Exhibit 10.3
 

 
LETTER OF CREDIT AGREEMENT
 
A. THIS LETTER OF CREDIT AGREEMENT ("this Agreement") dated as of July 27, 2009
is entered into by M/I HOMES, INC., an Ohio corporation (“Borrower”), and
REGIONS BANK, an Alabama banking corporation (the "Bank").
 

 
Recitals
 
B. Borrower has asked the Bank to issue, at any time and from time to time,
irrevocable standby letters of credit (the "Letters of Credit") in favor of the
beneficiaries identified by Borrower (the “Beneficiaries”) in a form customarily
used or otherwise approved by the Bank in an aggregate amount not to exceed
$8,750,000 (the “Commitment”).
 
C. The Letters of Credit will be issued by the Bank pursuant to this Agreement,
whereby Borrower will agree, among other things, to reimburse the Bank for all
amounts drawn by the Beneficiaries pursuant to the Letters of Credit.
 

 
Agreement
 
D. NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank to issue the Letters of Credit, Borrower and the Bank hereby covenant,
agree and bind themselves as follows:
 
ARTICLE 1
 

 
Definitions and Other Provisions
 
of General Application
 
SECTION 1.1 Definitions
 
E. Unless otherwise defined herein, terms that are defined in the Syndicated
Credit Agreement and used herein shall have the meanings ascribed to them in the
Syndicated Credit Agreement and the following terms shall have the following
meanings:
 
F. "Bank" shall mean Regions Bank, an Alabama banking corporation, and its
successors and assigns.
 
G. "Beneficiaries" shall have the meaning stated in the Recitals.
 
H. “Borrower" shall mean M/I Homes, Inc., a corporation organized under the laws
of Ohio, and its successors and assigns.
 
I. "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
on which banking institutions are required or authorized to close in the city
where drawings under the Letters of Credit are to be made.
 
J. "Commitment" shall have the meaning stated in the Recitals.
 
K. “Control and Pledge Agreement” shall mean that certain Deposit Account
Control Agreement and Security Agreement of even date herewith executed by
Borrower and the Bank.
 
L. "Credit Agreement" or "this Agreement" shall mean this instrument as
originally executed or as it may from time to time be supplemented, modified or
amended by one or more instruments entered into pursuant to the applicable
provisions hereof.
 
M. "Drawing" shall mean a drawing under the Letters of Credit.
 
N. "Event of Default" shall have the meanings stated in Section 5.1.  An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
 
O. “Fee Letter” shall mean the letter from the Bank to the Borrower dated as of
July 27, 2009 relating to certain fees payable by the Borrower in respect of the
transactions provided for in this Agreement as it may be amended, modified,
restated or supplemented from time to time.
 
P. "Financing Documents" shall mean the Letters of Credit, this Agreement, the
Control and Pledge Agreement and all other agreements, instruments, documents
and certificates executed and delivered to, or in favor of, the Bank and
including all other pledges, powers of attorney, consents, assignments,
contracts, notices, agreements and all other written matter whether heretofore,
now or hereafter executed by or on behalf of Borrower, or any employee of
Borrower (in each case, to the extent relating to the Obligations), and
delivered to the Bank in connection with this Agreement or the transactions
contemplated thereby.  Any reference in this Agreement or any other Financing
Document to a Financing Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Financing
Document as the same may be in effect at any and all times such reference
becomes operative.
 
Q. "Letter of Credit Exposure" shall mean the sum of (i) the aggregate Stated
Amount of all Letters of Credit outstanding at such time and (ii) the aggregate
amount of all Reimbursement Obligations related to the Letters of Credit
outstanding at such time.
 
R. "Letters of Credit" shall have the meaning stated in the Recitals.
 
S. “Minimum Coverage Amount” shall mean, at any time, 105% of the Letter of
Credit Exposure.
 
T. "Obligations" shall mean (1) all Letters of Credit commissions, fees, charges
and costs becoming due and payable under this Agreement in accordance with the
terms thereof; (2) all amounts becoming due and payable under this Agreement in
accordance with the terms thereof as reimbursement of sums paid by the Bank
under the Letters of Credit; (3) all interest becoming due and payable under
this Agreement in accordance with the terms thereof; (4) all amounts becoming
due and payable under this Agreement in accordance with the terms thereof upon
the occurrence and continuance of an Event of Default under this Agreement;
(5) all amounts becoming due and payable by Borrower under this Agreement as
reimbursement of increased cost to the Bank caused by changes in law or
regulations or in the interpretation thereof; (6) all other amounts payable by
Borrower under this Agreement or any of the other Financing Documents; and (7)
all renewals and extensions of any or all of the Obligations of Borrower
described in clauses (1) through (6) above (including without limitation any
renewal or extension of, and any substitute for, the Letters of Credit), whether
or not any renewal or extension agreement is executed in connection therewith.
 
U. "Prime Rate" shall mean that rate of interest designated by the Bank from
time to time as its “prime rate,” it being expressly understood and agreed that
the “prime rate” is merely an index rate used by the Bank to establish lending
rates and is not necessarily the Bank’s most favorable lending rate and that
changes in the “prime rate” are discretionary with the Bank.
 
V. "Reimbursement Obligations" shall have the meaning stated in Section 2.2.
 
W. "Stated Amount" shall mean the maximum amount available to be drawn under the
Letters of Credit, as reduced from time to time and reinstated from time to time
pursuant to the terms and conditions of the Letters of Credit.
 
X. "Stated Expiration Date" shall mean the date on which the Letters of Credit
will expire by their terms unless terminated sooner upon the occurrence of any
early termination event specified therein.
 
Y. "Syndicated Credit Agreement" shall mean that certain Second Amended and
Restated Credit Agreement effective as of October 6, 2006, executed by Borrower,
the other parties signatory thereto, JP Morgan Chase Bank, N.A., as Agent for
itself and for the lenders and the other lenders signatory thereto, as amended,
restated or supplemented from time to time.
 
Z. "Termination Date" shall mean August 31, 2010.
 
SECTION 1.2 General Rules of Construction
 
AA. For all purposes of this Agreement, except as otherwise expressly provided,
or unless the context otherwise requires:
 
(a) Defined terms in the singular shall include the plural as well as the
singular and vice versa.
 
(b) The definitions in the recitals are incorporated into this Agreement.
 
(c) All accounting terms not otherwise defined herein have the meanings assigned
to them, and all computations herein provided for shall be made, in accordance
with generally accepted accounting principles.  All references herein to
"generally accepted accounting principles" refer to such principles as they
exist at the date of application thereof.
 
(d) All references in this instrument to designated "articles", "sections" and
other subdivisions are to the designated articles, sections and subdivisions of
this instrument as originally executed.
 
(e) The terms "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular article,
section or other subdivision.
 
(f) All references in this instrument to a separate instrument are to such
separate instrument as the same may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.
 
(g) The term "person" shall include any individual, corporation, partnership,
joint venture, limited liability company, association, trust, unincorporated
organization and any government or any agency or political subdivision thereof.
 
SECTION 1.3 Effect of Headings and Table of Contents
 
BB. The article and section headings herein and in the Table of Contents are for
convenience only and shall not affect the construction hereof.
 
SECTION 1.4 Separability Clause
 
CC. If any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
 
SECTION 1.5 Governing Law
 
DD. This Agreement shall be construed in accordance with and governed by the
laws of the State of Alabama.
 
SECTION 1.6 Counterparts
 
EE. This Agreement may be executed in any number of counterparts, each of which
so executed shall be deemed an original, but all such counterparts shall
together constitute but one and the same instrument.
 
ARTICLE 2
 

 
Issuance of Letters of Credit;
 
Reimbursement and Fees
 
SECTION 2.1 Issuance of Letters of Credit
 
(a) Subject to and upon the terms and conditions herein set forth, so long as no
Event of Default has occurred and is continuing, the Bank will, at any time and
from time to time on and after the Closing Date and prior to the Termination
Date, and upon request by Borrower in accordance with the provisions of Section
2.1(b) hereof, issue for the account of Borrower the Letters of Credit
denominated in U.S. dollars and in a form customarily used or otherwise approved
by the Bank.  In no event shall the aggregate Stated Amount of the Letters of
Credit exceed the Commitment.  Notwithstanding the foregoing:
 
(i) No Letter of Credit shall be issued that by its terms expires later than the
Termination Date; provided, however, that such Letter of Credit may expire by
its terms on a date later than the Termination Date so long as the Control and
Pledge Agreement is in effect and Borrower maintains the Minimum Coverage
Amount.
 
(ii) The Bank shall be under no obligation to issue any Letter of Credit if, at
the time of such proposed issuance, any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its terms to enjoin or
restrain the Bank from issuing such Letter of Credit, or any requirement of law
applicable to the Bank or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over the Bank
shall prohibit, or request that the Bank refrain from, the issuance of letters
of credit generally or such Letter of Credit in particular or shall impose upon
the Bank with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which the Bank is not otherwise compensated) not in
effect on the Closing Date, or any unreimbursed loss, cost or expense that was
not applicable, in effect or known to the Bank as of the Closing Date and that
the Bank in good faith deems material to it.  The Bank agrees that, as promptly
as practicable as it becomes aware of any circumstances that may prevent the
Bank from issuing any Letter of Credit pursuant to this clause (ii), the Bank
shall notify Borrower and describe such circumstances in reasonable detail, and
the Bank shall, to the extent not inconsistent with the Bank’s internal policies
of general application and in accordance with applicable law, use reasonable
commercial efforts to take such actions as would allow the Bank to issue Letters
of Credit in accordance with this Agreement notwithstanding the existence of any
circumstances described in this clause (ii).
 
(iii) No Letter of Credit shall be issued if the Stated Amount upon issuance,
when added to the aggregate Letter of Credit Exposure at such time, would exceed
the Commitment.
 
(iv) Notwithstanding any other provisions to the contrary set forth herein,
Letters of Credit deemed issued hereunder may contain a statement to the effect
that such credit is issued for the account of any subsidiary or affiliate of
Borrower providing that notwithstanding such statement, Borrower shall be the
actual account party for all purposes of this Agreement for such Letters of
Credit and such statement shall not affect Borrower’s reimbursement obligations
hereunder with respect to such Letters of Credit.
 
(b) Whenever Borrower desires the issuance of a Letter of Credit, Borrower will
give the Bank written notice not later than 11:00 a.m., Birmingham, Alabama
time, three Business Days (or such shorter period as is acceptable to the Bank
in any given case) prior to the requested date of issuance thereof.  Each such
notice (each, a “Letter of Credit Notice”) shall be irrevocable, shall be given
in the form specified by the Bank, and shall specify (i) the requested date of
issuance, which shall be a Business Day, (ii) the requested Stated Amount and
expiry date of the Letter of Credit, and (iii) the name and address of the
requested beneficiary or beneficiaries of the Letter of Credit.  Borrower will
also complete any application procedures and documents reasonably required by
the Bank in connection with the issuance of any Letter of Credit.  In the event
of any conflict between the provisions of any application and the provisions of
this Agreement, the provisions of this Agreement shall govern.  The renewal or
extension of any outstanding Letter of Credit shall, for purposes of this
Section 2.1, be treated in all respects as the issuance of a new Letter of
Credit.
 
SECTION 2.2 Reimbursement
 
Borrower agrees to reimburse the Bank (a "Reimbursement Obligation"), within
three (3) Business Days after demand therefor, for all sums paid by the Bank
under the Letter of Credit, together with interest thereon during the period
from the date of payment thereof by the Bank until receipt by the Bank of
reimbursement therefor, at an annual rate equal to the Prime Rate in effect from
time to time during such period.
 
SECTION 2.3 Fees for Maintenance of Letters of Credit
 
(a) For the issuance of the Letters of Credit, Borrower agrees to pay to the
Bank such fees set forth in the Fee Letter.
 
(b) Borrower shall pay to the Bank such commissions, draw fees, transfer fees
and other fees and charges incurred in connection with the issuance and
administration of each Letter of Credit as are customarily charged from time to
time by the Bank for the performance of such services in connection with similar
letters of credit, or as may be otherwise agreed to by the Bank (including all
courier fees associated with such Letters of Credit), but without duplication of
amounts payable under Section 2.3(a).
 
SECTION 2.4 Increased Costs
 
(a) If, after the date of delivery of this Agreement, any change in any law or
regulation or in the interpretation, administration or enforcement thereof by
any Governmental Authority charged with the administration thereof or any action
by any Governmental Authority (whether or not constituting or resulting from
such change) shall either
 
(i) impose, modify or deem applicable any reserve, assessment, special deposit
or similar requirement against letters of credit issued by the Bank or
 
(ii) impose on the Bank any other condition (including without limitation any
capital adequacy requirement) regarding this Agreement or the Letters of Credit,
 
and the result of any such event shall be to increase the cost to the Bank of
issuing or maintaining the Letters of Credit (which increase in cost shall be
the result of the Bank's reasonable allocation of the aggregate of such cost
increases resulting from such events and shall be calculated without giving
effect to any participation granted in the Letters of Credit), then, upon demand
by the Bank, Borrower shall immediately pay to the Bank from time to time, as
specified by the Bank in writing, additional amounts which shall be sufficient
to compensate the Bank for such increased costs.
 
(b) The Bank shall deliver to Borrower a reasonably detailed certificate showing
the basis for such increased costs incurred by the Bank as a result of any event
referred to in subsection (a) of this Section, and such certificate shall be
presumptive evidence as to the amount thereof provided that such determination
is made in good faith.  In making the determination contemplated by such
certificate, the Bank may make such reasonable estimates, assumptions,
allocations and the like that the Bank deems to be appropriate.  If the Bank
claims any amount payable under this Section 2.4, the Bank shall use reasonable
commercial efforts (consistent with its internal policy and legal and regulatory
restrictions) efforts to minimize such increased costs.
 
SECTION 2.5 Place and Time of Payments
 
(a) All payments by Borrower to the Bank hereunder shall be made in lawful
currency of the United States and in immediately available funds to the Bank at
its hand delivery address set forth in Section 6.1 or at such other address
within the continental United States as shall be specified by the Bank by notice
to Borrower.
 
(b) All amounts payable by Borrower to the Bank hereunder for which a payment
date is expressly set forth herein (including without limitation payments due
pursuant to Sections 2.2 and 2.3) shall be payable without notice or written
demand by the Bank.  All amounts payable by Borrower to the Bank hereunder for
which no payment date is expressly set forth herein shall be payable on written
demand by the Bank to Borrower.
 
(c) The Bank may, at its option, send written notice to Borrower of amounts
payable pursuant to Sections 2.2 and 2.3, but the failure to send such notice
shall not affect or excuse Borrower's obligation to make payment of the amounts
required by such Sections on the due date specified in such Sections.
 
(d) Payments which are due on a day which is not a Business Day shall be payable
on the next succeeding Business Day, and any interest payable thereon shall be
payable for such extended time at the specified rate.
 
SECTION 2.6 Late Payments
 
FF. With respect to all amounts payable to the Bank by Borrower pursuant to this
Article (a) which are not paid on the due date, in the case of amounts payable
on a specified date, or (b) which are not paid within 3 Business Days of written
notice to Borrower, in the case of amounts payable on demand, Borrower agrees to
pay to the Bank on demand interest at a variable per annum rate equal to the
Prime Rate plus four percent (4%), for each day from the specified date of
payment, or the date of written demand for payment, as the case may be, to the
date payment is made.
 
SECTION 2.7 Computation of Charges
 
GG. The interest, fees and charges provided for in this Agreement based upon
annual rates shall be computed on the basis of a 360-day year, for actual days
elapsed.  All interest rates based upon the Prime Rate shall change when and as
the Prime Rate shall change, effective on the opening of business on the date of
any such change.
 
SECTION 2.8 Obligations of Borrower Absolute
 
HH. The obligations of Borrower under this Agreement shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including, without
limitation, the following:
 
(a) any lack of validity or enforceability of any of the Financing Documents;
 
(b) any amendment or waiver of or any consent to departure from all or any of
the Financing Documents;
 
(c) the existence of any claim, set-off, defense or other rights which Borrower
may have at any time against any person or entity, whether in connection with
any of the Financing Documents, or any unrelated transaction;
 
(d) any statement or any other document presented under the Letters of Credit
proves to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein proves to be untrue or inaccurate in any respect whatsoever;
 
(e) payment by the Bank under the Letters of Credit against presentation of a
draft or certificate which does not strictly comply with the terms of the
Letters of Credit, provided such payment shall not have constituted negligence
or willful misconduct by the Bank; and
 
(f) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, provided the same shall not have constituted gross
negligence or willful misconduct by the Bank.
 
ARTICLE 3
 

 
Conditions Precedent to Issuance
 
of Letters of Credit
 
SECTION 3.1 Representations and Warranties
 
II. On and as of the date of issuance of the Letters of Credit, the
representations and warranties set forth in Section 4.1 shall be true and
correct in all material respects, except to the extent that such representations
and warranties expressly relate to an earlier date.
 
SECTION 3.2 No Default
 
JJ. On and as of the date of issuance of the Letters of Credit, Borrower shall
be in compliance with all the terms and provisions set forth in this Agreement
on its part to be observed or performed, and no Event of Default, nor any event
that upon notice or lapse of time or both would constitute such an Event of
Default, shall exist.
 
SECTION 3.3 Conditions Precedent to Issuance of Letters of Credit
 
KK. The obligation of the Bank to issue the Letters of Credit is subject to the
receipt by the Bank of the following, each of which shall be satisfactory to the
Bank in form and substance:
 
(a) Financing Documents.  An executed counterpart of each of the Financing
Documents.
 
(b) Organization of Borrower and Approvals.  A certified copy of the
organizational documents of Borrower and all action taken by its governing body
approving the Financing Documents and the consummation of the transactions
contemplated thereby (including, without limitation, a certificate setting forth
the resolutions (if any) of the governing body of Borrower for such purpose).
 
(c) Certificate of Borrower.  A certificate by Borrower to the effect that, as
of the date of delivery of the Letters of Credit and after giving effect
thereto:  (1) no Event of Default, as herein defined, shall have occurred and be
continuing under this Agreement; (2) no event shall have occurred and be
continuing which, with notice or lapse of time or both, would constitute an
Event of Default under this Agreement; and (3) the representations and
warranties made by Borrower in Section 4.1 of this Agreement shall be true in
all material respects on and as of such date with the same force and effect as
if made on and as of such date except to the extent that such representations
and warranties expressly relate to an earlier date.
 
(d) Deposit.  Evidence that Borrower has deposited cash into the Account (as
defined in the Control and Pledge Agreement) in an amount not less than
$4,375,000.
 
(e) Additional Evidence.  Such additional legal opinions, certificates,
proceedings, instruments and other documents as the Bank or its counsel may
reasonably request to evidence (1) compliance by Borrower with legal
requirements, (2) the truth and accuracy, as of the date of delivery of the
Letters of Credit, of the respective representations of Borrower contained in
the Financing Documents, and (3) the due performance or satisfaction by
Borrower, at or prior to the date of delivery of the Letters of Credit, of all
agreements then required to be performed and all conditions then required to be
satisfied by them pursuant to the Financing Documents.
 
ARTICLE 4
 

 
Representations and Covenants
 
SECTION 4.1 Representations and Warranties
 
LL. Borrower hereby represents and warrants to the Bank that each representation
and warranty contained in Section 4 of the Syndicated Credit Agreement (as in
effect on the date hereof) is true and correct in all material respects on the
date hereof (except to the extent such representations and warranties relate to
an earlier date), and by this reference each such representation and warranty is
incorporated herein in its entirety (provided that any changes thereto which are
consented to in writing by the Required Lenders shall be deemed incorporated
into this provision automatically upon such written consent).  For clarity,
defined terms used in Section 4 of the Syndicated Credit Agreement which are
also defined in this Agreement, shall have the meaning as set forth in this
Agreement.
 
SECTION 4.2 Affirmative Covenants
 
MM. Borrower hereby covenants and agrees with the Bank that, so long as any of
the Obligations remain unpaid, it will perform and comply with each of the
covenants and agreements set forth in Section 6 of the Syndicated Credit
Agreement (as in effect on the date hereof) as though such covenants were
recited herein in their entirety, and by this reference each such covenant and
agreement is incorporated herein in its entirety (provided that any changes
thereto which are consented to in writing by the Required Lenders shall be
deemed incorporated into this provision automatically upon such written
consent).  For clarity, (a) where any of the aforementioned covenants require
notice to or from a party, or delivery of items or information to or from a
party, as incorporated herein such references shall be references to the
applicable parties to this Agreement, and (b) defined terms used in Section 6 of
the Syndicated Credit Agreement which are also defined in this Agreement shall
have the meaning as set forth in this Agreement.
 
SECTION 4.3 Negative Covenants
 
NN. Borrower hereby covenants and agrees with the Bank that, so long as any of
the Obligations remain unpaid, it will perform and comply with each of the
covenants and agreements set forth in Section 7 of the Syndicated Credit
Agreement (as in effect on the date hereof) as though such covenants and
agreements were recited herein in their entirety, and by this reference each
such covenant and agreement is incorporated herein in its entirety (provided
that any changes thereto which are consented to in writing by the Required
Lenders shall be deemed incorporated into this provision automatically upon such
written consent).  For clarity, (a) where any of the aforementioned covenants
require notice to or from a party, or delivery of items or information to or
from a party, as incorporated herein such references shall be references to the
applicable parties to this Agreement, and (b) defined terms used in Section 7 of
the Syndicated Credit Agreement which are also defined in this Agreement shall
have the meaning as set forth in this Agreement.
 
SECTION 4.4 Minimum Coverage Amount
 
OO. Borrower shall (i) maintain the Minimum Coverage Amount at all times and
(ii) deposit the sum of $4,375,000 into the Account (as defined in the Control
and Pledge Agreement) on the date the Letter of Credit Exposure exceeds
$4,170,000.
 
ARTICLE 5
 

 
Events of Default and Remedies
 
SECTION 5.1 Events of Default
 
PP. Any one or more of the following shall constitute an event of default (an
"Event of Default") under this Agreement (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
 
(a) any representation or warranty made in this Agreement or in any of the other
Financing Documents by Borrower shall prove to be false or misleading in any
material respect as of the time made; or
 
(b) any report, certificate, financial statement or other instrument furnished
by Borrower in connection with this Agreement, or the transactions provided for
in this Agreement or any of the other Financing Documents, shall prove to be
false or misleading in any material respect as of the time made; or
 
(c) failure to make any payment required under Article 2 as and when the same
shall become due and payable; or
 
(d) default shall be made in the due observance or performance of the covenant
set forth in Section 4.4; or
 
(e) the occurrence of an event of default, as therein defined, under any other
Financing Document or the occurrence of any one or more of the events set forth
in Section 9 of the Syndicated Credit Agreement (whether or not such Syndicated
Credit Agreement is terminated) and the expiration of the applicable grace
period, if any, specified therein.
 
SECTION 5.2 Remedies
 
QQ. If any Event of Default exists, the Bank shall have no obligation to issue
any further Letters of Credit and may exercise any of the following remedies:
 
(a) upon notice to Borrower, declare all amounts, if any, not otherwise
immediately due under this Agreement to be, and all such amounts shall thereupon
become, due and payable to the Bank, without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived, anything in this
Agreement to the contrary notwithstanding, provided that any outstanding Letter
of Credit for which the Bank has cash collateral in accordance with the
requirements of this Agreement and the Control and Pledge Agreement shall remain
in full force and effect in accordance with its terms, subject to the Bank’s
rights pursuant to this Agreement and the Control and Pledge Agreement with
respect to the cash collateral that secures such Letter of Credit; or
 
(b) exercise its banker's lien or right of set-off; or
 
(c) proceed to protect its rights by suit in equity, action at law or other
appropriate proceedings, whether for the specific performance of any covenant or
agreement of Borrower herein contained or in aid of the exercise of any power or
remedy granted to the Bank under any other Financing Document.
 
SECTION 5.3 Reserve for Reimbursement
 
RR. If an Event of Default exists under this Agreement and the Letters of Credit
remain outstanding, Borrower agrees to pay to the Bank, promptly upon demand by
the Bank therefor, such amount that, when added to the aggregate cash collateral
in the Account (as defined in the Control and Pledge Agreement) equals 105% of
the maximum amount available to be drawn under the Letters of Credit.  All
amounts so paid to the Bank (or recovered by the Bank by legal or other action
in the event Borrower shall fail or refuse to make payment as required by this
Section) shall be held by the Bank in reserve as security for reimbursement for
any draws the Bank may be required to pay under the Letters of Credit.  The Bank
may maintain any reserve held under the terms of this Agreement in any manner
the Bank may see fit, and the Bank may invest the same in such investment or
investments as the Bank may choose or not invest the same.  So long as no Event
of Default exists, the Bank shall be required to pay, and to account to Borrower
for, any interest or other earnings on any reserve at any time held by the Bank
under this Agreement.  Any income or profits from any investment of such reserve
made by the Bank shall not become a part of such reserve and will be paid to
Borrower no less frequently than quarterly if no Event of Default exists.
 
SECTION 5.4 No Remedy Exclusive
 
SS. No remedy herein conferred upon or reserved to the Bank is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity or by
statute.  No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver thereof but any such right or power may be exercised from time to time
and as often as may be deemed expedient.
 
SECTION 5.5 Agreement to Pay Attorneys' Fees
 
TT. If Borrower should default under any of the provisions of this Agreement and
the Bank should employ attorneys or incur other expenses for the collection of
any payments due hereunder or the enforcement of performance or observance of
any agreement or covenant on the part of Borrower herein contained, Borrower
will on demand therefor pay to the Bank the reasonable fees of such attorneys
and such other expenses so incurred.
 
SECTION 5.6 No Additional Waiver Implied by One Waiver
 
UU. If any agreement contained in this Agreement should be breached by Borrower
and thereafter waived by the Bank, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
 
SECTION 5.7 Remedies Subject to Applicable Law
 
VV. All rights, remedies and powers provided by this Article may be exercised
only to the extent the exercise thereof does not violate any applicable
provision of law in the premises, and all the provisions of this Article are
intended to be subject to all applicable mandatory provisions of law which may
be controlling in the premises and to be limited to the extent necessary so that
they will not render this Agreement invalid or unenforceable.
 
ARTICLE 6
 

 
Miscellaneous
 
SECTION 6.1 Notices
 
(a) Any request, demand, authorization, direction, notice, consent, or other
document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with, Borrower or the Bank must (except as otherwise
provided in this Agreement) be in writing and be delivered by one of the
following means:  (1) by personal delivery at the hand delivery address
specified below, (2) by courier delivery, (3) by first-class, registered or
certified mail, postage prepaid and addressed as provided below, or (4) if
facsimile transmission facilities for such party are identified below or
pursuant to a separate notice from such party, sent by facsimile transmission to
the number specified below or in such notice.  The hand delivery or courier
delivery address, mailing address and (if applicable) facsimile transmission
number for receipt of notice or other documents are as follows:
 
Borrower

By hand or mail:                                M/I Homes, Inc.
3 Easton Oval
Columbus, Ohio  43219
Attention:                      Chief Financial Officer
Phone:                      (614) 418-8011
Fax:                      (614) 418-8080

With a copy to:                                Vorys, Sater, Seymour and Pease
LLP
52 East Gay Street
Columbus, Ohio  443215
Attention:                      Thomas O. Ruby
Phone:                      (614) 464-5698
Fax:                      (614) 719-4934

Bank

By hand:                                1900 5th Avenue North
25th Floor, Regions Center
Birmingham, Alabama  35203
Attention:                      Homebuilder Finance Department

By mail:                                P.O. Box 11077
Birmingham, Alabama 35288
Attention:                      Homebuilder Finance Department

By facsimile:                                (205) 801-0138

With a copy to:                                J. Kris Lowry
Maynard, Cooper and Gale, P.C.
1901 6th Avenue North
2400 Regions/Harbert Plaza
Birmingham, Alabama  35203-2618

1. By facsimile:                                (205) 254-1999

Any of such parties may change the address for receiving any such notice or
other document by giving notice of the change to the other parties named in this
Section.
 
(b) Any such notice or other document shall be deemed delivered when actually
received by the party to whom directed (or, if such party is not an individual,
to an officer, director or other legal representative of the party) at the
address or number specified pursuant to this Section, or, if sent by mail, 3
days after such notice or document is deposited in the United States mail,
addressed as provided above.
 
SECTION 6.2 Indemnification
 
WW. Borrower hereby indemnifies and holds harmless the Bank from and against any
and all claims, damages, losses, liabilities, reasonable costs or expenses
whatsoever which the Bank may incur (or which may be claimed against the Bank by
any person or entity whatsoever) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under, the
Letters of Credit; provided, that Borrower shall not be required to indemnify
the Bank for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (a) the willful misconduct or gross
negligence of the Bank in determining whether a draft or certificate presented
under the Letters of Credit complied with the terms of the Letters of Credit or
(b) the Bank's negligent or willful failure to pay under the Letters of Credit
after the presentation to it by the Beneficiary of a draft and certificate
strictly complying with the terms and conditions of the Letters of
Credit.  Nothing in this Section is intended to limit the reimbursement
obligation of Borrower contained in Article 2.
 
SECTION 6.3 Liability of the Bank
 
XX. For the exclusive benefit of the Bank and as between the Bank and Borrower
only, Borrower assumes all risks of the acts or omissions of the Beneficiary and
any transferee of the Letters of Credit with respect to its use of the Letters
of Credit.  Neither the Bank nor any of its officers or directors shall be
liable or responsible for:
 
(a) the use which may be made of the Letters of Credit or for any acts or
omissions of the Beneficiaries and any transferee in connection therewith;
 
(b) the validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged;
 
(c) payment by the Bank against presentment of documents which do not strictly
comply with the terms of the Letters of Credit, including but not limited to,
failure of any documents to bear any reference or adequate reference to the
Letters of Credit; or
 
(d) any other circumstances whatsoever in making or failing to make payment
under the Letters of Credit,
 
except only that Borrower shall have a claim against the Bank, and the Bank
shall be liable to Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential, damages suffered by Borrower which Borrower
proves were caused by the Bank's willful misconduct or negligence in determining
whether documents presented under the Letters of Credit comply with the terms of
the Letters of Credit or the Bank's willful or negligent failure to pay under
the Letters of Credit after the presentation to it by the Beneficiary of a draft
and certificate strictly complying with the terms and conditions of the Letters
of Credit.  In furtherance and not in limitation of the foregoing, the Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
 
SECTION 6.4 Continuing Obligation
 
YY. This Agreement is a continuing obligation and shall (a) be binding upon
Borrower and the Bank, their successors and assigns, and (b) inure to the
benefit of and be enforceable by Borrower and Bank and their successors and
assigns; provided, that Borrower may not assign all or any part of this
Agreement without the prior written consent of the Bank.
 
SECTION 6.5 Costs, Expenses and Taxes
 
ZZ. Borrower shall promptly on demand pay all costs and expenses, including the
reasonable fees and disbursements of counsel to the Bank, incurred by the Bank
in connection with (a) the issuance of the Letters of Credit and the
administration or collection of the Obligations, (b) the negotiation,
preparation and review of the Financing Documents, (c) the enforcement of any of
the Financing Documents, (d) the exercise by or on behalf of the Bank of any of
its rights, powers or remedies under the Financing Documents, and (e) the
prosecution or defense of any action or proceeding by or against the Bank,
Borrower, or any one or more of them, concerning any matter related to this
Agreement or any of the other Financing Documents, or any of the
Obligations.  Borrower's obligations under this Section 6.5 shall survive the
payment in full of the Obligations and the termination of this Agreement.
 
SECTION 6.6 Submission to Jurisdiction
 
AAA. Borrower irrevocably (a) acknowledges that this Agreement will be accepted
by the Bank and performed by Borrower in the State of Alabama (which is the
state in which the Bank’s main office is located) and that the Letter of Credit
will be issued in that state; (b) submits to the jurisdiction of each state or
federal court sitting in Jefferson County, Alabama (collectively, the “Courts”)
over any suit, action or proceeding arising out of or relating to this Agreement
(individually, an “Agreement Action”); (c) waives, to the fullest extent
permitted by law, any objection or defense that Borrower may now or hereafter
have based on improper venue, lack of personal jurisdiction, inconvenience of
forum or any similar matter in any Agreement Action brought in any of the
Courts; (d) agrees that final judgment in any Agreement Action brought in any of
the Courts shall be conclusive and binding upon Borrower and may be enforced in
any other court to the jurisdiction of which Borrower is subject, by a suit upon
such judgment; (e) consents to the service of process on Borrower in any
Agreement Action by the mailing of a copy thereof by registered or certified
mail, postage prepaid, to Borrower at the address designated in or pursuant to
Section 6.1 hereof; (f) agrees that service in the manner specified in clause
(e) next above shall in every respect be effective and binding on Borrower to
the same extent as though such service of process were served on Borrower in
person by a person duly authorized to serve such process; and (g) AGREES THAT
THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY
ANY COURT, SHALL CONSTITUTE “FAIR WARNING” TO BORROWER THAT THE EXECUTION OF
THIS AGREEMENT MAY SUBJECT BORROWER TO THE JURISDICTION OF THE COURTS OF THE
STATE OF ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS
FORESEEABLE BY BORROWER THAT BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF
THE COURTS OF THE STATE OF ALABAMA AND MAY BE SUED IN THAT STATE IN ANY
AGREEMENT ACTIONS.  Nothing in this Section 6.6 shall limit or restrict the
Bank’s right to serve process or bring Agreement Actions in manners and in
courts otherwise than as herein provided.
 
SECTION 6.7 Non Waiver
 
BBB. No failure or delay on the part of the Bank in exercising any right, power
or privilege under this Agreement or under any of the other Financing Documents
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other
right, power or privilege.
 
SECTION 6.8 Modification; etc.
 
CCC. No modification, amendment or waiver of any provision of this Agreement or
any of the other Financing Documents, and no consent to any departure by
Borrower therefrom, shall be effective unless the same shall be in writing and
signed by an authorized officer of the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  No notice to or demand on Borrower in any case shall entitle Borrower to
any other or further notice or demand in the same, similar or other
circumstances.
 
SECTION 6.9 Set off
 
DDD. While any Event of Default exists, the Bank is authorized at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived by Borrower), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of Borrower against any and all of the Obligations, irrespective of whether or
not the Bank shall have made any demand under this Agreement and although such
Obligations may be unmatured.  The rights of the Bank under this Section are in
addition to all other rights and remedies (including other rights of set off or
pursuant to any banker’s lien) that the Bank may have.
 
SECTION 6.10 WAIVER OF JURY TRIAL
 
EEE. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BANK
AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER FINANCING DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
 
SECTION 6.11 Termination
 
FFF. Borrower may terminate this Agreement and the Commitment before the
Termination Date, in whole but not in part, by giving the Bank 30 days prior
written notice; provided, however, no termination by Borrower shall be effective
until (a) Lender shall have received cash collateral in an amount that, when
added to the aggregate cash collateral in the Account (as defined in the Control
and Pledge Agreement) equals 105% of all Obligations which remain contingent and
(b) all other Obligations have been fully and finally paid and performed.  Any
notice of termination shall be irrevocable.  The Bank may terminate this
Agreement and the Commitment at any time, without notice, during the existence
of an Event of Default.
 
GGG.
 
HHH.           [Signatures on following page]
 

 
 

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III. IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
 
REGIONS BANK

By:                                                                           

Name:                     

Title:                                                                           

M/I HOMES, INC.

By:                                                                           
Name:  Phillip G. Creek         
Title:     Executive Vice President and Chief   
Financial Officer

 
 

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

 

LETTER OF CREDIT AGREEMENT

Dated as of July 27, 2009

Between

M/I HOMES, INC.,

and

REGIONS BANK

 
 

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

 

TABLE OF CONTENTS
 
Page

Parties 1
Recitals 1

 
ARTICLE 1 Definitions and Other Provisions of General Application 
 
SECTION 1.1                         Definitions [
SECTION 1.2                         General Rules of Construction 
SECTION 1.3                         Effect of Headings and Table of Contents 
SECTION 1.4                         Separability Clause 
SECTION 1.5                         Governing Law 
SECTION 1.6                         Counterparts 
 
ARTICLE 2 Issuance of Letters of Credit; Reimbursement and Fees 
 
SECTION 2.1                         Issuance of Letters of Credit 
SECTION 2.2                         Reimbursement 
SECTION 2.3                         Fees for Maintenance of Letters of Credit 
SECTION 2.4                         Increased Costs 
SECTION 2.5                         Place and Time of Payments
SECTION 2.6                         Late Payments 
SECTION 2.7                         Computation of Charges 
SECTION 2.8                         Obligations of Borrower Absolute 
 
ARTICLE 3 Conditions Precedent to Issuance of Letters of Credit 
 
SECTION 3.1                         Representations and Warranties 
SECTION 3.2                         No Default 
SECTION 3.3                         Conditions Precedent to Issuance of Letters
of Credit 
 
ARTICLE 4 Representations and Covenants 
 
SECTION 4.1                         Representations and Warranties 
SECTION 4.2                         Affirmative Covenants 
SECTION 4.3                         Negative Covenants 
SECTION 4.4                         Minimum Coverage Amount 
 
ARTICLE 5 Events of Default and Remedies 
 
SECTION 5.1                         Events of Default 
SECTION 5.2                         Remedies 
SECTION 5.3                         Reserve for Reimbursement 
SECTION 5.4                         No Remedy Exclusive 
SECTION 5.5                         Agreement to Pay Attorneys' Fees
SECTION 5.6                         No Additional Waiver Implied by One Waiver 
SECTION 5.7                         Remedies Subject to Applicable Law 
 
ARTICLE 6 Miscellaneous 
 
SECTION 6.1                         Notices
SECTION 6.2                         Indemnification 
SECTION 6.3                         Liability of the Bank 
SECTION 6.4                         Continuing Obligation 
SECTION 6.5                         Costs, Expenses and Taxes 
SECTION 6.6                         Submission to Jurisdiction 
SECTION 6.7                         Non Waiver 
SECTION 6.8                         Modification; etc. [
SECTION 6.9                         Set off 
SECTION 6.10                       WAIVER OF JURY TRIAL 
SECTION 6.11                       Termination 

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