Document:

kci8kamendno4exh4_1.htm

AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of August 17, 2010 is by and among Keystone Consolidated Industries, Inc., a Delaware corporation (“Keystone”), Engineered Wire Products, Inc., an Ohio corporation (“EWP”), Keystone-Calumet, Inc., a Delaware corporation (“KCI”), F V Steel and Wire Company, a Wisconsin corporation (“F V Steel” and, together with Keystone, EWP and KCI each individually a “Borrower” and collectively, “Borrowers”), Keystone Energy Resources, LLC, a Delaware limited liability company (“KER”), the parties hereto as lenders (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined) and Wells Fargo Capital Finance, LLC (f/k/a Wachovia Capital Finance Corporation (Central)), in its capacity as agent for Lenders (in such capacity, “Agent”).  Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement (defined below).

 

R E C I T A L S:

WHEREAS, Borrowers, the Agent and the Lenders have entered into that certain Loan and Security Agreement dated as of August 31, 2005 (as amended, the “Loan Agreement”);

 

WHEREAS, Borrowers have requested that Agent and Lenders agree to certain amendments to the Loan Agreement as set forth herein; and

 

WHEREAS, Agent and Lenders have agreed to such amendments upon the terms and conditions contained herein.

 

NOW, THEREFORE, in consideration of the premises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1   Amendments to the Loan Agreement.  Immediately upon the satisfaction of each of the conditions precedent set forth in Section 2 below, the Loan Agreement is hereby amended as follows:

 

(a)  The definition of “Adjusted Eurodollar Rate” set forth in Section 1 of the Loan Agreement is hereby amended by deleting the last sentence set forth therein.

 

(b)  The definition of “Applicable Margin” set forth in Section 1 of the Loan Agreement is hereby amended by amending and restating the definition of “Applicable Margin” to read as follows:

 

“Applicable Margins” shall mean, at any time, as to the Interest Rate for Prime Rate Loans, Eurodollar Rate Loans and the letter of credit fee on the outstanding undrawn amount of Letter of Credit Obligations, the applicable row of per annum rates set forth below if the average daily Excess Availability for all Borrowers in the aggregate during the immediately preceding calendar quarter is at or within the amounts indicated for such row:

 

 

  

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Excess Availability

	
Applicable Margin for Prime Rate Loans

	
Applicable Margin for Eurodollar Rate Loans

	
Applicable Margin for Letter of Credit                       Obligations                      

	
(a)  Greater than or equal to $15,000,000

	
0.25%

	
2.00%

	
2.00%

	
(b)  Less than $15,000,000

	
0.50%

	
2.25%

	
2.25%

provided however, that, beginning on the date hereof and continuing through September 30, 2010, the Applicable Margins shall be those per annum rates designated in row (a) above.  Commencing on the first Business Day of October 1, 2010 and thereafter on the first Business Day immediately following each calendar quarter, the Applicable Margins shall be adjusted based on the average daily Excess Availability for all Borrowers in the aggregate for the calendar quarter most recently ended.”

 

    (c)  The definition of “Borrowing Base” set forth in Section 1 of the Loan Agreement is hereby amended by amending and restating clause (a) of the definition of “Borrowing Base” to read as follows:

 

                      “(a)           the amount equal to: (i) eighty-five (85%) percent of the Eligible Accounts of such Borrower, plus (ii) the lesser of (A) the Inventory Loan Limit for such Borrower or (B) the sum of: (1) the lesser of sixty-five (65%) percent multiplied by the Value of the Eligible Inventory of such Borrower consisting of finished goods or eighty-five (85%) percent of the Net Recovery Percentage multiplied by the Value of such Eligible Inventory, plus (2) the lesser of sixty (60%) percent multiplied by the Value of the Eligible Inventory of such Borrower consisting of raw materials or eighty-five (85%) percent of the Net Recovery Percentage multiplied by the Value of such Inventory, plus (iii) the Fixed Asset Loan Value, minus”

 

       (d)  The definition of  “Eligible Accounts” set forth in Section 1 of the Loan Agreement is hereby amended by amending and restating clauses (m) and (n) in their entirety to read as follows:

 

“(m)  the aggregate amount of such Accounts owing by a single account debtor or its Affiliates do not constitute more than twenty (20%) percent (or (i) in the case of Tractor Supply, thirty (30%) percent and (ii) in the case of MMI Products, Inc., twenty-five (25%) percent) of the aggregate amount of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of the applicable percentages may be deemed Eligible Accounts);

 

 

  

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(n) such Accounts are not owed by an account debtor who has Accounts unpaid more than sixty (60) days after the original invoice date for them which constitute more than twenty (20%) percent (or (i) in the case of Tractor Supply, thirty (30%) percent and (ii) in the case of MMI Products, Inc. twenty-five (25%) percent) of the total Accounts of such account debtor;”

 

    (e)  The definition of “Fixed Charges” set forth in Section 1 of the Loan Agreement is hereby amended by adding a new sentence to the end of such definition to read as follows:

 

“This definition of Fixed Charges shall exclude any prepayment made in respect of the Peoria Debt.”

 

    (f)  The definition of “Interest Rate” set forth in Section 1 of the Loan Agreement is hereby amended and restated to read as follows:

 

“Interest Rate” shall mean,

 

(a)           Subject to clauses (b) and (c) of this definition below:

 

	
(i)  

	
as to Prime Rate Loans, a rate equal to the Applicable Margin for Prime Rate Loans then in effect plus the Prime Rate,

 

	
(ii)  

	
as to Eurodollar Rate Loans, a rate equal to the Applicable Margin for Eurodollar Rate Loans then in effect plus the Adjusted Eurodollar Rate (in each case, based on the London Interbank Offered Rate applicable for the Interest Period selected by a Borrower, or by Administrative Borrower on behalf of such Borrower, as in effect two (2) Business Days prior to the commencement of the Interest Period, whether such rate is higher or lower than any rate previously quoted to any Borrower or Guarantor), and

 

	
(iii) 

	
 as to fees for Letter of Credit Obligations, a rate equal to the Applicable Margin for Letter of Credit Obligations then in effect;

 

(b)           If Borrowers fail to deliver the collateral reports required under Section 7.1(a), the Agent may elect to increase the Applicable Margins to their highest levels set forth in the definition of the term “Applicable Margins” (without regard to the amount of Excess Availability) effective as of the first Business Day of such month in which such failure occurred until such time as Administrative Borrower satisfies such delivery requirement; and

 

  

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(c)           Notwithstanding anything to the contrary contained in clauses (a) and (b) of this definition, the Applicable Margins otherwise used to calculate the Interest Rate for Prime Rate Loans, Eurodollar Rate Loans and fees for Letter of Credit Obligations shall be the highest respective per annum rates set forth in the definition of “Applicable Margins” for each such category (without regard to the amount of Excess Availability) plus in each case two percent (2%) per annum, at Agent’s option, (i) either (A) without notice, for the period on and after the date of termination or non-renewal hereof until such time as all Obligations (other than contingent indemnification obligations not asserted or due) are paid and satisfied in full in immediately available funds, or (B) upon notice to the Administrative Borrower (which notice shall not be required if an Event of Default has occurred and is continuing under Sections 10.1(g) and (h) of this Agreement), for the period from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default is continuing and (ii) on the Revolving Loans to any Borrower at any time outstanding in excess of the Borrowing Base of such Borrower or the Revolving Loan Limit of such Borrower (whether or not such excess(es) arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after an Event of Default).

 

(g)  The definition of “Maximum Credit” set forth in Section 1 of the Loan Agreement is hereby amended by deleting the amount of “$100,000,000” set forth in the definition of “Maximum Credit” and replacing it with the amount of “$70,000,000”.

 

(h)  The definition of “Obligations” set forth in Section 1 of the Loan Agreement is hereby amended by adding the following new sentence to the end of such definition to read as follows:

 

“Obligations shall include all obligations, liabilities or indebtedness (contingent or otherwise) of any Borrower arising under or in connection with any Bank Products then provided or outstanding.”

 

 (i)  The definition of “Reserves” set forth in Section 1 of the Loan Agreement is hereby amended by (a) replacing the word “and” after clause (vi) therein with a semicolon and (b) amending and restating clause (ii) set forth in the second sentence of such definition and by adding a new clause (viii) at the end of the second sentence of such definition, in each case to read as follows:

 

“(ii) that the orderly liquidation value of the Equipment or fair market value or quick sale value of any of the Real Property as set forth in the most recent acceptable appraisals received by Agent with respect thereto has declined so that the then outstanding portion of the Revolving Loans attributable to the Fixed Asset Loan Value is greater than such percentage with respect to such appraised values as Agent used in establishing the Fixed Asset Loan Value multiplied by such appraised values;”

 

 

  

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“and (viii) obligations, liabilities or indebtedness (contingent or otherwise) of any Borrower arising under or in connection with any Bank Products then provided or outstanding.”

 

(j)  The definition of “Revolving Loan Limit” set forth in Section 1 of the Loan Agreement is hereby amended by deleting the amount of “$100,000,000” set forth in the definition of “Revolving Loan Limit” and replacing it with the amount of “$70,000,000”.

 

(k)  Section 1 of the Loan Agreement is hereby amended by adding two new defined terms as follows in their proper alphabetical places:

 

“Bank Products” shall mean any services or facilities provided to a Borrower by the Agent or any of its Affiliates including (a) ACH transactions, (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit or debit cards, (e) credit card processing services, (f) purchase cards, (g) merchant services, (h) factoring, and (i) leasing.

 

“Fixed Asset Loan Value” shall mean the initial amount of $10,000,000 as reduced from time to time pursuant to Section 2.5.

 

(l)  Section 2 of the Loan Agreement is hereby amended by adding a new Section 2.5 to the end thereof to read as follows:

 

“2.5.           Amortization of Fixed Asset Loan Value.   The Fixed Asset Loan Value shall be reduced on the first Business Day of each month, commencing on the first Business Day of September, 2010, by an amount equal to $166,666.67 for each such month.  Notwithstanding the foregoing, in the event of any disposition, condemnation or casualty of Equipment of a Borrower (or in the event of receipt of any condemnation awards or casualty insurance proceeds in respect thereof), and the value of which Equipment has been included in determining the Fixed Asset Loan Value, then the Fixed Asset Loan Value shall be reduced by an amount equal to the value of such Equipment, as determined by Agent, attributable to the Fixed Asset Loan Value and such reduction shall be allocated to the monthly installments described above ratably against all such installments.”

 

(m)  Section 3.2(a) of the Loan Agreement is hereby amended by (a) deleting the language “three-eights of one percent (0.375%)" and replacing it with the language “one quarter of one percent (0.25%)” and (b) deleting reference to the amount of “$100,000,000” set forth therein and replacing it with the amount of “$70,000,000”.

 

 

  

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 (n)  Section 3.2(c) of the Loan Agreement is hereby amended and restated to read as follows:

 

“Borrowers shall pay to Agent a monthly servicing fee in the amount of $1,000 per month, payable in advance on the first day of each month (commencing on September 1, 2010), which fee shall be fully earned when paid and nonrefundable.  The foregoing fee shall replace the monthly account servicing fee set forth in the Fee Letter.”

 

             (o)  Section 6.4(a) of the Loan Agreement is hereby amended by amending and restating the categories designated as “fourth”, “fifth” and “sixth” to read as follows:

 

“fourth, to pay principal due in respect of the Loans (and at any time an Event of Default exists or has occurred and is continuing, to provide cash collateral for any Letter of Credit Obligations) in such order as Agent shall determine unless otherwise expressly provided in this Agreement, to pay or prepay Obligations arising under or pursuant to any Hedge Agreement of a Borrower with Agent, any Lender, any Affiliate of any Lender or any other financial institution or acceptable to Agent (up to the amount of any then effective Reserve established in respect of such Obligations) and to pay or prepay Obligations arising under or pursuant to any Bank Products (up to the amount of any then effective Reserve established in respect of such Obligations), on a pro rata basis (as between the Loans and Obligations under any Hedge Agreement and Bank Products); and fifth, to pay or prepay any other Obligations including Obligations arising under or pursuant to Hedge Agreements and Bank Products (other than to the extent provided for above) on a pro rata basis

 

             (p)  Section 7.1(a)(ii) of the Loan Agreement is hereby amended by (a) replacing the word “and” after clause (C) therein with a semicolon and (b) adding a new clause (E) to the end thereof to read as follows:

 

“and (E) a borrowing base certificate substantially in the form of Exhibit E to this Agreement”;

 

         (q)      Section 9.10 of the Loan Agreement is hereby amended by adding a new clause, Sections 9.10(m), at the end of Section 9.10 to read as follows:

 

    “(m) repurchases of Capital Stock permitted under Section 9.11.

 

    (r)  Section 9.11 of the Loan Agreement is hereby amended by adding two new clauses, Sections 9.11(e) and (f), at the end of Section 9.11 to read as follows:

 

“(e) Administrative Borrower may repurchase its own Capital Stock from any Person for cancellation; provided, that, as to any such repurchase, each of the following conditions is satisfied: (i) as of the date of the payment for such repurchase and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (ii) such repurchase shall be paid with funds legally available therefore, (iii) such repurchase shall not violate any law or regulation or the terms of any material indenture, agreement or undertaking to which such Borrower is a party or by which such Borrower or its property are bound, (iv) as of the date of any repurchase and after giving effect thereto, Borrowers have aggregate Excess Availability equal to at least $7,500,000 and (v)  Borrowers and their Subsidiaries on a consolidated basis have, at the end of the calendar month most recently ended for which financial statements are available, a Fixed Charge Coverage Ratio for the 12-month period then ending of not less than 1.0:1.0, after giving pro forma effect to such repurchase, provided, further, that satisfaction with this clause (v) shall not be required to the extent that as of the date of any repurchase and after giving effect thereto, Borrowers have aggregate Excess Availability equal to at least $10,000,000.

 

 

  

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(f) Administrative Borrower may pay dividends to holders of its Capital Stock; provided, that, as to any such payment of dividends, each of the following conditions is satisfied: (i) as of the date of the payment of such dividend and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (ii) such dividend shall be paid with funds legally available therefore, (iii) payment of such dividend shall not violate any law or regulation or the terms of any material indenture, agreement or undertaking to which such Borrower is a party or by which such Borrower or its property are bound, (iv) as of the date of any payment of such dividend and after giving effect thereto, Borrowers have aggregate Excess Availability equal to at least $7,500,000 and (v)  Borrowers and their Subsidiaries on a consolidated basis have, at the end of the calendar month most recently ended for which financial statements are available, a Fixed Charge Coverage Ratio for the 12-month period then ending of not less than 1.0:1.0, after giving pro forma effect to such dividend, provided, further, that satisfaction with this clause (v) shall not be required to the extent that as of the date of any dividend and after giving effect thereto, Borrowers have aggregate Excess Availability equal to at least $10,000,000.”

 

       (s)   Section 9.17 of the Loan Agreement is hereby amended and restated to read as follows:

 

    “9.17   [Intentionally Deleted]”

 

       (t)   Section 9.18 of the Loan Agreement is hereby amended and restated to read as follows:

 

    “9.18           Minimum Fixed Charge Coverage Ratio.  To the extent Excess Availability falls below $10,000,000 at any time, Borrowers and their Subsidiaries on a consolidated basis shall be required to have, at the end of each calendar month (commencing with the calendar month most recently ended for which financial statements are available and continuing through the month ending after the date on which Excess Availability is in excess of $10,000,000), a Fixed Charge Coverage Ratio for the 12-month period then ending of not less than 1.0:1.0.”

 

 

  

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       (u)  Section 9.19 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“9.19           Cash Management.         Borrowers shall transfer all of their cash management services (including, without limitation, lock box accounts, other blocked accounts and controlled disbursement services)  to Wells Fargo Bank on or prior to November 15, 2010”.

 

       (v)   Section 13.1(a) of the Loan Agreement is hereby amended by amending and restating the first sentence of such Section 13.1(a) to read as follows:

 

“This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on August __, 2015 (the “Renewal Date”), and from year to year thereafter, unless sooner terminated pursuant to the terms hereof.  ”

 

           (w)   Section 13.1(c) of the Loan Agreement is hereby amended by amending and restating the early termination fee grid set forth therein to read as follows:

 

 

	
Amount

	
Period

	
(i)   1.0% of Maximum Credit

	
From August 17, 2010 to and including August 16, 2011

	
(ii)  0.50% of Maximum Credit

	
From and after August 17, 2011 to and including August 16, 2012

	
(iii)  0.25% of Maximum Credit

	
From and after August 17, 2012 to the end of the then current term (excluding the last 30 days of the then current term).

 

       (x)  The Loan Agreement is hereby amended by adding a new Exhibit E to the Loan Agreement (Borrowing Base Certificate) in the form of Annex I hereto.

 

SECTION 2   Conditions to Effectiveness.  The effectiveness of the amendments set forth in Section 1 above are subject to the satisfaction of each of the following conditions and in each case in form and substance, and with results, satisfactory to Agent:

 

 

  

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       (a)   Agent shall have received a duly executed counterpart of this Amendment from Borrowers, KER and Lenders;

 

       (b)   Agent shall have received an amendment fee equal to $350,000 for the ratable benefit of the Lenders executing this Amendment, which fee shall be earned in full and payable on the date hereof;

 

       (c)   Agent shall have received an officer’s certificate certifying (and attaching) resolutions of the Borrowers approving the transactions contemplated by this Amendment and an incumbency of officers, in form and substance satisfactory to the Agent;

 

       (d)   Agent shall have received an updated Information Certificate;

 

       (e)   Wells Fargo Capital Finance, LLC shall have received assignments from the other Lenders, assigning all Loans and Commitments of such Lenders to Wells Fargo Capital Finance, LLC; and

 

    (f)   Borrowers shall have paid in full the remaining principal balance of the Term Loans under the Loan Agreement, together with all accrued and unpaid interest thereon.

 

SECTION 3    Representations, Warranties and Covenants.  In order to induce Agent and Lenders to enter into this Amendment, Borrowers and KER represent, warrant and covenant to Agent and Lenders, upon the effectiveness of this Amendment, which representations, warranties and covenants shall survive the execution and delivery of this Amendment that:

 

       (a)   No Default; etc.  No Default or Event of Default has occurred and is continuing after giving effect to this Amendment or would result from the execution or delivery of this Amendment or the consummation of the transactions contemplated hereby.

 

       (b)   Corporate or Limited Liability Company Power and Authority; Authorization.  Each Borrower and KER have the power and authority to execute and deliver this Amendment and to carry out the terms and provisions of the Financing Agreements, as amended by this Amendment, to which they are a party and the execution and delivery by such Borrower and KER of this Amendment, and the performance by such Borrower and KER of their obligations hereunder have been duly authorized by all requisite action by such Borrower and KER.

 

       (c)   Execution and Delivery.  Each Borrower and KER have duly executed and delivered this Amendment.

 

       (d)   Enforceability.  This Amendment constitutes the legal, valid and binding obligations of each Borrower and KER, enforceable against each Borrower and KER in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ right generally, and by general principles of equity.

 

       (e)   Representations and Warranties.  All of the representations and warranties contained in the Financing Agreements (other than those which speak expressly only as of a different date) are true and correct as of the date hereof after giving effect to this Amendment and the transactions contemplated hereby.

 

 

  

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SECTION 4   Miscellaneous.

 

       (a)   Effect; Ratification.  Borrowers acknowledge that all of the reasonable legal expenses incurred by Agent in connection herewith shall be reimbursable under Section 9.23 of the Loan Agreement.  The amendments set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of any Financing Agreement or (ii) prejudice any right or rights that any Lender may now have or may have in the future under or in connection with any Financing Agreement.  Each reference in the Financing Agreements to “this Agreement”, “herein”, “hereof” and words of like import shall mean such Financing Agreement as amended hereby.  This Amendment shall be construed in connection with and as part of the Financing Agreements and all terms, conditions, representations, warranties, covenants and agreements set forth in the Financing Agreements, except as herein amended are hereby ratified and confirmed and shall remain in full force and effect.

 

       (b)   Counterparts; etc.  This Amendment may be executed in any number of counterparts, each such counterpart constituting an original but all together one and the same instrument.  Delivery of an executed counterpart of this Amendment by fax shall have the same force and effect as the delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by fax shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of this Amendment.

 

       (c)   Governing Law.  This Amendment shall be deemed a Financing Agreement and shall be governed by, and construed and interpreted in accordance with the internal laws of the State of Illinois but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of Illinois.

 

       (d)   Reaffirmation.  Each Borrower and KER reaffirms all of its obligations under Section 14 of the Loan Agreement as a guarantor of the Obligations.

 

[Signature Pages Follow]

 

 

 

  

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IN WITNESS WHEREOF, Agent, Lenders, Borrowers and KER have caused this Amendment No. 4 to Loan and Security Agreement to be duly executed as of the day and year first above written.

 

BORROWERS:

 

KEYSTONE CONSOLIDATED INDUSTRIES, INC.

 

By:   /s/ Bert E. Downing, Jr.                                                                          

Title:    VP - CFO                                                                       

Name:  Bert E. Downing, Jr.                                                                         

ENGINEERED WIRE PRODUCTS, INC.

By:   /s/ Bert E. Downing, Jr.                                                                                      

Title:     VP - Treasurer                                                                                                                                          

Name:   Bert E. Downing, Jr.                                                                        

F V STEEL AND WIRE COMPANY

By:   /s/ Bert E. Downing, Jr.                                                                                      

Title:     VP - Treasurer                                                                     

Name:   Bert E. Downing, Jr.                                                                        

KEYSTONE-CALUMET, INC.

By:    /s/ Bert E. Downing, Jr.                                                                                     

Title:      VP - CFO                                                                     

Name:    Bert E. Downing, Jr.                                                                       

Agreed and Acknowledged by:

KEYSTONE ENERGY RESOURCES, LLC

By:   /s/ Bert E. Downing, Jr.                                                                                      

Title:    VP - Treasurer                                                                                                                                           

Name:  Bert E. Downing, Jr.                                                                         

 

 

  

  

  

 

AGENT AND LENDERS:

WELLS FARGO CAPITAL FINANCE, LLC, as Agent and a Lender

By:   /s/ Laura Dixon                         

Title:    Vice President

Name:   Laura Dixon                                                             

  

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ANNEX I

Borrowing Base Certificate

(attached)

  

3exhibit101usbank.htm

Exhibit 10.1

AMENDED AND RESTATED MASTER LETTER OF CREDIT FACILITY AGREEMENT

This Amended and Restated Master Letter of Credit Facility Agreement (this "Agreement") is entered into at Columbus, Ohio, as of the 16th day of August, 2010 (the “Effective Date”), by and between U.S. BANK NATIONAL ASSOCIATION, a national banking association (the "Bank"), and M/I HOMES, INC., an Ohio corporation (the "Company").

1. Letter of Credit Facility.

1.1.            Generally.  Subject to the terms and conditions hereof, Bank, upon the proper application by the Company, will issue standby letters of credit in the form of Exhibit "A" attached hereto, or such other form as the Bank may approve from time to time (each, a "Letter of Credit"), provided that the aggregate stated value outstanding at any one time shall in no event exceed $12,000,000.00 (the "Facility"), and provided, further, that all Letters of Credit issued under this Section 1.1 shall expire not later than three (3) years from the date of issuance.  The Company's right to obtain the issuance of Letters of Credit under the Facility shall terminate on September 30, 2011.

Each request for a Letter of Credit submitted by the Company shall, at the option of the Bank, be accompanied by the following materials (collectively, the "LC Application Materials"):

	
a.  

	
An application (the "Application") in the form of Exhibit "B" attached hereto and made a part hereof, or such other form as the Bank may require from time to time;

	
b.  

	
Cash (the "Cash Collateral") in an amount equal to not less than 101% of the face amount of the applicable Letter of Credit, which the Bank shall deposit in an Account (hereinafter defined);

	
c.  

	
Such information as the Bank reasonably requests regarding the intended use of the Letter of Credit;

	
d.  

	
Such other documents or materials as the Bank may request from time to time.

With respect to each request for the issuance of a Letter of Credit, the Company shall present the LC Application Materials to the Bank not later than noon, Columbus, Ohio time, on a Business Day that is not less than four (4) Business Days prior to the Business Day on which issuance of the Letter of Credit is desired.  "Business Day" means a day which is not a Saturday or Sunday or a legal holiday and on which the Bank is not required by law or other governmental action to close in Ohio.

  

  

 

Each Letter of Credit issued by the Bank shall be deemed issued subject to the following:

	
a.  

	
The executed reimbursement agreement (the "Reimbursement Agreement") dated July 27, 2009, and attached hereto as Exhibit "C"; and

 

	
b.  

	
The executed security agreement (the "Security Agreement") dated July 27, 2009, and attached hereto as Exhibit "D".

At the request of the Company, and subject to the terms and conditions of this Agreement, the Bank shall issue Letters of Credit on behalf of one or more Company Subsidiaries (hereinafter defined), provided, however, that the applicable Company Subsidiary(ies) and the Company shall be jointly and severally liable for all obligations pursuant to this Agreement, the Reimbursement Agreement, and the other Loan Documents.

Notwithstanding anything in the Reimbursement Agreement to the contrary, to the extent that any provision of this Agreement or the Security Agreement is inconsistent with the Reimbursement Agreement, the terms of this Agreement and the Security Agreement shall prevail.  Specifically, without limitation: (i) the security interest granted by the Company to the Bank pursuant to the Reimbursement Agreement shall be limited to the Collateral (as defined in the Security Agreement), and the Bank shall not file any financing statement that contains a collateral description that is broader than such definition of Collateral, and (ii) except for the Collateral and the Cash Collateral, as to which the Bank’s rights shall include all rights contained in this Agreement, the Reimbursement Agreement and the Security Agreement, the Bank shall not set off or apply any deposits (general or special, time or demand, provisional or final) at any time held or other indebtedness at any time owing by Bank to or for the credit or the account of the Company.

1.2           Account(s).  The Bank shall deposit the Cash Collateral in one or more accounts at the Bank specified in the Security Agreement (each, an "Account").  Each Account shall be an interest bearing account (unless the Company requests a non-interest bearing account) satisfactory to the Bank, including as of the Effective Date, without limitation, money market accounts and commercial paper open accounts.  The Cash Collateral applicable to a given Letter of Credit shall be held in the Account until the earlier of (a) the occurrence of a draw pursuant to the Letter of Credit, or (b) the expiration of the Letter of Credit.  Upon the expiration of a Letter of Credit, provided that no draws have been made upon such Letter of Credit, Bank shall remit to the Company an amount equal to the Cash Collateral together with any interest earned thereon.

1.3 Letter of Credit Draws.  In the event that the Bank pays any sum (a "LC Draw Amount") drawn by the beneficiary of an outstanding Letter of Credit (a "LC Draw"), interest shall immediately start to accrue on the LC Draw Amount at the Adjusted One Month LIBOR Rate (hereinafter defined), and such interest shall continue to accrue until reimbursement in full to the Bank.  In the event that the LC Draw Amount (together with accrued interest) has not been repaid to Bank within ten (10) Business Days, then the Bank may, without further notice to the Company and at Bank’s sole option, reimburse itself from the Account applicable to the Letter of Credit.  In the event that the funds contained in the Account are not sufficient to reimburse the Bank for the LC Draw Amount plus accrued interest, the Bank shall have the right to declare any remaining funds due and payable by written notice to the Company.  Such funds shall continue to bear interest at the Adjusted One Month LIBOR Rate until fully repaid by the Company.

2. Interest Rate; Fees.

2.1.            Adjusted One Month LIBOR Rate.  As used herein, "Adjusted One Month LIBOR Rate" shall mean an annual rate equal to two and one-half percent (2.50%) plus the greater of:  (a) the One-Month LIBOR Rate, or (b) one and one-half percent (1.50%).  "One Month LIBOR Rate" shall mean the one-month LIBOR rate quoted by the Bank from Reuters Screen LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate in effect two New York Banking Days prior to the Reprice Date, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate rounded up to the nearest one-sixteenth percent and such rate to be reset monthly on each Reprice Date.  The term "New York Banking Day" means any date (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.  The term "Reprice Date" means the first day of each month.  If an LC Draw occurs other than on the Reprice Date, the initial one-month LIBOR rate shall be that one-month LIBOR rate in effect two New York Banking Days prior to the date of the LC Draw, which rate plus the percentage described above shall be in effect until the next Reprice Date.  Lender’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

 

 

2.2.            Fees, Costs, Expenses.  In consideration of the issuance of each Letter of Credit, the Company agrees to pay to the Bank, for the sole benefit of the Bank, Bank's customary letter of credit negotiation and documentation fees (which fees shall not exceed $500.00 for each Letter of Credit), all such fees being due and payable at the time of issuance of such Letter of Credit.

With respect to the period prior to September 30, 2011, the Company also agrees to pay to the Bank a fee (which shall accrue on a daily basis, but be due and payable quarterly in arrears upon the issuance of a statement to the Company by the Bank) equal to the sum of (a) an amount equal to an annualized rate of one and one-half percent (1.50%) on the daily outstanding balance of all Letters of Credit pursuant to the Facility during such calendar quarter; and (b) an amount equal to an annualized rate of one-quarter of one percent (0.25%) on the daily unused portion of the Facility during such calendar quarter (i.e., $12,000,000.00 minus the daily outstanding balance of all Letters of Credit pursuant to the Facility).

With respect to the period following September 30, 2011, the Company shall, in addition, pay to the Bank a variable fee (which shall be due and payable quarterly in arrears upon the issuance of a statement to the Company by the Bank) equal to an annualized rate of one and one-half percent (1.50%) on the average daily outstanding balance of all Letters of Credit pursuant to the Facility during such calendar quarter; such quarterly payments shall continue until a quarter occurs when there are no such outstanding Letters of Credit.

Additionally, the Company agrees to pay on demand by the Bank all other reasonable and actual costs and expenses incidental to or incurred in connection with (a) the Facility and the preparation of this Agreement and the other Loan Documents (as hereinafter defined), and any subsequent amendments or modifications thereof, (b) the enforcement of the rights of the Bank in connection therewith, and (c) any litigation, contest, dispute, proceeding or action in any way relating to the Collateral (as hereinafter defined), this Agreement or the other Loan Documents, whether any of the foregoing are incurred prior to or after maturity, the occurrence of an Event of Default, or the rendering of a judgment.  Such costs and expenses shall include, but not be limited to, reasonable attorneys' fees and out-of-pocket expenses of the Bank.  All indebtedness, debts and liabilities, including, without limitation, principal, interest, indemnification obligations, prepayment fees, late charges, collection costs, attorneys' fees and expenses, of the Company to the Bank arising under or in connection with this Agreement or the other Loan Documents are hereafter referred to collectively as the "Obligations.")

Upon the occurrence of an Event of Default as defined in Section 6.1, the payment of any fees, costs and expenses set forth in this Section 2.2 may be charged (via automatic debit) by the Bank to any Account.

All fees shall be fully earned by the Bank, as applicable, pursuant to the foregoing provisions of this Agreement on the due date thereof and, except as otherwise set forth herein or required by applicable law, shall not be subject to rebate, refund or proration.  All fees provided for in this Section 2.2 shall be deemed to be for compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money.

2.3           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 requirements against Letters of Credit issued by the Bank, or (b) impose on the Bank any other condition regarding this Agreement or the Facility, and the result of any event referred to in clause (a) or (b) above shall be to increase the cost to the Bank of issuing or maintaining any Letter of Credit or the Facility (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), then, upon demand by the Bank, the Company shall immediately pay to the Bank additional amounts which shall be sufficient to compensate the Bank 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 Adjusted Daily LIBOR Rate. A certificate as to such increased cost incurred by the Bank, submitted by the Bank to the Company, 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 the Bank under any Letter of Credit.

2.4           Further Assurances.  The Company hereby agrees to do and perform any and all acts and to execute any and all further instruments reasonably requested by the Bank more fully to effect the purposes of this Agreement and the issuance of Letters of Credit hereunder, and further agrees to execute any and all instruments reasonably requested by the Bank in connection with the obtaining and/or maintaining of any insurance coverage applicable to any Letter of Credit.

3. Warranties and Representations.       In order to induce the Bank to enter into this Agreement and to make the Facility available to the Company, the Company warrants and represents to the Bank that each of the following statements is true and correct:

3.1.            Corporate Organization and Authority.  The Company (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio; (b) has all requisite corporate power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted; and (c) is not doing business or conducting any activity in any jurisdiction in which it has not duly qualified and become authorized to do business, except where the failure to so qualify will not have a Material Adverse Effect.  "Material Adverse Effect" means a material adverse effect upon (i) the business (present or future), condition (financial or otherwise), operations, performance or properties of the Company, (ii) the ability of the Company to perform its obligations under this Agreement, the Reimbursement Agreement, the Security Agreement and/or the other documents contemplated herein or therein and/or executed in connection herewith or therewith, any mortgage, any guaranty, or any other agreement or instrument (collectively, the "Loan Documents"), or (iii) the rights and remedies of the Bank under the Loan Documents.

3.2.            Borrowing is Legal and Authorized.  (a) The Executive Committee of the Board of Directors of the Company has duly authorized the execution and delivery of the Loan Documents, and the Loan Documents constitute valid and binding obligations of the Company enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally; and (b) the execution of the Loan Documents and the compliance by the Company with the applicable provisions thereof (i) are within the corporate powers of the Company, and (ii) are legal and will not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any lien or encumbrance upon any property of the Company under the provisions of, any agreement, charter instrument, bylaw or other instrument to which the Company is a party or by which it is bound.

3.3.            Taxes.  All tax returns required to be filed by the Company in any jurisdiction have in fact been filed, and all taxes, estimated payments, assessments, fees and other governmental charges or levies upon the Company, or upon any of its property or assets or in respect of its franchises, businesses or income, which are due and payable have been paid, except those (a) contested in good faith by the Company, by appropriate proceedings diligently instituted and conducted, and (b) with respect to which any reserve or other appropriate provision, as shall be required in accordance with generally accepted accounting principles consistently applied ("GAAP"), shall have been made therefor.  The Company does not know of any proposed additional tax assessment against it.  The accruals for taxes on the books of the Company for its current fiscal period are adequate.

3.4.            Compliance with Law.  The Company is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject, except to the extent that such a violation or failure does not have or is not likely to have a Material Adverse Effect.

3.5.            Litigation; Adverse Effects.  There is no action, suit, audit, proceeding, administrative proceeding, investigation or arbitration (or series of related actions, suits, audits, proceedings, investigations or arbitrations) before or by any governmental authority or private arbitrator pending or, to the knowledge of the Company, threatened against the Company or any property of the Company challenging the validity or the enforceability of any of the Loan Documents, or which, if adversely determined, shall have or is reasonably likely to have a Material Adverse Effect.  The Company is not subject to or in default with respect to any final judgment, writ, injunction, restraining order or order of any nature, decree, rule or regulation of any court or governmental authority, in each case which shall have or is likely to have a Material Adverse Effect.

3.6.            No Insolvency.  On the date of this Agreement and after giving effect to all indebtedness of the Company, the Company (a) will be able to pay its obligations as they become due and payable; (b) has assets, the present fair saleable value of which exceeds the amount that will be required to pay its probable liability on its obligations as the same become absolute and matured; (c) has sufficient property, the sum of which at a fair valuation exceeds all of the Company's indebtedness; and (d) will have sufficient capital to engage in its business.  The determination of the foregoing for the Company takes into account all of the Company's properties and liabilities, regardless of whether, or the amount at which, any such property or liability is included on a balance sheet of the Company prepared in accordance with GAAP, including property such as contingent contribution or subrogation rights, business prospects and goodwill.  The determination of the sum of the Company's properties at the present fair salable value has been made on a going concern basis.

3.7.            Government Consent.  Neither the nature of the Company or of its business or properties, nor any relationship between the Company and any other entity or person, nor any circumstance in connection with the execution of this Agreement, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any governmental authority on the part of the Company as a condition to the execution and delivery of the Loan Documents.

3.8.            No Defaults.  No event has occurred and no condition exists which would constitute an Event of Default pursuant to this Agreement.  The Company is not in violation in any respect of any term of any material agreement, charter instrument, bylaw or other material instrument to which it is a party or by which it may be bound, which violation would have a Material Adverse Effect.

3.9.            Warranties and Representations.  On the date of the issuance of any Letter of Credit pursuant to the Facility, the warranties and representations set forth in this Section 3 shall be true and correct on and as of such date with the same effect as though such warranties and representations had been made on and as of such date, except to the extent that such warranties and representations expressly relate to an earlier date.

4. Company Business Covenants.  The Company covenants that on and after the date of this Agreement until terminated pursuant to the terms of this Agreement, or so long as any of the indebtedness provided for herein remains unpaid:

4.1.            Payment of Taxes.  The Company shall pay all taxes, estimated payments, assessments and governmental charges or levies imposed upon it or its property or assets or in respect of any of its franchises, businesses, income or property before any penalty or interest accrues thereon; provided, however, that no such taxes, estimated payments, assessments and governmental charges are required to be paid if being contested in good faith by the Company, by appropriate proceedings diligently instituted and conducted, without any of the same becoming a lien upon the Cash Collateral, and if such reserve or other appropriate provision, if any, as shall be required in accordance with GAAP, shall have been made therefor.

 

 

4.2.            Maintenance of Properties and Corporate Existence.  The Company shall do or cause to be done all things necessary (i) to preserve and keep in full force and effect its existence, rights and franchises, and (ii) to maintain its status as a corporation duly organized and existing and in good standing under the laws of the state of its organization.

4.3. Subsidiaries.  Except as disclosed in Schedule 4.3 attached hereto as amended from time to time (the "Company Subsidiaries"), the Company has no wholly-owned subsidiaries and conducts business only in the name of the Company.  The Company will promptly notify the Bank upon the creation of any additional Company Subsidiaries.

5. Financial Information and Reporting.  As long as the Company is listed on the New York Stock Exchange, is publicly traded and timely Securities and Exchange Commission filings for the Company are generally available on EDGAR Online, the Company will have no additional financial information or reporting requirements hereunder, but if any of the foregoing shall cease to be true, then at the request of the Bank, the Company shall provide such tax returns and other financial information and reports as the Bank may from time to time reasonably require.

 

6. Default.

6.1.            Events of Default.  Each of the following shall constitute an "Event of Default" hereunder: (a) the Company fails to make any payment of fees, principal or interest in connection with this Agreement when due; (b) the Company fails to perform or observe any covenant contained in Sections 1, 2, 3, 4 or 5 of this Agreement; (c) the Company fails to comply with any other provision of this Agreement or (subject to any shorter cure period as may be set forth in any of the following agreements) any provision contained in any security agreement, reimbursement agreement or other agreement now or hereafter executed by the Company in connection with the Facility in favor of the Bank, and such failure continues for more than 10 days after such failure shall first become known to any officer of the Company; (d) any warranty, representation or other statement by or on behalf of the Company contained in this Agreement or in any other Loan Document or in any instrument or certificate furnished in compliance with or in reference hereto or thereto is false or misleading in any material respect; (e) the Company becomes insolvent or makes an assignment for the benefit of creditors, or consents to the appointment of a trustee, receiver or liquidator; (f) bankruptcy, reorganization, composition, arrangement, insolvency, dissolution or liquidation proceedings are instituted by the Company, or bankruptcy, reorganization, composition, arrangement, insolvency, dissolution or liquidation proceedings are instituted against the Company which are not stayed or dismissed within 60 days; (g) the default by Company or any Company Subsidiary with respect to any Obligation or indebtedness to the Bank; or (h) a Change of Control of the Company shall have occurred.

For purposes of this Agreement, a "Change of Control" of the Company shall mean 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 the Company equal to at least fifty percent (50%); or (b) as of any date a majority of the Board of Directors of the Company consists of individuals who were not either (i) directors of the Company as of the corresponding date of the previous year, (ii) selected or nominated to become directors by the Board of Directors of the Company 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 the Company of which a majority consisted of individuals described in clause (b)(i) above and individuals described in clause (b)(ii) above.  For purposes of the definition of “Change of Control,” “Person” shall mean 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 or any other entity of whatever nature (including without limitation a joint venture).

6.2.            Default Remedies.  If an Event of Default exists, the Bank may immediately exercise any right, power or remedy permitted to the Bank by law or any provision of this Agreement and the Security Agreement, provided that any outstanding Letter of Credit for which the Bank has Cash Collateral in accordance with the requirements of this Agreement and the Security 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 Security Agreement with respect to the Cash Collateral that secures such Letter of Credit.  In addition, following the occurrence of an Event of Default, the Bank shall have no further obligation to issue additional Letters of Credit pursuant to the Facility.

7. Miscellaneous.

7.1.            Notices.

(a) All communications under the Loan Documents shall be in writing and shall be mailed by certified mail, postage prepaid, or sent by commercial overnight courier:

(i) if to the Bank, at the following address, or at such other address as may have been furnished in writing to the Company by the Bank:

U.S. Bank National Association

10 West Broad Street, 12th Floor

Columbus, Ohio  43215

Attn:  Commercial Real Estate

(ii) if to the Company, at the following address, or at such other address as may have been furnished in writing to the Bank by the Company:

M/I Homes, Inc.

3 Easton Oval

Columbus, Ohio 43219

Attn:  Chief Financial Officer

(b) Any notice so addressed and stamped, if mailed by certified mail, shall be deemed to be given on the second business day following the postmark date, or if sent by commercial overnight courier, shall be deemed to be given when delivered.

7.2.            Successors and Assigns.  This Agreement and the Loan Documents shall inure to the benefit of and be binding upon the heirs, successors and assigns of each of the parties.  Notwithstanding the foregoing, the Company shall not have the right to assign its rights or obligations under this Agreement or the Loan Documents.

7.3.            Entire Agreement.

The Loan Documents embody the entire agreement and understanding between the Company and the Bank and supersede all prior agreements and understandings between the Company and the Bank relating to the subject matter thereof.

7.4.            Reinstatement.  Notwithstanding any other provision of this Agreement, all of the rights, claims, interests and authorizations in favor of the Bank under this Agreement shall be reinstated and revived, and all of such rights, claims, interests and authorizations shall be fully enforceable, if at any time any amount paid to the Bank or any of their respective affiliates on account of any Obligation is thereafter required to be restored or returned by the Bank as a result of the bankruptcy, insolvency or reorganization of the Company, or any other person, or as a result of any other fact or circumstance, all as though such amount had not been paid.

7.5.            Amendment and Waiver; Duplicate Originals.  All references to this Agreement and the other Loan Documents shall also include all amendments, extensions, renewals, modifications and substitutions thereto and thereof.  The provisions of this Agreement and the other Loan Documents may be amended, and the observance of any term of this Agreement and the other Loan Documents may be waived, with (and only with) the written consent of the Company and the Bank; provided, however that nothing herein shall change the sole discretion of the Bank (as set forth elsewhere in this Agreement) to make advances, determinations, decisions or to take or refrain from taking other actions.  Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument.  This Agreement amends, restates, releases and supersedes that certain Master Letter of Credit Facility Agreement by and between the Bank and the Company dated as of July 27, 2009.

7.6.            Severability; Enforceability; Governing Law; Jurisdiction; Venue; and Service of Process.  Any provision of this Agreement or the other Loan Documents which is prohibited or unenforceable in any jurisdiction, as to such jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  No delay or failure or other course of conduct by the Bank in the exercise of any power or right shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any other or further exercise thereof, or the exercise of any other power or right.  All of the rights and remedies of the Bank, whether evidenced hereby or by any other agreement or instrument, shall be cumulative and may be exercised singularly or concurrently.

The validity of this Agreement and the other Loan Documents, their construction, interpretation and enforcement, and the rights of the parties hereto and thereto shall be determined under, governed by and construed in accordance with the laws of the State of Ohio (without reference to the choice of law principles thereof), but giving effect to applicable federal laws.  The parties agree that all actions or proceedings arising in connection with this Agreement and the other Loan Documents shall be tried and litigated only in the state and federal courts located in the County of Franklin, State of Ohio.

The Company hereby submits, for itself and in respect of its property, generally and unconditionally, to the jurisdiction of the aforesaid courts and waives, to the extent permitted under applicable law, any right it may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section 7.6.

The Company hereby waives personal service of the summons, complaint or other process issued in any action or proceeding and agrees that service of such summons, complaint or other process may be made by registered or certified mail addressed to the Company at the address for notices set forth in Section 7.1 of this Agreement and that service so made shall be deemed completed upon the earlier of the Company's actual receipt thereof or 3 days after deposit in the United States mails, proper postage prepaid.

Nothing in this Agreement shall be deemed or operate to affect the right of the Bank to serve legal process in any other manner permitted by law, or to preclude the enforcement by the Bank of any judgment or order obtained in such forum or the taking of any action under this Agreement or the other Loan Documents to enforce same in any other appropriate forum or jurisdiction.

7.7.            No Consequential Damages.                                                      No claim may be made by the Company, or by any of its affiliates, or their respective directors, officers, employees, attorneys or agents, against the Bank, or any of its affiliates, directors, officers, employees, attorneys or agents for any special, indirect or consequential damages in respect of any breach or wrongful conduct (whether the claim therefor is based on contract, tort or duty imposed by law) in connection with, arising out of or in any way related to the transactions contemplated and relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, and the Company hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

7.8.            Indemnity; Assumption of Risk.  The Company agrees to indemnify the Bank, and its affiliates, directors, officers, employees, agents and advisors (each an "Indemnitee"), against, and hold each Indemnitee harmless from, any and all claims, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any other document, agreement or instrument contemplated hereby or thereby, the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Letter of Credit or the use of the proceeds therefrom (including any refusal by the Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (iii) any actual or prospective claim, litigation, proceeding or investigation (including, without limitation, any investigation instituted or conducted by any governmental agency or instrumentality) relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

As among the Company and the Bank, the Company assumes all risks of the acts and omissions of, or misuse of Letters of Credit by the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, the Bank shall not be responsible (other than 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 a Letter of Credit, 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 Letter of Credit 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 Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (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 Letter of Credit or of the proceeds of any drawing under such Letter of Credit; or (viii) for any consequences arising from causes beyond the control of the Bank 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 the Bank's rights or powers under this subsection 7.8.

7.9.            WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY HERETO HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP AMONG THE COMPANY AND THE BANK.  THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN ANY OTHER LOAN DOCUMENT.

7.10. Interest Rate Limitation.  Notwithstanding anything in this Agreement to the contrary, if at any time the interest rate applicable to the Facility, together with all fees, charges and other amounts which are treated as interest on the Facility under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Bank in accordance with applicable law, the rate of interest payable in respect of the Facility hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate.

7.11. Important Information About Procedures For Opening A New Account.  To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an Account.  When the Company opens an Account the Bank will ask for the depositor's name, address and other information that will allow the Bank to identify the depositor.  The Bank may also ask to see other documents that substantiate the depositor's identity.

7.12. Definitions, Exhibits and Schedules.

Definitions:

"Account" is defined in Section 1.2.

"Act" is defined in Section 7.11.

"Adjusted One Month LIBOR Rate" is defined in Section 2.1.

"Agreement" is defined in the preamble.

"Application" is defined in Section 1.1.

"Bank" is defined in the preamble.

"Business Day" is defined in Section 1.1.

"Cash Collateral" is defined in Section 1.1.

"Change of Control" is defined in Section 6.1.

"Charges" is defined in Section 7.10.

"Company" is defined in the preamble.

"Company Subsidiaries" is defined in Section 4.3.

"Event of Default" is defined in Section 6.1.

"Facility" is defined in Section 1.1.

"GAAP" is defined in Section 3.3.

"LC Application Materials" is defined in Section 1.1.

"LC Draw" is defined in Section 1.3.

"LC Draw Amount" is defined in Section 1.3.

"Letter of Credit" is defined in Section 1.1.

"Loan Documents" is defined in Section 3.1.

"Material Adverse Effect" is defined in Section 3.1.

"Maximum Rate" is defined in Section 7.10.

"New York Banking Day" is defined in Section 2.1.

"Obligations" is defined in Section 2.2.

"One Month LIBOR Rate" is defined in Section 2.1.

"Reimbursement Agreement" is defined in Section 1.1.

“Person” is defined in Section 6.1.

"Reprice Date" is defined in Section 2.1.

"Security Agreement" is defined in Section 1.1.

Exhibits:

Exhibit A                                Form of Letter of Credit

Exhibit B                                Form of Application

Exhibit C                                Reimbursement Agreement

Exhibit D                                Security Agreement

Schedules:

Schedule 4.3                                Schedule of Company Subsidiaries

[SIGNATURE PAGE FOLLOWS]

  

  

  

IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be duly executed as of the Effective Date first written above.

M/I HOMES, INC.,

an Ohio corporation

By:                                                                           

	
  

	
Its: Executive Vice President and Chief Financial Officer

U.S. BANK NATIONAL ASSOCIATION,

a national banking association,

By:                                                                           

Its:                                                                          

  

  

  

EXHIBIT  A

Form of Letter of Credit

U.S. BANK NATIONAL ASSOCIATION                                                      SWIFT:   USBKUS44STL

INTERNATIONAL DEPT. SL-MO-L2IL                                                        TELEX:

721 LOCUST STREET                                                                                     TELEPHONE: 314-418-2875

ST. LOUIS, MO 63101                                                                               FACSIMILE:                                314-418-1376

DATE:

BENEFICIARY:

OUR IRREVOCABLE LETTER OF CREDIT NO. SLCLSTL0XXXX

 

 

GENTLEMEN:

WE HEREBY ISSUE OUR IRREVOCABLE LETTER OF CREDIT NO. SLCLSTL0XXXX IN FAVOR OF YOURSELVES FOR THE ACCOUNT OF         UP TO THE AGGREGATE AMOUNT OF USD       (AMOUNT IN WORDS AND 00/100 UNITED STATES DOLLARS) AVAILABLE BY YOUR DRAFT AT SIGHT DRAWN ON U.S. BANK NATIONAL ASSOCIATION, ST. LOUIS, MISSOURI ACCOMPANIED BY:

A DATED AND SIGNED STATEMENT APPEARING ON ITS FACE TO BE EXECUTED BY

BENEFICIARY OR DULY AUTHORIZED AGENT THEREOF CERTIFYING THAT:

 “

          .”

THIS INSTRUMENT MUST BE PRESENTED WITH THE ABOVE REFERENCED DOCUMENTS FOR NEGOTIATION.

 

 

DRAFTS MUST BE DRAWN AND PRESENTED AT U.S. BANK NATIONAL ASSOCIATION, INTERNATIONAL DEPT., SL-MO-L2IL, 721 LOCUST STREET, ST. LOUIS, MISSOURI 63101 NOT LATER THAN (EXPIRY DATE).

EACH DRAFT MUST STATE THAT IT IS “DRAWN UNDER U.S. BANK NATIONAL ASSOCIATION, ST. LOUIS, MISSOURI LETTER OF CREDIT NO. SLCLSTL0XXXX DATED (ISSUANCE DATE).”

WE HEREBY ENGAGE WITH THE DRAWERS OF ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT, THAT SUCH DRAFTS WILL BE DULY HONORED UPON PRESENTATION TO THE DRAWEE.

CANCELLATION OF LETTER OF CREDIT PRIOR TO EXPIRY: THIS LETTER OF CREDIT AND AMENDMENTS, IF ANY, MUST BE RETURNED TO US FOR CANCELLATION WITH BENEFICIARY’S STATEMENT THAT THE LETTER OF CREDIT IS BEING RETURNED FOR CANCELLATION. IN THE ABSENCE OF BENEFICIARY’S STATEMENT WE WILL CONSIDER THE LETTER OF CREDIT RETURNED FOR CANCELLATION.

THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (2007 REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NUMBER 600.

VERY TRULY YOURS,

 

 

U.S. BANK NATIONAL ASSOCIATION

________________________________

AUTHORIZED SIGNATURE/

  

  

 

EXHIBIT B

 

Form of Application

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

EXHIBIT C

 

Form of Reimbursement Agreement

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

EXHIBIT D

 

Security Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

SCHEDULE 4.3

Schedule of Company Subsidiaries

M/I Financial Corp.

M/I Homes Service LLC

MHO, LLC

M/I Properties, LLC

Northeast Office Venture, LLC

TransOhio Residential Title Agency, Ltd.

M/I Homes of Indiana, L.P.

M/I Homes First Indiana LLC

M/I Homes Second Indiana LLC

M/I Homes of Florida LLC

M/I Homes of Tampa, LLC

M/I Homes of Orlando, LLC

M/I Homes of West Palm Beach, LLC

M/I Homes of Central Ohio, LLC

M/I Homes of Cincinnati, LLC

M/I Homes of Raleigh, LLC

M/I Homes of Charlotte, LLC

M/I Homes of DC, LLC

MHO Holdings, LLC

The Fields at Perry Hall, LLC

Wilson Farm, LLC

M/I Homes of Chicago, LLC

M/I Title Agency, Ltd.

Prince Georges Utilities, LLC

M/I Homes of Houston, LLC

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