30, 1997, does not exceed the sum of
     (a) $82,500,000.00 plus (b) twenty-five percent (25%) of the cumulative
     Consolidated Earnings of the Borrower for the periods (i) starting on June
     30, 1997 through and including March 31, 2003, and (ii) subsequent to
     December 31, 2003. Notwithstanding the foregoing, the purchase by Borrower
     of 702,439 shares of stock from the Family of Melvin Schottenstein on July
     31, 1997 shall not be considered for the purposes of the foregoing limits.”
      
 3.  References to Credit Agreement. All references in the Loan Documents to the
     Credit Agreement shall be deemed a reference to the Credit Agreement, as
     modified and amended herein.
 4.  Consent of Borrower and Guarantors. By execution of this Amendment,
     Guarantors hereby expressly consent to the modification and amendment to
     the Credit Agreement as set forth herein, and Borrower and Guarantors
     hereby acknowledge, represent and agree that the Loan Documents (including,
     without limitation, the Guaranty) remain in full force and effect and
     constitute the valid and legally binding obligations of Borrower and
     Guarantors enforceable against such Persons in accordance with their
     respective terms, and that the execution and delivery of this Amendment and
     any other modification documents do not constitute, and shall not be deemed
     to constitute, a release, waiver or satisfaction of Borrower’s or
     Guarantors’ obligations under the Loan Documents (including without
     limitation the Guaranty).
     
          2  
     
     --------------------------------------------------------------------------------
     
      
     
      
 5.  Representations. Borrower and Guarantors represent and warrant to Agent and
     the Lenders as follows:
      1. Authorization. The execution, delivery and performance of this
         Amendment and the transactions contemplated hereby (i) are within the
         authority of Borrower and Guarantors, (ii) have been duly authorized by
         all necessary proceedings on the part of such Persons, (iii) do not and
         will not conflict with or result in any breach or contravention of any
         provision of law, statute, rule or regulation to which any of such
         Persons is subject or any judgment, order, writ, injunction, license or
         permit applicable to such Persons, (iv) do not and will not conflict
         with or constitute a default (whether with the passage of time or the
         giving of notice, or both) under any provision of the partnership
         agreement or certificate, certificate of formation, operating
         agreement, articles of incorporation or other charter documents or
         bylaws of, or any mortgage, indenture, agreement, contract or other
         instrument binding upon, any of such Persons or any of its properties
         or to which any of such Persons is subject, and (v) do not and will not
         result in or require the imposition of any lien or other encumbrance on
         any of the properties, assets or rights of such Persons. Borrower
         hereby represents and warrants that it has received any and all
         consents to enter into this Amendment that are required pursuant the
         Senior Credit Agreement, including but not limited to Subsection 7.13
         thereof.
      2. Enforceability. The execution and delivery of this Amendment is the
         valid and legally binding obligations of Borrower and Guarantors
         enforceable in accordance with the terms and provisions hereof, except
         as enforceability is limited by bankruptcy, insolvency, reorganization,
         moratorium or other laws relating to or affecting generally the
         enforcement of creditors’ rights and except to the extent that
         availability of the remedy of specific performance or injunctive relief
         is subject to the discretion of the court before which any proceeding
         therefor may be brought.
      3. Approvals. The execution, delivery and performance of this Amendment
         and the transactions contemplated hereby do not require the approval or
         consent of any Person or the authorization, consent, approval of or any
         license or permit issued by, or any filing or registration with, or the
         giving of any notice to, any court, department, board, commission or
         other governmental agency or authority other than those already
         obtained.

 6.  No Default. By execution hereof, the Borrower and Guarantors certify that
     each such Person is and will be in compliance with all covenants under the
     Loan Documents after the execution and delivery of this Amendment, and that
     no Default or Event of Default has occurred and is continuing.
 7.  Waiver of Claims. Borrower and Guarantors acknowledge, represent and agree
     that none of such Persons has any defenses, setoffs, claims, counterclaims
     or causes of action of any kind or nature whatsoever with respect to the
     Loan Documents, the administration or funding of the Loan or with respect
     to any acts or omissions of Agent or any Lender, or any past or present
     officers, agents or employees of Agent or any Lender, and each of such
     Persons does hereby expressly waive, release and relinquish any and all
     such defenses, setoffs, claims, counterclaims and causes of action, if any.
     
         3   
     
     --------------------------------------------------------------------------------
     
      
     
      
 8.  Ratification. Except as hereinabove set forth, all terms, covenants and
     provisions of the Credit Agreement, the Guaranty and the other Loan
     Documents remain unaltered and in full force and effect, and the parties
     hereto do hereby expressly ratify and confirm the Credit Agreement, as
     modified and amended herein, the Guaranty and the other Loan Documents.
     Nothing in this Amendment shall be deemed or construed to constitute, and
     there has not otherwise occurred, a novation, cancellation, satisfaction,
     release, extinguishment or substitution of the indebtedness evidenced by
     the Notes or the other obligations of Borrower and Guarantors under the
     Loan Documents. Without limiting the forgoing, it is hereby specifically
     acknowledged and agreed that nothing in this Amendment shall be deemed or
     construed to have triggered the effectiveness of the covenants set forth in
     §3.5, §6, §7 of the Credit Agreement and the provisions of §9.1 and §10 of
     the Credit Agreement, and it is hereby specifically acknowledged and agreed
     that such covenants and provisions hereby remain ineffective until August
     29, 2004.
 9.  Amendment as Loan Document. This Amendment shall constitute a Loan
     Document.
 10. Counterparts. This Amendment may be executed in any number of counterparts
     which shall together constitute but one and the same agreement.
 11. Miscellaneous. This Amendment shall be construed and enforced in accordance
     with the laws of the Commonwealth of Massachusetts. This Amendment shall be
     effective upon the execution and delivery of this Amendment by the
     Borrower, the Guarantors, the Agent and Fleet, as the Majority Holders.
     This Amendment shall be binding upon and shall inure to the benefit of the
     parties hereto and their respective permitted successors,
     successors-in-title and assigns as provided in the Credit Agreement and the
     Guaranty.
      
       4   
     
     --------------------------------------------------------------------------------
     
      
     
     IN WITNESS WHEREOF, the parties hereto have hereto set their hands and
     affixed their seals as of the day and year first above written.
     BORROWER:
     M/I SCHOTTENSTEIN HOMES, INC., an Ohio corporation
     
     
     By:                       
     Name:                   
     Title:                  
      
     Attest:                      
     Name:                   
     Title:                   
     
     
     GUARANTORS:
     M/I HOMES OF FLORIDA, LLC, a Florida limited liability company
     By: M/I Schottenstein Homes, Inc., its sole member and manager
      
     By:                       
     Name:                   
     Title:                   
     
     
     M/I HOMES OF ORLANDO, LLC, a Florida limited liability company
      
     By:                       
     Name:                   
     Title:                   
     
     
     MHO HOLDINGS, LLC, a Florida limited liability company
      
     By:                       
     Name:                   
     Title:                   
      
     
         5   
     
     --------------------------------------------------------------------------------
     
      
     
      
     M/I HOMES OF TAMPA, LLC, a Florida limited liability company
      
     By:                       
     Name:                   
     Title:                   
     
     
     M/I HOMES OF WEST PALM BEACH, LLC, a Florida limited liability company
      
     By:                       
     Name:                   
     Title:                   
     
     
     M/I HOMES OF INDIANA, L.P., an Indiana limited partnership
     By: M/I Homes First Indiana, LLC, its sole general partner
      
     By:                       
     Name:                   
     Title:                   
     
     
     M/I HOMES FIRST INDIANA, LLC, an Indiana limited liability company
      
     By:                       
     Name:                   
     Title:                   
      
     
        6  
     
     --------------------------------------------------------------------------------
     
     M/I HOMES SECOND INDIANA, LLC, an Indiana limited liability company
     By: M/I Schottenstein Homes, Inc., its sole member and manager
      
     By:                       
     Name:                   
     Title:                    
     
     
     M/I FINANCIAL CORP., an Ohio corporation
      
     By:                   
         Name:              
         Title:_________________________
     
     
     
     M/I HOMES CONSTRUCTION, INC., an Arizona corporation
      
     By:                   
         Name:              
         Title:_________________________
     
     
     
     NORTHEAST OFFICE VENTURE, LIMITED LIABILITY COMPANY, a Delaware limited
     liability company,
     By: M/I Schottenstein Homes, Inc., its sole member
      
     By:                  
         Name:             
         Title:________________________
     
     
     
     
     
      
       7   
     
     --------------------------------------------------------------------------------
     
     
     
     601RS, LLC, an Ohio limited liability company
     By: M/I Schottenstein Homes, Inc., its sole member
      
     By:                   
         Name:              
         Title:_________________________
     
     
     
     M/I SCHOTTENSTEIN HOMES SERVICE CORP., an Ohio corporation
      
     By:                   
         Name:              
         Title:_________________________
     
     
     
     MHO, LLC, an Arizona limited liability company
     By: M/I Homes, Inc., its sole member
      
     By:                   
         Name:              
         Title:__________________________
     
     
     
     M/I HOMES, INC., an Arizona corporation
      
     By:                  
          Name:             
         Title:________________________
     
     
     
     
     
     
     
      
       8   
     
     --------------------------------------------------------------------------------
     
     
     
     M/I PROPERTIES LLC, an Ohio limited liability company
     By: M/I Schottenstein Homes, Inc., its sole member
      
     By:                         
         Name:                       
          Title:                   
     
     
     
     FLEET/AGENT:
     FLEET NATIONAL BANK, individually and as Agent
     
     
     By:                       
     Name:                   
     Title:               
        
     DEUTSCHE BANK TRUST COMPANY AMERICAS (f/k/a Bankers Trust Company)
     
     
     By:                       
     Name:                   
     Title:                   
      
       9