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#96292.04
09/28/95
FINAL
RESTATED REVOLVING CREDIT LOAN, SEASONAL LOAN AND
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STANDBY LETTER OF CREDIT AGREEMENT
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THIS AGREEMENT is made to be effective as of September 29,
1995, 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"),
NBD BANK, a Michigan banking corporation, formerly known as NBD Bank N.A., a
national banking association ("NBD"), NATIONAL CITY BANK, COLUMBUS, a national
banking association ("NCB"), THE FIRST NATIONAL BANK OF BOSTON, a national
banking association("BOB"), (Bank One, HNB, NBD, NCB and BOB 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, intending to be legally bound, hereby
recite and agree as follows:
BACKGROUND INFORMATION
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A. Borrower is a party to a Revolving Credit Loan,
Seasonal Loan and Standby Letter of Credit Agreement made to be effective as of
June 8, 1994, as amended by Amendment No. 1 to Revolving Credit Loan, Seasonal
Loan and Standby Letter of Credit Agreement entered into and made to be
effective as of September 30, 1994 and by Amendment No. 2 to Revolving Credit
Loan, Seasonal Loan and Standby Letter of Credit Agreement entered into and
made to be effective as of February 28, 1995, by Borrower, Bank One, HNB, NBD,
NCB and Agent (collectively, the "Existing Loan Agreement").
B. Borrower, Banks and Agent want to, among other
things, add BOB as a lender, pay in full the obligations outstanding on the
Revolving Credit Loans and Seasonal Loans, if any (as each term is defined in
the Existing Loan Agreement), under the Existing Loan Agreement, increase the
amount of credit available to Borrower and replace the Existing Loan Agreement
with this Restated Revolving Credit Loan, Seasonal Loan and Standby Letter of
Credit Agreement by and between Borrower, Banks and Agent. Borrower, Banks and
Agent agree that such addition to, and increase and replacement of, the
Existing Loan Agreement is to be accomplished by this Agreement.
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AGREEMENT
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SECTION 1. DEFINITIONS
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1.1 DEFINED TERMS. As used in this Agreement, the
following terms have the following respective meanings:
"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.
"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
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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;
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 6.2(i) hereof.
"BORROWING BASE CERTIFICATE" shall have the meaning set forth
in subsection 4.1(c) hereof.
"BORROWING DATE" shall mean any Business Day specified
pursuant to (a) subsection 2.5 hereof as a date on which Banks make,
at Borrower's request, a disbursement of the Revolving Credit Loans
hereunder, (b) subsection 2.5 hereof as a date on which Seasonal Loan
Banks make, at Borrower's request, a disbursement of the Seasonal
Loans hereunder, or (c) subsection 2.16 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.
"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 or BOB 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 Moody's 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.
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"COMMITMENT" shall mean the aggregate of (a) the
Revolving Credit Loan Commitments, (b) the Seasonal Loan
Commitments, and (c) 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, 2000, or such
earlier or later date as the Commitment shall terminate as
provided herein.
"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.
"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.
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"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 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 8 hereof, whether or not any requirement for the
giving of notice, the lapse of time, or both, has been
satisfied.
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"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.
"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 6.1(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 6.1(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
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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 6.1(d) hereof; provided, however, that
(a) the aggregate value of attached (including townhouse
condominiums and condominiums) single family homes
constituting 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 6.1(d) hereof; provided that the cost of obtaining
commitments for financing terms to be provided
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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 6.1(d) hereof.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"EVENT OF DEFAULT" shall mean any of the events
specified in Section 8 hereof, provided that any requirement
for the giving of notice, the lapse of time, or both, has been
satisfied.
"FANNIE MAE" 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 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 3.1 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.
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"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
hereto, 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 each other permitted Subsidiary, if any, of
Borrower.
"HNB JOINT VENTURES LETTER OF CREDIT AGREEMENT" shall
have the meaning set forth in subsection 4.1(p) hereof.
"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
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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.
"INDENTURE" shall mean the Indenture dated as of
December 1, 1991, between Borrower and Society National Bank,
as successor to Ameritrust Company National Association, as
amended by a Supplemental Indenture dated April 22, 1992,
governing Borrower's 14% Subordinated Notes due December 1,
2001, and 14% Subordinated Notes due December 1, 2001
(Exchange Series).
"INTEREST PAYMENT DATE" shall mean the last day of
each March, June, September and December, commencing on the
first of such days to occur after the first Borrowing Date.
"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 6.9 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
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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".
"L/C PARTICIPANT(S)" shall mean any one or more of
the Banks.
"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 6.1(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 collectively the Revolving Credit
Loans and the Seasonal Loans.
"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 made to be effective as of August
8, 1995, by and among M/I Financial Corp., Borrower and Bank
One, as the same may be, in Bank One's sole discretion,
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 6.9(g) hereof, and (d) those first
mortgage refinancing loans permitted by subsection 6.9(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 and underwriting criteria
for such Purchase Commitment, (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 90 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, or (E) the mortgagor engages in
fraudulent conduct or misrepresentation.
"NOTES" shall mean collectively the Revolving Credit
Notes and the Seasonal Loan Notes.
"OFFICE BUILDING" shall mean the office building to
be constructed by the Office Building Limited Liability
Company on Morse Road in Columbus, Ohio in which Borrower will
be a tenant.
"OFFICE BUILDING LIMITED LIABILITY COMPANY" shall
mean Northeast Office Venture, Limited Liability Company, to
be formed under Delaware law, the ownership interest of which
shall be 33-1/3% in Borrower, 33-1/3% in Limited Oval Office
I, Inc., a Delaware corporation,
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and 33-1/3% in The Georgetown Company, a New York general
partnership, the purpose of which limited liability company
shall be 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.
"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
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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 5.14 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
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(or Code of Regulations), Close Corporation Agreement (where
applicable) or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or
determination, including without limitation all environmental
laws, rules, regulations and determinations, of an arbitrator
or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
"RESPONSIBLE OFFICER" shall mean as to Borrower or
any of 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 2.9 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.
"SEASONAL LOAN BANK(S)" shall mean any one or more of
the Banks.
"SEASONAL LOAN COMMITMENT" shall mean, as to any Bank
that has committed to make Seasonal Loans hereunder, the
percentage (the "SEASONAL LOAN COMMITMENT PERCENTAGE") and
amount set forth opposite its name on Schedule 1 hereto under
the headings "Seasonal Loan Commitment Percentage" and
"Seasonal Loan Commitment" as
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such amount may be reduced from time to time in accordance
with the provisions of subsection 2.9 hereof; and
collectively, as to all Banks that have committed to make
Seasonal Loans hereunder, the "SEASONAL LOAN COMMITMENTS".
"SEASONAL LOAN NOTES" shall have the meaning set
forth in subsection 2.4 hereof.
"SEASONAL LOANS" shall mean the revolving credit
seasonal loans made pursuant to this Agreement that are more
particularly described in subsection 2.3 hereof.
"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 6.1(d) hereof) as
determined in accordance with GAAP of: (a) all uncompleted
houses for which 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 Loan Agreement, or by Bank One or HNB pursuant to any
predecessor to the Existing Loan
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Agreement, and which will remain in place after the effective
date of this Agreement, 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 2.16 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 6.6 hereof.
"SUBORDINATED INDEBTEDNESS" at any date shall mean
(i) the unsecured Indebtedness of Borrower created as a result
of the Indenture, 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
Borrower's obligations to Banks and Agent under this Agreement
and the Notes and to 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) by
agreement and in a manner satisfactory in form and substance
to the Required Banks in their sole discretion.
"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 manage-
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ment 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.
"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.
(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
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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, SEASONAL 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 5.4 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 Thirty-Six Million and
00/100 Dollars ($136,000,000.00). 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;
provided, however, that Borrower may not prepay any Revolving Credit Loan while
any Seasonal Loan remains outstanding, i.e., any prepayments shall be applied
first to the Seasonal Loans until all Seasonal Loans are paid in full before
any prepayments will be applied to the Revolving Credit Loans.
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 2.8 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
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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, 2000, which maturity
date may be extended as provided in subsection 2.10 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 2.8 hereof.
Interest on each Revolving Credit Note shall be payable as specified in
subsection 2.8 hereof.
2.3 SEASONAL LOAN COMMITMENTS. Subject to the terms and
conditions of this Agreement, each Seasonal Loan Bank severally agrees to make
revolving credit seasonal loans ("SEASONAL LOANS") to Borrower during the times
more particularly described in this subsection 2.3 during the Commitment Period
in an aggregate principal amount at any one time outstanding not to exceed that
Bank's Seasonal 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 5.4
hereof, as of the date stated in such Borrowing Base Certificate) minus the sum
of (i) $136,000,000 and (ii) the aggregate principal amount of undrawn and
drawn (A) Standby L/Cs, exclusive of the amount of Standby L/Cs issued for the
purpose of satisfying bonding requirements, then outstanding plus (B)
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) $30,000,000. Subject
to the terms and conditions of this Agreement, Seasonal Loans shall be
available: (a) in 1995, from the date of this Agreement until December 31; in
each year of the Commitment Period thereafter, from March 1 until December 31
of such year, provided that in no event shall the Seasonal Loans be available
beyond the last day of the Commitment Period; and (b) only if the entire
$136,000,000 principal amount of the Revolving Credit Loans has been advanced
and no portion thereof has been repaid as of the time of the request for any
Seasonal Loan. All Seasonal Loans must be repaid by December 31 of each year
during the Commitment Period, except if the Commitment Period ends on a date
other than December 31, all Seasonal Loans made during the last year of the
Commitment Period shall be due and payable on the last day of the Commitment
Period. In addition to the other requirements for Seasonal Loans, all Seasonal
Loans shall have a zero balance, and no Seasonal Loans shall be available, from
January 1 through and including February 28 (or February 29, if appropriate) of
any year during the Commitment Period. During the times when the Seasonal
Loans are available during the Commitment Period and as long as no Event of
Default exists, Borrower may use the Seasonal Loan Commitments by borrowing,
prepaying the Seasonal
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Loans in whole or in part, and reborrowing, all in accordance with the terms
and conditions hereof.
2.4 SEASONAL LOAN NOTES. The Seasonal Loans made by each
Seasonal Loan Bank pursuant hereto shall be evidenced by promissory notes of
Borrower, substantially in the form of Exhibit C attached hereto (each a
"SEASONAL LOAN NOTE" and collectively the "SEASONAL LOAN NOTES"), payable to
the order of the respective Seasonal Loan Bank and evidencing the obligation of
Borrower to pay the unpaid principal amount of the Seasonal Loans made by such
Bank, with interest thereon as prescribed by subsection 2.8 hereof. The
Seasonal Loan Notes shall (a) be dated as of the date hereof, (b) be stated to
mature on September 30, 2000, which maturity date may be extended as provided
in subsection 2.10 hereof, (c) provide that each Seasonal Loan Note shall have
a zero balance from January 1 through February 28 (or February 29, if
appropriate) of each year during the Commitment Period and shall be paid in
full at maturity, and (d) 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 2.8 hereof. Each Seasonal Loan Bank is hereby authorized to record
electronically or otherwise the date and amount of each Seasonal 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 Seasonal Loan Notes in accordance
with the terms hereof and thereof.
2.5 PROCEDURE FOR BORROWING. Borrower may borrow under
the Revolving Credit Loan Commitments and the Seasonal Loan Commitments
(subject to the limitations on the times Seasonal Loans are available during
each year), during the Commitment Period, provided Borrower shall give Agent
irrevocable telephonic or written notice (which notice must be received by
Agent prior to 11:00 a.m., Columbus, Ohio time) on or before the requested
Borrowing Date, specifying (i) the date of the requested borrowing (which shall
be a Business Day), and (ii) the amount of the requested borrowing. Each
borrowing pursuant to the Revolving Credit Loan Commitments and the Seasonal
Loan Commitments, as appropriate, shall be in the principal amount of the
lesser of (a) $1,000,000 or any larger amount which is an even multiple of
$100,000, or (b) the then undrawn Revolving Credit Loan Commitments or the
Seasonal Loan Commitments, as appropriate. Agent shall give prompt telephonic
or written notice to each Bank of such request, specifying the amount of the
requested borrowing and the Borrowing
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Date. Subject to satisfaction of the terms and conditions of this Agreement,
each Bank and/or Seasonal Loan Bank, as appropriate, 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 and/or its Seasonal
Loan Commitment Percentage of the Seasonal Loans, as appropriate, 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/or Seasonal Loan Banks,
as appropriate, and in like funds as received by Agent.
2.6 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.
2.7 SEASONAL LOAN COMMITMENT FEE. During the Commitment
Period, Borrower agrees to pay to Agent for the pro rata benefit of Seasonal
Loan Banks a commitment fee for the period from March 1 through December 31 of
each year during the Commitment Period, whether or not all or any portion of
the Seasonal Loans are available to Borrower during such period, computed at
the rate of 1/4 of 1 percent (1/4%) per annum, on the average daily unused
amount of the aggregate Seasonal Loan Commitments during such portion of each
year, 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.
2.8 INTEREST; DEFAULT INTEREST.
---------------------------
(a) Except as provided in subsection 2.8(b)
hereof, the Revolving Credit Loans and, if permitted to be outstanding, the
Seasonal Loans shall bear interest on the unpaid principal amount thereof at a
rate per annum equal to the Prime Rate in effect from time to time.
(b) If all or a portion of the principal amount
of any of the Revolving Credit Loans or the Seasonal Loans made hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), any such overdue principal amount and, to the extent permitted by
applicable law, any overdue installment of interest on any Revolving Credit
Loan or Seasonal
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Loan shall, without limiting any other rights of Banks, bear interest at a rate
per annum which is the sum of (i) one percent (1.0%), and (ii) 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).
(c) Interest shall be payable in arrears and shall be due on each Interest
Payment Date.
2.9 TERMINATION OR REDUCTION OF COMMITMENT. Provided
that each Bank consents in writing, Borrower shall have the right, upon not
less than five Business Days' written notice to each Bank, 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; provided that (i) any such
reduction shall be accompanied by prepayment of the Revolving Credit Loans, if
the Revolving Credit Loan Commitments are being reduced, and any outstanding
Seasonal Loans, if the Seasonal Loan Commitments are being reduced, made
hereunder, together with accrued interest on the amount so prepaid to the date
of such prepayment, to the extent, if any, that the amount of such Revolving
Credit Loans and/or Seasonal Loans, as appropriate, then outstanding exceeds
the amount of the Revolving Credit Loan Commitments and/or the Seasonal Loan
Commitments, as appropriate, portion(s) of the Commitment as then reduced, and
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 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, and (ii) any such termination of the Commitment
shall be accompanied by (A) prepayment in full of the Revolving Credit Loans
and the Seasonal 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 and (B) with respect to Standby L/Cs,
Borrower's compliance with the terms of subsection 2.16 (b) hereof. Any such
reduction of the Commitment shall be in the amount of $1,000,000 or a whole
multiple of $500,000 in excess thereof and shall reduce permanently the amount
of the Commitment then in effect. Any such reduction or termination of the
Revolving Credit Loan Commitments, the Seasonal 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, Seasonal Loan Commitment Percentage, and/or L/C Commitment
Percentage, as appropriate.
2.10 MATURITY DATE OF COMMITMENT; EXTENSION. Unless
earlier terminated pursuant to the terms of this Agreement, the Commitment
shall terminate on September 30, 2000, and the unpaid
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balance of the Revolving Credit Loans and Seasonal Loans outstanding shall be
paid on said date; provided, however, that all Banks shall make an election
annually during the Commitment Period 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.
2.11 COMPUTATION OF INTEREST AND FEES. Commitment fees on
the Commitment and interest in respect of the Revolving Credit Loans and the
Seasonal 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 shall become effective as of
the opening of business of the day on which such change in the Prime Rate 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. 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.
2.12 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 Banks (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
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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
Revolving Credit Loans and Seasonal 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 2.12 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 L/C
Participant under any Standby L/C.
2.13 USE OF PROCEEDS. The proceeds of the initial
Revolving Credit Loans and Seasonal 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 Loan
Agreement), under the Existing Loan Agreement. Upon Borrower's irrevocable
payment in full of the obligations outstanding under the Existing Loan
Agreement (other than Standby L/Cs that remain in existence), Bank One, HNB,
NBD and NCB shall cancel the Existing Loan 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 Loan Agreement. Thereafter, the proceeds of Revolving Credit Loans
and Seasonal Loans made hereunder shall be used by Borrower for lawful purposes
in its business.
2.14 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing
by Borrower from Banks hereunder, each payment (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, the Seasonal Loan Commitments and/or the L/C
Commitments shall be made pro rata according to the respective Revolving Credit
Loan Commitment Percentage, Seasonal 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 100 East Broad Street office in Columbus, Ohio, in Dollars
and in immediately available funds. Agent shall distribute such payments to
Banks promptly upon receipt
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26
in like funds as received. If any payment hereunder 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.
(b) Unless Agent shall have been notified in
writing by any Bank on or prior to a Borrowing Date that such Bank will not
make available to Agent the amount that would constitute its Revolving Credit
Loan Commitment Percentage and/or Seasonal Loan Commitment Percentage, as
appropriate, of the borrowing on such date, Agent may assume that such Bank has
made such amount available to Agent on such Borrowing Date, and Agent may in
reliance upon such assumption, make available to Borrower a corresponding
amount. If such amount is made available to Agent on a date after such
Borrowing Date, such Bank shall pay to Agent on demand an amount equal to the
product of (i) the daily average Federal funds rate during such period as
quoted by Agent, multiplied by (ii) the amount of such Bank's applicable
Revolving Credit Loan Commitment Percentage or Seasonal Loan Commitment
Percentage of such borrowing, multiplied by (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Bank's applicable Revolving Credit Loan Commitment
Percentage or Seasonal Loan Commitment Percentage of such borrowing shall have
become immediately available to Agent and the denominator of which is 360 (the
"EFFECTIVE FEDERAL FUNDS RATE"). A certificate of Agent submitted to any Bank
with respect to any amounts owing under this subsection shall be conclusive in
the absence of manifest error. If such amount is so available, such payment to
Agent shall constitute such Bank's Loan on such Borrowing Date for all purposes
of this Agreement. If such amount is not so made available to Agent, then
Agent shall notify Borrower of such failure and on the fourth Business Day
following such Borrowing Date, Borrower shall pay to Agent such ratable
portion, together with interest thereon for each day that Borrower had the use
of such ratable portion, at the Effective Federal Funds Rate. Nothing
contained in this subsection 2.14(b) shall relieve any Bank which has failed to
make available its ratable portion of any borrowing hereunder from its
obligation to do so in accordance with the terms hereof.
(c) The failure of any Bank to make the Loan to
be made by it on any Borrowing Date shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on such Borrowing Date, but no
Bank shall be responsible for the failure of any other Bank to make the Loan to
be made by such other Bank on such Borrowing Date.
2.15 THE STANDBY L/CS. So long as no Default or Event of
Default exists, Agent agrees to issue Standby L/Cs, pursuant to
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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
5.4 hereof, as of the date stated in such Borrowing Base Certificate) minus
(ii) the sum of (A) the principal amount of Revolving Credit Loans and Seasonal
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).
2.16 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 2.16 (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.
2.17 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
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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.
2.18 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 2.16(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 within three Business Days
after the date 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 required to be paid by any L/C
Participant pursuant to this subsection 2.18 is not in fact made available 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 such due date at
the rate per annum applicable to Revolving Credit Loans hereunder. A
certificate of Agent submitted to any L/C Participant with respect to any
amounts owing under this
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subsection 2.18 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.
2.19 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 which is not in default, and (ii) thereafter, the rate which would then be
payable on any outstanding Revolving Credit Loan which is in default.
2.20 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 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
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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.
2.21 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. 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.
2.22 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 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.
2.23 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:
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(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.
2.24 EXISTING STANDBY L/Cs; L/C PARTICIPATIONS. Attached
hereto as Schedule 2 is a list of all present standby letters of credit issued
by Bank One or HNB for the account of Borrower which are outstanding and which
will remain in place after the execution of this Agreement. The amount of such
standby letters of credit shall be deemed to be included in the aggregate
amount of Standby L/Cs outstanding as of the date of this Agreement for
purposes of subsection 2.15 hereof. Where appropriate, in any provision in
subsections 2.18 through 2.23 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 Standby L/Cs previously issued by Bank One or HNB which
will remain in place after the execution of this Agreement. Not later than the
execution of this Agreement by all parties, each L/C Participant shall enter
into a letter agreement in substantially the form of Exhibit I attached hereto
whereby (a) each L/C Participant shall purchase or sell, as appropriate,
participations in each Standby L/C previously issued by Bank One or HNB that
remains in place after the execution of this Agreement in such amounts to make
each L/C Participant's percentage interest in all outstanding Standby L/Cs
equal to such L/C Participant's L/C
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Commitment Percentage and (b) from and after the execution of this Agreement,
each L/C Participant shall share in the fees (including the portion of any fees
paid in advance that have not been earned as of the execution of this
Agreement), and shall pay to the appropriate issuer for the account of Borrower
any refunds (as provided in subsection 2.20 hereof) of the fees, for such
Standby L/Cs in a pro rata amount equal to such L/C Participant's L/C
Commitment Percentage.
SECTION 3. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Banks and Agent to enter into this
Agreement and to make the Revolving Credit Loans and Seasonal 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:
3.1 FINANCIAL STATEMENTS. Borrower has heretofore
furnished to each Bank (a) the consolidated balance sheet of Borrower and its
Subsidiary as of December 31, 1994, 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 June 30, 1995. 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 June 30, 1995 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.
3.2 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
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.
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3.3 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.
3.4 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.
3.5 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 have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower and its Subsidiary taken as a whole.
3.6 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
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"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.
3.7 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.
3.8 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.
3.9 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.
3.10 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.
3.11 SCHEDULES. Each of the Schedules to this Agreement
contains true, complete and correct information in all material respects.
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SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 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 and each Seasonal Loan Bank
shall have received its respective Seasonal Loan 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 D attached hereto
("BORROWING BASE CERTIFICATE"), certified by Borrower's chief
financial officer, which shows that the Borrowing Base as of
August 31, 1995 is at least equal to the Loans (including the
issuance of any Standby L/C and, if appropriate, Seasonal
Loans) requested hereunder.
(d) LEGAL OPINIONS OF COUNSEL TO BORROWER. Each
Bank and Agent shall have received an executed legal opinion
of Schottenstein, Zox & Dunn, 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 E
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
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consummation of the transactions contemplated hereby, (iii)
the borrowings herein provided for, and (iv) the execution,
delivery and performance of the Notes and the other documents
provided for in this Agreement, all certified by the Secretary
or the Assistant Secretary of Borrower as of the date hereof.
Such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded
as of the date hereof.
(f) 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
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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 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 Seasonal Loans, if appropriate, and
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
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date of Borrower's December 31, 1994, 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 2.16 hereof for each Standby L/C
that Borrower has requested Agent to issue on the first
Borrowing Date.
(p) HNB JOINT VENTURES LETTER OF CREDIT
AGREEMENT. Borrower and HNB shall have entered into the First
Amendment to the Agreement to Issue Letters of Credit dated as
of June 8, 1994 (the Agreement to Issue Letters of Credit and
the First Amendment thereto collectively, "HNB JOINT VENTURES
LETTER OF CREDIT AGREEMENT") in form and substance
satisfactory to Agent with respect to standby letters of
credit to be issued by HNB for the account of certain joint
ventures of which Borrower is a partner. The HNB Joint
Ventures Letter of Credit Agreement shall provide, among other
things, that Borrower's guaranty of each such letter of credit
shall be limited to a percentage of the amount of such letter
of credit equal to Borrower's pro rata equitable ownership
interest in the joint venture that is the account party of
such letter of credit. The aggregate amount of Borrower's
guaranties of all such 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 date of
this Agreement) issued pursuant to the HNB Joint Ventures
Letter of Credit Agreement shall not exceed $4,000,000 at any
one time outstanding, and the HNB Joint Ventures Letter of
Credit Agreement shall not be modified or amended without the
written consent of the Required Banks.
4.2 CONDITIONS TO ALL LOANS. In addition to the other
terms and conditions of this Agreement with respect to the making
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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 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 2.16 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 4.2
have been satisfied.
SECTION 5. 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 5.6, 5.7, 5.8 and 5.9 hereof, shall cause each
of its Subsidiaries to:
5.1 FINANCIAL STATEMENTS. Furnish to each Bank and Agent:
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(a) as soon as available, but in any event within 90
days after the end of each fiscal year of Borrower, a copy of
the audited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of such year and the
related audited consolidated statements of income, of
stockholders' equity and of cash flows for such year, setting
forth in each case in comparative form the figures for the
previous year, together with the opinion of independent
certified public accountants of nationally recognized
standing, which opinion shall not contain a "going concern" or
like qualification or exception, or qualification arising out
of the scope of the audit or qualification which would affect
the computation of financial covenants contained herein other
than a qualification for consistency due to a change in the
application of GAAP with which Borrower's independent
certified public accountants concur; and
(b) as soon as available, but in any event not
later than 45 days after the end of each monthly accounting
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 5.1,
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that such financial statements need not contain footnotes and may be subject to
year-end audit adjustments).
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to each
Bank and Agent:
(a) concurrently with the delivery of each
financial statement referred to in subsection 5.1(a) above and
each financial statement referred to in subsection 5.1(b)
above, a summary in form and substance satisfactory to the
Required Banks of the status of the hedging investments
described in subsection 6.9(j) hereof, and a certificate of a
Responsible Officer of Borrower (in the form of Exhibit F
attached hereto or such other form as shall be reasonably
acceptable to each 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 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 5.11, 5.12, 5.13, 5.14, 6.1(d), 6.3, 6.6, 6.7,
6.8, 6.9(e) and (k), 6.20 and 6.22 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 G hereto of the chief financial officer or the
controller of Borrower with respect to such projections;
(c) promptly after the same are sent, copies of
all financial statements, reports and notices which Borrower
or any of its Subsidiaries sends to its stockholders as
stockholders and, so long as Borrower is a reporting company
under the Securities Exchange Act of 1934, promptly after the
same are filed, copies of all financial statements
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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.
5.3 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 D, certified by the chief financial officer or the controller of
Borrower, showing the calculation of the Borrowing Base for such month.
5.4 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 5.3 hereof indicates that the aggregate
principal amount of the Loans and undrawn and drawn Standby L/Cs then
outstanding exceeds the amount 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.
5.5 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
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pursuant to this subsection 5.5, 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 Moody's Investor Service, Inc. or at least A- by
Standard & Poor's Corporation.
5.6 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its Indebtedness and other material obligations of whatever nature,
except, (a) without prejudice to the effectiveness of paragraph (5) of Section
8 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).
5.7 MAINTENANCE OF EXISTENCE. Except as may be permitted
under subsection 6.4 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
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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.
5.8 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.
5.9 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 Subsidiaries and, if notice thereof is given to
Borrower prior to the date of such discussions, with its independent certified
public accountants.
5.10 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
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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
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
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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 5.10 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 5.10,
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.
5.11 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 12/31/95 $ 85,000,000
1/1/96 to and including 12/31/96 $ 89,000,000
1/1/97 to and including 12/31/97 $ 89,000,000 plus 50% of
audited Consolidated Earnings
for fiscal year 1996
1/1/98 to and including 12/31/98 Consolidated Tangible Net
Worth required for 1997 plus
50% of audited
Consolidated Earnings for
fiscal year 1997
1/1/99 to and including 12/31/99 Consolidated Tangible Net
Worth required for 1998 plus
50% of audited
Consolidated Earnings for
fiscal year 1998
1/1/00 and thereafter Consolidated Tangible Net
Worth required for 1999 plus
50% of audited
Consolidated Earnings for
fiscal year 1999
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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.
5.12 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.
5.13 MAINTENANCE OF LIQUIDITY RATIO. Maintain at all
times during the Commitment Period a Liquidity Ratio of not less than 1.10 to
1.0.
5.14 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.
SECTION 6. 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 to, directly or indirectly:
6.1 LIMITATION OF 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;
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(c) Subordinated Indebtedness of Borrower,
subject to the limitations of subsection 5.14 hereof;
(d) Secured Indebtedness in respect of
capitalized lease obligations and purchase money obligations
within the limitations set forth in subsection 6.2(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 6.3(a) hereof,
provided payment of said Indebtedness is not yet due, and
further provided that the 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
(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 6.3(d) hereof shall at no time exceed the
principal amount of $8,500,000 in the aggregate.
6.2 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 6.1(b) hereof not in excess of
$25,000,000;
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(c) Liens securing Indebtedness permitted under
subsection 6.1(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;
(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 6.3 (a) hereof;
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(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.
6.3 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:
(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 $7,500,000 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
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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
6.9(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 6.3(c) shall not exceed (i)
$10,000,000 less (ii) the aggregate amount of secured and
unsecured Indebtedness then outstanding pursuant to subsection
6.1(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 6.1(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.
6.4 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,
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liquidation or consolidation, Borrower or such wholly-owned Subsidiary, as the
case may be, shall be the continuing or surviving corporation.
6.5 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.
6.6 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.
6.7 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, $35,000,000; and (b) as to the sum of undeveloped land
and land under development, $80,000,000; 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 H attached hereto. For purposes of this
subsection 6.7, the cost of undeveloped land and land under development shall
be determined in accordance with GAAP. Further, for purposes of this
subsection 6.7, any tract of
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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.
6.8 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.
6.9 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:
(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;
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(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 6.3 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 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
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$5,000,000 in the aggregate at any one time outstanding;
(i) investments by M/I Financial Corp. in the
stock of Fannie Mae to the extent required for M/I Financial
Corp. to sell mortgages to Fannie Mae, but the amount of such
investments in Fannie Mae 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; and
(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.
6.10 LIMITATION ON OPERATING LEASES. Enter into any
Operating Lease if as a result thereof (a) the aggregate rentals payable by
Borrower and all of its Subsidiaries under all Operating Leases would exceed in
any period of 12 consecutive months the aggregate amount of $4,000,000 or (b)
the aggregate rentals payable by Borrower and all of its Subsidiaries under all
Operating Leases other than Operating Leases with respect to Eligible Model
Houses would exceed in any period of 12 consecutive months the aggregate amount
of $3,000,000; provided, however, that: (i) for the first 12-month period of
Borrower's occupancy of the Office Building, the aggregate dollar amount of
rentals described in clause (a) above shall not exceed $5,100,000 (instead of
$4,000,000) and the aggregate dollar amount of rentals described in clause (b)
above shall not exceed $4,100,000 (instead of $3,000,000); and (ii) for each
12-month period thereafter, so long as Borrower occupies the Office Building
during the term of this Agreement, the aggregate dollar amount of rentals
described in clause (a) above shall not exceed $4,360,000 and the aggregate
dollar amount of rentals described in clause (b) above shall not exceed
$3,360,000.
6.11 TRANSACTIONS WITH AFFILIATES AND OFFICERS.
------------------------------------------
(a) Except for (i) any consulting agreements or
employment agreements to which Borrower is a party and which were
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in effect as of March 1, 1994, (ii) 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 a comparable arm's length transaction with
a Person not an Affiliate;
(b) make any advance or loan to any Affiliate or
any director or officer thereof or of Borrower or 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 6.9(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 6.11, and except as may
be required pursuant to the Melvin and Irving Schottenstein Family Agreement
dated October 11, 1993, in connection with certain registration rights of
certain shareholders.
6.12 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 6.10 hereof.
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6.13 LIMITATION ON PAYMENTS OF SUBORDINATED INDEBTEDNESS
AND MODIFICATION OF SUBORDINATION AGREEMENTS.
Without the prior written consent of the Required Banks,
(a) prepay, purchase, redeem, or otherwise
acquire any of its Subordinated Indebtedness; or
(b) permit the modification, waiver or amendment
of any of the terms of any Subordinated Indebtedness; or
(c) make any payments on any Subordinated
Indebtedness if an Event of Default exists; or
(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 6.13 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.
6.14 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 6.14 shall not prohibit
Indebtedness of any Subsidiary permitted under subsection 6.1 hereof.
6.15 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.
6.16 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.
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6.17 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.
6.18 LIMITATION ON RENTAL HOUSES. Permit investments in
Rental Houses, determined in accordance with GAAP, to exceed $500,000 in
aggregate at any time.
6.19 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 6.9(k) hereof shall not be
included in the $1,500,000 investment limitation of this subsection 6.19.
6.20 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, 1995, 1.35 to 1.0; (B) from January
1, 1996 through and including December 31, 1996, 1.30 to 1.0; and (C) from
January 1, 1997 and thereafter, 1.25 to 1.0.
6.21 LIMITATION ON NEGATIVE PLEDGES. Enter into any
agreement other than this Agreement which prohibits or limits the ability of
Borrower or any of its Subsidiaries 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.
6.22 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 2.15 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.
SECTION 7. 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
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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 8
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 8. 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 hereof and has not been
paid; or Borrower shall fail to comply with the provisions of any one
or more of subsections 5.4, 5.5, 6.4, 6.5, 6.10, 6.12, 6.13, 6.14,
6.16, 6.17, 6.21, 6.22 or the limitations set forth in 6.9(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
5.3 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 5.2(c), 5.2(d), 5.6, 5.10, 5.11, 5.12,
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5.13, 5.14, 6.1, 6.2, 6.3, 6.6, 6.7, 6.8, 6.9 (other than failure to
comply with the limitations of 6.9(j)), 6.11, 6.15, 6.18, 6.19 or 6.20
hereof and such default remains uncured ten days after Agent or any
Bank notifies Borrower that such default has occurred, (c) subsection
5.9 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 5.9 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 5.1(b), 5.2(a)
or 5.2(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 5.1(a), 5.2(e), 5.7 and 5.8 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 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,
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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 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
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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
Irving E. Schottenstein and the estate of Melvin L. Schottenstein and
the immediate families of Irving E. Schottenstein and Melvin L.
Schottenstein 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
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all of Borrower's indebtedness and other liabilities 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 and Seasonal 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
2.16(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 and
Seasonal 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 and the Seasonal 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 8, 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
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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 ("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 10.8(a) hereof to
make the appropriate distributions to Banks as set forth in this paragraph of
this Section 8.
SECTION 9. THE AGENT
---------
9.1 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.
9.2 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.
9.3 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
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with this Agreement or any Note or Guaranty (except for its or such Person's
own gross negligence or willful misconduct) or (ii) 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.
9.4 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 10.1 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 10.1 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.
9.5 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
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Event of Default and stating that such notice is a "notice of default". If
Agent receives such a notice, Agent shall give notice thereof to 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 10.1 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.
9.6 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.
9.7 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 and Seasonal
Loan Commitment Percentage, as appropriate, in the case of Revolving
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Credit Loans and Seasonal 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.
9.8 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.
9.9 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 9 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 10. MISCELLANEOUS
-------------
10.1 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 the purpose of adding any
provisions to this Agreement or the Notes or
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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, Seasonal 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 7 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.
10.2 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.
41 South High Street
24th Floor
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Columbus, Ohio 43215
Attention: Irving E. Schottenstein
With a copy to: Phillip G. Creek
Facsimile: (614) 221-0893
With a copy to: Paul S. Coppel, Esq.
M/I Schottenstein Homes, Inc.
41 South High Street
24th Floor
Columbus, Ohio 43215
Facsimile: (614) 221-0893
Agent and/or
Bank One: Bank One, Columbus, N.A.
100 East Broad Street
7th Floor
Columbus, Ohio 43271
Attention: Thomas D. Igoe
Facsimile: (614) 248-5518
HNB: The Huntington National Bank
41 South High Street
8th Floor
Columbus, Ohio 43215
Attention: Joanne Woerner
Facsimile: (614) 463-5791
NBD: NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Patrick J. Power
Facsimile: (313) 225-3074
NCB: National City Bank, Columbus
155 East Broad Street
3rd Floor
Columbus, Ohio 43251
Attention: Ralph A. Kaparos
Facsimile: (614) 463-6770
BOB: The First National Bank of Boston
115 Perimeter Center Place
Suite 500
Atlanta, Georgia 30346
Attention: Kevin C. Hake
Facsimile: (404) 391-9811
10.3 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
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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.
10.4 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 or
Seasonal 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 Commitment of such Bank, any Seasonal 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, 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
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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 10.4, 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.
10.5 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.
10.6 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
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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.
10.7 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.
10.8 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 8 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 (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
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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.
10.9 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 AGENT, ANY BANK OR BORROWER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
10.10 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
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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 10.10. 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.
10.11 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.
10.12 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.
10.13 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_________________________________
Irving E. Schottenstein
Title: President
BANK ONE, COLUMBUS, N.A., as Agent and
as a Bank
By_________________________________
Thomas D. Igoe
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By_________________________________
Joanne Woerner
Title: Vice President
NBD BANK
By_________________________________
Print Name:______________________
Title: Vice President
NATIONAL CITY BANK, COLUMBUS
By_________________________________
Ralph A. Kaparos
Title: Senior Vice President
THE FIRST NATIONAL BANK OF BOSTON
By________________________________
Kevin C. Hake
Title: Vice President
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