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Exhibit 10.12
SECOND RESTATED REVOLVING CREDIT LOAN AND
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STANDBY LETTER OF CREDIT AGREEMENT
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THIS AGREEMENT is made to be effective as of December 30,
1996, by and among M/I SCHOTTENSTEIN HOMES, INC., an Ohio corporation
("BORROWER"), BANK ONE, COLUMBUS, N.A., a national banking association ("BANK
One"), THE HUNTINGTON NATIONAL BANK, a national banking association ("HNB"), THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association ("FIRST
CHICAGO"), NATIONAL CITY BANK OF COLUMBUS, a national banking association
("NCB"), THE FIRST NATIONAL BANK OF BOSTON, a national banking association
("BOB"), THE FIFTH THIRD BANK OF COLUMBUS, an Ohio banking corporation ("FIFTH
THIRD") (Bank One, HNB, First Chicago, NCB, BOB and Fifth Third is each a "BANK"
and, collectively, "BANKS"), and BANK ONE, COLUMBUS, N.A., as agent for Banks
("AGENT"). For valuable consideration, the receipt of which is hereby
acknowledged, Borrower, Banks and Agent, each intending to be legally bound,
hereby recite and agree as follows:
BACKGROUND INFORMATION
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A. Borrower, Bank One, HNB, First Chicago, NCB, BOB and Agent
are parties to a certain Restated Revolving Credit Loan, Seasonal Loan and
Standby Letter of Credit Agreement effective as of September 29, 1995, as
amended by Amendment No. 1 thereto effective as of May 7, 1996 (collectively,
the "EXISTING CREDIT AGREEMENT").
B. Borrower, Banks and Agent want to modify the Existing
Credit Agreement by, among other things, adding Fifth Third as a Bank,
eliminating the Seasonal Loans (as defined in the Existing Credit Agreement) and
increasing the amount of credit available to Borrower as Revolving Credit Loans.
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AGREEMENT
SECTION 1. DEFINITIONS
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1.1 DEFINED TERMS. As used in this Agreement, the following
terms have the following respective meanings:
"ADJUSTMENT DATE" shall mean each date that is two
Business Days after February 15, May 15, August 15 and November 15 of each year
of the Commitment, subject to the provisions in the definition of "Applicable
Eurodollar Margin" for a later adjustment in certain circumstances.
"AFFILIATE" shall mean (a) any Person (other than a
Subsidiary of Borrower) which, directly or indirectly, controls, is controlled
by or is under common control with Borrower or (b) any Person who is a director,
officer or key employee of Borrower, any Subsidiary of Borrower or any Person
described in clause (a) of this definition. For purposes of this definition,
"control" of a Person means the power, direct or indirect, to vote twenty
percent (20%) or more of the securities having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGREEMENT" shall mean this Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"APPLICABLE EURODOLLAR MARGIN" shall mean, during the
period from the date hereof until the first Adjustment Date, [2.00]% per annum.
Thereafter, subject to the other terms and conditions of this Agreement
(including the limitations on the availability of Eurodollar Rate Loans and
including the termination of the Commitment as set forth in Section 9 hereof),
the "Applicable Eurodollar Margin" will be adjusted on each Adjustment Date to
the applicable rate per annum that corresponds to the ratio of EBITDA to
Consolidated Interest Incurred, determined from the financial statements and
compliance certificate that relate to the last month of the fiscal quarter
immediately preceding such Adjustment Date, as set forth below:
If the ratio of EBITDA Applicable Eurodollar
to Consolidated Margin for Eurodollar
Interest INCURRED Rate Loans is:
is: ------------------------
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If the ratio of EBITDA Applicable Eurodollar
to Consolidated Margin for Eurodollar
Interest INCURRED Rate Loans is:
is: ------------------------
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less than 1.75 to 1.0 Eurodollar Rate Loans are
not available
equal to or greater
than 1.75 to 1.0 but
less than 2.0 to 1.0 2.50% per annum
equal to or greater
than 2.0 to 1.0 but
less than 2.50 to 1.0 2.25% per annum
equal to or greater
than 2.50 to 1.0 but
less than 3.0 to 1.0 2.00% per annum
equal to or greater
than 3.0 to 1.0 1.75% per annum
If, however, the financial statements required to be delivered pursuant to
subsection 6.1(b) and the related compliance certificate required to be
delivered pursuant to subsection 6.2(a) are not delivered when due, then:
(a) if such financial statements and compliance
certificate are delivered after the date such financial statements and
compliance certificate were required to be delivered but before the expiration
of any applicable cure period and the Applicable Eurodollar Margin increases
from that previously in effect as a result of a change in the ratio of EBITDA to
Consolidated Interest Incurred as determined from such financial statements and
compliance certificate, then the Applicable Eurodollar Margin during the period
from the date upon which such financial statements were required to be delivered
but before the expiration of any applicable cure period until the date upon
which they actually are delivered shall be the Applicable Eurodollar Margin as
so increased;
(b) if such financial statements and compliance
certificate are delivered after the date such financial statements and
compliance certificate were required to be delivered but before the expiration
of any applicable cure period and the Applicable Eurodollar Margin decreases
from that previously in effect as a result of a change in the ratio of EBITDA to
Consolidated Interest Incurred as determined from such
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financial statements and compliance certificate, then such decrease in the
Applicable Eurodollar Margin shall not become applicable until the date upon
which the financial statements and compliance certificates are actually
delivered; and
(c) if such financial statements and certificate are not
delivered prior to the expiration of the applicable cure period, the Applicable
Eurodollar Margin for the period beginning as of the date upon which such
financial statements and compliance certificate were required to be delivered
without regard to any applicable cure period until two Business Days following
the date upon which they actually are delivered shall be, per annum, one percent
(1.0%) plus the Applicable Eurodollar Margin that was in effect at the time of
such expiration (it being understood that the foregoing shall not limit the
rights of the Agent and the Banks set forth in Section 9).
"BANKS" shall mean Bank One, HNB, First Chicago, NCB, BOB and
Fifth Third.
"BORROWING BASE" shall mean, as of any date of determination,
an amount equal to the sum of:
(a) the amount calculated by multiplying .90 by the value
of Eligible Production Inventory; plus
(b) the amount calculated by multiplying .85 by the
aggregate value of Eligible Model Houses which are not over two (2) years old
(as measured from the date of the completion of construction); plus
(c) the amount calculated by multiplying .75 by the
aggregate value of Eligible Model Houses which are over two (2) years old (as
measured from the date of the completion of construction); plus
(d) the amount calculated by multiplying .80 by the value
of Eligible Developed Lots Sold; plus
(e) the amount calculated by multiplying .50 by the value
of Eligible Developed Lots Unsold; plus
(f) the amount calculated by multiplying .25 by the value
of Eligible Raw Land and Land Under Development; plus
(g) the amount calculated by multiplying .25 by the value
of Investments in Joint Ventures;
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less the sum of (i) the aggregate amount of Customer Deposits then held by
Borrower and (ii) the aggregate outstanding amount of Liens incurred by Borrower
and permitted by subsection 7.2(i) hereof.
"BORROWING BASE CERTIFICATE" shall have the meaning set forth
in subsection 5.1(c) hereof.
"BORROWING DATE" shall mean any Business Day specified
pursuant to (a) subsection 2.3 hereof as a date on which Banks make, at
Borrower's request, a disbursement of the Revolving Credit Loans hereunder, or
(b) subsection 2.13 hereof as a date on which Agent issues, at Borrower's
request, a Standby L/C hereunder.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Columbus, Ohio are authorized or
required by law to close, except that when used in connection with Eurodollar
Rate Loans, "Business Day" shall mean any Business Day on which dealings in
Dollars between banks may be carried on in London, England and Columbus, Ohio.
"CASH EQUIVALENTS" shall mean (a) securities with maturities
of 180 days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit and bankers' acceptances, each issued by Bank One, HNB, NBD, NCB, BOB
or Fifth Third and each with a maturity of 180 days or less from the date of
acquisition, and (c) commercial paper of a domestic issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. with a
maturity of not more than 180 days.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended or superseded from time to time. Any reference to a specific provision
of the Code shall be construed to include any comparable provision of the Code
as hereafter amended or superseded.
"COMMITMENT" shall mean the aggregate of (a) the Revolving
Credit Loan Commitments and (b) the L/C Commitments as set forth on Schedule 1
hereto.
"COMMITMENT PERIOD" shall mean the period from and including
the date hereof to September 30, 2001, or such earlier or later date as the
Commitment shall terminate as provided herein.
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"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or
not incorporated, which is under common control with Borrower within the meaning
of Section 414(b) or (c) of the Code.
"CONSOLIDATED EARNINGS" at any date shall mean the amount
which would be set forth opposite the caption "net income" (or any like caption)
in a consolidated statement of income or operations of Borrower and its
Subsidiaries at such date prepared in accordance with GAAP.
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"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period,
interest expense on Indebtedness of the Borrower and its Subsidiaries for such
period, in each case determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST INCURRED" shall mean, for any rolling
12 month period, all interest incurred during such period on outstanding
Indebtedness of Borrower and its Subsidiaries irrespective of whether such
interest is expensed or capitalized by Borrower or its Subsidiaries, in each
case determined on a consolidated basis.
"CONSOLIDATED LIABILITIES" at any date shall mean the total of
all amounts which would be properly classified as liabilities in a consolidated
balance sheet of Borrower and its Subsidiaries at such date prepared in
accordance with GAAP, including without limitation deferred income taxes and
capital lease obligations, if any.
"CONSOLIDATED TANGIBLE NET WORTH" at any date shall be the
excess, if any, of the total amount of assets over the total amount of
liabilities, deferred credits and minority interests, as the same would appear
in a consolidated balance sheet of Borrower and its Subsidiaries at such date
prepared in accordance with GAAP, less the book value of all intangible assets,
determined in accordance with GAAP.
"CONSOLIDATED UNSUBORDINATED LIABILITIES" at any date shall
mean Consolidated Liabilities less Subordinated Indebtedness.
"CONSTRUCTION BONDS" shall mean bonds issued by surety bond
companies for the benefit of, and as required by, municipalities or other
political subdivisions to secure Borrower's performance of its obligations
relating to lot improvements and subdivision development and completion.
"CONTINGENT OBLIGATION" shall mean as to any Person, any
reimbursement obligations (including Reimbursement Obligations) of such Person
in respect of drafts that may be drawn under letters of credit, any
reimbursement obligations of such Person in respect of surety bonds (including
reimbursement obligations in respect of Construction Bonds), and any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations primarily to pay money ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including without limitation any obligation of such Person, whether
or not contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect
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security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation, or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, or (d) otherwise to assure or hold harmless the obligee
under such primary obligation against loss in respect thereof; provided,
however, that the term "Contingent Obligation" shall not include (A)
endorsements of instruments for deposit or collection in the ordinary course of
business, (B) Mortgage Loan Repurchase Obligations, or (C) obligations under lot
purchase contracts entered into in the ordinary course of business.
"CONTRACTUAL OBLIGATION" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any of its
property is bound.
"CUSTOMER DEPOSITS" shall mean cash deposits made by customers
of Borrower in connection with the execution of purchase contracts, which
deposits shall be shown as liabilities on Borrower's financial statements.
"DEFAULT" shall mean any of the events specified in Section 9
hereof, whether or not any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"DEVELOPED LOTS" shall mean (a) all residential lots with
respect to which (i) development has been completed to such an extent that
permits that allow use and construction, including building, sanitary sewer and
water, could be obtained for a detached or attached single family house
(including a townhouse condominium building or condominium building) on each
such lot, and (ii) Start of Construction has not occurred; and (b) all lots
zoned for commercial use that have sewer and water available for use at such
lots. The value of Developed Lots shall be calculated in accordance with GAAP
and shall include all associated costs required to be capitalized under GAAP;
provided, however, that the total value (calculated in accordance with GAAP) of
commercial lots constituting Developed Lots shall not exceed $1,000,000 at any
one time.
"DOLLARS" and "$" shall mean dollars in lawful currency of the
United States of America.
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"EBITDA" shall mean, for any rolling 12 month period, on a
consolidated basis for the Borrower and its Subsidiaries, the sum of the amounts
for such period of (a) Consolidated Earnings, PLUS (b) charges against income
for federal, state and local income taxes, PLUS (c) Consolidated Interest
Expense, PLUS (d) depreciation and amortization expense, PLUS (e) extraordinary
losses EXCLUSIVE of any such losses that are attributable to the write-down or
other downward revaluation of assets (including the establishment of reserves),
MINUS (x) interest income, MINUS (y) all extraordinary gains.
"ELIGIBLE DEVELOPED LOTS SOLD" shall mean all Developed Lots
which Borrower has recorded as sold in accordance with its usual accounting
practices to any Person other than an Affiliate or Subsidiary of Borrower. The
value of Eligible Developed Lots Sold shall be calculated in accordance with
GAAP and shall include all associated costs required to be capitalized under
GAAP, but shall be reduced by the then outstanding aggregate amount of
Indebtedness secured by any Eligible Developed Lots Sold and permitted by
subsection 7.1(d) hereof.
"ELIGIBLE DEVELOPED LOTS UNSOLD" shall mean all Developed Lots
which Borrower has not recorded as sold in accordance with its usual accounting
practices, or which Borrower has recorded as sold to an Affiliate or Subsidiary
of Borrower. The value of Eligible Developed Lots Unsold shall be calculated in
accordance with GAAP and shall include all associated costs required to be
capitalized under GAAP, but shall be reduced by the then outstanding aggregate
amount of Indebtedness secured by any Eligible Developed Lots Unsold and
permitted by subsection 7.1(d) hereof.
"ELIGIBLE MODEL HOUSES" shall mean (a) all completed detached
or attached single family houses (including townhouse condominiums and
condominiums) which are being used by Borrower as sales models, and the lots on
which such houses are located and (b) detached or attached (including townhouse
condominiums and condominiums) single family houses for which there has been a
Start of Construction which upon completion will be used by Borrower as sales
models, and the lots on which such houses are located. The value of Eligible
Model Houses shall be calculated in accordance with GAAP and shall include all
associated costs required to be capitalized under GAAP except for the costs of
any furnishings, but shall be reduced by the then outstanding aggregate amount
of Indebtedness secured by any Eligible Model Houses and permitted by subsection
7.1(d) hereof; provided, however, that (a) the aggregate value of attached
(including townhouse condominiums and condominiums) single family homes
constituting
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Eligible Model Houses shall not exceed $3,000,000, and (b) the aggregate value
of all Eligible Model Houses shall not exceed $30,000,000.
"ELIGIBLE MORTGAGE LOAN" shall mean at any date an original
(not a rewritten or renewed) loan evidenced by a note and secured by a first
mortgage on residential real property which (a) M/I Financial Corp. has made to
enable a natural person or persons to purchase a home from Borrower or another
Person that is substantially completed, (b) is not more than 60 days old as
determined by the date of the note which evidences such loan, and (c) is
subject, or M/I Financial Corp. reasonably believes is subject, to a Purchase
Commitment; provided, however, that the amount of Eligible Mortgage Loans
consisting of loans made by M/I Financial Corp. for the purchase of homes from
any Person other than Borrower shall not, in the aggregate at any one time
outstanding, exceed the amount of $5,000,000.
"ELIGIBLE PRODUCTION INVENTORY" shall mean all detached or
attached (including townhouse condominiums and condominiums) single family
houses which are completed (including Speculative Houses but excluding Eligible
Model Houses and Rental Houses, if any) or for which there has been a Start of
Construction (including Speculative Houses but excluding Eligible Model Houses
and Rental Houses, if any), and the lots on which such houses are located. The
value of Eligible Production Inventory shall be calculated in accordance with
GAAP and shall include all associated costs required to be capitalized under
GAAP, but shall be reduced by the then outstanding aggregate amount of
Indebtedness secured by any Eligible Production Inventory and permitted by
subsection 7.1(d) hereof; provided that the cost of obtaining commitments for
financing terms to be provided to the buyers of Eligible Production Inventory
shall be excluded.
"ELIGIBLE RAW LAND AND LAND UNDER DEVELOPMENT" shall mean all
land other than land included in the definition of Eligible Model Houses, Rental
Houses (if any), Eligible Production Inventory, Eligible Developed Lots Sold, or
Eligible Developed Lots Unsold. The value of Eligible Raw Land and Land Under
Development shall be calculated in accordance with GAAP and shall include all
associated costs required to be capitalized in accordance with GAAP, but shall
be reduced by the then outstanding aggregate amount of Indebtedness secured by
any Eligible Raw Land and Land Under Development and permitted by subsection
7.1(d) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
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"EUROCURRENCY RESERVE REQUIREMENTS" shall mean, for any day as
applied to a Eurodollar Rate Loan, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.
"EURODOLLAR BASE RATE" shall mean, with respect to each day
during each Interest Period, the rate per annum equal to the rate at which Agent
is offered Dollar deposits at or about 10:00 A.M., Columbus, Ohio time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Rate Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Rate Loan to be outstanding during such Interest Period.
"EURODOLLAR RATE LOANS" shall mean Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"EURODOLLAR RATE" shall mean with respect to each day during
each Interest Period pertaining to a Eurodollar Rate Loan, a rate per annum
determined for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):
EURODOLLAR BASE RATE
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1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT" shall mean any of the events specified in
Section 9 hereof, provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"▇▇▇▇▇▇ ▇▇▇" shall mean the Federal National Mortgage
Association, or any successor thereto.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect at the time any determination is made
or financial statement is required hereunder as promulgated by the American
Institute of Certified Public Accountants, the Accounting Principles Board, the
Financial Accounting Standards Board or any other body existing from time to
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time which is authorized to establish or interpret such principles, applied on a
consistent basis throughout any applicable period, subject to any change
required by a change in GAAP; provided, however, that if any change in generally
accepted accounting principles from those applied in preparing the financial
statements referred to in subsection 4.1 hereof affects the calculation of any
financial covenant contained herein, Borrower, Banks and Agent hereby agree to
amend the Agreement to the effect that each such financial covenant is not more
or less restrictive than such covenant as in effect on the date hereof using
generally accepted accounting principles consistent with those reflected in such
financial statements.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEED HNB JOINT VENTURES LETTERS OF CREDIT" shall mean
that portion of the standby letters of credit (including joint venture letters
of credit issued by HNB prior to the date of this Agreement that will remain in
place after the effective date of this Agreement) issued by HNB for the account
of joint ventures of which Borrower is a partner pursuant to the HNB Joint
Ventures Letter of Credit Agreement that Borrower has guaranteed in accordance
with the terms of the HNB Joint Ventures Letter of Credit Agreement, provided
that the portion of such letters of credit that has been guaranteed by Borrower
shall not exceed in the aggregate $4,000,000 at any one time outstanding.
"GUARANTIES" (individually, "GUARANTY") shall mean the
guaranties of the Indebtedness evidenced by this Agreement and by all documents
contemplated by this Agreement, including without limitation the Notes, as this
Agreement and such documents may be amended or restated from time to time, which
guaranties are substantially in the form of Exhibit A attached to this
Agreement, executed by M/I Financial Corp. (which as of the date hereof is
Borrower's only Subsidiary) in favor of the respective Banks and to which Agent
shall also be a party, and any guaranties in favor of Agent and the respective
Banks executed by (a) each other permitted Subsidiary, if any, of Borrower
and/or (b) the M/I Ancillary Businesses that are wholly-owned by the Borrower or
by any Subsidiary.
"HNB JOINT VENTURES LETTER OF CREDIT AGREEMENT" shall mean the
Agreement to Issue Letters of Credit dated as of June 8, 1994, as amended by the
First Amendment to Agreement to Issue Letters of Credit dated as of September
29, 1995, with respect to standby letters of credit issued or to be issued by
HNB
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for the account of certain joint ventures of which Borrower is a partner.
"INDEBTEDNESS" shall mean as to any Person, at a particular
time, (a) indebtedness for borrowed money or for the deferred purchase price of
property or services (including without limitation any such indebtedness which
is non-recourse to the credit of such Person but is secured by assets of such
Person) other than current (due and payable within 12 months or less), unsecured
obligations for operating expense items incurred in the ordinary course of
business, (b) any other indebtedness evidenced by promissory notes or other debt
instruments, (c) obligations under material leases which shall have been or
should be, in accordance with GAAP, recorded as capitalized leases, (d)
indebtedness arising under acceptance facilities, (e) indebtedness arising under
unpaid reimbursement obligations (including Reimbursement Obligations) in
respect of all drafts actually drawn under letters or credit (including Standby
L/Cs) issued for the account of such Person, (f) indebtedness arising under
unpaid reimbursement obligations in respect of all payments actually made under
surety bonds (including payments actually made under Construction Bonds), and
(g) the incurrence of withdrawal liability under Title IV of ERISA by such
Person or a Commonly Controlled Entity to a Multiemployer Plan.
"INTEREST PAYMENT DATE" shall mean, (a) with respect to any
Prime Rate Loan, the last day of each March, June, September and December,
commencing on the first of such days to occur after the first Borrowing Date,
(b) with respect to any Eurodollar Rate Loan having an Interest Period of three
months or less, the last day of such Interest Period, and (c) with respect to
any Eurodollar Rate Loan having an Interest Period longer than three months, (x)
each day which is three months, or a whole multiple thereof, after the first day
of such Interest Period, and (y) the last day of such Interest Period.
"INTEREST PERIOD" shall mean with respect to any Eurodollar
Rate Loan:
(i) initially, the period commencing on the Borrowing Date
or conversion date, as the case may be, with respect to such Eurodollar Rate
Loan and ending one, two, three or six months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Rate Loan and
ending one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to
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the Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(2) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and
(3) no Interest Period shall be for less than one month,
and the Borrower shall not select an Interest Period for a Eurodollar Rate Loan
as a Revolving Credit Loan if the last day of such Interest Period would be
after the last day of the Commitment Period.
"INTEREST RATE CONTRACT" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate insurance arrangement, or any other agreement or arrangement designed to
provide protection against fluctuation in interest rates.
"INVESTMENTS IN JOINT VENTURES" shall mean investments (as
defined in subsection 7.9 hereof) in joint ventures that are general
partnerships, limited partnerships, limited liability companies, corporations or
any other business association formed for the purpose of acquiring land, the
majority of which land is zoned residential and is to be developed into
residential lots for attached or detached single family housing (including a
townhouse condominium building or condominium building), and/or performing such
development. The value of Investments in Joint Ventures shall be calculated in
accordance with GAAP.
"L/C COMMITMENT" shall mean, as to any L/C Participant, the
percentage (the "L/C COMMITMENT PERCENTAGE") and amount set forth opposite its
name on Schedule 1 hereto under the headings "L/C Commitment Percentage" and
"L/C Commitment"; and collectively, as to all L/C Participants, the "L/C
COMMITMENTS".
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"L/C PARTICIPANT(S)" shall mean any one or more of the Banks.
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"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, charge, encumbrance, lien
(statutory or other), preference, priority or other security agreement or
similar preferential arrangement of any kind or nature whatsoever (including
without limitation any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the authorized filing by or against a Person of any financing
statement as debtor under the Uniform Commercial Code or comparable law of any
jurisdiction). A restriction, covenant, easement, right of way, or similar
encumbrance affecting any interest in real property owned by Borrower and which
does not secure an obligation to pay money is not a Lien.
"LIQUIDITY RATIO" at any date shall mean the ratio, determined
on an unconsolidated basis of Borrower only, of (a) the sum of Borrower's (i)
cash, (ii) trade receivables (exclusive of any receivables due from Affiliates
or Subsidiaries), (iii) Eligible Production Inventory, (iv) the aggregate cost
of Developed Lots, and (v) the aggregate costs of all Eligible Model Houses that
are not more than two years old as measured from the date of completion of
construction thereof, to (b) the sum of all of Borrower's (i) accounts payable,
(ii) accruals, (iii) Customer Deposits, and (iv) Indebtedness permitted pursuant
to subsection 7.1(a) hereof. The amount of each asset included in (a) above
shall be the book value of such asset (net of any applicable reserves)
determined in accordance with GAAP and the value of each liability included in
(b) above shall be determined in accordance with GAAP.
"LOANS" shall mean the Revolving Credit Loans.
"M/I ANCILLARY BUSINESSES" shall mean businesses that are
corporations, limited partnerships, limited liability partnerships or limited
liability companies which are engaged solely in activities reasonably related to
the sale of single family housing and in which the Borrower or any Subsidiary
has an investment or other interest, provided that such investment or other
interest shall be as (a) a shareholder if the business is a corporation, (b) a
limited partner if the business is a limited partnership, (c) a limited
liability partner if the business is a limited liability partnership, or (d) a
limited liability member if the business is a limited liability company.
"M/I FINANCIAL CORP." shall mean M/I Financial Corp., an Ohio
corporation, and, as of the date of this Agreement, the only Subsidiary of
Borrower.
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"M/I FINANCIAL CORP. LOAN AGREEMENT" shall mean the Revolving
Credit Agreement by and among M/I Financial Corp., Borrower and Bank One,
effective as of July 19, 1996, as the same may be, in Bank One's sole
discretion, amended, extended, renewed or replaced from time to time.
"MORTGAGE LOAN REPURCHASE OBLIGATIONS" shall mean those
obligations (as more particularly described in this definition) of M/I Financial
Corp. under a Purchase Commitment to repurchase (a) Eligible Mortgage Loans, (b)
first mortgage loans that are not Eligible Mortgage Loans solely because either
(i) the mortgagor did not purchase from Borrower the home subject to such
mortgage loan, or (ii) such mortgage loan is more than 60 days old as determined
by the date of the note which evidences such loan, (c) those second mortgage
loans permitted by subsection 7.9(g) hereof, and (d) those first mortgage
refinancing loans permitted by subsection 7.9(h) hereof; provided, the
obligations to repurchase the mortgage loans described in clauses (a) through
(d) of this definition shall exist only if (A) such mortgage loans do not meet
for any reason the investor guidelines regarding loan origination, loan
processing or loan closing and regarding underwriting criteria for such Purchase
Commitment or defects are noted in origination, processing or closing of
Mortgage Loans by investor, (B) M/I Financial Corp. or its employees engage in
any fraudulent conduct or misrepresentation, (C) the mortgagor fails to make
timely payment of any of the first, second, third or fourth installments due
under such mortgage loan, and such delinquency remains uncured for a period of
more than 30 days or results in a foreclosure action, (D) the mortgagor fails to
make timely payment of two or more monthly installments within six months from
the date such mortgage loan is purchased by such secondary market lender, (E)
the mortgagor engages in fraudulent conduct or misrepresentation or (F) with
respect to mortgage loans issued pursuant to the North Carolina Housing Finance
Authority bond programs, the mortgagor fails to make timely payment of the first
installment due under such mortgage loans.
"NOTE PURCHASE AGREEMENT" shall mean the note purchase
agreement dated September 30, 1996 between Borrower and The First National Bank
of Boston, in its capacity as note purchaser, and any subsequent purchasers or
assignees, which note purchase agreement governs the issuance by Borrower of
subordinated indebtedness in the principal amount of $25,000,000.00.
"NOTES" shall mean the Revolving Credit Notes.
"OFFICE BUILDING" shall mean the office building constructed
by the Office Building Limited Liability Company at ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ in which Borrower is a tenant.
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"OFFICE BUILDING LIMITED LIABILITY COMPANY" shall mean
Northeast Office Venture, Limited Liability Company, formed under Delaware law,
the ownership interest of which is 33-1/3% in Borrower, 33-1/3% in Limited Oval
Office I, Inc., a Delaware corporation, and 33-1/3% in The Georgetown Company, a
New York general partnership, the purpose of which limited liability company is
for the construction and operation of the Office Building.
"OFFICE BUILDING LOAN OBLIGATIONS" shall mean the joint and
several obligations of Borrower, as a guarantor or as a direct borrower or
direct co-borrower, on the construction loan from Bank One, Columbus, N.A. for
the construction of the Office Building, provided that the principal amount of
such loan and Borrower's obligations thereunder shall not at any time exceed
$8,500,000, and further provided that the maturity date of such loan shall not
be later than June 30, 1997.
"OPERATING LEASE" at any date shall mean any lease other than
a lease which is required to be capitalized in accordance with GAAP, provided
such lease has, as of the date of determination, a remaining term of 12 months
or more, or may at the option of the lessor or lessee be extended for a term of
12 months or more.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERSON" shall mean an individual, a partnership (including
without limitation a joint venture), a limited liability company (including
without limitation a joint venture), a corporation (including without limitation
a joint venture), a business trust, a joint stock company, a trust, an
unincorporated association, a Governmental Authority or any other entity of
whatever nature (including without limitation a joint venture).
"PLAN" shall mean any pension plan which is covered by Title
IV of ERISA and in respect of which Borrower or a Commonly Controlled Entity is
an "employer" as defined in Section 3(5) of ERISA.
"PRIME RATE" shall mean the rate of interest per annum
announced by Agent from time to time as its prime rate, with any change thereto
effective as of the opening of business on the day of the change; which Prime
Rate is not necessarily the best interest rate offered by Agent.
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"PRIME RATE LOANS" shall mean Loans the rate of interest
applicable to which is based on the Prime Rate.
"PURCHASE COMMITMENT" shall mean a commitment from a secondary
market lender, pursuant to an agreement with M/I Financial Corp., either with
respect to a particular mortgage loan or with respect to mortgage loans meeting
specified criteria, to purchase such mortgage loan or loans without recourse
(except for Mortgage Loan Repurchase Obligations) for an amount not less than
the difference of (a) the face amount of the note evidencing such mortgage
loan(s), minus (b) the sum of (i) the points agreed upon between M/I Financial
Corp. and such secondary market lender, and (ii) the amount of funds (for
example, without limitation, escrow funds and origination fees), other than
points, received by M/I Financial Corp. at the loan closing from the mortgagor.
"REIMBURSEMENT OBLIGATIONS" shall mean Borrower's obligations
to reimburse (a) Agent or, (b) in the case of Standby L/Cs previously issued
which will remain in place after the execution of this Agreement, Bank One or
HNB, as appropriate, as a result of draws on one or more Standby L/Cs.
"RENTAL HOUSES" shall mean (a) all completed detached or
attached (including townhouse condominiums and condominiums) single family
houses which are rented to third parties or held for rental by Borrower or which
were previously so held and are currently held for sale and (b) detached or
attached (including townhouse condominiums and condominiums) single family
houses for which there has been a Start of Construction which upon completion
will be rented to third parties or will be held for rental by Borrower. The
value of Rental Houses shall be calculated in accordance with GAAP and shall
include all associated costs required to be capitalized under GAAP.
"REPORTABLE EVENT" shall mean any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"REQUIRED BANKS" shall mean, at any particular time, Banks
having at least 55% of the aggregate amount of the Commitment, whether or not
Borrower has drawn all or any portion of the Commitment; provided that for
purposes of consent to waiver or amendment of the covenants contained in
subsection 6.14 hereof, Required Banks shall mean, at any particular time, Banks
having at least 67% of the aggregate amount of the Commitment, whether or not
Borrower has drawn all or any portion of the Commitment.
"REQUIREMENT OF LAW" shall mean as to any Person, the
Certificate (or Articles) of Incorporation, By-Laws (or Code of Regulations),
Close Corporation Agreement (where applicable) or
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other organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or determination, including without limitation all
environmental laws, rules, regulations and determinations, of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"RESPONSIBLE OFFICER" shall mean as to Borrower or any of its
Subsidiaries, the Chairman, President, an Executive Vice President or a Senior
Vice President of such Person and, with respect to financial matters, the chief
financial officer, treasurer or controller of such Person, in each case acting
in his or her capacity as such.
"REVOLVING CREDIT LOAN COMMITMENT" shall mean, as to any Bank
that has committed to make Revolving Credit Loans hereunder, the percentage (the
"REVOLVING CREDIT LOAN COMMITMENT PERCENTAGE") and amount set forth opposite its
name on Schedule 1 hereto under the headings "Revolving Credit Loan Commitment
Percentage" and "Revolving Credit Loan Commitment" as such amount may be reduced
from time to time in accordance with the provisions of subsection 2.6 hereof;
and collectively, as to all Banks that have committed to make Revolving Credit
Loans hereunder, the "REVOLVING CREDIT LOAN COMMITMENTS".
"REVOLVING CREDIT LOANS" shall mean the revolving credit loans
made pursuant to this Agreement that are more particularly described in
subsection 2.1 hereof.
"REVOLVING CREDIT NOTES" shall have the meaning set forth in
subsection 2.2 hereof.
"S CORPORATION" shall have the meaning set forth in Section
1361(a)(1) of the Code.
"SHAREHOLDERS EQUITY" at any date shall mean the amount which
would be set forth opposite the caption "Shareholders Equity" or "Stockholders
Equity" (or any like caption) in a consolidated balance sheet of Borrower and
its Subsidiaries at any such date prepared in accordance with GAAP.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is not a
Multiemployer Plan (as defined in ERISA).
"SPECULATIVE HOUSES" shall mean the aggregate value (which
value shall be reduced by the then outstanding aggregate amount of Indebtedness
secured by any Speculative Houses and permitted by subsection 7.1(d) hereof) as
determined in accordance with GAAP of: (a) all uncompleted houses for which
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there has been a Start of Construction except (1) Eligible Model Houses, (2)
Rental Houses, if any, and (3) those which are less than nine months old as
measured from the date on which construction was begun and are subject to valid
noncontingent, except for financing, contracts of sale (A) to Persons who are
not Affiliates or Subsidiaries, and (B) that provide for closing within 30 days
after completion; and (b) all completed houses except (1) Eligible Model Houses,
(2) Rental Houses, if any, and (3) those subject to valid noncontingent, except
for financing, contracts of sale (A) to Persons who are not Affiliates or
Subsidiaries, and (B) that provide for closing on or before the later of 60 days
after the date of the contract or 30 days after completion of construction.
"STANDBY L/C" shall mean an irrevocable letter of credit,
including any extensions or renewals, (a) issued by Agent or (b) previously
issued by Bank One pursuant to the Existing Credit Agreement, or by Bank One or
HNB pursuant to any predecessor to the Existing Credit Agreement, and which will
remain in place as of the first Borrowing Date, in which each L/C Participant
agrees to purchase a participation equal to its L/C Commitment Percentage and
the issuing bank agrees to make payments in Dollars for the account of Borrower,
on behalf of Borrower or any Subsidiary thereof in respect of obligations of
Borrower or such Subsidiary incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to which
Borrower or such Subsidiary is or proposes to become a party in the ordinary
course of Borrower's or such Subsidiary's business. The term "Standby L/C" shall
not include any letters of credit issued pursuant to the HNB Joint Ventures
Letter of Credit Agreement.
"STANDBY L/C APPLICATION" shall have the meaning set forth in
subsection 2.13 hereof.
"START OF CONSTRUCTION" shall mean the commencement of the
digging of the foundation or footer for a detached or attached single family
house (including a townhouse condominium building or condominium building).
"STOCKHOLDER PAYMENT" shall have the meaning set forth in
subsection 7.6 hereof.
"SUBORDINATED INDEBTEDNESS" at any date shall mean (i) the
unsecured Indebtedness of Borrower created as a result of the Note Purchase
Agreement, and (ii) all other future unsecured subordinated Indebtedness of
Borrower, the terms and manner (including without limitation the terms and
manner with respect to subordination) of which are satisfactory to Required
Banks in their sole discretion and approved in writing by Required Banks and
which is subordinate to (a) Borrower's obligations to Banks
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and Agent under this Agreement and the Notes and (b) Borrower's obligations, if
any, as a guarantor or otherwise of the obligations of M/I Financial Corp.
(including without limitation the obligations with respect to the M/I Financial
Corp. Loan Agreement).
"SUBSIDIARY" shall mean as to any Person, a corporation of
which shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person, and with
respect to Borrower shall include all Subsidiaries of Subsidiaries of Borrower.
"TRANCHE" shall mean the collective reference to those
Eurodollar Rate Loans, the then current Interest Periods with respect to all of
which begin on the same date and end on the same date (whether or not such Loans
shall originally have been made on the same day).
"UNCOMMITTED LAND" shall mean the aggregate value as
determined in accordance with GAAP of: (a) Eligible Raw Land and Land Under
Development, (b) Eligible Developed Lots Unsold, (c) Borrower's pro rata share
of land that constitutes part of Investments in Joint Ventures which is not
subject to an agreement for sale, and (d) deposits for land purchases and
purchase options.
"UNIFORM CUSTOMS" shall mean the Uniform Customs and Practice
for Documentary Credits, 1993 revision, ICC Publication No. 500, or amendment
thereof or successor thereto referenced in Agent's issued letters of credit;
provided, however, as to any letter of credit issued prior to January 1, 1994,
"Uniform Customs" shall mean the Uniform Customs and Practice for Documentary
Credits, 1983 revision, ICC Publication No. 400.
"WASHINGTON, D.C. MARKET" shall mean the geographic area
consisting of Washington, D.C., Virginia and Maryland.
1.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto or thereto unless otherwise defined therein.
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(b) As used herein, in the Notes or in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
relating to Borrower and its Subsidiaries not defined in subsection 1.1 hereof,
to the extent not defined, shall have the respective meanings given to them
under GAAP.
(c) Any reference to "value" of property shall mean the lower
of cost or market value of such property, determined in accordance with GAAP.
(d) The definition of any document or instrument includes all
schedules, attachments and exhibits thereto and all renewals, extensions,
supplements and amendments thereof; terms otherwise defined herein have the same
meanings throughout this Agreement.
(e) "Hereunder," "herein," "hereto," "this Agreement" and
words of similar import refer to this entire document; "including" is used by
way of illustration and not by way of limitation, unless the context clearly
indicates the contrary; and the singular includes the plural and conversely.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT, REVOLVING
-----------------------------------------
CREDIT LOANS AND STANDBY LETTERS OF CREDIT
------------------------------------------
2.1 REVOLVING CREDIT LOAN COMMITMENTS. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make revolving
credit loans ("REVOLVING CREDIT LOANS") to Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed that Bank's Revolving Credit Loan Commitment Percentage of the
lesser of (a) the Borrowing Base (determined as of the most recent month end or,
if Borrower elects to provide an interim Borrowing Base Certificate pursuant to
subsection 6.4 hereof, as of the date stated in such Borrowing Base Certificate)
minus the sum of the (i) aggregate principal amount of undrawn and drawn Standby
L/Cs, exclusive of the amount of Standby L/Cs issued for the purpose of
satisfying bonding requirements, then outstanding, and (ii) the aggregate
principal amount of undrawn and drawn Guaranteed HNB Joint Ventures Letters of
Credit, exclusive of the amount of Guaranteed HNB Joint Ventures Letters of
Credit issued for the purpose of satisfying bonding requirements, then
outstanding, or (b) One Hundred Eighty-Six Million and 00/100 Dollars
($186,000,000.00). During the Commitment Period and as long as no Event of
Default exists, Borrower may use the Revolving Credit Loan Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
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Subject to the terms and conditions of this Agreement (including the
limitations on the availability of Eurodollar Rate Loans and including the
termination of the Commitment as set forth in Section 9 hereof), the Revolving
Credit Loans may from time to time be (i) Eurodollar Rate Loans, (ii) Prime Rate
Loans, or (iii) a combination thereof, as determined by Borrower and notified to
Agent in accordance with subsection 2.3 hereof, provided (a) that no Revolving
Credit Loan shall be made as a Eurodollar Rate Loan if the ratio of EBITDA to
Consolidated Interest Incurred as of the most recent Adjustment Date, determined
from the financial statements and compliance certificate that relate to the last
month of the fiscal quarter immediately preceding such Adjustment Date, is less
than 1.75 to 1.0, (b) that no Revolving Credit Loan shall be made as a
Eurodollar Rate Loan after the day that is one month prior to the last day of
the Commitment Period, and (c) that the maximum number of Tranches that may be
outstanding at any one time as Revolving Credit Loans may not exceed five in the
aggregate.
2.2 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by Banks
pursuant hereto shall be evidenced by promissory notes of Borrower,
substantially in the form of Exhibit B attached hereto (each a "REVOLVING CREDIT
NOTE" and collectively the "REVOLVING CREDIT NOTES"), payable to the order of
the respective Bank and evidencing the obligation of Borrower to pay the
aggregate unpaid principal amount of the Revolving Credit Loans made by such
Bank, with interest thereon as prescribed in subsection 2.5 hereof. Each Bank is
hereby authorized to record electronically or otherwise the date and amount of
each Revolving Credit Loan disbursement made by such Bank, and the date and
amount of each payment or prepayment of principal thereof, and any such
recordation shall constitute PRIMA FACIE evidence of the accuracy of the
information so recorded; provided, however, the failure of such Bank to make any
such recordation(s) shall not affect the obligation of Borrower to repay
outstanding principal, interest, or any other amount due hereunder or under the
Revolving Credit Notes in accordance with the terms hereof and thereof. Each
Revolving Credit Note shall (a) be dated as of the date hereof, (b) be stated to
mature on September 30, 2001, which maturity date may be extended as provided in
subsection 2.7 hereof, and (c) bear interest for the period from and including
the date thereof on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in
subsection 2.5 hereof. Interest on each Revolving Credit Note shall be payable
as specified in subsection 2.5 hereof.
2.3 PROCEDURE FOR BORROWING. Borrower may borrow under the Revolving
Credit Loan Commitments (subject to the limitations on the availability of
Eurodollar Rate Loans), during
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the Commitment Period, provided Borrower shall give Agent telephonic or written
notice (the "NOTICE OF BORROWING"), which Notice of Borrowing must be received
(a) prior to 12:00 Noon, Columbus, Ohio time, at least three Business Days prior
to the requested Borrowing Date for that part of the requested borrowing that is
to be Eurodollar Rate Loans, or (b) prior to 11:00 a.m., Columbus, Ohio time on
or before the requested Borrowing Date for that part of the requested borrowing
that is to be Prime Rate Loans which Notice of Borrowing, in the case of Prime
Rate Loan(s), shall be irrevocable. Each Notice of Borrowing shall specify (i)
the Borrowing Date (which shall be a Business Day), (ii) the amount of the
requested borrowing, (iii) whether the borrowing is to be of Eurodollar Rate
Loans, Prime Rate Loans or a combination thereof and (iv) if the borrowing is to
be entirely or partly of Eurodollar Rate Loans, the amount of each Prime Rate
Loan, if any, and the respective amounts of each such Eurodollar Rate Loan and
the respective lengths of the initial Interest Periods therefor. Each borrowing
pursuant to the Revolving Credit Loan Commitments shall be in the principal
amount (a) in the case of Prime Rate Loans, of the lesser of (i) $1,000,000 or
any larger amount which is an even multiple of $100,000, and (ii) the then
undrawn Revolving Credit Loan Commitments, and (b) in the case of Eurodollar
Rate Loans, of $10,000,000 or any larger amount which is an even multiple of
$1,000,000 so long as the principal amount of the requested borrowing is less
than the then undrawn Revolving Credit Loan Commitments.
After the Borrower gives a Notice of Borrowing with respect to
Eurodollar Rate Loans, Agent, by 10:00 a.m., Columbus, Ohio time, two Business
Days prior to the requested Borrowing Date, shall advise the Borrower of the
applicable interest rate(s) (which is the sum of the applicable Eurodollar
Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate Loan(s)
and Interest Period(s) requested in the Notice of Borrowing. Not more than two
hours thereafter, the Borrower shall give Agent written irrevocable confirmation
of whether or not the Borrower wants Eurodollar Rate Loan(s) on such Borrowing
Date and, if so, the amount(s) and Interest Period(s) of such Eurodollar Rate
Loan(s).
If the Borrower's written confirmation is timely made, the Borrower
shall be deemed to be requesting borrowing(s) of Eurodollar Rate Loan(s) in the
amount(s) and for the Interest Period(s) stated in the confirmation. If the
Borrower's confirmation is not timely made, the Borrower shall be deemed to have
requested a borrowing entirely as a Prime Rate Loan in the aggregate amount and
on the Borrowing Date specified in the Notice of Borrowing.
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By 2:00 p.m., Columbus, Ohio time, two Business Days prior to the
requested Borrowing Date, Agent shall give telephonic or written notice to each
Bank of such request, specifying (i) the Borrowing Date (which shall be a
Business Day), (ii) the amount of the requested borrowing, (iii) whether the
borrowing is to be of Eurodollar Rate Loans, Prime Rate Loans or a combination
thereof, and (iv) if the borrowing is to be entirely or partly of Eurodollar
Rate Loans, the amount of each Prime Rate Loan, if any, and the respective
amounts of each such Eurodollar Rate Loan, the applicable Eurodollar Rate for
each such Eurodollar Rate Loan and the respective lengths of the initial
Interest Periods therefor. Subject to satisfaction of the terms and conditions
of this Agreement, each Bank shall deposit funds with Agent for the account of
Borrower by 2:00 p.m. on the Borrowing Date by wire transfer or other
immediately available funds equal to its Revolving Credit Loan Commitment
Percentage of the Revolving Credit Loans to be made on the Borrowing Date. The
Loan(s) will then be made available to Borrower by Agent crediting the account
of Borrower on the books of Agent with the aggregate amounts made available to
Agent by Banks, and in like funds as received by Agent. The provisions for
conversion and continuation of the Loans are set forth in subsection 3.1.
2.4 REVOLVING CREDIT LOAN COMMITMENT FEE. Borrower agrees to pay to
Agent for the pro rata benefit of Banks a commitment fee for the Commitment
Period, computed at the rate of 1/4 of 1 percent (1/4%) per annum on the average
daily unused amount of the aggregate Revolving Credit Loan Commitments during
the Commitment Period, payable quarterly in arrears and due on the last day of
each March, June, September and December and on the last day of the Commitment
Period, commencing on the first of such dates to occur after the date hereof.
2.5 Interest; Default Interest.
--------------------------
(a) Except as provided in subsection 2.5(b) hereof, the
Revolving Credit Loans shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to (i) in the case of Prime Rate Loans, the
Prime Rate in effect from time to time and (ii) in the case of Eurodollar Rate
Loans, if permitted hereunder at such time, the Eurodollar Rate determined for
such day plus the Applicable Eurodollar Margin in effect for such day.
(b) If all or a portion of the principal amount of any of the
Revolving Credit Loans made hereunder (whether as Prime Rate Loans or Eurodollar
Rate Loans or a combination thereof) shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), any such overdue
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principal amount and, to the extent permitted by applicable law, any overdue
installment of interest on any Revolving Credit Loan shall, without limiting any
other rights of Banks, bear interest at a rate per annum which is the sum of one
percent (1.0%) plus the Prime Rate in effect from time to time from the date of
such non-payment until paid in full (before, as well as after, judgment);
provided, however, if all or any portion of any principal on any Revolving
Credit Loan made as a Eurodollar Rate Loan hereunder shall not be paid when due
and the then current Interest Period for such Eurodollar Rate Loan has not yet
expired, the entire principal amount of such Eurodollar Rate Loan and, to the
extent permitted by applicable law, any overdue installment of interest on such
Eurodollar Rate Loan shall, without limiting any other rights of Banks, bear
interest at a rate per annum which is the sum of one percent (1.0%) plus the
applicable non-default interest rate (which is the sum of the applicable
Eurodollar Rate and the Applicable Eurodollar Margin) on such Eurodollar Rate
Loan then in effect from the date of such non-payment until the expiration of
the then current Interest Period with respect to such Eurodollar Rate Loan
(before, as well as after, judgment); thereafter, the entire principal amount of
such Eurodollar Rate Loan and, to the extent permitted by applicable law, any
overdue installment of interest on such Eurodollar Rate Loan shall, without
limiting any other rights of Banks, bear interest at a rate per annum which is
the sum of one percent (1.0%) plus the Prime Rate in effect from time to time
until paid in full (before, as well as after, judgment).
(c) Interest shall be payable in arrears and shall be due on
each Interest Payment Date.
2.6 Termination Or Reduction Of Commitment.
--------------------------------------
(a) Provided that each Bank consents in writing, Borrower
shall have the right to terminate the Commitment or, from time to time (and so
long as no Default or Event of Default exists), reduce the amount of the
Commitment, upon not less than five Business Days' written notice to each Bank
specifying (i) either a reduction or termination and (ii) in the case of a
reduction, whether any prepayment, if required by this Agreement, shall be of
Prime Rate Loans, Eurodollar Rate Loans or a combination thereof, and, in each
case if a combination thereof, the principal allocable to each.
(b) Any reduction of the Commitment shall be in the amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently the amount of the Commitment then in effect. Any such reduction
shall be accompanied by prepayment of the Revolving Credit Loans made hereunder
to the extent, if any, that the amount of such
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Revolving Credit Loans then outstanding exceeds the amount of the Revolving
Credit Loan Commitments, as then reduced, together with accrued interest on the
amount so prepaid to the date of such prepayment, and (ii) if a Revolving Credit
Loan is a Eurodollar Rate Loan that is prepaid other than at the end of the
Interest Period applicable thereto, by any amounts payable pursuant to
subsection 3.5, Indemnity. Any such reduction of the L/C Commitment, if the L/C
Commitment is being reduced, shall be accompanied by either (A) return to Agent
of the outstanding Standby L/Cs or (B) payment by Borrower to Agent of cash to
fully
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collateralize outstanding Standby L/Cs, to the extent, if any, that the amount
of such Standby L/Cs then outstanding exceeds the L/C Commitment portion of the
Commitment as then reduced.
(c) Any such termination of the Commitment shall be
accompanied (i) by prepayment in full of the Revolving Credit Loans then
outstanding hereunder, together with accrued interest thereon to the date of
such prepayment, and the payment of any unpaid commitment fee then accrued
hereunder; (ii) with respect to Standby L/Cs, by Borrower's compliance with the
terms of subsection 2.13(b) hereof; and (iii) if a Revolving Credit Loan is a
Eurodollar Rate Loan that is prepaid other than at the end of the Interest
Period applicable thereto, by any amounts payable pursuant to subsection 3.5,
Indemnity.
(d) Any such reduction or termination of the Revolving Credit
Loan Commitments and/or L/C Commitments portion(s) of the Commitment shall be
allocated to each Bank ratably in proportion to that Bank's Revolving Credit
Loan Commitment Percentage and/or L/C Commitment Percentage, as appropriate.
2.7 MATURITY DATE OF COMMITMENT; EXTENSION. Unless earlier terminated
pursuant to the terms of this Agreement, the Commitment shall terminate on
September 30, 2001, and the unpaid balance of the Revolving Credit Loans
outstanding shall be paid on said date; provided, however, that once each year
during each and every year of the Commitment Period (without regard to whether
or not all Banks elected to extend the Commitment Period in any preceding year
during the Commitment Period) all Banks shall make an election whether or not,
in all Banks' sole discretion, to extend the maturity date of the Commitment by
one year. If all Banks elect to extend the maturity date of the Commitment by
one year, such election shall be made on or before September 30 of each year (or
the first Business Day after September 30 if September 30 is not a Business Day)
by written notice from Agent to Borrower. Each notice granting an extension
shall be attached to each of the Notes and shall constitute an amendment
extending the maturity date of each Note by one year. If all Banks do not
unanimously elect to extend the maturity date of the Commitment by one year,
Agent shall not be required to give notice to Borrower of such election not to
extend. If Borrower has not received notice from Agent as stated herein that all
Banks have elected to extend the maturity date of the Commitment by one year,
the maturity date of the Commitment shall be deemed not to have been extended.
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2.8 COMPUTATION OF INTEREST AND FEES. Commitment fees on the
Commitment and interest in respect of the Revolving Credit Loans shall be
calculated on the basis of a 360 day year for the actual days elapsed. Any
change in the interest rate on the Loans and the Notes resulting from a change
in the Prime Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business of the day on which such change in the
Prime Rate or the Eurocurrency Reserve Requirements shall become effective,
without notice to Banks or Borrower. However, Agent shall give Borrower and
Banks prompt notice of all changes in the Prime Rate or the Eurocurrency Reserve
Requirements. Each determination of an interest rate by Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Banks and
Borrower in the absence of manifest error.
2.9 INCREASED COSTS. In the event that at any time after the
date of this Agreement any law, rule or regulation regarding capital adequacy,
or any change therein or in the interpretation or application thereof or
compliance by any Bank (including Agent) with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or other Governmental Authority, agency or instrumentality, does or shall have,
in the opinion of such Bank, the effect of reducing the rate of return on the
capital of such Bank or any corporation controlling such Bank as a consequence
of such Bank's obligations hereunder to a level below that which such Bank or
any corporation controlling such Bank could have achieved but for its adoption,
change or compliance (taking into account such Bank's or such corporation's
policies, as the case may be, with respect to capital adequacy) by an amount
deemed by such Bank to be material, then, from time to time, after submission by
such Bank to Borrower of a written request therefor, Borrower shall pay to such
Bank additional amount or amounts as will compensate such Bank or such
corporation, as the case may be, for such reduction. Such Bank's written request
to Borrower for compensation shall set forth in reasonable detail the
computation of any additional amounts payable to such Bank by Borrower, and such
request and computation shall be conclusive in the absence of manifest error.
This provision shall remain in full force and effect, with respect to the
Revolving Credit Loans until the later of (a) the termination of this Agreement
or (b) the payment in full of all Notes (provided that before accepting final
payment on the Notes, Bank shall calculate any amounts due in accordance with
this subsection 2.9 and give notice to Borrower of such amounts as stated
herein, and Borrower shall include such amounts in its final payment). This
provision shall survive the termination of all Standby L/Cs and, with respect to
Standby L/Cs, shall remain in full force and effect until there is no existing
or future obligation of Agent or any
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L/C Participant under any Standby L/C. The provisions of this subsection 2.9
shall be supplemented by the provisions of Section 3 hereof.
2.10 USE OF PROCEEDS. The proceeds of the initial Revolving
Credit Loans made hereunder shall be used by Borrower to pay in full the
obligations outstanding on the Revolving Credit Loans and Seasonal Loans, if any
(as each term is defined in the Existing Credit Agreement), under the Existing
Credit Agreement. Upon Borrower's irrevocable payment in full of the obligations
outstanding under the Existing Credit Agreement (other than Standby L/Cs that
remain in existence), Bank One, HNB, First Chicago, NCB and BOB shall cancel the
Existing Credit Agreement (except for Standby L/Cs that remain in existence and
all reimbursement agreements related to such Standby L/Cs) and all promissory
notes and guaranties executed pursuant to the Existing Credit Agreement.
Thereafter, the proceeds of the Revolving Credit Loans made hereunder shall be
used by Borrower for lawful purposes in its business.
2.11 PRO RATA TREATMENT AND PAYMENTS.
(a) Each borrowing by Borrower from Banks hereunder, each
ayment (including each prepayment) by Borrower on account of principal of and
interest on the Loans, each payment by Borrower on account of any commitment fee
hereunder and any reduction of the Revolving Credit Loan Commitments and/or the
L/C Commitments shall be made pro rata according to the respective Revolving
Credit Loan Commitment Percentage and/or L/C Commitment Percentage, as
appropriate, then held by Banks. All payments (including prepayments) to be made
by Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set-off or counterclaim and
shall be made prior to 12:00 Noon, Columbus, Ohio time, on the due date thereof
to Agent, for the account of Banks, at Agent's ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ office in
Columbus, Ohio, in Dollars and in immediately available funds. Agent shall
distribute such payments to Banks promptly upon receipt in like funds as
received. If any payment hereunder on a Prime Rate Loan becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment hereunder on a Eurodollar Rate Loan becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding
Business Day (and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension) unless the result
of such extension would be to extend
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such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.
2.12 THE STANDBY L/CS. So long as no Default or Event of
Default exists, Agent agrees to issue Standby L/Cs, pursuant to the terms and
conditions hereof, provided that the aggregate of the undrawn and drawn amounts
of the Standby L/Cs at any one time outstanding, including the amount of Standby
L/Cs issued for the purpose of satisfying bonding requirements, shall not exceed
Twenty-One Million and 00/100 Dollars ($21,000,000), of which the amount of
Standby L/Cs issued for purposes other than satisfying bonding requirements
shall not exceed the lesser of (x) (i) the Borrowing Base (determined as of the
most recent month end or, if Borrower elects to provide an interim Borrowing
Base Certificate pursuant to subsection 6.4 hereof, as of the date stated in
such Borrowing Base Certificate) minus (ii) the sum of (A) the principal amount
of Revolving Credit Loans hereunder then outstanding and (B) the aggregate
principal amount of undrawn and drawn Guaranteed HNB Joint Ventures Letters of
Credit, exclusive of the amount of Guaranteed HNB Joint Ventures Letters of
Credit issued for the purpose of satisfying bonding requirements, then
outstanding, or (y) Twelve Million and 00/100 Dollars ($12,000,000).
2.13 ISSUANCE OF STANDBY L/CS.
(a) Borrower may request Agent to issue a Standby L/C by
delivering to Agent, no later than 11:00 a.m. two Business Days prior to the
date on which issuance of the Standby L/C is requested by Borrower, a standby
letter of credit application and reimbursement agreement in Agent's then
customary form (the "STANDBY L/C APPLICATION") completed to the satisfaction of
Agent, together with the proposed form of such letter of credit (which shall
comply with the applicable requirements of subsection 2.13 (b) below) and such
other certificates, documents and other papers and information as Agent may
reasonably request.
(b) Each Standby L/C issued hereunder shall, among other
things, (i) be in such form requested by Borrower as shall be acceptable to
Agent in its sole discretion, and (ii) have an expiry date occurring not later
than three years after such Standby L/C's date of issuance. If the Commitment is
terminated (whether by acceleration, demand, or otherwise), then, not later than
simultaneously with such termination, all outstanding Standby L/Cs shall be
returned to Agent or Borrower shall provide cash to Agent to fully collateralize
all outstanding Standby L/Cs. Each Standby L/C Application and each Standby L/C
shall be subject to the Uniform Customs and, to the extent not inconsistent
therewith, the laws of the State of Ohio.
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2.14 PROCEDURE FOR OPENING STANDBY L/CS. Upon receipt of any
Standby L/C Application from Borrower, Agent will process such Standby L/C
Application, and the other certificates, documents and other papers delivered to
Agent in connection therewith, in accordance with its customary procedures and
send a copy thereof to each L/C Participant, and, upon satisfaction of all
conditions contained in this Agreement, shall promptly open such Standby L/C by
issuing the original of such Standby L/C to the beneficiary thereof and by
furnishing a copy thereof to Borrower.
2.15 STANDBY L/C PARTICIPATIONS.
(a) Agent irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Agent to issue Standby L/Cs
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from Agent, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk, an undivided interest
equal to such L/C Participant's L/C Commitment Percentage in Agent's obligations
and rights under each Standby L/C and the amount of each draft paid by Agent.
Each L/C Participant's obligations as set forth in the immediately preceding
sentence shall be limited to the term of this Agreement, subject to the
condition that each L/C Participant unconditionally and irrevocably agrees with
Agent that, if a draft is paid at any time (whether during or after the term of
this Agreement) under any Standby L/C issued prior to the end of the term of
this Agreement for which Agent is not reimbursed in full by Borrower (including
failure by Borrower to provide cash collateral as provided in subsection 2.13(b)
hereof) at any time in accordance with the terms of this Agreement or for which
Agent is required at any time to return any portion of such reimbursement
(whether because of Borrower's bankruptcy or otherwise), such L/C Participant
shall pay to Agent upon demand at Agent's address for notices specified herein
an amount equal to such L/C Participant's L/C Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed or which
Agent is required to return.
(b) If any amount required to be paid by any L/C
Participant to Agent in respect of any unreimbursed portion of any payment made
by Agent under any Standby L/C is not paid to Agent on the date such payment is
due but is paid within three Business Days after such payment is due, such L/C
Participant shall pay to Agent on demand an amount equal to the product of (i)
such amount, multiplied by (ii) the daily average Federal funds rate, as quoted
by Agent, during the period from and including the date such payment is required
to the date on which such payment is immediately available to Agent, multiplied
by (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
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required to be paid by any L/C Participant pursuant to this subsection 2.15 is
not paid to Agent by such L/C Participant within three Business Days after the
date such payment is due, Agent shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from the
fourth Business Day after such due date until paid at the rate per annum
applicable to Revolving Credit Loans made as Prime Rate Loans hereunder. A
certificate of Agent submitted to any L/C Participant with respect to any
amounts owing under this subsection 2.15 shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after Agent has made
payment under any Standby L/C and has received from any L/C Participant its pro
rata share of such payment, Agent receives any payment related to such Standby
L/C (whether directly from Borrower or otherwise, including proceeds of
collateral applied thereto by Agent), or any payment of interest on account
thereof, Agent will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
Agent shall be required to be returned by Agent, such L/C Participant shall
return to Agent the portion thereof previously distributed by Agent to it.
2.16 PAYMENTS. Borrower agrees (a) to reimburse Agent, for the
pro rata benefit of the L/C Participants in accordance with each L/C
Participant's respective L/C Commitment Percentage, forthwith upon its demand
and otherwise in accordance with the terms of the Standby L/C Application
relating thereto, for any expenditure or payment made by Agent or L/C
Participants under any Standby L/C, and (b) to pay interest on any unreimbursed
portion of any such payments from the date of such payment until reimbursement
in full thereof at a rate per annum equal to (i) prior to the date which is (A)
one Business Day after the day on which Agent demands reimbursement from
Borrower for such payment if such demand is made prior to 11:00 a.m., Columbus,
Ohio time or (B) two Business Days after the day on which Agent demands
reimbursement if such demand is made at or after 11:00 a.m. Columbus, Ohio time,
the rate which would then be payable on any outstanding Revolving Credit Loan
made as a Prime Rate Loan which is not in default, and (ii) thereafter, the rate
which would then be payable on any outstanding Revolving Credit Loan made as a
Prime Rate Loan which is in default.
2.17 STANDBY L/C FEES. In lieu of any letter of credit
commissions and fees provided for in any Standby L/C Application (other than
standard issuance, amendment and negotiation fees), Borrower agrees to pay
Agent, for the pro rata benefit of the L/C Participants according to each L/C
Participant's respective L/C Commitment Percentage, with respect to each Standby
L/C, a Standby
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L/C fee (which shall be refundable on a pro rata basis to the extent (i) such
Standby L/C is cancelled prior to its expiry date or (ii) the face amount of
such Standby L/C is reduced from time to time) equal to and payable in
accordance with one of the following options selected by Borrower with respect
to each Standby L/C: (a) one percent (1%) per annum on the face amount of each
Standby L/C, payable in advance not later than the date of issuance thereof; or
(b) one and one-quarter percent (1 1/4%) per annum on the face amount of the
Standby L/C, payable in advance on the first day of each January, April, July
and October, beginning on the first of such dates to occur after the date of
issuance of the Standby L/C, occurring prior to the expiry date of the Standby
L/C. In addition, Agent shall charge and retain for its own account, and
Borrower agrees to pay, Agent's usual and customary charges with respect to the
issuance and administration of the Standby L/C.
2.18 LETTER OF CREDIT RESERVES. If any change in any law or
regulation or in the interpretation or application thereof by any court or other
governmental authority charged with the administration thereof shall either (a)
impose, modify, deem or make applicable any reserve, special deposit, assessment
or similar requirement against letters of credit issued by Agent, or (b) impose
on Agent or any L/C Participant any other condition regarding this Agreement or
any Standby L/C, and the result of any event referred to in clause (a) or (b)
above shall be to increase the cost to Agent or any L/C Participant of issuing
or maintaining any Standby L/C (which increase in cost shall be the result of
Agent's or any L/C Participant's reasonable allocation of the aggregate of such
cost increases resulting from such events), then, upon demand by Agent or any
L/C Participant, Borrower shall immediately pay to Agent, for the pro rata
benefit of such L/C Participant(s), from time to time as specified by Agent or
such L/C Participant(s), additional amounts which shall be sufficient to
compensate Agent or such L/C Participant(s) for such increased cost, together
with interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the then applicable interest rate on the
Revolving Credit Loans made as Prime Rate Loans. A certificate as to such
increased cost incurred by Agent or such L/C Participant(s), submitted by Agent
or such L/C Participant(s) to Borrower, shall be conclusive, absent manifest
error, as to the amount thereof. This provision shall survive the termination of
this Agreement and shall remain in full force and effect until there is no
existing or future obligation of Agent or any L/C Participant under any Standby
L/C.
2.19 FURTHER ASSURANCES. Borrower hereby agrees to do and
perform any and all acts and to execute any and all further instruments
reasonably requested by Agent more fully to effect the purposes of this
Agreement and the issuance of Standby L/Cs
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hereunder, and further agrees to execute any and all instruments reasonably
requested by Agent in connection with the obtaining and/or maintaining of any
insurance coverage applicable to any Standby L/C.
2.20 OBLIGATIONS ABSOLUTE. The contingent reimbursement
obligations and the Reimbursement Obligations of Borrower with respect to
Standby L/Cs under this Agreement shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including without limitation the following:
(a) the existence of any claim, set-off, defense or
other right which Borrower may have at any time against any beneficiary, or any
transferee, of any Standby L/C (or any Persons for whom any such beneficiary or
any such transferee may be acting), Agent, or any other Person, whether in
connection with this Agreement, the transaction contemplated herein, or any
unrelated transaction;
(b) any statement or any other document presented
under any Standby L/C proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(c) payment by Agent under any Standby L/C against
presentation of a draft or certificate which does not comply with the terms of
such Standby L/C provided that Agent has made such payment to the beneficiary
set forth on the face of such Standby L/C; or
(d) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
2.21 EXISTING STANDBY L/CS; L/C PARTICIPATIONS. Attached
hereto as Schedule 2 is a list of all Standby L/Cs previously issued by Bank One
or HNB for the account of Borrower that are outstanding and will remain in place
as of the first Borrowing Date ("Existing Standby L/Cs"). The amount of the
Existing Standby L/Cs shall be deemed to be included in the aggregate amount of
Standby L/Cs outstanding as of the first Borrowing Date for purposes of
subsection 2.12 hereof. Where appropriate, in any provision in subsections 2.15
through 2.20 hereof that provides for Borrower to make payment to Agent or that
grants other rights to Agent with respect to Standby L/Cs, or that provides for
the purchase by L/C Participants of an interest in Standby L/Cs, the words "Bank
One or HNB, as appropriate" shall be substituted for "Agent" with respect to
Existing Standby L/Cs. Not later than the first Borrowing Date, each L/C
Participant shall enter into a letter agreement in substantially the form of
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Exhibit H attached hereto whereby (a) each L/C Participant shall purchase or
sell, as appropriate, participations in each Existing Standby L/C in such
amounts to make each L/C Participant's respective percentage interest in each
Existing Standby L/C equal to such L/C Participant's L/C Commitment Percentage
and (b) each L/C Participant shall share in the fees paid and earned beginning
as of the first Borrowing Date (including that portion of fees paid prior to the
first Borrowing Date that have not been earned as of the first Borrowing Date),
and shall pay to Bank One or HNB, as appropriate, for the account of Borrower
such L/C Participant's respective L/C Commitment Percentage of the refund (as
provided in subsection 2.17 hereof) of any fees for any Existing Standby L/C
that is terminated early or reduced in amount and for which a fee has been
allocated in accordance with the such letter agreement.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to
convert outstanding Revolving CreditLoans from Eurodollar Rate Loans to Prime
Rate Loans by giving the Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Rate
Loans may only be made on the last day of an Interest Period with respect
thereto. Subject to the limitations on the availability of Eurodollar Rate
Loans, the Borrower may elect from time to time to convert outstanding Revolving
Credit Loans from Prime Rate Loans to Eurodollar Rate Loans by giving the Agent
telephonic or written notice (the "NOTICE OF CONVERSION"), which Notice of
Conversion must be received prior to 12:00 Noon, Columbus, Ohio time, at least
three Business Days prior to the requested date for the conversion, which Notice
of Conversion shall specify (i) the date for the conversion; (ii) the aggregate
amount of Prime Rate Loans to be converted; and (iii) and for each such Prime
Rate Loan to be converted to a Eurodollar Rate Loan, the respective amount and
the respective length of the initial Interest Period. Each conversion from Prime
Rate Loans to Eurodollar Rate Loans shall be in the principal amount of
$10,000,000 or any larger amount which is an even multiple of $1,000,000. After
the Borrower gives a Notice of Conversion from Prime Rate Loans to Eurodollar
Rate Loans, Agent, by 10:00 a.m., Columbus, Ohio time, two Business Days prior
to the requested date for the conversion, shall advise the Borrower of the
applicable interest rate(s) (which is the sum of the applicable Eurodollar
Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate Loan(s)
and Interest Period(s) requested in the Notice of Conversion. Not more than two
hours thereafter, the Borrower shall give Agent written irrevocable confirmation
of whether or not the Borrower wants to convert the Prime Rate Loans
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to Eurodollar Rate Loan(s) on such requested date and, if so, the amount and
the Interest Period for each such Eurodollar Rate Loan. If the Borrower's
confirmation is not timely made, the Borrower shall be deemed to have withdrawn
Borrower's Notice of Conversion and the Prime Rate Loans that were the subject
of such Notice of Conversion shall continue as Prime Rate Loans. If the
Borrower's written confirmation is timely made, the Borrower shall be deemed to
be requesting a conversion from Prime Rate Loans to Eurodollar Rate Loan(s) in
the amount(s) and for the Interest Period(s) stated in the confirmation. By
2:00 p.m., Columbus, Ohio time, two Business Days prior to the requested
Borrowing Date, Agent shall give telephonic or written notice to each Bank of
Borrower's request for conversion, specifying (i) the date for the conversion;
(ii) the aggregate amount of Prime Rate Loans to be converted; and (iii) and,
for each such Prime Rate Loan to be converted to a Eurodollar Rate Loan, the
respective amount, the respective Eurodollar Rate, and the respective length of
the initial Interest Period applicable thereto. All or any part of outstanding
Eurodollar Rate Loans and Prime Rate Loans may be converted as provided herein,
provided that (i) (unless the Required Banks otherwise consent) no Prime Rate
Loan may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing and (ii) no Prime Rate Loan may be
converted into a Eurodollar Rate Loan after the date that is one month prior to
the last day of the Commitment Period.
(b) Subject to the limitations on the availability
of Eurodollar Rate Loans, any Eurodollar Rate Loans may be continued as such
upon the expiration of the then current Interest Period with respect thereto by
the Borrower giving Agent telephonic or written notice, which notice must be
received prior to 12:00 Noon, Columbus, Ohio time, at least three Business Days
prior to such last day of the then current Interest Period, and which notice
shall specify the amount of the Eurodollar Rate Loans to be continued as such
and the respective amount and the respective length of the Interest Period for
each Eurodollar Rate Loan. After the Borrower gives such notice, Agent, by 10:00
a.m. two Business Days prior to the end of the Interest Period, shall advise the
Borrower of the applicable interest rate(s) (which is the sum of the applicable
Eurodollar Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate
Loan(s) and Interest Period(s) requested in such notice. Not more than two hours
thereafter, the Borrower shall give Agent written irrevocable confirmation of
whether or not the Borrower wants to continue the Eurodollar Rate Loan(s) as
such and, if so, the amount and the Interest Period for each such Eurodollar
Rate Loan. If the Borrower's confirmation is not timely made, the Borrower shall
be deemed to have withdrawn Borrower's notice for a continuation and the
Eurodollar Rate Loans that were the subject of such request
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shall convert automatically to a Prime Rate Loan upon the expiration of the then
current Interest Period. If the Borrower's written confirmation is timely made,
the Borrower shall be deemed to be requesting a continuation of the Eurodollar
Rate Loan(s) in the amount(s) and for the Interest Period(s) stated in such
notice. Agent shall give prompt telephonic or written notice to each Bank of
such request for continuation, specifying the aggregate amount of the Eurodollar
Rate Loans to be continued as such and, for each such Eurodollar Rate Loan to be
continued, the respective amount, the respective Eurodollar Rate, and the
respective length of the Interest Period applicable thereto. All or any part of
outstanding Eurodollar Rate Loans may be continued as provided herein, provided
that (i) (unless the Required Banks otherwise consent) no Eurodollar Rate Loan
may be continued when any Default or Event of Default has occurred and is
continuing and (ii) no Eurodollar Rate Loan may be continued as a Eurodollar
Rate Loan after the date that is one month prior to the last day of the
Commitment Period.
3.2 INABILITY TO DETERMINE INTEREST RATE. If prior to the
first day of any Interest Period, the Agent or the Required Banks shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy, telephonic or written
notice thereof to the Borrower and the Banks as soon as practicable thereafter.
If such notice is given (x) any Eurodollar Rate Loans requested to be made on
the first day of such Interest Period shall be made as Prime Rate Loans and (y)
any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurodollar Rate Loans shall be converted to or
continued as Prime Rate Loans. Until such notice has been withdrawn by the
Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Prime Rate Loans to Eurodollar Rate
Loans.
3.3 ILLEGALITY; IMPRACTICABILITY. Notwithstanding any other
provision herein, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof shall make it unlawful, or if
compliance by any Bank or its applicable lending office, branch or any affiliate
thereof with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority occurring after the date
hereof (or, if later, the date on which such Bank becomes a Bank pursuant to any
permitted assignment) shall make it impracticable, for any Bank, or its
applicable lending office, branch or any affiliate thereof, to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement,
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(a) such Bank shall promptly give written notice of such circumstances to the
Borrower and the Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Bank hereunder to
make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Bank to make or maintain
Eurodollar Rate Loans, such Bank shall then have a commitment only to make a
Prime Rate Loan when a Eurodollar Rate Loan is requested and (c) such Bank's
Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Bank such amounts, if any,
as may be required pursuant to subsection 3.5, Indemnity.
3.4 REQUIREMENTS OF LAW. If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof
applicable to any Bank, or its applicable lending office, branch or any
affiliate thereof, or compliance by any Bank, or its applicable lending office,
branch or any affiliate thereof, with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority,
in each case made subsequent to the date hereof (or, if later, the date on which
such Bank becomes a Bank pursuant to any permitted assignment):
(a) shall subject such Bank, or its applicable lending
office, branch or any affiliate thereof, to any tax of any kind whatsoever with
respect to any Eurodollar Rate Loans made by it or its obligation to make
Eurodollar Rate Loans, or change the basis of taxation of payments to such Bank
in respect thereof and changes in taxes measured by or imposed upon the overall
net income, or franchise taxes, or taxes measured by or imposed upon overall
capital or net worth, or branch taxes (in the case of such capital, net worth or
branch taxes, imposed in lieu of such net income tax), of such Bank or its
applicable lending office, branch, or any affiliate thereof;
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Bank which is not otherwise included in the determination of the Eurodollar
Rate hereunder; or
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(c) shall impose on such Bank, or its applicable lending
office, branch or any affiliate thereof, any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank, or its applicable lending office, branch or any
affiliate thereof, deems to be material, of making, converting into, continuing
or maintaining Eurodollar Rate Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Bank, through the Agent, in accordance herewith, the
Borrower shall promptly pay such Bank, upon its demand, any additional amounts
necessary to compensate such Bank for such increased cost or reduced amount
receivable; in addition, in any such case, the Borrower may elect to convert
the Eurodollar Rate Loans made by such Bank hereunder to Prime Rate Loans by
giving the Agent at least one Business Day's notice of such election, in which
case the Borrower shall promptly pay to such Bank, upon demand, without
duplication, such amounts, if any, as may be required pursuant to subsection
3.5. If any Bank becomes entitled to claim any additional amounts pursuant to
this subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount receivable hereunder
resulting from such event and (z) as to the additional amount demanded by such
Bank and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Bank, through the Agent, to the Borrower shall be conclusive
in the absence of manifest error. This covenant shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.5 INDEMNITY. The Borrower agrees to indemnify each Bank and
to hold each Bank harmless from any loss or expense which such Bank may sustain
or incur (other than through such Bank's gross negligence or willful misconduct)
as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Rate Loans after the Borrower has
given Agent written irrevocable confirmation that Borrower wants such Eurodollar
Rate Loans in accordance with subsection 2.3 or subsection 3.1, as appropriate,
of this Agreement, (b) default by the Borrower in making any prepayment or
conversion of a Eurodollar Rate Loan after the Borrower has given a notice
thereof in accordance with the provisions of this Agreement or (c) the making of
a prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto (whether by acceleration, demand or
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otherwise). Such indemnification may include, without limitation, an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or converted, or not so borrowed, converted or
continued, for the period from the date of such prepayment or conversion or of
such failure to borrow, convert or continue to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Eurodollar Rate Loans
provided for herein over (ii) the amount of interest (as reasonably determined
by such Bank) which would have accrued to such Bank on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Banks and Agent to enter into this
Agreement and to make the Revolving Credit Loans and to issue the Standby L/Cs
herein provided for, Borrower hereby covenants, represents and warrants to each
Bank and to Agent that on the date hereof:
4.1 FINANCIAL STATEMENTS. Borrower has heretofore furnished to
each Bank (a) the consolidated balance sheet of Borrower and its Subsidiary as
of December 31, 1995, and the related consolidated statements of income, of
stockholders' equity and of cash flows for the fiscal year of Borrower then
ended, certified by Deloitte & Touche, independent public accountants and (b)
the consolidated unaudited balance sheet and income statement of Borrower and
its Subsidiary as of October 31, 1996. Each of the foregoing financial
statements fairly presents the financial condition of Borrower and its
Subsidiary as of the date thereof and the results of the operations of Borrower
and its Subsidiary for the period then ended (subject, in the case of the
October 31, 1996 financial statements, to year-end audit adjustments) and, from
the respective dates of the foregoing financial statements to the date hereof,
there has been no material adverse change in such condition.
4.2 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of Borrower
and its Subsidiary (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power and authority to conduct the business in which it is currently engaged,
(c) is qualified as a foreign corporation under the laws of any
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jurisdiction where the failure to so qualify would have a material adverse
effect on the business of Borrower and its Subsidiary taken as a whole, and (d)
is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith would not, in the aggregate, have a material adverse
effect on the business, operations, property or financial or other condition of
Borrower and its Subsidiary taken as a whole and would not materially adversely
affect the ability of Borrower to perform its obligations under this Agreement
and the Notes.
4.3 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Borrower has the corporate power and authority to make, deliver and perform this
Agreement and the Notes and to borrow hereunder, and has taken all corporate
action necessary to be taken by it to authorize (a) the borrowings on the terms
and conditions of this Agreement and the Notes, and (b) the execution, delivery
and performance of this Agreement and the Notes. No consent, waiver or
authorization of, or filing with any Person (including without limitation any
Governmental Authority) is required to be made or obtained by Borrower in
connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement and the Notes. This
Agreement has been, and each Note will be, duly executed and delivered on behalf
of Borrower and this Agreement constitutes, and each Note when executed and
delivered hereunder will constitute, a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms, subject to
the effect, if any, of bankruptcy, insolvency, reorganization, arrangement or
other similar laws relating to or affecting the rights of creditors generally
and the limitations, if any, imposed by the general principles of equity and
public policy.
4.4 NO LEGAL BAR. The execution, delivery and performance of
this Agreement and the Notes, the borrowings hereunder and the use of the
proceeds thereof do not and will not violate any Requirement of Law or
Contractual Obligation (including without limitation the Indenture) of Borrower
or its Subsidiary and do not and will not result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any
Requirement of Law or Contractual Obligation.
4.5 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of Borrower, threatened by or against Borrower or its
Subsidiary or against any of their respective properties or revenues (a) with
respect to this Agreement or the Notes or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to
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have a material adverse effect on the business, operations, property or
financial or other condition of Borrower and its Subsidiary taken as a whole.
4.6 REGULATION U. Neither Borrower nor its Subsidiary is
engaged, nor will either of them engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any loans hereunder will be used for "purchasing" or "carrying" "margin
stock" as so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of such Board of Governors.
If requested by Agent, Borrower and its Subsidiary will furnish to Agent a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation U to the foregoing effect.
4.7 INVESTMENT COMPANY ACT. Neither Borrower nor its
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
4.8 ERISA. Borrower and its Subsidiary are in compliance in
all material respects with ERISA. There has been no Reportable Event with
respect to any Plan. There has been no institution of proceedings or any other
action by PBGC or Borrower or any Commonly Controlled Entity to terminate or
withdraw or partially withdraw from any Plan under any circumstances which could
lead to material liabilities to PBGC or, with respect to a Multiemployer Plan,
the Reorganization or Insolvency (as each such term is defined in ERISA) of the
Plan.
4.9 DISCLOSURE. No representations or warranties made by
Borrower in this Agreement or in any other document furnished from time to time
in connection herewith (as such other documents may be supplemented from time to
time) contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary to make the statements herein
or therein not misleading.
4.10 SUBSIDIARY INFORMATION. Schedule 3 attached hereto
contains the name, principal place of business, all other places of business and
percentage of ownership of the only Subsidiary of Borrower.
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4.11 SCHEDULES. Each of the Schedules to this Agreement contains true,
complete and correct information in all material respects.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL LOAN(S). The obligation of the Banks to make
the initial Loan(s) and of Agent to issue any Standby L/C hereunder on the first
Borrowing Date is subject to the satisfaction of the following conditions
precedent on or prior to such date:
(a) NOTES. Each Bank shall have received its respective
Revolving Credit Note, conforming to the requirements hereof and duly executed
and delivered by a duly authorized officer of Borrower.
(b) GUARANTIES. Each Bank shall have received its respective
Guaranty to which Agent shall also be a party, conforming to the requirements
hereof and duly executed and delivered by a duly authorized officer of
Borrower's Subsidiary.
(c) BORROWING BASE COMPLIANCE. Borrower shall have delivered
to each Bank and Agent a Borrowing Base Certificate in the form of Exhibit C
attached hereto ("BORROWING BASE CERTIFICATE"), certified by Borrower's chief
financial officer, which shows that the Borrowing Base as of October 31, 1996 is
at least equal to the Loans (including any Standby L/Cs either (i) issued
hereunder or (ii) issued under the Existing Credit Agreement and that remain in
place) requested hereunder.
(d) LEGAL OPINIONS OF COUNSEL TO BORROWER. Each Bank and Agent
shall have received an executed legal opinion of Schottenstein, Zox & ▇▇▇▇,
counsel to Borrower and its Subsidiary, dated as of the date hereof and
addressed to each Bank and Agent, substantially in the form of Exhibit D
attached hereto, and otherwise in form and substance satisfactory to each Bank
and Agent and covering such other matters incident to the transactions
contemplated hereby as each Bank and Agent or their respective counsel may
reasonably require.
(e) CORPORATE PROCEEDINGS OF BORROWER. Each Bank and Agent
shall have received a copy of the resolutions (in form and substance
satisfactory to each Bank and Agent) of the Board of Directors of Borrower
authorizing (i) the execution, delivery and performance of this Agreement, (ii)
the consummation of the transactions contemplated hereby, (iii) the borrowings
herein provided for, and (iv) the execution, delivery and performance of the
Notes and the other documents provided for in this Agreement,
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all certified by the Secretary or the Assistant Secretary of Borrower as of the
date hereof. Such certificate shall state that the resolutions set forth therein
have not been amended, modified, revoked or rescinded as of the date hereof.
(f) CORPORATE PROCEEDINGS OF SUBSIDIARY OF BORROWER. Each Bank
and Agent shall have received a copy of the resolutions (in form and substance
satisfactory to each Bank and Agent) of the Sole Shareholder of the Subsidiary
of Borrower authorizing the execution, delivery and performance of each
Guaranty, all certified by the Secretary or Assistant Secretary of the
Subsidiary of Borrower as of the date hereof. Such certificate shall state that
the resolutions set forth therein have not been amended, modified, revoked or
rescinded as of the date hereof.
(g) INCUMBENCY CERTIFICATE OF BORROWER. Each Bank and Agent
shall have received a certificate of the Secretary or an Assistant Secretary of
Borrower, dated the date hereof, as to the incumbency and signature of the
officer(s) of Borrower executing this Agreement, the Notes and any certificate
or other documents to be delivered pursuant hereto or thereto.
(h) INCUMBENCY CERTIFICATE OF SUBSIDIARY. Each Bank and Agent
shall have received a certificate of the Secretary or Assistant Secretary of the
Subsidiary of Borrower, dated the date hereof, as to the incumbency and
signatures of the officer(s) of the Subsidiary of Borrower executing each
Guaranty.
(i) NO PROCEEDING OR LITIGATION; NO INJUNCTIVE RELIEF. No
action, suit or proceeding before any arbitrator or any Governmental Authority
shall have been commenced, no investigation by any Governmental Authority shall
have been commenced and no action, suit, proceeding or investigation by any
Governmental Authority shall have been threatened, against Borrower or the
Subsidiary of Borrower or any of the officers or directors of Borrower or the
Subsidiary of Borrower, seeking to restrain, prevent or change the transactions
contemplated by this Agreement in whole or in part or questioning the validity
or legality of the transactions contemplated by this Agreement or seeking
damages in connection with such transactions.
(j) CONSENTS, LICENSES, APPROVALS, ETC. Each Bank and Agent
shall have received true copies (certified to be such by Borrower or other
appropriate party) of all consents, licenses and approvals required in
accordance with applicable law in connection with the execution, delivery,
performance, validity and enforceability of this Agreement, the Notes and the
Guaranties, if the failure to obtain such consents, licenses or approvals,
individually or in the aggregate, would have a material
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adverse effect on Borrower and its Subsidiary taken as a whole, or would
adversely affect the validity or enforceability of any of the foregoing
documents, and approvals obtained shall be in full force and effect and be
satisfactory in form and substance to each Bank and Agent.
(k) COMPLIANCE WITH LAW. Neither Borrower nor its Subsidiary
shall be in violation in any material respect of any applicable statute,
regulation or ordinance, including without limitation statutes, regulations or
ordinances relating to environmental matters, of any governmental entity, or any
agency thereof, in any respect materially and adversely affecting the business,
property, assets, operations or condition, financial or otherwise, of Borrower
and its Subsidiary taken as a whole.
(l) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing hereunder prior to or after giving
effect to the making of the initial loans (including the issuance of Standby
L/Cs) on the first Borrowing Date hereunder.
(m) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the consolidated financial condition or business or
operations of Borrower or its Subsidiary from the date of Borrower's December
31, 1995, audited financial statements to the first Borrowing Date.
(n) ADDITIONAL MATTERS. All corporate and other proceedings
and all other documents and legal matters in connection with the transactions
contemplated by this Agreement, the Notes and the Guaranties shall be
satisfactory in form and substance to each Bank and Agent and their respective
counsel.
(o) STANDBY L/C APPLICATION. If the issuance of any Standby
L/C is part of the initial loan(s), Borrower shall have delivered to Agent a
Standby L/C Application in accordance with subsection 2.13 hereof for each
Standby L/C that Borrower has requested Agent to issue on the first Borrowing
Date.
5.2 CONDITIONS TO ALL LOANS. In addition to the other terms
and conditions of this Agreement with respect to the making of Loans and the
issuance of Standby L/Cs, the obligation of each Bank to make any Loan and of
Agent to issue of any Standby L/C hereunder on any date (including without
limitation the first Borrowing Date) is subject to the satisfaction of the
following conditions precedent as of such date:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Borrower in this Agreement and any representations and
warranties made by Borrower or any
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Subsidiary of Borrower which are contained in any certificate, document or
financial or other statement furnished at any time under or in connection
herewith or therewith, shall be true and correct in all material respects on
and as of the date of such Loan as if made on and as of such date unless
stated to relate to a specific earlier date.
(b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the Loan to be made or Standby L/C to be issued on such date.
(c) STANDBY L/C APPLICATION. If the issuance of any Standby
L/C is part of any borrowing, Borrower shall have delivered to Agent a Standby
L/C Application in accordance with subsection 2.13 hereof for each Standby L/C
that Borrower has requested Agent to issue as part of such borrowing.
Each borrowing by Borrower (including the submission of a Standby L/C
Application) under this Agreement shall constitute a representation and warranty
by Borrower as of the date of such borrowing that the conditions contained in
the foregoing paragraphs (a), (b) and (c) of this subsection 5.2 have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower hereby agrees that, from the date hereof and so long
as the Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains outstanding and unpaid, any Standby L/C remains outstanding
that is not fully collateralized with cash in a manner satisfactory to Agent, or
any other amount is owing to Agent or any Bank hereunder, Borrower shall, and in
the case of subsections 6.6, 6.7, 6.8 and 6.9 hereof, shall cause each of its
Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to each Bank and Agent:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Borrower, a copy of the audited
consolidated balance sheet of Borrower and its consolidated Subsidiaries as of
the end of such year and the related audited consolidated statements of income,
of stockholders' equity and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, together with the
opinion of independent certified public accountants of nationally recognized
standing, which opinion shall not contain a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
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audit or qualification which would affect the computation of financial
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covenants contained herein other than a qualification for consistency due to a
change in the application of GAAP with which Borrower's independent certified
public accountants concur; and
(b) as soon as available, but in any event not later than 45
days after the end of each monthly accounting period (including the monthly
accounting period for the last month of each fiscal year of the Commitment
Period), the unaudited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of each such month and the related
unaudited consolidated statements of income and of stockholders' equity of
Borrower and its consolidated Subsidiaries for such month and the portion of the
fiscal year through such date setting forth in each case in comparative form the
figures for the previous year, and including in each case: (i) the relevant
figures broken down with respect to each division of Borrower and its
Subsidiaries, (ii) a listing of all residential and commercial lots, land under
development and unsold lots, and (iii) a statement of the calculation of
Borrower's ratio of Consolidated Unsubordinated Liabilities to the sum of
Consolidated Tangible Net Worth and Subordinated Indebtedness as of the end of
such month, all of the foregoing certified by a Responsible Officer as being
fairly stated in all material respects, subject to year-end audit adjustments;
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP (except,
in the case of the financial statements referred to in subparagraph (b) of this
subsection 6.1, that such financial statements need not contain footnotes and
may be subject to year-end audit adjustments).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Bank and Agent:
(a) concurrently with the delivery of each financial statement
referred to in subsection 6.1(a) above and each financial statement referred to
in subsection 6.1(b) above, a summary in form and substance satisfactory to the
Required Banks of the status of the hedging investments described in subsection
7.9(j) hereof, and a certificate of a Responsible Officer of Borrower (in the
form of Exhibit E attached hereto or such other form as shall be reasonably
acceptable to each Bank and Agent) stated to have been made after due
examination by such Responsible Officer (i) stating that, to the best of such
officer's knowledge, Borrower and each of its Subsidiaries during such period
has observed or performed in all material respects all of its covenants and
other agreements, and satisfied every condition contained in this Agreement and
the Notes to be observed, performed or satisfied by it, and that such officer
has
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obtained no knowledge of any Default or Event of Default except as specified
in such certificate, and (ii) showing in detail the calculations supporting such
statement in respect of subsections 6.11, 6.12, 6.13, 6.14, 6.15, 7.1(d), 7.3,
7.6, 7.7, 7.8, 7.9(e), 7.9(k), 7.9(l), 7.20 and 7.22 hereof;
(b) not later than March 31 of each year, comprehensive
projections for that year, setting forth projected income and cash flow for each
quarter of that year, and the projected balance sheet as of the end of each
quarter of that year, together with a summary of the assumptions upon which such
projections are based and a certificate in the form of Exhibit F hereto of the
chief financial officer or the controller of Borrower with respect to such
projections;
(c) promptly after the same are sent, copies of all financial
statements, reports and notices which Borrower or any of its Subsidiaries sends
to its stockholders as stockholders and, so long as Borrower is a reporting
company under the Securities Exchange Act of 1934, promptly after the same are
filed, copies of all financial statements which Borrower may make to, or file
with, and copies of all material notices Borrower receives from, the Securities
and Exchange Commission or any public body succeeding to any or all of the
functions of the Securities and Exchange Commission;
(d) promptly upon receipt thereof, copies of all final reports
submitted to Borrower by independent certified public accountants in connection
with each annual, interim or special audit of the books of Borrower or any of
its Subsidiaries made by such accountants, including without limitation any
final comment letter submitted by such accountants to management in connection
with their annual audit; and
(e) promptly, on reasonable notice to Borrower, such
additional financial and other information as any Bank may from time to time
reasonably request.
6.3 BORROWING BASE CERTIFICATE. Furnish to each Bank and Agent
as soon as available, but in any event within twenty-five (25) days after the
end of each month, a Borrowing Base Certificate in substantially the form of
Exhibit C, certified by the chief financial officer or the controller of
Borrower, showing the calculation of the Borrowing Base for such month.
6.4 COMPLIANCE WITH BORROWING BASE REQUIREMENTS. At any time any
Borrowing Base Certificate required to be furnished to each Bank and Agent
in accordance with subsection 6.3 hereof indicates that the aggregate principal
amount of the Loans and undrawn and drawn Standby L/Cs then outstanding exceeds
the amount
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of Loans and Standby L/Cs then permitted hereunder, within five calendar days
after the delivery of such Borrowing Base Certificate to each Bank and Agent,
(a) reduce the principal amount of the Loans and undrawn and drawn Standby L/Cs
then outstanding by an amount sufficient to make the Loans and undrawn and drawn
Standby L/Cs then outstanding not more than the Loans and Standby L/Cs then
permitted hereunder, or (b) deliver to each Bank and Agent a more current
Borrowing Base Certificate that demonstrates that the aggregate principal amount
of the Loans and undrawn and drawn Standby L/Cs outstanding as of the date of
such Borrowing Base Certificate is not in excess of the Loans and Standby L/Cs
permitted hereunder at such time.
6.5 INTEREST RATE PROTECTION. At any time the Prime Rate shall equal or
exceed eight percent (8%) per annum and Borrower shall not have an Interest Rate
Contract in effect pursuant to this subsection 6.5, the Required Banks, by
written notice from Agent to Borrower, may require Borrower to enter into an
Interest Rate Contract or series of Interest Rate Contracts providing to
Borrower an effective specified rate of interest on fifty percent (50%) of the
maximum amount of Revolving Credit Loans available hereunder of not more than
two percentage points higher than the Prime Rate per annum in effect at the time
of Agent's notice to Borrower. In such event, Borrower, within 30 days of
receipt of such notice from Agent, shall enter into an Interest Rate Contract or
series of Interest Rate Contracts, and provide a copy or copies thereof to each
Bank and Agent, which Interest Rate Contract or series of Interest Rate
Contracts shall (i) provide interest rate protection to Borrower on fifty
percent (50%) of the maximum Revolving Credit Loans available hereunder by
providing to Borrower an effective specified rate of interest on fifty percent
(50%) of the maximum amount of Revolving Credit Loans available hereunder of not
more than two percentage points higher than the Prime Rate per annum in effect
at the time of Agent's notice to Borrower, (ii) be in effect for a period of at
least three years from the later of (A) the date of acquisition of such Interest
Rate Contract or series of Interest Rate Contracts or (B) the date of Agent's
notice to Borrower hereunder (provided that if such period exceeds the maturity
date of the Commitment, including any permitted extensions of the maturity date,
the Interest Rate Contract(s) need only be in effect until such maturity date),
and (iii) be entered into with (A) any Bank, or (B) a bank or other financial
institution that has unsecured, uninsured and unguaranteed long-term debt which
is rated at least A-3 by ▇▇▇▇▇'▇ Investor Service, Inc. or at least A- by
Standard & Poor's Corporation.
6.6 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its Indebtedness and other
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material obligations of whatever nature, except, (a) without prejudice to the
effectiveness of paragraph (5) of Section 9 hereof, for any Indebtedness or
other obligations (including any obligations for taxes), when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Borrower or its Subsidiaries, as the case may be, and
(b) for any Indebtedness secured by a mortgage on real estate if such
Indebtedness is, by its terms, exculpatory (I.E., non-recourse to Borrower and
its Subsidiaries).
6.7 MAINTENANCE OF EXISTENCE. Except as may be permitted under
subsection 7.4 hereof, preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges, contracts, copyrights, patents, trademarks, trade names and
franchises necessary or desirable in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law except to the
extent that the failure to take such actions or comply with such Contractual
Obligations and Requirements of Law would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower or of Borrower and its Subsidiaries, taken as a whole.
Borrower and its Subsidiaries have no duty to renew or extend contracts which
expire by their terms.
6.8 MAINTENANCE OF PROPERTY, INSURANCE. Keep all property useful in and
necessary to its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, general liability and business interruption
insurance) as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to each Bank and Agent,
upon written request, full information as to the insurance carried.
6.9 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities, subject in the case
of interim statements to year-end audit adjustments; and permit representatives
of each Bank and Agent to visit and inspect any of its properties, and examine
and make abstracts from any of its books and records at any reasonable time and
as often as may reasonably be requested, and to discuss the business,
operations, properties and financial and other condition of Borrower and its
Subsidiaries with officers and employees of Borrower and its
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Subsidiaries and, if notice thereof is given to Borrower prior to the date of
such discussions, with its independent certified public accountants.
6.10 NOTICES. Promptly give notice to each Bank and Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any loan or
letter of credit agreement binding upon Borrower or any of its Subsidiaries,
(ii) default under any other Contractual Obligation that would enable the
obligee of the Contractual Obligations to compel Borrower or any of its
Subsidiaries to immediately pay all amounts owing thereunder or otherwise
accelerate payments thereunder and would have a material adverse effect on
Borrower and its Subsidiaries taken as a whole, or (iii) litigation,
investigation or proceeding which may exist at any time between Borrower and its
Subsidiaries and any Governmental Authority, which, if adversely determined,
would have a material adverse effect on the business, operations, property or
financial or other condition of Borrower and its Subsidiaries taken as a whole;
(c) of any litigation or proceeding affecting Borrower or any
of its Subsidiaries (i) (A) in which the amount involved is $500,000.00 or more
and not covered by insurance, or (B) which, in the reasonable opinion of a
Responsible Officer of Borrower, would, if adversely determined, have a material
adverse effect on Borrower and its Subsidiaries taken as a whole, or (ii) in
which injunctive or similar relief is sought and which, in the reasonable
opinion of a Responsible Officer of Borrower, would, if adversely determined,
have a material adverse effect on Borrower and its Subsidiaries taken as a
whole;
(d) of the following events, as soon as possible and in any
event within 30 days after Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan with respect to
which the PBGC has not waived the 30 day reporting requirement, or (ii) the
institution of proceedings or the taking or expected taking of any other action
by PBGC or Borrower or any Commonly Controlled Entity to terminate or withdraw
or partially withdraw from any Plan under circumstances which could lead to
material liability to the PBGC or, with respect to a Multiemployer Plan, the
Reorganization or Insolvency (as each such term is defined in ERISA) of the Plan
and in addition to such notice, deliver to each Bank and Agent whichever of the
following may be applicable: (A) a certificate of a Responsible Officer of
Borrower setting forth details as to
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such Reportable Event and the action that Borrower or Commonly Controlled Entity
proposes to take with respect thereto, together with a copy of any notice of
such Reportable Event that may be required to be filed with PBGC, or (B) any
notice delivered by PBGC evidencing its intent to institute such proceedings or
any notice to PBGC that such Plan is to be terminated, as the case may be; and
(e) of a material adverse change in the business, operations,
property or financial or other condition of Borrower and its Subsidiaries taken
as a whole.
Each notice pursuant to this subsection 6.10 shall be accompanied by a statement
of the chief executive officer or chief financial officer or other Responsible
Officer of Borrower setting forth details of the occurrence referred to therein
and stating what action Borrower proposes to take with respect thereto. For all
purposes of clause (d) of this subsection 6.10, Borrower shall be deemed to have
all knowledge or knowledge of all facts attributable to the administrator of
such Plan if such Plan is a Single Employer Plan.
6.11 MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH. Maintain its
Consolidated Tangible Net Worth in amounts at all times equal to at least the
following amounts during the following periods:
PERIOD AMOUNT
------ ------
Date hereof to and including $ 89,000,000
12/31/96
1/1/97 to and including $89,000,000 plus 50% of audited
12/31/97 Consolidated Earnings for
fiscal year 1996
1/1/98 to and including Consolidated Tangible Net
12/31/98 Worth required for 1997 plus
50% of audited Consolidated
Earnings for fiscal year 1997
1/1/99 to and including Consolidated Tangible Net Worth
12/31/99 required for 1998 plus 50% of
audited Consolidated Earnings for
fiscal year 1998
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PERIOD AMOUNT
------ ------
1/1/00 to and including Consolidated Tangible Net
12/31/00 Worth required for 1999 plus
50% of audited Consolidated
Earnings for fiscal year 1999
1/1/01 and thereafter Consolidated Tangible Net Worth
required for 2000 plus 50% of
audited Consolidated Earnings for
fiscal year 2000
provided, however, that the Consolidated Tangible Net Worth requirements shall
not be reduced if Consolidated Earnings is zero or negative for any applicable
fiscal year or any applicable interim period; and further provided, however,
that each of the foregoing Consolidated Tangible Net Worth amounts shall be
increased by 90% of the aggregate increase in Borrower's Consolidated Tangible
Net Worth as a result of the issuance of additional stock of Borrower after the
date hereof.
6.12 MAINTENANCE OF DEBT TO WORTH. Maintain at all times (a) during the
period from March 1 through November 30 of each year during the Commitment
Period a ratio of Consolidated Unsubordinated Liabilities to the sum of
Consolidated Tangible Net Worth and Subordinated Indebtedness not in excess of
2.25 to 1.0, and (b) during the period from December 1 through February 28 or
29, as appropriate, of each year during the Commitment Period a ratio of
Consolidated Unsubordinated Liabilities to the sum of Consolidated Tangible Net
Worth and Subordinated Indebtedness not in excess of 2.1 to 1.0.
6.13 MAINTENANCE OF LIQUIDITY RATIO. Maintain at all times during the
Commitment Period a Liquidity Ratio of not less than 1.10 to 1.0.
6.14 MAINTENANCE OF OVERALL LEVERAGE RATIO. Maintain at all times
during the Commitment Period (a) a ratio of Consolidated Tangible Net Worth to
Subordinated Indebtedness of not less than 3.0 to 1.0, and (b) a ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth not in excess of 3.0
to 1.0.
6.15 MAINTENANCE OF EBITDA TO CONSOLIDATED INTEREST INCURRED RATIO.
Maintain at all times during the Commitment Period a ratio of EBITDA to
Consolidated Interest Incurred of not less than 1.65 to 1.0.
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6.16 GUARANTIES OF WHOLLY-OWNED M/I ANCILLARY BUSINESSES. Upon the
request of the Agent on behalf of the Required Banks, cause each of the M/I
Ancillary Businesses that is wholly-owned by the Borrower or by any Subsidiary
and which is not precluded by law from executing a Guaranty to execute a
Guaranty in favor of the Banks and the Agent with respect to the Indebtedness of
the Borrower hereunder.
SECTION 7. NEGATIVE COVENANTS
Borrower hereby agrees that, from the date hereof and so long
as the Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains outstanding and unpaid, any Standby L/C remains outstanding
that is not fully collateralized with cash in a manner satisfactory to Agent, or
any other amount is owing to Agent or any Bank hereunder, Borrower shall not,
nor shall it permit any of its Subsidiaries or, in the case of subsections 7.1,
7.2, 7.3 and 7.21, permit any M/I Ancillary Business that is wholly-owned by the
Borrower or by any Subsidiary to, directly or indirectly:
7.1 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness except:
(a) Indebtedness in respect of the Notes;
(b) Indebtedness of Borrower and M/I Financial Corp. under the
M/I Financial Corp. Loan Agreement, which shall not exceed the aggregate
principal amount of $25,000,000 at any time;
(c) Subordinated Indebtedness of Borrower, subject to the
limitations of subsection 6.14 hereof;
(d) Secured Indebtedness in respect of capitalized lease
obligations and purchase money obligations within the limitations set forth in
subsection 7.2(c) hereof; provided, however, that the aggregate amount of any
such secured Indebtedness at any one time outstanding shall not exceed
$10,000,000 on a consolidated basis;
(e) Indebtedness of Borrower and its Subsidiaries arising out
of or under unpaid reimbursement and guaranty obligations in respect of payments
actually made by (i) issuers or otherwise on all drafts or borrowings under
standby letters of credit and (ii) bonding companies on Construction Bonds, as
each is permitted by subsection 7.3(a) hereof, provided payment of said
Indebtedness is not yet due, and further provided that the
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aggregate amount of said Indebtedness does not exceed $2,000,000 at any one
time outstanding;
(f) Indebtedness of Borrower in respect of Standby L/Cs,
provided payment of said Indebtedness is not yet due; and
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(g) Indebtedness for Office Building Loan Obligations,
provided that the sum of the amount of such Indebtedness and the amount of
Borrower's Contingent Obligations for Office Building Loan Obligations as
permitted by subsection 7.3(d) hereof shall at no time exceed the principal
amount of $8,500,000 in the aggregate.
(h) Indebtedness of Borrower with respect to loans from M/I
Financial Corp.; provided that the amount of such loans from M/I Financial Corp.
shall not exceed $5,000,000 at any time that the aggregate principal amount of
the Loans outstanding is less than the aggregate principal amount of the Loans
available pursuant to subsection 2.1 hereof.
7.2 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether owned or hereafter
acquired, except:
(a) Liens in favor of Agent, for the ratable benefit of Banks,
including without limitation Liens in favor of Agent on Borrower's real
property inventory situated in the State of Indiana to secure the Indebtedness
to Banks;
(b) Liens granted by M/I Financial Corp. on mortgage notes
receivable, which Liens secure Indebtedness permitted under subsection 7.1(b)
hereof not in excess of $25,000,000;
(c) Liens securing Indebtedness permitted under subsection
7.1(d) hereof; provided, however, that (i) such Liens do not at any time
encumber any property other than the property financed by such secured
Indebtedness, and (ii) the Indebtedness secured thereby shall not exceed the
cost or fair market value, whichever is lower, of the property being acquired on
the date of acquisition;
(d) Liens for taxes and special assessments not yet due or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of Borrower
and its Subsidiaries in accordance with GAAP;
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(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of Borrower and its Subsidiaries in
accordance with GAAP;
(f) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(g) (i) deposits to secure the performance of: bids; trade
contracts (other than for borrowed money or the purchase price of property or
services); leases; statutory and other obligations required by law; surety,
appeal and performance bonds (including Construction Bonds); and other
obligations of a like nature incurred in the ordinary course of business; and
(ii) Liens in favor of surety bond companies pursuant to indemnity agreements to
secure Borrower's reimbursement obligations on Construction Bonds, provided (A)
the Liens securing Construction Bonds shall be limited to the Borrower's assets
at, and Borrower's rights arising out of, the projects that are the subject of
the Construction Bonds, (B) the Liens shall not attach to any real estate, and
(C) the aggregate amount of such Liens at any time shall not exceed the dollar
amount of Construction Bonds then outstanding, and in any event shall not exceed
the amount of reimbursement obligations on Construction Bonds permitted to
Borrower pursuant to subsection 7.3 (a) hereof;
(h) Liens of landlords, arising solely by operation of law, on
fixtures and moveable property located on premises leased in the ordinary course
of business; provided, however, that the rental payments secured thereby are not
yet due; and
(i) Liens arising as a result of a judgment or judgments
against Borrower or any of its Subsidiaries which do not in the aggregate exceed
$500,000 at any one time outstanding, which are being diligently contested in
good faith, which are not the subject of any attachment, levy or enforcement
proceeding, and as to which appropriate reserves have been established in
accordance with GAAP.
7.3 LIMITATION ON CONTINGENT OBLIGATIONS. Agree to or assume,
guarantee, indorse or otherwise in any way be or become responsible or liable
for, directly or indirectly, any Contingent Obligation, including but not
limited to Contingent Obligations incurred as a general partner in any limited
partnership or general partnership, except:
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(a)(i) reimbursement and other obligations under standby
letters of credit (including letters of credit issued for the purpose of
satisfying bonding requirements) issued by Persons other than Banks; (ii)
Contingent Obligations of Borrower as the guarantor of letters of credit issued
for the account of joint ventures in which Borrower is a partner (including
Guaranteed HNB Joint Ventures Letters of Credit), provided that Borrower's
Contingent Obligation on any such guaranty shall be limited to a percentage of
the amount of that joint venture's letters of credit equal to Borrower's pro
rata equitable ownership interest in such joint venture, provided further that
the sum of the obligations permitted by clauses (a)(i) and (a)(ii) shall not
exceed the aggregate amount of $7,000,000 at any one time outstanding on a
consolidated basis, which $7,000,000 limitation shall not include any
obligations in connection with Standby L/Cs; and (iii) reimbursement obligations
not in excess of $10,000,000 at any one time outstanding on a consolidated basis
under Construction Bonds;
(b) Contingent Obligations consisting of (i) guaranties by
Borrower of M/I Financial Corp.'s lease obligations in an amount not to exceed
$1,000,000 in any period of 12 consecutive months, (ii) Borrower's obligations
under the M/I Financial Corp. Loan Agreement in a principal amount not to exceed
$25,000,000, and (iii) guaranties by any Subsidiary of the obligations of
Borrower (including without limitation any guaranty by M/I Financial Corp. of
any obligation of Borrower to Banks);
(c) Contingent Obligations related to Indebtedness of joint
ventures in which Borrower has made Investments in Joint Ventures as permitted
by subsection 7.9(e) hereof and in which Borrower is a partner, member or
shareholder; provided, however, that the aggregate amount of such Contingent
Obligations at any one time outstanding pursuant to this subsection 7.3(c) shall
not exceed (i) $10,000,000 less (ii) the aggregate amount of secured and
unsecured Indebtedness then outstanding pursuant to subsection 7.1(d) hereof;
(d) Contingent Obligations for Office Building Loan
Obligations, provided that the sum of the amount of such Contingent Obligations
and the amount of Borrower's Indebtedness for Office Building Loan Obligations
as permitted by subsection 7.1(g) hereof shall at no time exceed the principal
amount of $8,500,000 in the aggregate; and
(e) other Contingent Obligations of Borrower which do not in
the aggregate at any one time outstanding exceed $2,000,000, subject to the
limitations of subsection 7.9(l) hereof.
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7.4 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any transaction of
merger, consolidation, amalgamation or reorganization (including without
limitation any election to be taxed as an S Corporation), or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or, except for
the sale of land, lots and houses from inventory in the ordinary course of
business, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
business or assets, whether now owned or hereafter acquired, or make any
material change in the method by which it conducts business, except any
Subsidiary of Borrower may be (i) merged, amalgamated or consolidated with or
into Borrower or any wholly-owned Subsidiary of Borrower, or (ii) liquidated,
wound up or dissolved into, or all or substantially all of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Borrower or any
wholly-owned Subsidiary of Borrower; provided, however, that, in the case of
such a merger, liquidation or consolidation, Borrower or such wholly-owned
Subsidiary, as the case may be, shall be the continuing or surviving
corporation.
7.5 LIMITATION ON ACQUISITIONS. Except for the acquisition of land,
lots and houses in the ordinary course of business to the extent not otherwise
prohibited hereunder, acquire all or any material part of the business or assets
of, any Person without the prior written consent of the Required Banks.
7.6 LIMITATION ON DIVIDENDS. Declare any dividends (other than
dividends payable solely in common stock of Borrower) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement or other acquisition of any shares of any class
of stock of Borrower, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Borrower (any of the foregoing a "STOCKHOLDER
PAYMENT"), except so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Borrower may make Stockholder Payments in
an amount that, when added to all other Stockholder Payments permitted by this
Agreement, does not exceed the sum of (i) twenty-five percent (25%) of
cumulative Consolidated Earnings (taking into account losses, if any) of
Borrower subsequent to December 31, 1994 plus (ii) $5,000,000. In determining
compliance with the foregoing, Borrower shall be in compliance if, as of the
last day of the calendar month immediately preceding the month in which such
payment is made, the cumulative payments previously made plus the payments made
during the current month would not in the aggregate exceed the amount permitted
by the foregoing.
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7.7 LIMITATION ON CERTAIN REAL PROPERTY EXPENDITURES. Purchase or
acquire any Eligible Raw Land and Land Under Development by the expenditure of
cash, the incurrence of Indebtedness, as a result of Investment in Joint
Venture(s), or otherwise, if as a result of such purchase or acquisition the
aggregate cost of all the foregoing then owned by Borrower and its Subsidiaries
(including their pro rata share of any undeveloped land that constitutes part of
an Investment in Joint Venture) shall exceed (a) as to undeveloped land only,
$50,000,000; and (b) as to the sum of undeveloped land and land under
development, $95,000,000; and, provided further, that the aggregate cost of any
individual tract of land acquired by Borrower or any of its Subsidiaries, or
their pro rata share of any tract that constitutes part of an Investment in
Joint Venture may not exceed $2,000,000 except for land holdings set forth on
Exhibit G attached hereto. For purposes of this subsection 7.7, the cost of
undeveloped land and land under development shall be determined in accordance
with GAAP. Further, for purposes of this subsection 7.7, any tract of land shall
cease to be classified as undeveloped land after (i) commencement of the
development of such tract into residential lots in good faith and provided the
development thereof is completed over a period of not more than one year, or
(ii) such tract is the subject of a valid, noncontingent contract of sale with a
person who is not an Affiliate or Subsidiary and who is satisfactory to the
Required Banks in their sole discretion, provided the sale contemplated by such
contract is to be completed not more than two years after the date of the
contract. In the event the development of any tract is discontinued for a period
of 60 days or longer or not completed within one year, such tract shall
automatically be deemed to be undeveloped land.
7.8 LIMITATION ON SPECULATIVE HOUSES AND ELIGIBLE MODEL HOUSES. Permit
the aggregate cost, as determined in accordance with GAAP on a consolidated
basis, of (a) Speculative Houses owned by Borrower and its Subsidiaries to
exceed $20,000,000 at any one time outstanding, of which not more than
$4,000,000 may consist of attached (including townhouse condominiums and
condominiums) single family homes, or (b) Eligible Model Houses owned by
Borrower and its Subsidiaries to exceed $30,000,000 at any one time outstanding,
of which not more than $3,000,000 may consist of attached (including townhouse
condominiums and condominiums) single family homes.
7.9 LIMITATION ON INVESTMENTS. Make or commit to make any advance,
loan, extension of credit or capital contribution to, or purchase of any stock,
bonds, note, debenture or other security of, or make any other investment in,
any Person (all such transactions being herein called "investments"), except:
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(a) investments in Cash Equivalents;
(b) extensions of credit in connection with the sale of land,
secured by land sold, which do not exceed in the aggregate $1,000,000 at any one
time outstanding and which have a maximum maturity of five years;
(c) loans and advances to officers and employees of Borrower
or its Subsidiaries, to other Persons in the ordinary course of business or as
permitted by the Code of Regulations of Borrower, which do not exceed in the
aggregate $500,000 at any one time outstanding;
(d) any investments in M/I Financial Corp. or any other
Subsidiary created with the consent of the Required Banks hereafter;
(e) any Investments in Joint Ventures, the aggregate cost of
which, as determined in accordance with GAAP (excluding, however, Borrower's or
its Subsidiaries' equity in the undistributed earnings or losses in each such
joint venture, whether such joint venture is a general or limited partnership, a
limited liability company, a corporation or any other form of business
association), does not at any one time outstanding exceed $17,500,000; provided,
however, that with respect to each such joint venture, whether such joint
venture is a general partnership, a limited partnership, a limited liability
company, a corporation or any other form of business association, Borrower shall
have at least a 33 1/3% ownership interest in such joint venture and all
decisions with respect to the management and control of each such joint
venture's business (other than decisions with respect to development of
undeveloped land owned by such joint venture) shall require the consent and
approval of Borrower; and provided further, however, that no such investment may
be made if it causes or results (singly or with other actions or events) in (i)
any violation of subsection 7.3 hereof or any other covenant or condition
hereof, or (ii) any other Default or Event of Default;
(f) first mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purchase of residential
real property;
(g) second mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purchase of residential
real property, provided that such second mortgage loans (i) shall be made only
in connection with a specific financing program to natural persons who have a
first mortgage loan from M/I Financial Corp. with respect to the same
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real property, and (ii) shall not in the aggregate exceed $500,000 at any one
time outstanding;
(h) first mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purpose of refinancing an
existing first mortgage loan, provided that the amount of such refinancing
mortgage loans shall not exceed $5,000,000 in the aggregate at any one time
outstanding;
(i) investments by M/I Financial Corp. in the stock of ▇▇▇▇▇▇
▇▇▇ to the extent required for M/I Financial Corp. to sell mortgages to ▇▇▇▇▇▇
Mae, but the amount of such investments in ▇▇▇▇▇▇ ▇▇▇ stock shall in no event
exceed $100,000;
(j) investments by M/I Financial Corp. in the ordinary course
of its business in standard instruments hedging against interest rate risk
incurred in the origination and sale of mortgage loans, in each case matching a
hedging instrument or instruments to specific mortgages or specific groups of
mortgages, but in no event including investments in futures contracts, options
contracts or other derivative investment vehicles acquired as independent
investments;
(k) investments in the Office Building Limited Liability
Company specifically for the purpose of constructing, owning and operating the
Office Building in an amount not to exceed $1,200,000 in the aggregate;
(l) investments in, advances to, and Contingent Obligations
related to the obligations of, the M/I Ancillary Businesses in an amount not to
exceed $100,000 in the aggregate; and
(m) other investments or advances directly related to the
Borrower's business, provided that the aggregate amount of such investments and
advances shall not at any time exceed $2,000,000.00 in the aggregate.
7.10 LIMITATION ON OPERATING LEASES. Enter into or renew any
Operating Lease if as a result thereof: (a) the aggregate rentals payable by
Borrower and all of its Subsidiaries under all Operating Leases, except for any
Operating Lease with respect to the Office Building, would exceed in any period
of 12 consecutive months the aggregate amount of $4,200,000; or (b) the term of
(i) any Operating Lease with respect to Eligible Model Houses and furnishings
for Eligible Model Houses would exceed three years, and (ii) any other Operating
Lease, except for any Operating Lease with respect to the Office Building, would
exceed five years, provided that so long as the initial term or
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any renewal of an Operating Lease included within this clause (b) does not
exceed five years or three years, as appropriate, the aggregate of the initial
term and all renewals of such Operating Lease may exceed five years or three
years, as appropriate, if any right of renewal is solely at the option of the
Borrower or its Subsidiaries; or (c) the aggregate rentals payable by Borrower
and all of its Subsidiaries under all Operating Leases with respect to the
Office Building would exceed, for the periods set forth below, the amounts that
correspond to such periods, as set forth below:
Aggregate Rentals
Year of the Operating Lease Per Lease Year
--------------------------- -----------------
Beginning with Lease Year 1 $1,131,576.00
Through and including Lease Year 5
Beginning with Lease Year 6 $1,217,693.00
Through and including Lease Year 10
Beginning with Lease Year 11 $1,275,104.00
Through and including Lease Year 15
Beginning with Lease Year 16 $1,303,810.00
Through and including Lease Year 20
7.11 TRANSACTIONS WITH AFFILIATES AND OFFICERS.
(a) Except for (i) any consulting agreements or employment
agreements to which Borrower is a party and which were in effect as of ▇▇▇▇▇ ▇,
▇▇▇▇, (▇▇) any agreements entered into in connection with the construction of
the Office Building by the Office Building Limited Liability Company and/or with
Borrower's leasehold improvements to, the Office Building, and (iii)
compensation arrangements in the ordinary course of business with the officers,
directors, and employees of Borrower and its Subsidiaries, enter into any
transaction, including without limitation the purchase, sale or exchange of
property or the rendering of any services, with any Affiliate or any officer or
director thereof, or enter into, assume or suffer to exist any employment or
consulting contract with any Affiliate or an officer or director thereof, except
any transaction or contract which is in the ordinary course of Borrower's or any
of its Subsidiaries' business and which is upon fair and reasonable terms no
less favorable to Borrower or its Subsidiaries than it would obtain in
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a comparable arm's length transaction with a Person not an Affiliate;
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(b) make any advance or loan to any Affiliate or any director
or officer thereof or of Borrower or to any trust of which any of the foregoing
is a beneficiary, or to any Person on the guarantee of any of the foregoing,
except as expressly permitted by subsection 7.9(c) hereof; or
(c) pay any fees or expenses to, or reimburse or assume any
obligation for the reimbursement of any expenses incurred by, any Affiliate or
any officer or director thereof, except as may be permitted in accordance with
clauses (a) and (b) of this subsection 7.11, and except as may be required
pursuant to the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Family Agreement dated October
11, 1993, in connection with certain registration rights of certain
shareholders.
7.12 SALE AND LEASEBACK. Enter into any arrangement with any Person
providing for the leasing by Borrower or any of its Subsidiaries of real or
personal property which has been or is to be sold or transferred by Borrower or
any of its Subsidiaries to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of Borrower or any of its Subsidiaries; provided, however,
that such arrangements shall be permitted with respect to Eligible Model Houses,
so long as any such arrangement with respect to Eligible Model Houses does not
result in: (a) the creation of a lease which is required to be capitalized in
accordance with GAAP; (b) the initial term of such arrangement plus any options
or renewals exercisable by lessor or lessee exceeding three years; or (c) the
violation of any term, condition or covenant hereof, including without
limitation subsection 7.10 hereof.
7.13 LIMITATION ON PAYMENTS OF SUBORDINATED INDEBTEDNESS AND
MODIFICATION OF SUBORDINATION AGREEMENTS.
Without the prior written consent of the Required Banks,
(a) repay, prepay, purchase, redeem, or otherwise acquire any
of its Subordinated Indebtedness; or
(b) make any other payments, including without limitation
payment of interest, on any Subordinated Indebtedness if an Event of Default
exists or if such payment would cause an Event of Default to occur; or
(c) permit the modification, waiver or amendment of any of the
terms of any Subordinated Indebtedness; or
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(d) permit (whether or not within the control of Borrower or
any of its Subsidiaries) the modification, waiver, or amendment of, or release
of any parties to, any subordination agreement with respect to any Subordinated
Indebtedness;
provided, however, nothing contained in this subsection 7.13 shall prevent
Borrower from making regularly scheduled payments (including sinking fund
payments) on any Subordinated Indebtedness if no Event of Default exists and
the payment would not cause an Event of Default to occur. With respect to the
Subordinated Indebtedness pursuant to the Note Purchase Agreement, dated as of
September 30, 1996 (the "Bank of Boston Subordinated Indebtedness"), between
the Borrower and The First National Bank of Boston, in its capacity as note
purchaser, and any subsequent purchasers or assignees (the "Note Purchaser"),
"regularly scheduled payments" shall mean only (i) the $500,000.00 commitment
fee, (ii) quarterly interest payments, (iii) the $250,000.00 extension fee if
the Borrower exercises its option to extend the maturity date of the Note
Purchase Agreement which is December 15, 2001 (iv) the three mandatory
prepayments of $2,500,000.00 each if the Borrower elects to extend the maturity
date from December 15, 2001 to December 15, 2003 pursuant to Section 3.2 of the
Note Purchase Agreement and (v) the payment of principal at the maturity date
which is December 15, 2001 or, if extended pursuant to Section 3.2 of the Note
Purchase Agreement, December 15, 2003.
The parties hereby agree that the addition of the definition
of "regularly scheduled payments" set forth herein is intended to clarify what
payments of Subordinated Indebtedness pursuant to the Bank of Boston
Subordinated Indebtedness constitute "regularly scheduled payments" and that
none of the amendments to this subsection 7.13 are intended to modify the rights
and obligations of the Note Purchaser and the Borrower, or the rights of the
Banks and the Agent, pursuant to or arising out of the Bank of Boston
Subordinated Indebtedness; provided that nothing herein shall be construed to be
a consent by the Banks (in their capacity as Banks under this Agreement) and the
Agent to any payment of any Subordinated Indebtedness that is prohibited by this
Agreement.
7.14 SALE OF SUBSIDIARY SECURITIES. Sell any security, debt or
equity of any Subsidiary, or permit any Subsidiary to sell or issue any
security, debt or equity to any Person other than Borrower or any Bank;
provided, however, Borrower may sell through M/I Financial Corp. mortgage loans
on a non-recourse basis, subject to Mortgage Loan Repurchase Obligations;
provided further, however, that this subsection 7.14 shall not prohibit
Indebtedness of any Subsidiary permitted under subsection 7.1 hereof.
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7.15 CONSTRUCTION ON REAL PROPERTY NOT OWNED. Make investments
in construction on real property that is not then owned by Borrower; provided,
however, that Borrower may make investments in construction on such real
property if the contract price for the land plus the cost of investment in
construction with respect to all such real property does not in the aggregate
exceed $500,000 at any one time outstanding.
7.16 LIMITATION ON SUBSIDIARIES. Create any Subsidiaries,
other than the Office Building Limited Liability Company (to the extent, if any,
that the Office Building Limited Liability Company is considered a Subsidiary),
without the prior written consent of the Required Banks.
7.17 LIMITATION ON LOCATION OF ATTACHED HOUSES. Construct or
make investments in construction of any attached (including townhouse
condominiums and condominiums) single family houses in any area outside of the
Washington, D.C. Market.
7.18 LIMITATION ON RENTAL HOUSES. Permit investments in Rental
Houses, determined in accordance with GAAP, to exceed $500,000 in aggregate at
any time.
7.19 LIMITATION ON INVESTMENTS IN COMMERCIAL REAL ESTATE.
Permit investments (including investments attributed to Borrower's pro rata
share of land owned by partnerships in which Borrower is a general or limited
partner or by limited liability companies of which Borrower is a member) in
commercial real estate (including raw land, land under development and
commercial Developed Lots), determined in accordance with GAAP, to exceed
$1,500,000 in the aggregate at any one time outstanding; provided, however, that
any investments permitted by subsection 7.9(k) hereof shall not be included in
the $1,500,000 investment limitation of this subsection 7.19.
7.20 LIMITATION ON UNCOMMITTED LAND. Permit the ratio of (a)
Uncommitted Land to (b) the sum of Borrower's (i) Shareholders Equity, and (ii)
Subordinated Indebtedness to exceed at any one time: (A) from the date hereof
through and including December 31, 1997, 1.30 to 1.0; and (B) from January 1,
1998 and thereafter, 1.25 to 1.0.
7.21 LIMITATION ON NEGATIVE PLEDGES. Enter into any agreement
other than this Agreement which prohibits or limits the ability of Borrower, any
of its Subsidiaries or any of the M/I Ancillary Businesses that are wholly-owned
by the Borrower or by any Subsidiary to create, incur, assume or suffer to exist
any Lien upon any of its assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, whether now owned or hereafter acquired.
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7.22 LIMITATION ON STANDBY L/CS. Have drawn and undrawn
Standby L/Cs outstanding at any time in an amount in excess of the amounts
permitted at such time by subsection 2.12 hereof for (a) Standby L/Cs, including
those issued for the purpose of satisfying bonding requirements, and (b) Standby
L/Cs, exclusive of those issued for the purpose of satisfying bonding
requirements, respectively.
7.23 HNB JOINT VENTURES LETTER OF CREDIT AGREEMENT. Modify or
amend the HNB Joint Ventures Letter of Credit Agreement in any way without the
written consent of the Required Banks.
SECTION 8. OPTIONAL SECURITY
Notwithstanding any other provision of this Agreement, from
time to time if Agent requests and Borrower consents, Borrower may grant to
Agent, for the pro rata benefit of Banks, mortgages on specific parcels of real
property owned by Borrower in the State of Indiana, each securing Borrower's
Indebtedness to Banks hereunder. Unless an Event of Default has occurred and is
continuing, each such mortgage shall be released by Agent upon Borrower's sale
of the subject real property, without the requirement of any payment to Agent
(other than reimbursement of costs incurred) or the consent of any Banks. If an
Event of Default that has not been waived by all Banks has occurred and is
continuing, Agent shall release any such mortgage(s) only upon (a) payment to
Agent for the pro rata benefit of Banks (in accordance with the pro rata
distribution as described in Section 9 hereof with respect to distribution of
Proceeds after Default) of the amount secured by such mortgage(s) and (b) the
consent of all Banks.
SECTION 9. DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF
PROCEEDS AFTER EVENT OF DEFAULT
Upon the occurrence of any of the following events:
(1) Borrower shall fail to pay any principal of any Note or
make any reimbursement (including payment of Reimbursement Obligations) in
connection with any Standby L/C when due in accordance with the terms thereof;
or
(2) Borrower shall fail to pay (a) any interest on any Note or
in connection with any Standby L/C, or (b) any fee, charge or other amount
payable hereunder, within three days after Agent or any Bank notifies Borrower
that such interest, fee or amount has become due in accordance with the terms
thereof or
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hereof and has not been paid; or Borrower shall fail to comply with the
provisions of any one or more of subsections 6.4, 6.5, 7.4, 7.5, 7.10, 7.12,
7.13, 7.14, 7.16, 7.17, 7.21, 7.22 or the limitations set forth in 7.9(j)
hereof; or
(3) any representation or warranty made or deemed made by
Borrower herein or which is contained in any certificate, document or financial
or other statement furnished at any time under or in connection herewith or
therewith, shall prove to have been incorrect in any material respect on or as
of the date made or deemed made; or
(4) Borrower shall default in the observance or performance of
any covenant or agreement contained in (a) subsection 6.3 hereof and such
default remains uncured for five days (notice to Borrower from Agent or any Bank
of such default is not required), (b) subsections 6.2(c), 6.2(d), 6.6, 6.10,
6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.9 (other
than failure to comply with the limitations of 7.9(j)), 7.11, 7.15, 7.18, 7.19
or 7.20 hereof and such default remains uncured ten days after Agent or any Bank
notifies Borrower that such default has occurred, (c) subsection 6.9 hereof and
such default remains uncured for ten days after Agent or any Bank notifies
Borrower that such default has occurred, provided, that for any default under
subsection 6.9 for which cure cannot reasonably be accomplished within ten days,
if cure is commenced within such ten-day period, Borrower may have an additional
period of up to 30 days after notice to cure such default before it is an Event
of Default, (d) any one or more of subsections 6.1(b), 6.2(a) or 6.2(b) hereof
and such default remains uncured 15 days after Agent or any Bank notifies
Borrower that such default has occurred, or (e) any other provision of this
Agreement (including without limitation subsections 6.1(a), 6.2(e), 6.7 and 6.8
hereof) which default shall remain uncured 30 days after Agent or any Bank
notifies Borrower that such a default has occurred, which notice shall specify
the nature of the default; or
(5) (a) Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (i) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(ii) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or Borrower or
any of its Subsidiaries shall make a general assignment for the benefit of
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its creditors; or (b) there shall be commenced against Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (a) above which (i) results in the entry of an order for relief or any
such adjudication or appointment, and (ii) remains undismissed, undischarged or
unbonded for a period of 60 days; or (c) there shall be commenced against
Borrower or any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or (d)
Borrower or any of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clauses (a), (b) or (c) above; or (e) Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(6) Borrower shall (a) default in any payment of principal of
or interest on any Indebtedness (other than the Notes and Reimbursement
Obligations) or in the payment of any Contingent Obligation, the aggregate
principal amount then outstanding of which exceeds $500,000.00, beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Contingent Obligation was created, or (b) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Contingent Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Contingent Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Contingent Obligation to become payable;
provided, however, that it shall not constitute a Default or Event of Default if
(x) Borrower defaults on Indebtedness secured by a mortgage on real estate if
such Indebtedness is by its terms exculpatory, i.e., non-recourse to Borrower
and its Subsidiaries, or (y) a draw is made on a standby letter of credit or
payment is made on a performance bond, so long as any reimbursement obligation
of Borrower with respect to such letter of credit or performance bond is made
within the time required by the document creating the reimbursement obligation;
or
(7) (a) any party in interest (as defined in Section 3(14) of
ERISA) affiliated with Borrower or any of its
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Subsidiaries shall engage in any "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (b) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan, (c) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or institution of proceedings is,
in the opinion of the Required Banks, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, and, in the case of a Reportable
Event, the continuance of such Reportable Event unremedied for 30 days after
notice of such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA
is given or, in the case of institution of proceedings, the continuance of such
proceedings for 30 days after commencement thereof, (d) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, or (e) any other event or
condition shall occur or exist with respect to a Single Employer Plan and in
each case in clauses (a) through (e) above, such event or condition, together
with all other such events or conditions, if any, could subject Borrower or any
of its Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or financial or other
condition of Borrower or of Borrower and its Subsidiaries taken as a whole; or
(8) one or more judgments or decrees shall be entered against
Borrower or any of its Subsidiaries involving in the aggregate a liability (not
covered by insurance) of $500,000.00 or more and all such judgments or decrees
in excess of $500,000.00 shall not have been vacated, satisfied, discharged, or
stayed or bonded pending appeal within 30 days from the entry thereof; or
(9) any Person or group of related Persons (other than ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ and the estate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ and the immediate
families of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ or trusts for
the benefit of their respective children and grandchildren) owns or controls
more than twenty-five percent (25%) of the outstanding voting capital stock of
Borrower; or
(10) any subordination agreement that evidences any
Subordinated Indebtedness (i) ceases to be the legal, valid and binding
agreement of any Person party thereto, enforceable against such Person in
accordance with its terms or a payment is made by Borrower in violation of any
provision thereof, or (ii) shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way ceases to fully subordinate
all of Borrower's indebtedness and other liabilities
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to Banks and Agent under this Agreement and the Notes and to Borrower's
obligations, if any, as a guarantor or otherwise of the indebtedness and other
liabilities of M/I Financial Corp. (including without limitation the obligations
with respect to the M/I Financial Corp. Loan Agreement);
then, and in any such event, (a) if such event is an Event of Default specified
in paragraph (5) above, the Commitment, if still outstanding, shall
automatically and immediately terminate and the full amount of all outstanding
Revolving Credit Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and/or the Notes shall immediately become
due and payable, (b) if such event is any other Event of Default and is
continuing, either or both of the following actions may be taken: (i) with the
consent of the Required Banks Agent may, or upon the request of the Required
Banks Agent shall, by notice to Borrower, declare the Commitment to be
terminated forthwith, whereupon the Commitment shall immediately terminate and
Agent shall have the rights set forth in subsection 2.13(b) hereof with respect
to the Standby L/Cs upon the termination of the Commitment; and (ii) with the
consent of the Required Banks Agent may, or upon the request of the Required
Banks Agent shall, by notice of default to Borrower, declare the full amount of
all outstanding Revolving Credit Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable, and (c) if such event is any payment Event of Default, then, in
addition to the rights given to Agent in clause (b), each Bank may, by notice
of default to Borrower and each other Bank, declare the full amount of all of
the obligations owing by Borrower to such Bank pursuant to the Revolving Credit
Loans (with accrued interest thereon) and all other amounts owing to such Bank
under this Agreement and the Notes to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section 9, presentment, demand, protest and all other notices of
any kind are hereby expressly waived. Additionally, Agent and each Bank may
exercise any and all other rights and remedies available to Agent and each Bank
at law or in equity to the extent not inconsistent with the rights specifically
granted to Agent and each Bank hereunder.
Notwithstanding any provisions concerning distribution of
payments to the contrary in this Agreement, so long as any Event of Default
exists that has not been waived by all Banks, each Bank shall share in any
payments or proceeds, including proceeds of any collateral, received by Agent or
any Bank (including without limitation proceeds received by HNB with respect to
Guaranteed HNB Joint Ventures Letters of Credit) made or received at any time
from and after any Event of Default
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("PROCEEDS AFTER DEFAULT") in an amount equal to the Proceeds after Default
multiplied by such Bank's Total Commitment Percentage as set forth on Schedule 1
hereto as such Schedule may be amended from time to time; provided, however, if
any one or more of the Bank(s) has not made any funding when required hereunder,
the distribution of Proceeds after Default shall be adjusted so that each Bank
shall receive Proceeds after Default in an amount equal to (a) the Proceeds
after Default multiplied by (b) the percentage (rounded to five decimal places)
of the total amount outstanding funded by all Banks that such Bank has actually
funded (including the amount of such Bank's participation in outstanding Standby
L/Cs). If necessary, Agent and each Bank shall use the adjustments procedure set
forth in subsection 11.8(a) hereof to make the appropriate distributions to
Banks as set forth in this paragraph of this Section 9.
SECTION 10. THE AGENT
10.1 APPOINTMENT. Each Bank hereby irrevocably designates and
appoints Bank One, Columbus, N.A. as Agent of such Bank under this Agreement and
each of the Notes and the Guaranties, and each Bank hereby irrevocably
authorizes Bank One, Columbus, N.A., as Agent for such Bank, to take such action
on its behalf under the provisions of this Agreement, the Notes and the
Guaranties and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement, the Notes and the Guaranties,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or any
Note or Guaranty, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any Note or Guaranty or
otherwise exist against Agent.
10.2 DELEGATION OF DUTIES. Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS. Neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any Note or Guaranty
(except for its or such Person's own gross negligence or willful misconduct) or
(ii)
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responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by Borrower or any of Borrower's Subsidiaries
or any officer thereof contained in this Agreement or any Note or Guaranty or in
any certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any Note
or Guaranty or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Notes or the Guaranties, or
for any failure of Borrower or any of Borrower's Subsidiaries to perform its
obligations hereunder or thereunder. Agent shall be under no obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement, the Notes, or the
Guaranties, or to inspect the properties, books or records of Borrower or any of
Borrower's Subsidiaries.
10.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, Guaranty, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to
Borrower or any of Borrower's Subsidiaries), independent accountants and other
experts selected by Agent. Agent may deem and treat the payee of any Note as the
owner thereof for all purposes. Agent shall be fully justified in failing or
refusing to take any action under this Agreement, the Notes or the Guaranties
unless it shall first receive such advice or concurrence of the Required Banks
or, in the case of items set forth in subsection 11.1 hereof that require
written consent of all Banks, all Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by all Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement, the Notes and the
Guaranties in accordance with a request of the Required Banks or, in the case of
items set forth in subsection 11.1 hereof that require written consent of all
Banks, all Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Banks and all future holders of the
Notes.
10.5 NOTICE OF DEFAULT. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Agent has received notice from any Bank or Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a
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"notice of default". If Agent receives such a notice, Agent shall give notice
thereof to Banks. Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks or, in
the case of items set forth in subsection 11.1 hereof that require written
consent of all Banks, all Banks; provided that, unless and until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall reasonably deem advisable in the best interests of
Banks.
10.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower and Borrower's Subsidiaries shall be deemed to
constitute any representation or warranty by Agent to any Bank. Each Bank
represents to Agent that it has, independently and without reliance upon Agent
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Borrower and Borrower's Subsidiaries and made its own decision to make its
extensions of credit hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, the Notes and
the Guaranties, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of Borrower and Borrower's Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of
Borrower or any of Borrower's Subsidiaries which may come into the possession of
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7 INDEMNIFICATION. Each Bank agrees to indemnify Agent in
its capacity as such (to the extent not reimbursed by Borrower and any of
Borrower's Subsidiaries and without limiting the obligation of Borrower and
Borrower's Subsidiaries to do so), ratably according to the respective amounts
of its original (a) Revolving Credit Loan Commitment Percentage, in the
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case of Revolving Credit Loans, and (b) L/C Commitment Percentage, in the case
of Standby L/Cs, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against Agent in any way relating to or arising out of this Agreement,
the Notes, the Guaranties or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted by Agent
under or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
10.8 BANK ONE IN ITS INDIVIDUAL CAPACITY. Bank One and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Borrower or any of Borrower's Subsidiaries as though Bank
One were not the Agent hereunder. With respect to its loans made or renewed by
it and any Note issued to it and with respect to any Standby L/C issued by it
either as Bank One or Agent, Bank One shall have the same rights and powers
under this Agreement as any Bank and may exercise the same as though it were not
the Agent, and the terms "Bank" and "Banks" shall include Bank One in its
individual capacity.
10.9 SUCCESSOR AGENT. Agent may resign as agent upon 30 days'
notice to the Banks. If Agent shall resign as agent under this Agreement, then
the Required Banks shall appoint from among the Banks a successor agent for the
Banks, whereupon such successor agent shall succeed to the rights, powers and
duties of Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent or any of the parties to this Agreement or any holders of the
Notes. After any retiring Agent's resignation hereunder as agent, the provisions
of this Section 10 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
SECTION 11. MISCELLANEOUS
11.1 AMENDMENTS AND WAIVERS. Agent and Borrower may, from time
to time, with the written consent of the Required Banks, enter into written
amendments, supplements or modifications for
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the purpose of adding any provisions to this Agreement or the Notes or changing
in any manner the rights of Banks or Borrower hereunder or thereunder, and with
the consent of the Required Banks, Agent on behalf of Banks may execute and
deliver to Borrower a written instrument waiving, on such terms and conditions
as Agent may specify in such instrument, any of the requirements of this
Agreement, the Notes or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall extend the final maturity of any Note, or reduce the rate or
extend the time of payment of interest or fees thereon or reduce the principal
amount thereof, or change the amount or terms of any Bank's Revolving Credit
Loan or L/C Commitment Percentage, or change the Borrowing Base, or amend,
modify, change any provision of the Guaranties, or release any Guaranties, or
amend, modify or change any provision of this subsection, or reduce the
percentage specified in the definition of Required Banks, or consent to the
assignment or transfer by Borrower of any of its rights and obligations under
this Agreement, or consent to the modification or termination of any
subordination agreement or provisions that evidence Subordinated Indebtedness,
or consent to the release of any collateral (except as provided in Section 8
hereof with respect to collateral that is the subject of a mortgage in the State
of Indiana), or amend, modify or change any other provision of this Agreement
that requires the consent of all Banks, in each case without the written consent
of all Banks. Any such waiver and any such amendment, supplement or modification
shall be binding upon Borrower, Agent and each Bank, and all future holders of
the Notes. In the case of any waiver, Borrower, Agent and each Bank shall be
restored to their former position and rights hereunder and under the outstanding
Notes, and any Default or Event of Default waived shall be deemed to be cured
and not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
11.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing or by telecopy or
other electronic facsimile and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or when
deposited in the United States mail, Registered or Certified, Return Receipt
Requested, postage prepaid, or, in the case of telecopy or other electronic
facsimile notice, when receipt confirmed by sender's electronic facsimile
machine, addressed as follows in the case of Borrower, Agent and each Bank, or
to such other address as may be hereafter notified by the respective parties
hereto and any future holders of any Note:
Borrower: M/I Schottenstein Homes, Inc.
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▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. Creek
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
M/I Schottenstein Homes, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Agent and/or
Bank One: Bank One, Columbus, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
HNB: The Huntington National Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
First Chicago: The First National Bank of Chicago
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
NCB: National City Bank of Columbus
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BOB: The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Fifth Third: The Fifth Third Bank of Columbus
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of Agent or any Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and, except for rights the exercise of which
require consent of the Required Banks or all Banks, as appropriate, under this
Agreement, not exclusive of any rights, remedies, powers and privileges provided
by law.
11.4 PARTICIPANTS.
(a) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other financial institutions ("PARTICIPANTS") participating
interests in any Revolving Credit Loan owing to such Bank, any Note held by such
Bank, any interest (including any Reimbursement Obligation) in any Standby L/C
with respect to such Bank, any Revolving Credit Loan Commitment of such Bank, or
any other interest of such Bank hereunder; provided, however, that upon the sale
of any participating interest the selling Bank shall provide promptly to
Borrower and Agent notice of such sale; and provided further, however, that no
Participant's consent shall be required to approve any amendments, waivers or
other modifications of this Agreement or of any document contemplated by this
Agreement, and no participation agreement shall provide any Participant with
such rights. In the event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, and such Bank shall remain the holder
of any such Note for all purposes under this Agreement, and, except as provided
in the immediately following sentence, Borrower, the other Banks, and Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. However, any
Participant that is an affiliate of any Bank shall have the right to deal
directly with any other Bank and Borrower with respect to any matter that is the
subject of this Agreement, and Banks and Borrower agree to deal directly with
such affiliate Participant(s); provided,
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however, that each Bank needs to deal only with other Banks (and not such other
Banks' affiliate Participant(s)), in those matters in which the consent of any
one or more Banks is required. The rights set forth in the immediately preceding
sentence shall apply only to Participants that are affiliates of any Bank, and
such rights do not apply to any Participants that are not affiliates of any
Bank. Borrower agrees that if amounts outstanding under this Agreement or the
Notes are due and unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of a Default or an Event of Default, each
Participant shall be deemed to have the right of set-off provided to Banks in
this Agreement in respect of its participating interest in amounts owing under
this Agreement or any Note or Reimbursement Obligation to the same extent as if
the amount of its participating interests were owing directly to it as a Bank
under this Agreement, any Note or any Standby L/C or participation in any
Standby L/C.
(b) Borrower authorizes each Bank and Agent to disclose to any
Participant and any prospective Participant any and all financial information in
such Bank's or Agent's possession concerning Borrower and any of Borrower's
Subsidiaries which has been delivered to such Bank or Agent by Borrower or
Borrower's Subsidiaries pursuant to this Agreement or which has been delivered
to such Bank or Agent by Borrower or Borrower's Subsidiaries in connection with
such Bank's or Agent's credit evaluation of Borrower and Borrower's Subsidiaries
prior to entering into this Agreement. Any Participant or prospective
Participant shall be subject to the confidentiality provisions of this
Agreement.
(c) Other than the sale of participating interests as
described in this subsection 11.4, no Bank may sell or assign its rights and
interests under this Agreement without the written consent of each Bank and
Borrower, provided that after the occurrence of a Default or an Event of Default
that has not been waived by all Banks, Borrower's consent to such sale or
assignment shall not be required.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes and shall remain in
full force and effect until this Agreement is terminated, all Standby L/Cs are
cancelled or are fully collateralized with cash in a manner satisfactory to
Agent and all indebtedness (including Reimbursement Obligations with respect to
Standby L/Cs that are not fully collateralized with cash) created or evidenced
by this Agreement and/or each Note is paid in full.
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11.6 PAYMENT OF EXPENSES AND TAXES. Borrower agrees:
(a) to pay or reimburse Agent and each Bank for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement, the Notes, the Guaranties, the Standby L/Cs and any other
documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, including without limitation the
reasonable fees and disbursements of counsel to Agent and each Bank; and
(b) to pay or reimburse Agent and each Bank for all its costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the Guaranties, the Standby L/Cs and any
such other documents, including without limitation the reasonable fees and
disbursements of counsel to Agent and each Bank.
11.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrower, Agent and each Bank, all future
holders of the Notes and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of all Banks, which consent may be
withheld by any Bank in its sole discretion.
11.8 ADJUSTMENTS; SET-OFF.
(a) If any Bank (a "BENEFITTED BANK") shall at any time
receive any payment of all or part of its Loans or Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in paragraph (5) of Section 9 hereof, or
otherwise) in a greater proportion than any such payment to any other Bank in
respect of such other Bank's Loans or Reimbursement Obligations owing to it, or
interest thereon, such benefitted Bank shall purchase for cash from the other
Banks such portion of each such other Bank's Loans or Reimbursement Obligations
owing to it, as shall be necessary to cause such benefitted Bank to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Banks; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. Borrower agrees that each Bank so
purchasing a portion of another Bank's Loans or Reimbursement Obligations owing
to it may exercise all rights of payment
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(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Bank were the direct holder of such portion.
(b) In addition to those rights and remedies of each Bank
provided by law, subject to the terms and conditions of this Agreement, upon the
occurrence of an Event of Default and acceleration of the obligations owing in
connection with this Agreement, each Bank shall have the right, without prior
notice to Borrower or its Subsidiaries, any such notice being expressly waived
by Borrower and its Subsidiaries to the extent permitted by applicable law, to
set-off and apply against any indebtedness, whether matured or unmatured, of
Borrower to such Bank, any amount held by or owing from such Bank to or for the
credit or the account of Borrower or its Subsidiaries at, or at any time after,
the happening of any of the above-mentioned events, and the aforesaid right of
set-off may be exercised by each Bank against Borrower and its Subsidiaries or
against any trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, receiver, custodian or execution, judgment or attachment
creditor of Borrower and its Subsidiaries, or against anyone else claiming
through or against Borrower and its Subsidiaries or such trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, receiver, custodian
or execution, judgment or attachment creditor, notwithstanding the fact that
such right of set-off shall not have been exercised by such Bank prior to the
making, filing or issuance of, or service upon such Bank of, or of notice of,
any such petition; assignment for the benefit of creditors; appointment or
application for the appointment of a receiver; or issuance of execution,
subpoena, order or warrant. Each Bank agrees promptly to notify Borrower and, if
set-off is made against Borrower's Subsidiaries, its Subsidiaries after any such
set-off and application made by such Bank, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
11.9 WAIVER OF JURY TRIAL. AGENT, EACH BANK AND BORROWER,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THE AGREEMENT OR
ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THE AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY OF THEM. NONE OF AGENT, ANY BANK OR BORROWER SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY OF
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AGENT, ANY BANK OR BORROWER EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
ALL OF THEM.
11.10 CONFIDENTIALITY. Agent and each Bank shall hold all
confidential information obtained pursuant to the requirements of the Agreement
which has been identified as such by Borrower in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with the Agreement or as reasonably required
by any bona fide Participant or prospective Participant in connection with any
contemplated participation therein or as required or requested by any
governmental agency or representative thereof or pursuant to legal process.
Without limiting the foregoing, it is expressly understood that such
confidential information which, at the time of disclosure is in the public
domain or which, after disclosure, other than disclosure by Agent or any Bank,
becomes part of the public domain or information which is obtained by Agent or
any Bank prior to the time of disclosure and identification by Borrower under
this subsection, or information received by Agent or any Bank from a third party
shall not be subject to the confidentiality requirements of this subsection
11.10. Nothing in this subsection or otherwise shall prohibit Agent or any Bank
from disclosing any confidential information to any other Bank in connection
with the Loans contemplated by this Agreement or render it liable in connection
with any such disclosure.
11.11 COUNTERPARTS; EFFECTIVE DATE. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement shall become
effective upon the receipt by Agent and each Bank of executed counterparts of
this Agreement by each of the parties hereto.
11.12 GOVERNING LAW. This Agreement, the Notes and the rights
and obligations of the parties under this Agreement and the Notes shall be
governed by, and construed and interpreted in accordance
with, the local laws of the State of Ohio.
11.13 HEADINGS. The headings of the Sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
M/I SCHOTTENSTEIN HOMES, INC.
By_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
BANK ONE, COLUMBUS, N.A.,
as Agent and as a Bank
By_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By_________________________________
_________________________________
Title: __________________________
NATIONAL CITY BANK OF COLUMBUS
By_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
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THE FIRST NATIONAL BANK OF BOSTON
By_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
THE FIFTH THIRD BANK OF COLUMBUS
By__________________________________
Print:____________________________
Title:____________________________
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