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Exhibit 10.1
THIRD RESTATED REVOLVING CREDIT LOAN, SWINGLINE LOAN
AND STANDBY LETTER OF CREDIT AGREEMENT
THIS THIRD RESTATED REVOLVING CREDIT LOAN, SWINGLINE LOAN AND
STANDBY LETTER OF CREDIT AGREEMENT (this "Agreement") is made to be effective as
of May 27, 1998, by and among M/I SCHOTTENSTEIN HOMES, INC., an Ohio corporation
("Borrower"), BANK ONE, NA, a national banking association ("Bank One"), THE
HUNTINGTON NATIONAL BANK, a national banking association ("HNB"), THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association ("First Chicago"),
NATIONAL CITY BANK, successor by merger with National City Bank of Columbus, a
national banking association ("NCB"), BANKBOSTON, N.A., a national banking
association, ("BKB"), THE FIFTH THIRD BANK OF COLUMBUS, an Ohio banking
corporation ("Fifth Third"), and SUNTRUST BANK, CENTRAL FLORIDA, N.A., a
national banking association ("STB") (Bank One, HNB, First Chicago, NCB, BKB,
Fifth Third and STB is each a "Bank" and, collectively, "Banks"), and BANK ONE,
NA, a national banking association, as agent for Banks ("Agent"). For valuable
consideration, the receipt of which is hereby acknowledged, Borrower, Banks and
Agent, each intending to be legally bound, hereby recite and agree as follows:
BACKGROUND INFORMATION
A. Borrower, Bank One, HNB, First Chicago, NCB, BKB, Fifth
Third and Agent are parties to a certain Second Restated Revolving Credit Loan
and Standby Letter of Credit Agreement effective as of December 30, 1996, as
amended by the First Amendment thereto effective as of March 14, 1997, the
Second Amendment thereto effective as of May 7, 1997, the Third Amendment
thereto effective as of September 29, 1997 and the Fourth Amendment thereto
effective as of December 29, 1997 (the "Existing Credit Agreement").
B. Borrower, Banks and Agent want to modify the Existing
Credit Agreement by adding STB as a Bank, increasing the
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amount of credit available to Borrower as Revolving Credit Loans (as defined in
the Existing Credit Agreement), increasing the Revolving Credit Loan Commitment
(as defined in the Existing Credit Agreement) of NCB, providing for swingline
loans and modifying certain covenants.
C. Borrower, Banks and Agent further want to modify the
Existing Credit Agreement to reflect the extension of the maturity date of the
Commitment from September 30, 2001 to September 30, 2002 pursuant to that
written notice dated September 30, 1997 from Bank One, as Agent, to Borrower
provided pursuant to subsection 2.7 of the Existing Credit Agreement.
AGREEMENT
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms have the following respective meanings:
"601RS, Inc." shall mean 601RS, Inc., an Ohio
corporation and a wholly-owned Subsidiary of Borrower.
"Adjustment Date" shall mean each date that is two
Business Days after February 15, May 15, August 15 and November 15 of each year
of the Commitment, subject to the provisions in the definition of "Applicable
Eurodollar Margin" for a later adjustment in certain circumstances.
"Affiliate" shall mean (a) any Person (other than a
Subsidiary of Borrower) which, directly or indirectly, controls, is controlled
by or is under common control with Borrower or (b) any Person who is a director,
officer or key employee of Borrower, any Subsidiary of Borrower or any Person
described in clause (a) of this definition. For purposes of this definition,
"control" of a Person means the power, direct or indirect, to vote twenty
percent (20%) or more of the securities having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
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"Agreement" shall mean this Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Applicable Eurodollar Margin" shall mean, during the
period from the date hereof until the first Adjustment Date, 1.60% per annum.
Thereafter, subject to the other terms and conditions of this Agreement
(including the limitations on the availability of Eurodollar Rate Loans and
including the termination of the Commitment as set forth in Section 9 hereof),
the "Applicable Eurodollar Margin" will be adjusted on each Adjustment Date to
the applicable rate per annum that corresponds to the ratio of EBITDA to
Consolidated Interest Incurred, determined from the financial statements and
compliance certificate that relate to the last month of the fiscal quarter
immediately preceding such Adjustment Date, as set forth below:
If the ratio of EBITDA to Applicable Eurodollar Margin
Consolidated Interest for Eurodollar Rate Loan is:
Incurred is: -----------------------------
-------------------------
less than 1.75 to 1.0 Eurodollar Rate Loans
are not available
equal to or greater
than 1.75 to 1.0 but
less than 2.0 to 1.0 2.35% per annum
equal to or greater
than 2.0 to 1.0 but
less than 2.50 to 1.0 2.10% per annum
equal to or greater
than 2.50 to 1.0 but
less than 3.0 to 1.0 1.85% per annum
equal to or greater
than 3.0 to 1.0 1.60% per annum
If, however, the financial statements required to be delivered pursuant to
subsection 6.1(b) and the related compliance
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certificate required to be delivered pursuant to subsection 6.2(a) are not
delivered when due, then:
(a) if such financial statements and
compliance certificate are delivered after the date such financial statements
and compliance certificate were required to be delivered but before the
expiration of any applicable cure period and the Applicable Eurodollar Margin
increases from that previously in effect as a result of a change in the ratio of
EBITDA to Consolidated Interest Incurred as determined from such financial
statements and compliance certificate, then the Applicable Eurodollar Margin
during the period from the date upon which such financial statements were
required to be delivered but before the expiration of any applicable cure period
until the date upon which they actually are delivered shall be the Applicable
Eurodollar Margin as so increased;
(b) if such financial statements and
compliance certificate are delivered after the date such financial statements
and compliance certificate were required to be delivered but before the
expiration of any applicable cure period and the Applicable Eurodollar Margin
decreases from that previously in effect as a result of a change in the ratio of
EBITDA to Consolidated Interest Incurred as determined from such financial
statements and compliance certificate, then such decrease in the Applicable
Eurodollar Margin shall not become applicable until the date upon which the
financial statements and compliance certificates are actually delivered; and
(c) if such financial statements and
certificate are not delivered prior to the expiration of the applicable cure
period, the Applicable Eurodollar Margin for the period beginning as of the date
upon which such financial statements and compliance certificate were required to
be delivered without regard to any applicable cure period until two Business
Days following the date upon which they actually are delivered shall be, per
annum, one percent (1.0%) plus the Applicable Eurodollar Margin that was in
effect at the time of such expiration (it being understood that the foregoing
shall not limit the rights of the Agent and the Banks set forth in Section 9).
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"BankBoston Agreement" shall mean the credit agreement dated
August 29, 1997 between Borrower and BankBoston, N.A., in its capacities as
lender and as agent, and any other parties which may become lenders thereunder,
and any subsequent successors or assigns, which credit agreement governs certain
subordinated indebtedness to BankBoston, N.A. in the principal amount of
$50,000,000.
"Banks" shall mean Bank One, HNB, First Chicago, NCB, BKB,
Fifth Third and STB.
"Bellwood L.L.C." shall mean Bellwood L.L.C., a Virginia
limited liability company and a Subsidiary of Borrower, which is owned 99% by
Xxx 0 - 0000, X.X.X. and 1% by KSI Services, Inc., a Virginia corporation.
"Borrowing Base" shall mean, as of any date of determination,
an amount equal to the sum of:
(a) the amount calculated by multiplying .90 by the
value of Eligible Production Inventory; plus
(b) the amount calculated by multiplying .85 by the
aggregate value of Eligible Model Houses which are not over two (2) years old
(as measured from the date of the completion of construction); plus
(c) the amount calculated by multiplying .75 by the
aggregate value of Eligible Model Houses which are over two (2) years old (as
measured from the date of the completion of construction); plus
(d) the amount calculated by multiplying .80 by the
value of Eligible Developed Lots Sold; plus
(e) the amount calculated by multiplying .50 by the
value of Eligible Developed Lots Unsold; plus
(f) the amount calculated by multiplying .25 by the
value of Eligible Raw Land and Land Under Development; plus
(g) the amount calculated by multiplying .25 by the
value of Investments in Joint Ventures;
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less the sum of (i) the aggregate amount of Customer Deposits then held by
Borrower and (ii) the aggregate outstanding amount of Liens incurred by Borrower
and permitted by subsection 7.2(i) hereof.
"Borrowing Base Certificate" shall have the meaning set forth
in subsection 5.1(c) hereof.
"Borrowing Date" shall mean any Business Day specified
pursuant to (a) subsection 2.3 hereof as a date on which Banks make a
disbursement of the Revolving Credit Loans hereunder, (b) subsection 2.12 hereof
as a date on which Bank One makes at Borrower's request, a disbursement of the
Swingline Loans hereunder, or (c) subsection 2.13 hereof as a date on which
Agent issues, at Borrower's request, a Standby L/C hereunder.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Columbus, Ohio are authorized or
required by law to close, except that when used in connection with Eurodollar
Rate Loans, "Business Day" shall mean any Business Day on which dealings in
Dollars between banks may be carried on in London, England and Columbus, Ohio.
"Cash Equivalents" shall mean (a) securities with maturities
of 180 days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit and bankers' acceptances, each issued by Bank One, HNB, First
Chicago, NCB, BKB, Fifth Third or STB 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 Xxxxx'x Investors
Service, Inc. with a maturity of not more than 180 days.
"Chevy Chase Villas, L.L.C." shall mean Chevy Chase Villas,
L.L.C., a Virginia limited liability company and a Subsidiary of Borrower, which
is owned 99% by Manor Road - 1997, L.L.C.
"Code" shall mean the Internal Revenue Code of 1986, as
amended or superseded from time to time. Any reference
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to a specific provision of the Code shall be construed to include any comparable
provision of the Code as hereafter amended or superseded.
"Commitment" shall mean the aggregate of (a) the Revolving
Credit Loan Commitments and (b) the L/C Commitments as set forth on Schedule 1
hereto.
"Commitment Period" shall mean the period from and including
the date hereof to the Maturity Date, 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 Interest Expense" shall mean, for any period,
interest expense on Indebtedness of the Borrower and its Subsidiaries for such
period, in each case determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Incurred" shall mean, for any rolling
12 month period, all interest incurred during such period on outstanding
Indebtedness of Borrower and its Subsidiaries irrespective of whether such
interest is expensed or capitalized by Borrower or its Subsidiaries, in each
case determined on a consolidated basis.
"Consolidated Liabilities" at any date shall mean the total of
all amounts which would be properly classified as liabilities in a consolidated
balance sheet of Borrower and its Subsidiaries at such date prepared in
accordance with GAAP, including without limitation deferred income taxes and
capital lease obligations, if any.
"Consolidated Tangible Net Worth" at any date shall be the
excess, if any, of the total amount of assets over
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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 the performance by Borrower or any Subsidiary
of its obligations relating to lot improvements and subdivision development and
completion.
"Contingent Obligation" shall mean as to any Person, any
reimbursement obligations (including Reimbursement Obligations) of such Person
in respect of drafts that may be drawn under letters of credit, any
reimbursement obligations of such Person in respect of surety bonds (including
reimbursement obligations in respect of Construction Bonds), and any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations primarily to pay money ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including without limitation any obligation of such Person, whether
or not contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect 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)
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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 or any Subsidiary in connection with the execution of purchase
contracts, which deposits shall be shown as liabilities on Borrower's
consolidated financial statements.
"Default" shall mean any of the events specified in Section 9
hereof, whether or not any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Developed Lots" shall mean (a) all residential lots with
respect to which (i) development has been completed to such an extent that
permits that allow use and construction, including building, sanitary sewer and
water, could be obtained for a detached or attached single family house
(including a townhouse condominium building or condominium building) on each
such lot, and (ii) Start of Construction has not occurred; and (b) all lots
zoned for commercial use that have sewer and water available for use at such
lots. The value of Developed Lots shall be calculated in accordance with GAAP
and shall include all associated costs required to be capitalized under GAAP;
provided, however, that the total value (calculated in accordance with GAAP) of
commercial lots constituting Developed Lots shall not exceed $1,000,000 at any
one time.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"EBITDA" shall mean, for any rolling 12 month period, on a
consolidated basis for the Borrower and its Subsidiaries, the sum of the amounts
for such period of (a) Consolidated Earnings, plus (b) charges against income
for federal, state and local income taxes, plus (c) Consolidated Interest
Expense, plus (d) depreciation and amortization expense, plus (e) extraordinary
losses exclusive of any such losses that are attributable to the write-down or
other downward revaluation
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of assets (including the establishment of reserves), minus (x) interest income,
minus (y) all extraordinary gains.
"Eligible Assignee" shall mean (a) any Bank or any affiliate
of a Bank and (b) any other commercial bank, financial institution,
institutional lender or "accredited investor" (as defined in Regulation D
promulgated under the Securities Act of 1993 by the Securities and Exchange
Commission) with capital of at least $500,000,000 and with an office in the
United States.
"Eligible Developed Lots Sold" shall mean all Developed Lots
which Borrower or any Subsidiary has recorded as sold in accordance with its
usual accounting practices to any Person other than an Affiliate or Subsidiary
of Borrower. The value of Eligible Developed Lots Sold shall be calculated in
accordance with GAAP and shall include all associated costs required to be
capitalized under GAAP, but shall be reduced by the then outstanding aggregate
amount of Indebtedness secured by any Eligible Developed Lots Sold and permitted
by subsection 7.1(d) hereof.
"Eligible Developed Lots Unsold" shall mean all Developed Lots
which Borrower or any Subsidiary has not recorded as sold in accordance with its
usual accounting practices, or which Borrower or any Subsidiary has recorded as
sold to an Affiliate or Subsidiary of Borrower. The value of Eligible Developed
Lots Unsold shall be calculated in accordance with GAAP and shall include all
associated costs required to be capitalized under GAAP, but shall be reduced by
the then outstanding aggregate amount of Indebtedness secured by any Eligible
Developed Lots Unsold and permitted by subsection 7.1(d) hereof.
"Eligible Model Houses" shall mean (a) all completed detached
or attached single family houses (including townhouse condominiums and
condominiums) which are being used by Borrower or any Subsidiary as sales
models, and the lots on which such houses are located and (b) detached or
attached (including townhouse condominiums and condominiums) single family
houses for which there has been a Start of Construction which upon completion
will be used by Borrower or any Subsidiary 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
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except for the costs of any furnishings, but shall be reduced by the then
outstanding aggregate amount of Indebtedness secured by any Eligible Model
Houses and permitted by subsection 7.1(d) hereof; provided, however, that (a)
the aggregate value of attached (including townhouse condominiums and
condominiums) single family homes constituting 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, any
Subsidiary of 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 or any Subsidiary of
Borrower shall not, in the aggregate at any one time outstanding, exceed the
amount of $5,000,000.
"Eligible Production Inventory" shall mean all detached or
attached (including townhouse condominiums and condominiums) single family
houses which are completed (including Speculative Houses but excluding Eligible
Model Houses and Rental Houses, if any) or for which there has been a Start of
Construction (including Speculative Houses but excluding Eligible Model Houses
and Rental Houses, if any), and the lots on which such houses are located. The
value of Eligible Production Inventory shall be calculated in accordance with
GAAP and shall include all associated costs required to be capitalized under
GAAP, but shall be reduced by the then outstanding aggregate amount of
Indebtedness secured by any Eligible Production Inventory and permitted by
subsection 7.1(d) hereof; provided that the cost of obtaining commitments for
financing terms to be provided to the buyers of Eligible Production Inventory
shall be excluded.
"Eligible Raw Land and Land Under Development" shall mean all
land other than land included in the definition of
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Eligible Model Houses, Rental Houses (if any), Eligible Production Inventory,
Eligible Developed Lots Sold, or Eligible Developed Lots Unsold. The value of
Eligible Raw Land and Land Under Development shall be calculated in accordance
with GAAP and shall include all associated costs required to be capitalized in
accordance with GAAP, but shall be reduced by the then outstanding aggregate
amount of Indebtedness secured by any Eligible Raw Land and Land Under
Development and permitted by subsection 7.1(d) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements" shall mean, for any day as
applied to a Eurodollar Rate Loan, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.
"Eurodollar Base Rate" shall mean, with respect to each day
during each Interest Period, the rate per annum equal to the rate at which Agent
is offered Dollar deposits at or about 10:00 A.M., Columbus, Ohio time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Rate Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Rate Loan to be outstanding during such Interest Period.
"Eurodollar Rate Loans" shall mean Revolving Credit Loans the
rate of interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean with respect to each day during
each Interest Period pertaining to a Eurodollar Rate
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Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall mean any of the events specified in
Section 9 hereof, provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"Xxxxxx Xxx" 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 4.1 hereof affects the calculation of any
financial covenant contained herein, Borrower, Banks and Agent hereby agree to
amend the Agreement to the effect that each such financial covenant is not more
or less restrictive than such covenant as in effect on the date hereof using
generally accepted accounting principles consistent with those reflected in such
financial statements.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed HNB Joint Ventures Letters of Credit" shall mean
that portion of the standby letters of credit (including joint venture letters
of credit issued by HNB prior to the date of this Agreement that will remain in
place after the
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effective date of this Agreement) issued by HNB pursuant to the HNB Joint
Ventures Letter of Credit Agreement for the account of joint ventures of which
Borrower is a partner which 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 $6,500,000 at any one time outstanding.
"Guaranties" (individually, "Guaranty") shall mean the
guaranties of the Indebtedness evidenced by this Agreement and by all documents
contemplated by this Agreement, including without limitation the Notes, as this
Agreement and such documents may be amended or restated from time to time, which
guaranties are substantially in the form of Exhibit A attached to this
Agreement, executed by each of Borrower's Subsidiaries (which are M/I Financial
Corp., 601RS, Inc., M/I Homes, Inc., M/I Homes Construction, Inc., Bellwood
L.L.C., Xxx 0 - 0000, X.X.X., Xxxxx Xxxx - 0000, X.X.X. and Chevy Chase Villas,
L.L.C.) in favor of the respective Banks and to which Agent shall also be a
party, and any guaranties in favor of Agent and the respective Banks executed by
(a) each other permitted Subsidiary, if any, of Borrower and/or (b) the M/I
Ancillary Businesses that are wholly-owned by the Borrower or by any Subsidiary.
"HNB Joint Ventures Letter of Credit Agreement" shall mean the
Agreement to Issue Letters of Credit dated as of June 8, 1994, as amended and to
be amended from time to time, with respect to standby letters of credit issued
or to be issued by HNB for the account of certain joint ventures of which
Borrower is a partner.
"Indebtedness" shall mean as to any Person, at a particular
time, (a) indebtedness for borrowed money or for the deferred purchase price of
property or services (including without limitation any such indebtedness which
is non-recourse to the credit of such Person but is secured by assets of such
Person) other than current (due and payable within 12 months or less), unsecured
obligations for operating expense items incurred in the ordinary course of
business, (b) any other indebtedness evidenced by promissory notes or other debt
instruments, (c) obligations under material leases which shall have been or
should be, in accordance with GAAP, recorded as capitalized leases, (d)
indebtedness arising under acceptance facilities, (e) indebtedness
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arising under unpaid reimbursement obligations (including Reimbursement
Obligations) in respect of all drafts actually drawn under letters or credit
(including Standby L/Cs) issued for the account of such Person, (f) indebtedness
arising under unpaid reimbursement obligations in respect of all payments
actually made under surety bonds (including payments actually made under
Construction Bonds), and (g) the incurrence of withdrawal liability under Title
IV of ERISA by such Person or a Commonly Controlled Entity to a Multiemployer
Plan.
"Interest Payment Date" shall mean, (a) with respect to any
Prime Rate Loan, the last day of each March, June, September and December,
commencing on the first of such days to occur after the first Borrowing Date,
(b) with respect to any Eurodollar Rate Loan having an Interest Period of three
months or less, the last day of such Interest Period, and (c) with respect to
any Eurodollar Rate Loan having an Interest Period longer than three months, (x)
each day which is three months, or a whole multiple thereof, after the first day
of such Interest Period, and (y) the last day of such Interest Period.
"Interest Period" shall mean with respect to any Eurodollar
Rate Loan:
(i) initially, the period commencing on the Borrowing
Date or conversion date, as the case may be, with respect to such Eurodollar
Rate Loan and ending one, two, three or six months thereafter, as selected by
the Borrower in its notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Eurodollar Rate
Loan and ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Agent not less than three Business Days
prior to the last day of the then current Interest Period with respect thereto;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period would otherwise
end on a day that is not a Business Day, such Interest
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Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the immediately preceding
Business Day;
(2) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(3) no Interest Period shall be for less
than one month, and the Borrower shall not select an Interest Period for a
Eurodollar Rate Loan as a Revolving Credit Loan if the last day of such Interest
Period would be after the last day of the Commitment Period.
"Interest Rate Contract" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate insurance arrangement, or any other agreement or arrangement designed to
provide protection against fluctuation in interest rates.
"Investments in Joint Ventures" shall mean investments (as
defined in subsection 7.9 hereof) in joint ventures that are general
partnerships, limited partnerships, limited liability companies, corporations or
any other business association formed for the purpose of acquiring land, the
majority of which land is zoned residential and is to be developed into
residential lots for attached or detached single family housing (including a
townhouse condominium building or condominium building), and/or performing such
development. The value of Investments in Joint Ventures shall be calculated in
accordance with GAAP.
"L/C Commitment" shall mean, as to any L/C Participant, the
percentage (the "L/C Commitment Percentage") and amount set forth opposite its
name on Schedule 1 hereto under the headings "L/C Commitment Percentage" and
"L/C Commitment"; and collectively, as to all L/C Participants, the "L/C
Commitments".
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"L/C Participant(s)" shall mean any one or more of the Banks.
"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 a consolidated basis for Borrower and all Subsidiaries of Borrower with the
exception of M/I Financial Corp., of (a) the sum of (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 (i) accounts payable, (ii) accruals, (iii) Customer
Deposits, and (iv) Indebtedness permitted pursuant to subsection 7.1(a) hereof.
The amount of each asset included in (a) above shall be the book value of such
asset (net of any applicable reserves) determined in accordance with GAAP and
the value of each liability included in (b) above shall be determined in
accordance with GAAP.
"Loans" shall mean the Revolving Credit Loans and the
Swingline Loans.
"Lot 5 - 1997, L.L.C." shall mean Xxx 0 - 0000, X.X.X., x
Xxxxxxxx limited liability company and a wholly-owned Subsidiary of Borrower.
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"Xxxxx Xxxx - 0000, L.L.C." shall mean Xxxxx Xxxx - 0000,
L.L.C., a Virginia limited liability company and a wholly-owned Subsidiary of
Borrower.
"Maturity Date" shall mean September 30, 2002.
"Maximum Swingline Amount" shall mean $5,000,000.
"M/I Ancillary Businesses" shall mean businesses that are
corporations, limited partnerships, limited liability partnerships or limited
liability companies which are engaged solely in activities reasonably related to
the sale of single family housing and in which the Borrower or any Subsidiary
has an investment or other interest, provided that such investment or other
interest shall be as (a) a shareholder if the business is a corporation, (b) a
limited partner if the business is a limited partnership, (c) a limited
liability partner if the business is a limited liability partnership, or (d) a
limited liability member if the business is a limited liability company.
"M/I Financial Corp." shall mean M/I Financial Corp., an Ohio
corporation and a wholly-owned Subsidiary of Borrower.
"M/I Financial Corp. Loan Agreement" shall mean the Revolving
Credit Agreement by and among M/I Financial Corp., Borrower and Bank One,
effective as of July 18, 1997, as the same may be amended, extended, renewed or
replaced from time to time.
"M/I Homes Construction, Inc." shall mean M/I Homes
Construction, Inc., an Arizona corporation and a wholly-owned Subsidiary of
Borrower.
"M/I Homes, Inc." shall mean M/I Homes, Inc., an Arizona
corporation and a wholly-owned Subsidiary of Borrower.
"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
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as determined by the date of the note which evidences such loan, (c) those
second mortgage loans permitted by subsection 7.9(g) hereof, and (d) those first
mortgage refinancing loans permitted by subsection 7.9(h) hereof; provided, the
obligations to repurchase the mortgage loans described in clauses (a) through
(d) of this definition shall exist only if (A) such mortgage loans do not meet
for any reason the investor guidelines regarding loan origination, loan
processing or loan closing and regarding underwriting criteria for such Purchase
Commitment or defects are noted in origination, processing or closing of
Mortgage Loans by investor, (B) M/I Financial Corp. or its employees engage in
any fraudulent conduct or misrepresentation, (C) the mortgagor fails to make
timely payment of any of the first, second, third or fourth installments due
under such mortgage loan, and such delinquency remains uncured for a period of
more than 30 days or results in a foreclosure action, (D) the mortgagor fails to
make timely payment of two or more monthly installments within six months from
the date such mortgage loan is purchased by such secondary market lender, (E)
the mortgagor engages in fraudulent conduct or misrepresentation or (F) with
respect to mortgage loans issued pursuant to the North Carolina Housing Finance
Authority bond programs, the mortgagor fails to make timely payment of the first
installment due under such mortgage loans.
"Notes" shall mean the Revolving Credit Notes and the
Swingline Note.
"Office Building" shall mean the office building constructed
by the Office Building Limited Liability Company at 0 Xxxxxx Xxxx, Xxxxxxxx,
Xxxx 00000 in which Borrower is a tenant.
"Office Building Limited Liability Company" shall mean
Northeast Office Venture, Limited Liability Company, formed under Delaware law,
the ownership interest of which is 33-1/3% in Borrower.
"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.
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"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.
"Prime Rate Loans" shall mean Loans the rate of interest
applicable to which is based on the Prime Rate.
"Purchase Commitment" shall mean a commitment from a secondary
market lender, pursuant to an agreement with M/I Financial Corp., either with
respect to a particular mortgage loan or with respect to mortgage loans meeting
specified criteria, to purchase such mortgage loan or loans without recourse
(except for Mortgage Loan Repurchase Obligations) for an amount not less than
the difference of (a) the face amount of the note evidencing such mortgage
loan(s), minus (b) the sum of (i) the points agreed upon between M/I Financial
Corp. and such secondary market lender, and (ii) the amount of funds (for
example, without limitation, escrow funds and origination fees), other than
points, received by M/I Financial Corp. at the loan closing from the mortgagor.
"Reimbursement Obligations" shall mean Borrower's obligations
to reimburse (a) Agent or, (b) in the case of Standby L/Cs previously issued
which will remain in place after the
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execution of this Agreement, Bank One or HNB, as appropriate, as a result of
draws on one or more Standby L/Cs.
"Rental Houses" shall mean (a) all completed detached or
attached (including townhouse condominiums and condominiums) single family
houses which are rented to third parties or held for rental by Borrower or which
were previously so held and are currently held for sale and (b) detached or
attached (including townhouse condominiums and condominiums) single family
houses for which there has been a Start of Construction which upon completion
will be rented to third parties or will be held for rental by Borrower. The
value of Rental Houses shall be calculated in accordance with GAAP and shall
include all associated costs required to be capitalized under GAAP.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"Required Banks" shall mean, at any particular time, Banks
having at least 55% of the aggregate amount of the Commitment, whether or not
Borrower has drawn all or any portion of the Commitment; provided that for
purposes of consent to waiver or amendment of the covenants contained in
subsection 6.14 hereof, Required Banks shall mean, at any particular time, Banks
having at least 67% of the aggregate amount of the Commitment, whether or not
Borrower has drawn all or any portion of the Commitment.
"Requirement of Law" shall mean as to any Person, the
Certificate (or Articles) of Incorporation, By-Laws (or Code of Regulations),
Close Corporation Agreement (where applicable) or 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, Senior Executive Vice President or a
Senior Vice President of such Person and, with respect to financial matters, the
chief financial officer,
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treasurer or controller of such Person, in each case acting in his or her
capacity as such.
"Revolving Credit Loan Commitment" shall mean, as to any Bank
that has committed to make Revolving Credit Loans hereunder, the percentage (the
"Revolving Credit Loan Commitment Percentage") and amount set forth opposite its
name on Schedule 1 hereto under the headings "Revolving Credit Loan Commitment
Percentage" and "Revolving Credit Loan Commitment" as such amount may be reduced
from time to time in accordance with the provisions of subsection 2.6 hereof;
and collectively, as to all Banks that have committed to make Revolving Credit
Loans hereunder, the "Revolving Credit Loan Commitments".
"Revolving Credit Loans" shall mean the revolving credit loans
made pursuant to this Agreement that are more particularly described in
subsection 2.1 hereof.
"Revolving Credit Notes" shall have the meaning set forth in
subsection 2.2 hereof.
"S Corporation" shall have the meaning set forth in Section
1361(a)(1) of the Code.
"Single Employer Plan" shall mean any Plan which is not a
Multiemployer Plan (as defined in ERISA).
"Speculative Houses" shall mean the aggregate value (which
value shall be reduced by the then outstanding aggregate amount of Indebtedness
secured by any Speculative Houses and permitted by subsection 7.1(d) hereof) as
determined in accordance with GAAP of: (a) all uncompleted houses for which
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
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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 pursuant to this
Agreement or (b) previously issued by Bank One pursuant to the Existing Credit
Agreement, or by Bank One or HNB pursuant to any predecessor to the Existing
Credit Agreement, and which will remain in place as of the first Borrowing Date,
in which each L/C Participant agrees to purchase a participation equal to its
L/C Commitment Percentage and the issuing bank agrees to make payments in
Dollars for the account of Borrower, on behalf of Borrower or any Subsidiary
thereof in respect of obligations of Borrower or such Subsidiary incurred
pursuant to contracts made or performances undertaken or to be undertaken or
like matters relating to contracts to which Borrower or such Subsidiary is or
proposes to become a party in the ordinary course of Borrower's or such
Subsidiary's business. The term "Standby L/C" shall not include any letters of
credit issued (x) pursuant to the HNB Joint Ventures Letter of Credit Agreement
or (y) by any Bank other than pursuant to this Agreement or the Existing Credit
Agreement.
"Standby L/C Application" shall have the meaning set forth in
subsection 2.14 hereof.
"Start of Construction" shall mean the commencement of the
digging of the foundation or footer for a detached or attached single family
house (including a townhouse condominium building or condominium building).
"Stockholder Payment" shall have the meaning set forth in
subsection 7.6 hereof.
"Subordinated Indebtedness" at any date shall mean (i) the
unsecured Indebtedness of Borrower created as a result of the BankBoston
Agreement, and (ii) all other future unsecured subordinated Indebtedness of
Borrower, the terms and manner (including without limitation the terms and
manner with respect to subordination) of which are satisfactory to Required
Banks in their sole discretion and approved in writing by Required Banks and
which is subordinate to (a) Borrower's obligations to Banks and Agent under this
Agreement and the Notes and (b) Borrower's obligations, if any, as a guarantor
or otherwise of the
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obligations of M/I Financial Corp. (including without limitation the obligations
with respect to the M/I Financial Corp. Loan Agreement).
"Subsidiary" shall mean as to any Person, a corporation,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests 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, limited liability company or other entity are at the time
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person, and with
respect to Borrower shall include all Subsidiaries of Subsidiaries of Borrower.
"Swingline Expiry Date" shall mean the date which is ten (10)
Business Days prior to the Maturity Date.
"Swingline Loan" shall have the meaning provided in subsection
2.12.
"Swingline Note" shall have the meaning provided in Subsection
2.12.
"Tranche" shall mean the collective reference to those
Eurodollar Rate Loans, the then current Interest Periods with respect to all of
which begin on the same date and end on the same date (whether or not such
Eurodollar Rate Loans shall originally have been made on the same day).
"Uncommitted Land" shall mean the aggregate value as
determined in accordance with GAAP of: (a) Eligible Raw Land and Land Under
Development, (b) Eligible Developed Lots Unsold, (c) Borrower's pro rata share
of land that constitutes part of Investments in Joint Ventures which is not
subject to an agreement for sale, and (d) deposits for land purchases and
purchase options.
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"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.
"Year 2000 Compliance" shall mean that all hardware, software,
operating systems, peripherals, networks and other devices and systems owned,
leased, licensed or used by Borrower or any of its Subsidiaries will be able
accurately to process, utilize and present, and will not be impacted negatively
by, processing, utilizing, or presenting, date information from, into and
between any times, days or periods prior to, on or after January 1, 2000.
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
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otherwise defined herein have the same meanings throughout this Agreement.
(e) "Hereunder," "herein," "hereto," "this Agreement"
and words of similar import refer to this entire document; "including" is used
by way of illustration and not by way of limitation, unless the context clearly
indicates the contrary; and the singular includes the plural and conversely.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT, REVOLVING
CREDIT LOANS, SWINGLINE LOANS AND STANDBY LETTERS OF CREDIT
2.1 Revolving Credit Loan Commitments. Subject to the terms
and conditions of this Agreement, each Bank severally agrees to make revolving
credit loans ("Revolving Credit Loans") to Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed that Bank's Revolving Credit Loan Commitment Percentage of the
lesser of (a) the Borrowing Base (determined as of the most recent month end or,
if Borrower elects to provide an interim Borrowing Base Certificate pursuant to
subsection 6.4 hereof, as of the date stated in such Borrowing Base Certificate)
minus the sum of (i) the 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, (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 and
(iii) the aggregate principal amount of Swingline Loans which remain outstanding
after giving effect to any repayment of Swingline Loans with the proceeds of a
borrowing of Revolving Credit Loans, or (b) Two Hundred Four Million Five
Hundred Thousand and 00/100 Dollars ($204,500,000.00) minus the aggregate
principal amount of all Swingline Loans which remain outstanding after giving
effect to any repayment of Swingline Loans with the proceeds of a borrowing of
Revolving Credit Loans. During the Commitment Period and as long as no Event of
Default exists, Borrower may use the Revolving Credit Loan Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
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Subject to the terms and conditions of this Agreement
(including the limitations on the availability of Eurodollar Rate Loans and
including the termination of the Commitment as set forth in Section 9 hereof),
the Revolving Credit Loans may from time to time be (i) Eurodollar Rate Loans,
(ii) Prime Rate Loans, or (iii) a combination thereof, as determined by Borrower
and notified to Agent in accordance with subsection 2.3 hereof, provided (a)
that no Revolving Credit Loan shall be made as a Eurodollar Rate Loan if the
ratio of EBITDA to Consolidated Interest Incurred as of the most recent
Adjustment Date, determined from the financial statements and compliance
certificate that relate to the last month of the fiscal quarter immediately
preceding such Adjustment Date, is less than 1.75 to 1.0, (b) that no Revolving
Credit Loan shall be made as a Eurodollar Rate Loan after the day that is one
month prior to the last day of the Commitment Period, and (c) that the maximum
number of Tranches that may be outstanding at any one time as Revolving Credit
Loans may not exceed seven in the aggregate.
2.2 Revolving Credit Notes. The Revolving Credit Loans made by
Banks pursuant hereto shall be evidenced by promissory notes of Borrower,
substantially in the form of Exhibit B attached hereto (each a "Revolving Credit
Note" and collectively the "Revolving Credit Notes"), payable to the order of
the respective Bank and evidencing the obligation of Borrower to pay the
aggregate unpaid principal amount of the Revolving Credit Loans made by such
Bank, with interest thereon as prescribed in subsection 2.5 hereof. Each Bank is
hereby authorized to record electronically or otherwise the date and amount of
each Revolving Credit Loan disbursement made by such Bank, and the date and
amount of each payment or prepayment of principal thereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, the failure of such Bank to make any
such recordation(s) shall not affect the obligation of Borrower to repay
outstanding principal, interest, or any other amount due hereunder or under the
Revolving Credit Notes in accordance with the terms hereof and thereof. Each
Revolving Credit Note shall (a) be dated as of the date hereof, (b) be stated to
mature on the Maturity Date, which Maturity Date may be extended as provided in
subsection 2.7 hereof, and (c) bear interest for the period from and including
the date thereof on the unpaid principal amount thereof from time to time
outstanding at the applicable interest
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rate per annum determined as provided in subsection 2.5 hereof. Interest on each
Revolving Credit Note shall be payable as specified in subsection 2.5 hereof.
2.3 Procedure for Borrowing. Borrower may borrow under the
Revolving Credit Loan Commitments (subject to the limitations on the
availability of Eurodollar Rate Loans), during the Commitment Period, provided
Borrower shall give Agent telephonic or written notice (the "Notice of
Borrowing"), which Notice of Borrowing must be received (a) prior to 12:00 Noon,
Columbus, Ohio time, at least three Business Days prior to the requested
Borrowing Date for that part of the requested borrowing that is to be Eurodollar
Rate Loans, or (b) prior to 11:00 a.m., Columbus, Ohio time on or before the
requested Borrowing Date for that part of the requested borrowing that is to be
Prime Rate Loans which Notice of Borrowing, in the case of Prime Rate Loan(s),
shall be irrevocable. Each Notice of Borrowing shall specify (i) the Borrowing
Date (which shall be a Business Day), (ii) the amount of the requested
borrowing, (iii) whether the borrowing is to be of Eurodollar Rate Loans, Prime
Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely
or partly of Eurodollar Rate Loans, the amount of each Prime Rate Loan, if any,
and the respective amounts of each such Eurodollar Rate Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing pursuant to the
Revolving Credit Loan Commitments shall be in the principal amount (a) in the
case of Prime Rate Loans, of the lesser of (i) $1,000,000 or any larger amount
which is an even multiple of $100,000, and (ii) the then undrawn Revolving
Credit Loan Commitments, and (b) in the case of Eurodollar Rate Loans, of
$10,000,000 or any larger amount which is an even multiple of $1,000,000 so long
as the principal amount of the requested borrowing is less than the then undrawn
Revolving Credit Loan Commitments.
After the Borrower gives a Notice of Borrowing with respect to
Eurodollar Rate Loans, Agent, by 10:00 a.m., Columbus, Ohio time, two Business
Days prior to the requested Borrowing Date, shall advise the Borrower of the
applicable interest rate(s) (which is the sum of the applicable Eurodollar
Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate Loan(s)
and Interest Period(s) requested in the Notice of Borrowing. Not more than two
hours thereafter, the Borrower shall give Agent written irrevocable confirmation
of whether or
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not the Borrower wants Eurodollar Rate Loan(s) on such Borrowing Date and, if
so, the amount(s) and Interest Period(s) of such Eurodollar Rate Loan(s).
If the Borrower's written confirmation is timely made, the
Borrower shall be deemed to be requesting borrowing(s) of Eurodollar Rate
Loan(s) in the amount(s) and for the Interest Period(s) stated in the
confirmation. If the Borrower's confirmation is not timely made, the Borrower
shall be deemed to have requested a borrowing entirely as a Prime Rate Loan in
the aggregate amount and on the Borrowing Date specified in the Notice of
Borrowing.
By 2:00 p.m., Columbus, Ohio time, two Business Days prior to
the requested Borrowing Date, Agent shall give telephonic or written notice to
each Bank of such request, specifying (i) the Borrowing Date (which shall be a
Business Day), (ii) the amount of the requested borrowing, (iii) whether the
borrowing is to be of Eurodollar Rate Loans, Prime Rate Loans or a combination
thereof, and (iv) if the borrowing is to be entirely or partly of Eurodollar
Rate Loans, the amount of each Prime Rate Loan, if any, and the respective
amounts of each such Eurodollar Rate Loan, the applicable Eurodollar Rate for
each such Eurodollar Rate Loan and the respective lengths of the initial
Interest Periods therefor. Subject to satisfaction of the terms and conditions
of this Agreement, each Bank shall deposit funds with Agent for the account of
Borrower by 2:00 p.m. on the Borrowing Date by wire transfer or other
immediately available funds equal to its Revolving Credit Loan Commitment
Percentage of the Revolving Credit Loans to be made on the Borrowing Date. The
Loan(s) will then be made available to Borrower by Agent crediting the account
of Borrower on the books of Agent with the aggregate amounts made available to
Agent by Banks, and in like funds as received by Agent. The provisions for
conversion and continuation of the Loans are set forth in subsection 3.1.
2.4 Revolving Credit Loan Commitment Fee. Borrower agrees to
pay to Agent for the pro rata benefit of Banks a commitment fee for the
Commitment Period, computed at the rate of 1/4 of 1 percent (1/4%) per annum on
the average daily unused amount of the aggregate Revolving Credit Loan
Commitments during the Commitment Period, payable quarterly in arrears and due
on the
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last day of each March, June, September and December and on the last day of the
Commitment Period, commencing on the first of such dates to occur after the date
hereof.
2.5 Interest; Default Interest.
(a) Except as provided in subsection 2.5(b) hereof,
(i) the Revolving Credit Loans shall bear interest on the unpaid principal
amount thereof at a rate per annum equal to (y) in the case of Prime Rate Loans,
the Prime Rate in effect from time to time and (z) in the case of Eurodollar
Rate Loans, if permitted hereunder at such time, the Eurodollar Rate determined
for such day plus the Applicable Eurodollar Margin in effect for such day, and
(ii) the Swingline 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 made hereunder (whether as Prime Rate Loans or
Eurodollar Rate Loans or a combination thereof) or the Swingline Loans 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
Swingline Loan shall, without limiting any other rights of Banks, bear interest
at a rate per annum which is the sum of one percent (1.0%) plus the Prime Rate
in effect from time to time from the date of such non-payment until paid in full
(before, as well as after, judgment); provided, however, if all or any portion
of any principal on any Revolving Credit Loan made as a Eurodollar Rate Loan
hereunder shall not be paid when due and the then current Interest Period for
such Eurodollar Rate Loan has not yet expired, the entire principal amount of
such Eurodollar Rate Loan and, to the extent permitted by applicable law, any
overdue installment of interest on such Eurodollar Rate Loan shall, without
limiting any other rights of Banks, bear interest at a rate per annum which is
the sum of one percent (1.0%) plus the applicable non-default interest rate
(which is the sum of the applicable Eurodollar Rate and the Applicable
Eurodollar Margin) on such Eurodollar Rate Loan then in effect from the date of
such non-payment until the expiration of the then current Interest Period with
respect to such Eurodollar Rate Loan (before, as well as after, judgment);
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thereafter, the entire principal amount of such Eurodollar Rate Loan and, to the
extent permitted by applicable law, any overdue installment of interest on such
Eurodollar Rate Loan shall, without limiting any other rights of Banks, bear
interest at a rate per annum which is the sum of one percent (1.0%) plus the
Prime Rate in effect from time to time until paid in full (before, as well as
after, judgment).
(c) Interest shall be payable in arrears and shall be
due on each Interest Payment Date.
2.6 Termination or Reduction of Commitment.
(a) Provided that each Bank consents in writing,
Borrower shall have the right to terminate the Commitment or, from time to time
(and so long as no Default or Event of Default exists), reduce the amount of the
Commitment, upon not less than five Business Days' written notice to each Bank
specifying (i) either a reduction or termination and (ii) in the case of a
reduction, whether any prepayment, if required by this Agreement, shall be of
Prime Rate Loans, Eurodollar Rate Loans or a combination thereof, and, in each
case if a combination thereof, the principal allocable to each.
(b) Any reduction of the Commitment shall be in the
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall reduce permanently the amount of the Commitment then in effect. Any such
reduction shall be accompanied by prepayment of the Revolving Credit Loans made
hereunder to the extent, if any, that the amount of such Revolving Credit Loans
then outstanding exceeds the amount of the Revolving Credit Loan Commitments, as
then reduced, together with accrued interest on the amount so prepaid to the
date of such prepayment, and (ii) if a Revolving Credit Loan is a Eurodollar
Rate Loan that is prepaid other than at the end of the Interest Period
applicable thereto, by any amounts payable pursuant to subsection 3.5,
Indemnity. Any such reduction of the L/C Commitment, if the L/C Commitment is
being reduced, shall be accompanied by either (A) return to Agent of the
outstanding Standby L/Cs or (B) payment by Borrower to Agent of cash to fully
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.
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(c) Any such termination of the Commitment shall be
accompanied (i) by prepayment in full of the Revolving Credit Loans then
outstanding hereunder, together with accrued interest thereon to the date of
such prepayment, and the payment of any unpaid commitment fee then accrued
hereunder; (ii) with respect to Standby L/Cs, by Borrower's compliance with the
terms of subsection 2.14(b) hereof; and (iii) if a Revolving Credit Loan is a
Eurodollar Rate Loan that is prepaid other than at the end of the Interest
Period applicable thereto, by any amounts payable pursuant to subsection 3.5,
Indemnity.
(d) Any such reduction or termination of the
Revolving Credit Loan Commitments and/or L/C Commitments portion(s) of the
Commitment shall be allocated to each Bank ratably in proportion to that Bank's
Revolving Credit Loan Commitment Percentage and/or L/C Commitment Percentage, as
appropriate.
2.7 Maturity Date of Commitment; Extension. Unless
earlier terminated pursuant to the terms of this Agreement, the Commitment shall
terminate on the Maturity Date, and the unpaid balance of the Revolving Credit
Loans outstanding shall be paid on the Maturity Date; provided, however, that
once each year during each and every year of the Commitment Period (without
regard to whether or not all Banks elected to extend the Commitment Period in
any preceding year during the Commitment Period) all Banks shall make an
election whether or not, in all Banks' sole discretion, to extend the Maturity
Date by one year. If all Banks elect to extend the Maturity Date 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 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 by one year, the Maturity Date shall be deemed not to have been extended.
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2.8 Computation of Interest and Fees. Commitment fees on
the Commitment and interest in respect of the Revolving Credit Loans shall be
calculated on the basis of a 360 day year for the actual days elapsed. Any
change in the interest rate on the Loans and the Notes resulting from a change
in the Prime Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business of the day on which such change in the
Prime Rate or the Eurocurrency Reserve Requirements shall become effective,
without notice to Banks or Borrower. However, Agent shall give Borrower and
Banks prompt notice of all changes in the Prime Rate or the Eurocurrency Reserve
Requirements. Each determination of an interest rate by Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Banks and
Borrower in the absence of manifest error.
2.9 Increased Costs. In the event that at any time after
the date of this Agreement any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application thereof
or compliance by any Bank (including Agent) with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank or other Governmental Authority, agency or instrumentality, does or
shall have, in the opinion of such Bank, the effect of reducing the rate of
return on the capital of such Bank or any corporation controlling such Bank as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or any corporation controlling such Bank could have achieved but for
its adoption, change or compliance (taking into account such Bank's or such
corporation's policies, as the case may be, with respect to capital adequacy) by
an amount deemed by such Bank to be material, then, from time to time, after
submission by such Bank to Borrower of a written request therefor, Borrower
shall pay to such Bank additional amount or amounts as will compensate such Bank
or such corporation, as the case may be, for such reduction. Such Bank's written
request to Borrower for compensation shall set forth in reasonable detail the
computation of any additional amounts payable to such Bank by Borrower, and such
request and computation shall be conclusive in the absence of manifest error.
This provision shall remain in full force and effect, with respect to the
Revolving Credit Loans until the later of (a) the termination of this Agreement
or (b) the payment in full of all Notes (provided that before accepting final
payment on the Notes, Bank shall calculate any
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amounts due in accordance with this subsection 2.9 and give notice to Borrower
of such amounts as stated herein, and Borrower shall include such amounts in its
final payment). This provision shall survive the termination of all Standby L/Cs
and, with respect to Standby L/Cs, shall remain in full force and effect until
there is no existing or future obligation of Agent or any L/C Participant under
any Standby L/C. The provisions of this subsection 2.9 shall be supplemented by
the provisions of Section 3 hereof.
2.10 Use of Proceeds. The proceeds of the initial
Revolving Credit Loans made hereunder shall be used by Borrower to pay in full
the obligations outstanding on the Revolving Credit Loans (as defined in the
Existing Credit Agreement), under the Existing Credit Agreement. Upon Borrower's
irrevocable payment in full of the obligations outstanding under the Existing
Credit Agreement (other than Standby L/Cs that remain in existence), Bank One,
HNB, First Chicago, NCB, BKB and Fifth Third shall cancel the Existing Credit
Agreement (except for Standby L/Cs that remain in existence and all
reimbursement agreements related to such Standby L/Cs) and all promissory notes
and guaranties executed pursuant to the Existing Credit Agreement. Thereafter,
the proceeds of the Revolving Credit Loans made hereunder shall be used by
Borrower for lawful purposes in its business.
2.11 Pro Rata Treatment and Payments.
(a) Each borrowing by Borrower from Banks hereunder,
each payment (including each prepayment) by Borrower on account of principal of
and interest on the Revolving Credit Loans, each payment by Borrower on account
of any commitment fee hereunder and any reduction of the Revolving Credit Loan
Commitments and/or the L/C Commitments shall be made pro rata according to the
respective Revolving Credit Loan Commitment Percentage and/or L/C Commitment
Percentage, as appropriate, then held by Banks. All payments (including
prepayments) to be made by Borrower hereunder and under the Notes, whether on
account of principal, interest, fees or otherwise, shall be made without set-off
or counterclaim and shall be made prior to 12:00 Noon, Columbus, Ohio time, on
the due date thereof to Agent, for the account of Banks, at Agent's 000 Xxxx
Xxxxx Xxxxxx office in Columbus, Ohio, in Dollars and in immediately available
funds. Agent shall distribute such payments to Banks promptly upon
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receipt in like funds as received. If any payment hereunder on a Prime Rate Loan
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment hereunder on a Eurodollar Rate Loan
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day (and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension) unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.
2.12 Swingline Loans.
(a) Subject to the terms and conditions of this
Agreement, Bank One in its individual capacity agrees to make at any time and
from time to time after the initial Borrowing Date and prior to the Swingline
Expiry Date swingline loans to Borrower ("Swingline Loans"), which Swingline
Loans (i) shall be made and maintained as Prime Rate Loans, (ii) shall be
denominated in U.S. Dollars, (iii) may be repaid and reborrowed in accordance
with the provisions hereof, (iv) shall not exceed in aggregate principal amount
at any one time outstanding, when combined with the aggregate principal amount
of all Revolving Credit Loans then outstanding, the Revolving Credit Loan
Commitments and (v) shall not exceed in aggregate principal amount at any time
outstanding the lesser of (y) the Borrowing Base (determined as of the most
recent month end or, if Borrower elects to provide an interim Borrowing Base
Certificate pursuant to subsection 6.4 hereof, as of the date stated in such
Borrowing Base Certificate) minus the sum of (1) the 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, (2)
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, and (3) the aggregate principal amount of all
Revolving Credit Loans then outstanding, or (z) the Maximum Swingline Amount.
Bank One will not make a
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Swingline Loan after it has received written notice from Borrower or the
Required Banks stating that a Default or an Event of Default exists until such
time as Bank One shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default, as required by the Credit Agreement.
(b) Borrower shall give Bank One irrevocable
telephonic or written notice prior to 3:00 p.m., Columbus, Ohio time on the
requested Borrowing Date specifying the amount of the requested Swingline Loan
which shall be in a minimum amount of $100,000 or whole multiples of $10,000 in
excess thereof. The Swingline Loans will then be made available to Borrower by
Bank One by crediting the account of Borrower on the books of Bank One.
(c) The Swingline Loans shall be evidenced by a
promissory note of Borrower, substantially in the form of Exhibit C attached
hereto, (the "Swingline Note"), payable to the order of Bank One and evidencing
the obligation of Borrower to pay the aggregate unpaid principal amount of the
Swingline Loans made by Bank One with interest thereon as prescribed in
subsection 2.5 hereof. Bank One is hereby authorized to record electronically or
otherwise the date and amount of each Swingline Loan, 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 Bank One 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 Swingline Note in accordance with
the terms hereof and thereof. The Swingline Note shall (i) be dated as of the
date hereof, (ii) be stated to mature on the Swingline Expiry Date, and (iii)
bear interest for the period from and including the date thereof on the unpaid
principal amount thereof from time to time outstanding at the applicable
interest rate per annum determined as provided in subsection 2.5 hereof.
Interest on each Swingline Note shall be payable as specified in subsection 2.5
hereof.
(d) Bank One, at any time and in its sole and
absolute discretion, may, on behalf of Borrower (which hereby irrevocably
directs Bank One to act on its behalf), request each
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Bank, including Bank One, to make a Revolving Credit Loan (each, a "Mandatory
Borrowing") in an amount equal to such Bank's Revolving Credit Loan Commitment
Percentage of the amount of the Swingline Loans (provided that each such request
shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 9 or upon the exercise of any of
the remedies provided in the last paragraph of Section 9), in which case each
Bank shall make the proceeds of its Revolving Credit Loan available to Bank One
on the immediately succeeding Business Day pro rata based on each Bank's
Revolving Credit Loan Commitment Percentage, and the proceeds thereof shall be
applied directly to repay Bank One for such outstanding Swingline Loans. Each
Bank hereby irrevocably agrees to make Prime Rate Loans upon one Business Day's
notice pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified by Bank One
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the minimum borrowing amount otherwise required hereunder, (ii) whether any
conditions specified in Section 5 are then satisfied, (iii) whether a Default or
an Event of Default has occurred and is continuing, (iv) the date of such
Mandatory Borrowing, (v) any reduction in the Revolving Credit Commitments after
any such Swingline Loans were made, (vi) Borrower's compliance with Borrowing
Base requirements, (vii) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against Bank One, Borrower or any other Person
for any reason whatsoever, or (viii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. In the event that
any Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code in respect of Borrower), each Bank
(other than Bank One) hereby agrees that it shall forthwith purchase from Bank
One (without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline Loans
ratably based upon their respective Revolving Credit Loan Commitment
Percentages, provided that all interest payable on the Swingline Loans shall be
for the account of Bank One until the date the Mandatory Borrowing is made, and,
to the extent attributable to the Mandatory Borrowing, shall be payable to the
Bank making such Mandatory Borrowing from and after the date such Mandatory
Borrowing is made.
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(e) Whenever, at any time after Bank One has received
from any Bank such Bank's participating interest in a Swingline Loan and Bank
One receives any payment on account thereof, Bank One will distribute to such
Bank its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Bank's participating interest was outstanding and funded); provided, however,
that in the event that such payment received by Bank One is required to be
returned, such Bank will return to Bank One any portion thereof previously
distributed by Bank One to it.
2.13 The Standby L/Cs. So long as no Default or Event of
Default exists, Agent agrees to issue Standby L/Cs, pursuant to the terms and
conditions hereof, provided that the aggregate of the undrawn and drawn amounts
of the Standby L/Cs at any one time outstanding, including the amount of Standby
L/Cs issued for the purpose of satisfying bonding requirements, shall not exceed
Twenty-Five Million and 00/100 Dollars ($25,000,000), of which the amount of
Standby L/Cs issued for purposes other than satisfying bonding requirements
shall not exceed the lesser of (x) (i) the Borrowing Base (determined as of the
most recent month end or, if Borrower elects to provide an interim Borrowing
Base Certificate pursuant to subsection 6.4 hereof, as of the date stated in
such Borrowing Base Certificate) minus (ii) the sum of (A) the aggregate
principal amount of Revolving Credit Loans then outstanding, (B) the aggregate
principal amount of Swingline Loans then outstanding and (C) 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).
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2.14 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 2.14 (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.
2.15 Procedure for Opening Standby L/Cs. Upon receipt of
any Standby L/C Application from Borrower, Agent will process such Standby L/C
Application, and the other certificates, documents and other papers delivered to
Agent in connection therewith, in accordance with its customary procedures and
send a copy thereof to each L/C Participant, and, upon satisfaction of all
conditions contained in this Agreement, shall promptly open such Standby L/C by
issuing the original of such Standby L/C to the beneficiary thereof and by
furnishing a copy thereof to Borrower.
2.16 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
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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 2.14(b) hereof) at any time
in accordance with the terms of this Agreement or for which Agent is required at
any time to return any portion of such reimbursement (whether because of
Borrower's bankruptcy or otherwise), such L/C Participant shall pay to Agent
upon demand at Agent's address for notices specified herein an amount equal to
such L/C Participant's L/C Commitment Percentage of the amount of such draft, or
any part thereof, which is not so reimbursed or which Agent is required to
return.
(b) If any amount required to be paid by any L/C
Participant to Agent in respect of any unreimbursed portion of any payment made
by Agent under any Standby L/C is not paid to Agent on the date such payment is
due but is paid within three Business Days after such payment is due, such L/C
Participant shall pay to Agent on demand an amount equal to the product of (i)
such amount, multiplied by (ii) the daily average Federal funds rate, as quoted
by Agent, during the period from and including the date such payment is required
to the date on which such payment is immediately available to Agent, multiplied
by (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to this subsection 2.16 is
not paid to Agent by such L/C Participant within three Business Days after the
date such payment is due, Agent shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from the
fourth Business Day after such due date until paid at the rate per annum
applicable to Loans made as Prime Rate Loans hereunder. A certificate of Agent
submitted to any L/C Participant with respect to any amounts owing under this
subsection 2.16 shall be conclusive in the absence of manifest error.
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(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.
2.17 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 Loan made as a Prime
Rate Loan which is not in default, and (ii) thereafter, the rate which would
then be payable on any outstanding Loan made as a Prime Rate Loan which is in
default.
2.18 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
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following options selected by Borrower with respect to each Standby L/C: (a) one
percent (1%) per annum on the face amount of each Standby L/C, payable in
advance not later than the date of issuance thereof; or (b) one and one-quarter
percent (1-1/4%) per annum on the face amount of the Standby L/C, payable in
advance on the first day of each January, April, July and October, beginning on
the first of such dates to occur after the date of issuance of the Standby L/C,
occurring prior to the expiry date of the Standby L/C. In addition, Agent shall
charge and retain for its own account, and Borrower agrees to pay, Agent's usual
and customary charges with respect to the issuance and administration of the
Standby L/C.
2.19 Letter of Credit Reserves. If any change in any law
or regulation or in the interpretation or application thereof by any court or
other governmental authority charged with the administration thereof shall
either (a) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by Agent, or
(b) impose on Agent or any L/C Participant any other condition regarding this
Agreement or any Standby L/C, and the result of any event referred to in clause
(a) or (b) above shall be to increase the cost to Agent or any L/C Participant
of issuing or maintaining any Standby L/C (which increase in cost shall be the
result of Agent's or any L/C Participant's reasonable allocation of the
aggregate of such cost increases resulting from such events), then, upon demand
by Agent or any L/C Participant, Borrower shall immediately pay to Agent, for
the pro rata benefit of such L/C Participant(s), from time to time as specified
by Agent or such L/C Participant(s), additional amounts which shall be
sufficient to compensate Agent or such L/C Participant(s) for such increased
cost, together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the then applicable
interest rate on the Revolving Credit Loans made as Prime Rate Loans. A
certificate as to such increased cost incurred by Agent or such L/C
Participant(s), submitted by Agent or such L/C Participant(s) to Borrower, shall
be conclusive, absent manifest error, as to the amount thereof. This provision
shall survive the termination of this Agreement and shall remain in full force
and effect until there is no existing or future obligation of Agent or any L/C
Participant under any Standby L/C.
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2.20 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.
2.21 Obligations Absolute. The contingent reimbursement
obligations and the Reimbursement Obligations of Borrower with respect to
Standby L/Cs under this Agreement shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including without limitation the following:
(a) the existence of any claim, set-off, defense or
other right which Borrower may have at any time against any beneficiary, or any
transferee, of any Standby L/C (or any Persons for whom any such beneficiary or
any such transferee may be acting), Agent, or any other Person, whether in
connection with this Agreement, the transaction contemplated herein, or any
unrelated transaction;
(b) any statement or any other document presented
under any Standby L/C proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(c) payment by Agent under any Standby L/C against
presentation of a draft or certificate which does not comply with the terms of
such Standby L/C provided that Agent has made such payment to the beneficiary
set forth on the face of such Standby L/C; or
(d) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
2.22 Existing Standby L/Cs; L/C Participations. Attached
hereto as Schedule 2 is a list of all Standby L/Cs previously issued by Bank One
or HNB for the account of Borrower that are outstanding and will remain in place
as of the first Borrowing Date ("Existing Standby L/Cs"). The amount of the
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Existing Standby L/Cs shall be deemed to be included in the aggregate amount of
Standby L/Cs outstanding as of the first Borrowing Date for purposes of
subsection 2.13 hereof. Where appropriate, in any provision in subsections 2.16
through 2.21 hereof that provides for Borrower to make payment to Agent or that
grants other rights to Agent with respect to Standby L/Cs, or that provides for
the purchase by L/C Participants of an interest in Standby L/Cs, the words "Bank
One or HNB, as appropriate" shall be substituted for "Agent" with respect to
Existing Standby L/Cs. Not later than the first Borrowing Date, each L/C
Participant shall enter into a letter agreement in substantially the form of
Exhibit I attached hereto whereby (a) each L/C Participant shall purchase or
sell, as appropriate, participations in each Existing Standby L/C in such
amounts to make each L/C Participant's respective percentage interest in each
Existing Standby L/C equal to such L/C Participant's L/C Commitment Percentage
and (b) each L/C Participant shall share in the fees paid and earned beginning
as of the first Borrowing Date (including that portion of fees paid prior to the
first Borrowing Date that have not been earned as of the first Borrowing Date),
and shall pay to Bank One or HNB, as appropriate, for the account of Borrower
such L/C Participant's respective L/C Commitment Percentage of the refund (as
provided in subsection 2.18 hereof) of any fees for any Existing Standby L/C
that is terminated early or reduced in amount and for which a fee has been
allocated in accordance with such letter agreement.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 Conversion and Continuation Options.
(a) The Borrower may elect from time to time to
convert outstanding Revolving Credit
Loans from Eurodollar Rate Loans to Prime Rate Loans by giving the Agent at
least two Business Days' prior irrevocable notice of such election, provided
that any such conversion of Eurodollar Rate Loans may only be made on the last
day of an Interest Period with respect thereto. Subject to the limitations on
the availability of Eurodollar Rate Loans, the Borrower may elect from time to
time to convert outstanding Revolving Credit Loans from Prime Rate Loans to
Eurodollar Rate Loans by giving the Agent telephonic or written notice (the
"Notice of Conversion"), which Notice of Conversion must be received prior to
12:00 Noon, Columbus, Ohio time, at least three Business Days prior to the
requested date
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for the conversion, which Notice of Conversion shall specify (i) the date for
the conversion; (ii) the aggregate amount of Prime Rate Loans to be converted;
and (iii) and for each such Prime Rate Loan to be converted to a Eurodollar Rate
Loan, the respective amount and the respective length of the initial Interest
Period. Each conversion from Prime Rate Loans to Eurodollar Rate Loans shall be
in the principal amount of $10,000,000 or any larger amount which is an even
multiple of $1,000,000. After the Borrower gives a Notice of Conversion from
Prime Rate Loans to Eurodollar Rate Loans, Agent, by 10:00 a.m., Columbus, Ohio
time, two Business Days prior to the requested date for the conversion, shall
advise the Borrower of the applicable interest rate(s) (which is the sum of the
applicable Eurodollar Rate(s) and the Applicable Eurodollar Margin) for the
Eurodollar Rate Loan(s) and Interest Period(s) requested in the Notice of
Conversion. Not more than two hours thereafter, the Borrower shall give Agent
written irrevocable confirmation of whether or not the Borrower wants to convert
the Prime Rate Loans to Eurodollar Rate Loan(s) on such requested date and, if
so, the amount and the Interest Period for each such Eurodollar Rate Loan. If
the Borrower's confirmation is not timely made, the Borrower shall be deemed to
have withdrawn Borrower's Notice of Conversion and the Prime Rate Loans that
were the subject of such Notice of Conversion shall continue as Prime Rate
Loans. If the Borrower's written confirmation is timely made, the Borrower shall
be deemed to be requesting a conversion from Prime Rate Loans to Eurodollar Rate
Loan(s) in the amount(s) and for the Interest Period(s) stated in the
confirmation. By 2:00 p.m., Columbus, Ohio time, two Business Days prior to the
requested Borrowing Date, Agent shall give telephonic or written notice to each
Bank of Borrower's request for conversion, specifying (i) the date for the
conversion; (ii) the aggregate amount of Prime Rate Loans to be converted; and
(iii) and, for each such Prime Rate Loan to be converted to a Eurodollar Rate
Loan, the respective amount, the respective Eurodollar Rate, and the respective
length of the initial Interest Period applicable thereto. All or any part of
outstanding Eurodollar Rate Loans and Prime Rate Loans may be converted as
provided herein, provided that (i) (unless the Required Banks otherwise consent)
no Prime Rate Loan may be converted into a Eurodollar Rate Loan when any Default
or Event of Default has occurred and is continuing and (ii) no Prime Rate Loan
may be converted into a
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Eurodollar Rate Loan after the date that is one month prior to the last day of
the Commitment Period.
(b) Subject to the limitations on the availability of
Eurodollar Rate Loans, any Eurodollar Rate Loans may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
Borrower giving Agent telephonic or written notice, which notice must be
received prior to 12:00 Noon, Columbus, Ohio time, at least three Business Days
prior to such last day of the then current Interest Period, and which notice
shall specify the amount of the Eurodollar Rate Loans to be continued as such
and the respective amount and the respective length of the Interest Period for
each Eurodollar Rate Loan. After the Borrower gives such notice, Agent, by 10:00
a.m. two Business Days prior to the end of the Interest Period, shall advise the
Borrower of the applicable interest rate(s) (which is the sum of the applicable
Eurodollar Rate(s) and the Applicable Eurodollar Margin) for the Eurodollar Rate
Loan(s) and Interest Period(s) requested in such notice. Not more than two hours
thereafter, the Borrower shall give Agent written irrevocable confirmation of
whether or not the Borrower wants to continue the Eurodollar Rate Loan(s) as
such and, if so, the amount and the Interest Period for each such Eurodollar
Rate Loan. If the Borrower's confirmation is not timely made, the Borrower shall
be deemed to have withdrawn Borrower's notice for a continuation and the
Eurodollar Rate Loans that were the subject of such request shall convert
automatically to a Prime Rate Loan upon the expiration of the then current
Interest Period. If the Borrower's written confirmation is timely made, the
Borrower shall be deemed to be requesting a continuation of the Eurodollar Rate
Loan(s) in the amount(s) and for the Interest Period(s) stated in such notice.
Agent shall give prompt telephonic or written notice to each Bank of such
request for continuation, specifying the aggregate amount of the Eurodollar Rate
Loans to be continued as such and, for each such Eurodollar Rate Loan to be
continued, the respective amount, the respective Eurodollar Rate, and the
respective length of the Interest Period applicable thereto. All or any part of
outstanding Eurodollar Rate Loans may be continued as provided herein, provided
that (i) (unless the Required Banks otherwise consent) no Eurodollar Rate Loan
may be continued when any Default or Event of Default has occurred and is
continuing and (ii) no Eurodollar Rate Loan may be continued
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as a Eurodollar Rate Loan after the date that is one month prior to the last day
of the Commitment Period.
3.2 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period, the Agent or the Required Banks shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy, telephonic or written
notice thereof to the Borrower and the Banks as soon as practicable thereafter.
If such notice is given (x) any Eurodollar Rate Loans requested to be made on
the first day of such Interest Period shall be made as Prime Rate Loans and (y)
any Loans that were to have been converted on the first day of such Interest
Period to or continued as Eurodollar Rate Loans shall be converted to or
continued as Prime Rate Loans. Until such notice has been withdrawn by the
Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Prime Rate Loans to Eurodollar Rate
Loans.
3.3 Illegality; Impracticability. Notwithstanding any
other provision herein, if the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof shall make it unlawful, or
if compliance by any Bank or its applicable lending office, branch or any
affiliate thereof with any request or directive (whether or not having the force
of law) from any central bank or other Governmental Authority occurring after
the date hereof (or, if later, the date on which such Bank becomes a Bank
pursuant to any permitted assignment) shall make it impracticable, for any Bank,
or its applicable lending office, branch or any affiliate thereof, to make or
maintain Eurodollar Rate Loans as contemplated by this Agreement, (a) such Bank
shall promptly give written notice of such circumstances to the Borrower and the
Agent (which notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Bank hereunder to make Eurodollar Rate Loans,
continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Bank to make or maintain Eurodollar Rate
Loans, such Bank shall then have a commitment only to make a Prime Rate Loan
when a
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Eurodollar Rate Loan is requested and (c) such Bank's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, the Borrower shall
pay to such Bank such amounts, if any, as may be required pursuant to subsection
3.5, Indemnity.
3.4 Requirements of Law. If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof
applicable to any Bank, or its applicable lending office, branch or any
affiliate thereof, or compliance by any Bank, or its applicable lending office,
branch or any affiliate thereof, with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority,
in each case made subsequent to the date hereof (or, if later, the date on which
such Bank becomes a Bank pursuant to any permitted assignment):
(a) shall subject such Bank, or its applicable
lending office, branch or any affiliate thereof, to any tax of any kind
whatsoever with respect to any Eurodollar Rate Loans made by it or its
obligation to make Eurodollar Rate Loans, or change the basis of taxation of
payments to such Bank in respect thereof and changes in taxes measured by or
imposed upon the overall net income, or franchise taxes, or taxes measured by or
imposed upon overall capital or net worth, or branch taxes (in the case of such
capital, net worth or branch taxes, imposed in lieu of such net income tax), of
such Bank or its applicable lending office, branch, or any affiliate thereof;
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Bank which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
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(c) shall impose on such Bank, or its applicable
lending office, branch or any affiliate thereof, any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank, or its applicable lending office, branch or any
affiliate thereof, deems to be material, of making, converting into, continuing
or maintaining Eurodollar Rate Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Bank, through the Agent, in accordance herewith, the Borrower
shall promptly pay such Bank, upon its demand, any additional amounts necessary
to compensate such Bank for such increased cost or reduced amount receivable; in
addition, in any such case, the Borrower may elect to convert the Eurodollar
Rate Loans made by such Bank hereunder to Prime Rate Loans by giving the Agent
at least one Business Day's notice of such election, in which case the Borrower
shall promptly pay to such Bank, upon demand, without duplication, such amounts,
if any, as may be required pursuant to subsection 3.5. If any Bank becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
provide prompt notice thereof to the Borrower, through the Agent, certifying (x)
that one of the events described in this paragraph (a) has occurred and
describing in reasonable detail the nature of such event, (y) as to the
increased cost or reduced amount receivable hereunder resulting from such event
and (z) as to the additional amount demanded by such Bank and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this subsection submitted by such Bank,
through the Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
3.5 Indemnity. The Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur (other than through such Bank's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Rate Loans after the
Borrower has given Agent written irrevocable confirmation that Borrower wants
such Eurodollar Rate Loans in accordance with
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subsection 2.3 or subsection 3.1, as appropriate, of this Agreement, (b) default
by the Borrower in making any prepayment or conversion of a Eurodollar Rate Loan
after the Borrower has given a notice thereof in accordance with the provisions
of this Agreement or (c) the making of a prepayment of Eurodollar Rate Loans on
a day which is not the last day of an Interest Period with respect thereto
(whether by acceleration, demand or otherwise). Such indemnification may
include, without limitation, an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or
converted, or not so borrowed, converted or continued, for the period from the
date of such prepayment or conversion or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Rate Loans provided for herein over (ii) the amount
of interest (as reasonably determined by such Bank) which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Banks and Agent to enter into this
Agreement and to make the Revolving Credit Loans and Swingline Loans and to
issue the Standby L/Cs herein provided for, Borrower hereby covenants,
represents and warrants to each Bank and to Agent that on the date hereof:
4.1 Financial Statements. Borrower has heretofore
furnished to each Bank (a) the consolidated balance sheet of Borrower and its
Subsidiaries as of December 31, 1997, and the related consolidated statements of
income, of stockholders' equity and of cash flows for the fiscal year of
Borrower then ended, certified by an independent public accountant of recognized
national standing and (b) the consolidated unaudited balance sheet and income
statement of Borrower and its Subsidiaries as of March 31, 1998. Each of the
foregoing financial statements fairly
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presents the financial condition of Borrower and its Subsidiaries as of the date
thereof and the results of the operations of Borrower and its Subsidiaries for
the period then ended (subject, in the case of the March 31, 1998 statements, to
year-end audit adjustments) and, from the respective dates of the foregoing
financial statements to the date hereof, there has been no material adverse
change in such condition.
4.2 Corporate Existence; Compliance with Law. Each of
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, formation
or organization, as appropriate, (b) has the requisite power and authority to
conduct the business in which it is currently engaged, (c) is qualified as a
foreign entity to do business 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 Subsidiaries 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 Subsidiaries taken as a whole and would not materially adversely affect the
ability of Borrower to perform its obligations under this Agreement and the
Notes.
4.3 Corporate Power; Authorization; Enforceable
Obligations. Borrower has the corporate power and authority to make, deliver and
perform this Agreement and the Notes and to borrow hereunder, and has taken all
corporate action necessary to be taken by it to authorize (a) the borrowings on
the terms and conditions of this Agreement and the Notes, and (b) the execution,
delivery and performance of this Agreement and the Notes. No consent, waiver or
authorization of, or filing with any Person (including without limitation any
Governmental Authority) is required to be made or obtained by Borrower in
connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement and the Notes. This
Agreement has been, and each Note will be, duly executed and delivered on behalf
of Borrower and this Agreement constitutes, and each Note when executed and
delivered hereunder will constitute, a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms, subject to
the effect, if any, of bankruptcy, insolvency, reorganization,
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arrangement or other similar laws relating to or affecting the rights of
creditors generally and the limitations, if any, imposed by the general
principles of equity and public policy.
4.4 No Legal Bar. The execution, delivery and performance
of this Agreement and the Notes, the borrowings hereunder and the use of the
proceeds thereof do not and will not violate any Requirement of Law or
Contractual Obligation (including without limitation the Indenture) of Borrower
or any of its Subsidiaries and do not and will not result in, or require, the
creation or imposition of any Lien on any of its properties or revenues pursuant
to any Requirement of Law or Contractual Obligation.
4.5 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the best knowledge of Borrower, threatened by or against Borrower or any
of its Subsidiaries 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 Subsidiaries taken as a whole.
4.6 Regulation U. Neither Borrower nor any of its
Subsidiaries is engaged, nor will either of them engage, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any loans hereunder will be used for "purchasing" or
"carrying" "margin stock" as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of the Regulations of such
Board of Governors. If requested by Agent, Borrower and each of its Subsidiaries
will furnish to Agent a statement in conformity with the requirements of Federal
Reserve Form U-1 referred to in said Regulation U to the foregoing effect.
4.7 Investment Company Act. Neither Borrower nor any of
its Subsidiaries is an "investment company" or a company
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"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
4.8 ERISA. Borrower and its Subsidiaries are in
compliance in all material respects with ERISA. There has been no Reportable
Event with respect to any Plan. There has been no institution of proceedings or
any other action by PBGC or Borrower or any Commonly Controlled Entity to
terminate or withdraw or partially withdraw from any Plan under any
circumstances which could lead to material liabilities to PBGC or, with respect
to a Multiemployer Plan, the Reorganization or Insolvency (as each such term is
defined in ERISA) of the Plan.
4.9 Disclosure. No representations or warranties made by
Borrower in this Agreement or in any other document furnished from time to time
in connection herewith (as such other documents may be supplemented from time to
time) contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary to make the statements herein
or therein not misleading.
4.10 Subsidiary Information. Schedule 3 attached hereto
contains the name, principal place of business, all other places of business and
percentage of ownership of all of the Subsidiaries of Borrower.
4.11 M/I Ancillary Businesses Information. Schedule 4
attached hereto contains the name, principal place of business, all other places
of business and percentage of ownership of all of the M/I Ancillary Businesses.
4.12 Schedules. Each of the Schedules to this Agreement
contains true, complete and correct information in all material respects.
4.13 Year 2000 Compliance. Borrower has identified the
issues with respect to Year 2000 Compliance and has a realistic and achievable
program for achieving Year 2000 Compliance on a timely basis. Based on such
identification and program, Borrower does not reasonably anticipate that any
issue with respect to Year 2000 Compliance will have a material adverse effect
on its operations, business or financial condition.
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SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loan(s). The obligation of the Banks
to make the initial Loan(s), of Bank One to make Swingline Loans 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.
(i) Each Bank shall have received its
respective Revolving Credit Note, conforming to the requirements hereof
and duly executed and delivered by a duly authorized officer of
Borrower; and
(ii) Bank One shall have received its
Swingline 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 Guaranties to which Agent shall also be a party, conforming to the
requirements hereof and duly executed and delivered by a duly authorized officer
(or other person in a comparable position) of each of Borrower's Subsidiaries.
(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 a
Responsible Officer of Borrower, which shows that the Borrowing Base as of March
31, 1998 is at least equal to the Loans (including any Standby L/Cs either (i)
issued hereunder or (ii) issued under the Existing Credit Agreement and that
remain in place) requested hereunder.
(d) Legal Opinions of Counsel to Borrower. Each Bank
and Agent shall have received an executed legal opinion of Xxxx X. Xxxxxx, Esq.,
counsel to Borrower and its Subsidiaries, 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
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contemplated hereby as each Bank and Agent or their respective counsel may
reasonably require.
(e) Corporate Proceedings of Borrower. Each Bank and
Agent shall have received a copy of the resolutions (in form and substance
satisfactory to each Bank and Agent) of the Board of Directors of Borrower
authorizing (i) the execution, delivery and performance of this Agreement, (ii)
the consummation of the transactions contemplated hereby, (iii) the borrowings
herein provided for, and (iv) the execution, delivery and performance of the
Notes and the other documents provided for in this Agreement, 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) Proceedings of Subsidiaries of Borrower. Each
Bank and Agent shall have received a copy of the resolutions (in form and
substance satisfactory to Agent) of (i) M/I Schottenstein Homes, Inc., as the
sole shareholder of each of M/I Financial Corp., 601RS, Inc., M/I Homes, Inc.
and M/I Homes Construction, Inc., and as the sole member of each of Xxx 0 -
0000, X.X.X. xxx Xxxxx Xxxx - 0000, L.L.C.; (ii) Xxx 0 - 0000, X.X.X., as the
99% member of Bellwood L.L.C.; and (iii) Xxxxx Xxxx - 0000, L.L.C., as the 99%
member of Chevy Chase Villas - 1997, L.L.C., each resolution authorizing the
execution, delivery and performance of each Guaranty, all certified by the
Secretary (or other person in a comparable position) of the respective
Subsidiary 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 Certificates of Subsidiaries. Each
Bank and Agent shall have received a certificate of the Secretary (or other
person in a comparable position) of each of the Subsidiaries of Borrower, dated
the date hereof, as to the
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incumbency and signatures of the officer(s) (or other person(s) in a comparable
position) of each executing its respective Guaranties.
(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 any Subsidiary of Borrower or any of the officers, directors or
managers of Borrower or any 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 Subsidiaries 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 any of
its Subsidiaries 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 Subsidiaries taken as a whole.
(l) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing hereunder
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prior to or after giving effect to the making of the initial loans (including
the issuance of Standby L/Cs) on the first Borrowing Date hereunder.
(m) No Material Adverse Change. There shall have been
no material adverse change in the consolidated financial condition or business
or operations of Borrower and its Subsidiaries from the date of Borrower's
December 31, 1997 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 2.14 hereof for
each Standby L/C that Borrower has requested Agent to issue on the first
Borrowing Date.
5.2 Conditions to All Loans. In addition to the other
terms and conditions of this Agreement with respect to the making of Loans and
the issuance of Standby L/Cs, the obligation of each Bank to make any Loan and
of Agent to issue of any Standby L/C hereunder on any date (including without
limitation the first Borrowing Date) is subject to the satisfaction of the
following conditions precedent as of such date:
(a) Representations and Warranties. The
representations and warranties made by Borrower in this Agreement and any
representations and warranties made by Borrower or any 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
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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 2.14 hereof for each
Standby L/C that Borrower has requested Agent to issue as part of such
borrowing.
Each borrowing by Borrower (including the submission of a Standby L/C
Application) under this Agreement shall constitute a representation and warranty
by Borrower as of the date of such borrowing that the conditions contained in
the foregoing paragraphs (a), (b) and (c) of this subsection 5.2 have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Borrower hereby agrees that, from the date hereof and so long
as the Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains outstanding and unpaid, any Standby L/C remains outstanding
that is not fully collateralized with cash in a manner satisfactory to Agent, or
any other amount is owing to Agent or any Bank hereunder, Borrower shall, and in
the case of subsections 6.6, 6.7, 6.8 and 6.9 hereof, shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to each Bank and Agent:
(a) as soon as available, but in any event within 90
days after the end of each fiscal year of Borrower, a copy of the audited
consolidated balance sheet of Borrower and its consolidated Subsidiaries as of
the end of such year and the related audited consolidated statements of income,
of stockholders' equity and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, together with the
opinion of independent certified public accountants of nationally recognized
standing, which opinion shall not contain a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit or qualification which would affect the computation of financial covenants
contained herein other than a qualification
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for consistency due to a change in the application of GAAP with which Borrower's
independent certified public accountants concur; and
(b) as soon as available, but in any event not later
than 45 days after the end of each monthly accounting period (including the
monthly accounting period for the last month of each fiscal year of the
Commitment Period), the unaudited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of each such month and the related
unaudited consolidated statements of income and of stockholders' equity of
Borrower and its consolidated Subsidiaries for such month and the portion of the
fiscal year through such date setting forth in each case in comparative form the
figures for the previous year, and including in each case: (i) the relevant
figures broken down with respect to each division of Borrower and its
Subsidiaries, (ii) a listing of all residential and commercial lots, land under
development and unsold lots, and (iii) a statement of the calculation of
Borrower's ratio of Consolidated Unsubordinated Liabilities to the sum of
Consolidated Tangible Net Worth and Subordinated Indebtedness as of the end of
such month, all of the foregoing certified by a Responsible Officer as being
fairly stated in all material respects, subject to year-end audit adjustments;
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP (except,
in the case of the financial statements referred to in subparagraph (b) of this
subsection 6.1, that such financial statements need not contain footnotes and
may be subject to year-end audit adjustments).
6.2 Certificates; Other Information. Furnish to each Bank
and Agent:
(a) concurrently with the delivery of each financial
statement referred to in subsection 6.1(a) above and each financial statement
referred to in subsection 6.1(b) above, a summary in form and substance
satisfactory to the Required Banks of the status of the hedging investments
described in subsection 7.9(j) hereof, and a certificate of a Responsible
Officer of Borrower (in the form of Exhibit F attached hereto or such other form
as shall be reasonably acceptable to each Bank
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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
6.11, 6.12, 6.13, 6.14, 6.15, 7.1(d), 7.3, 7.6, 7.7, 7.8, 7.9(e), 7.9(k),
7.9(l), 7.20 and 7.22 hereof;
(b) not later than March 31 of each year,
comprehensive projections for that year, setting forth projected income and cash
flow for each quarter of that year, and the projected balance sheet as of the
end of each quarter of that year, together with a summary of the assumptions
upon which such projections are based and a certificate in the form of Exhibit 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 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
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(e) promptly, on reasonable notice to Borrower, such
additional financial and other information as any Bank may from time to time
reasonably request.
6.3 Borrowing Base Certificate. Furnish to each Bank and
Agent as soon as available, but in any event within twenty-five (25) days after
the end of each month, a Borrowing Base Certificate in substantially the form of
Exhibit D, certified by the chief financial officer or the controller of
Borrower, showing the calculation of the Borrowing Base for such month.
6.4 Compliance with Borrowing Base Requirements. At any
time any Borrowing Base Certificate required to be furnished to each Bank and
Agent in accordance with subsection 6.3 hereof indicates that the aggregate
principal amount of the Loans and undrawn and drawn Standby L/Cs then
outstanding exceeds the amount of Loans and Standby L/Cs then permitted
hereunder, within five calendar days after the delivery of such Borrowing Base
Certificate to each Bank and Agent, (a) reduce the principal amount of the Loans
and undrawn and drawn Standby L/Cs then outstanding by an amount sufficient to
make the Loans and undrawn and drawn Standby L/Cs then outstanding not more than
the Loans and Standby L/Cs then permitted hereunder, or (b) deliver to each Bank
and Agent a more current Borrowing Base Certificate that demonstrates that the
aggregate principal amount of the Loans and undrawn and drawn Standby L/Cs
outstanding as of the date of such Borrowing Base Certificate is not in excess
of the Loans and Standby L/Cs permitted hereunder at such time.
6.5 Interest Rate Protection. At any time the Eurodollar
Base Rate for an Interest Period of one month shall equal or exceed six and
one-half percent (6.50%) per annum and Borrower shall not have in effect an
Interest Rate Contract or series of Interest Rate Contracts that provide to
Borrower an effective fixed rate of interest on a total of fifty percent (50%)
of the maximum amount of Revolving Credit Loans available hereunder, the
Required Banks, by written notice from the Agent to Borrower, may require
Borrower to enter into an Interest Rate Contract or series of Interest Rate
Contracts satisfactory to the Required Banks that provide to Borrower, when
combined with all other Interest Rate Contracts then in effect, an effective
fixed rate of interest on a total of fifty percent (50%) of the maximum amount
of Revolving Credit Loans available hereunder. In such
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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, when combined with all
other Interest Rate Contracts then in effect, (i) provide interest rate
protection to Borrower on a total of fifty percent (50%) of the maximum
Revolving Credit Loans available hereunder by providing to Borrower an effective
fixed rate of interest on a total of fifty percent (50%) of the maximum amount
of Revolving Credit Loans available hereunder, (ii) be in effect for a period of
at least two 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, including any permitted extensions of the Maturity Date, the
Interest Rate Contract(s) need only be in effect until the 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 Xxxxx'x Investor Service, Inc. or at least A- by
Standard & Poor's Corporation.
6.6 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its Indebtedness and other material obligations of whatever nature,
except, (a) without prejudice to the effectiveness of paragraph (5) of Section 9
hereof, for any Indebtedness or other obligations (including any obligations for
taxes), when the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of Borrower or its Subsidiaries,
as the case may be, and (b) for any Indebtedness secured by a mortgage on real
estate if such Indebtedness is, by its terms, exculpatory (i.e., non-recourse to
Borrower and its Subsidiaries).
6.7 Maintenance of Existence. Except as may be permitted
under subsection 7.4 hereof, preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all rights,
privileges, contracts, copyrights, patents, trademarks, trade names and
franchises necessary or desirable in the normal conduct of its business, and
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comply with all Contractual Obligations and Requirements of Law except to the
extent that the failure to take such actions or comply with such Contractual
Obligations and Requirements of Law would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of Borrower or of Borrower and its Subsidiaries, taken as a whole.
Borrower and its Subsidiaries have no duty to renew or extend contracts which
expire by their terms.
6.8 Maintenance of Property, Insurance. Keep all property
useful in and necessary to its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but
including in any event public liability, general liability and business
interruption insurance) as are usually insured against in the same general area
by companies engaged in the same or a similar business; and furnish to each Bank
and Agent, upon written request, full information as to the insurance carried.
6.9 Inspection of Property; Books and Records;
Discussions. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities, subject in the case of interim statements to year-end audit
adjustments; and permit representatives of each Bank and Agent to visit and
inspect any of its properties, and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
requested, and to discuss the business, operations, properties and financial and
other condition of Borrower and its Subsidiaries with officers and employees of
Borrower and its Subsidiaries and, if notice thereof is given to Borrower prior
to the date of such discussions, with its independent certified public
accountants.
6.10 Notices. Promptly give notice to each Bank and Agent:
(a) of the occurrence of any Default or Event of
Default;
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(b) of any (i) default or event of default under any
loan or letter of credit agreement binding upon Borrower or any of its
Subsidiaries, (ii) default under any other Contractual Obligation that would
enable the obligee of the Contractual Obligations to compel Borrower or any of
its Subsidiaries to immediately pay all amounts owing thereunder or otherwise
accelerate payments thereunder and would have a material adverse effect on
Borrower and its Subsidiaries taken as a whole, or (iii) litigation,
investigation or proceeding which may exist at any time between Borrower and its
Subsidiaries and any Governmental Authority, which, if adversely determined,
would have a material adverse effect on the business, operations, property or
financial or other condition of Borrower and its Subsidiaries taken as a whole;
(c) of any litigation or proceeding affecting
Borrower or any of its Subsidiaries (i) (A) in which the amount involved is
$500,000.00 or more and not covered by insurance, or (B) which, in the
reasonable opinion of a Responsible Officer of Borrower, would, if adversely
determined, have a material adverse effect on Borrower and its Subsidiaries
taken as a whole, or (ii) in which injunctive or similar relief is sought and
which, in the reasonable opinion of a Responsible Officer of Borrower, would, if
adversely determined, have a material adverse effect on Borrower and its
Subsidiaries taken as a whole;
(d) of the following events, as soon as possible and
in any event within 30 days after Borrower knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan with respect
to which the PBGC has not waived the 30 day reporting requirement, or (ii) the
institution of proceedings or the taking or expected taking of any other action
by PBGC or Borrower or any Commonly Controlled Entity to terminate or withdraw
or partially withdraw from any Plan under circumstances which could lead to
material liability to the PBGC or, with respect to a Multiemployer Plan, the
Reorganization or Insolvency (as each such term is defined in ERISA) of the Plan
and in addition to such notice, deliver to each Bank and Agent whichever of the
following may be applicable: (A) a certificate of a Responsible Officer of
Borrower setting forth details as to 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
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required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing
its intent to institute such proceedings or any notice to PBGC that such Plan is
to be terminated, as the case may be; and
(e) of a material adverse change in the business,
operations, property or financial or other condition of Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection 6.10 shall be accompanied by a statement
of the chief executive officer or chief financial officer or other Responsible
Officer of Borrower setting forth details of the occurrence referred to therein
and stating what action Borrower proposes to take with respect thereto. For all
purposes of clause (d) of this subsection 6.10, Borrower shall be deemed to have
all knowledge or knowledge of all facts attributable to the administrator of
such Plan if such Plan is a Single Employer Plan.
6.11 Maintenance of Consolidated Tangible Net Worth.
Maintain its Consolidated Tangible Net Worth in amounts at all times equal to at
least the following amounts during the following periods:
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Period Amount
------ ------
Date hereof to and including 12/31/98 $126,234,000.00
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 to and including 12/31/00 Consolidated Tangible Net Worth required
for 1999 plus 50% of audited Consolidated
Earnings for fiscal year 1999
1/1/01 to and including 12/31/01 Consolidated Tangible Net Worth required
for 2000 plus 50% of audited Consolidated
Earnings for fiscal year 2000
1/1/02 and thereafter Consolidated Tangible Net Worth required
for 2001 plus 50% of audited
Consolidated Earnings for fiscal year 2001
provided, however, that the Consolidated Tangible Net Worth requirements shall
not be reduced if Consolidated Earnings is zero or negative for any applicable
fiscal year or any applicable interim period; and further provided, however,
that each of the foregoing Consolidated Tangible Net Worth amounts shall be
increased by 90% of the aggregate increase in Borrower's Consolidated Tangible
Net Worth as a result of the issuance of additional stock of Borrower after the
date hereof.
6.12 Maintenance of Debt to Worth. Maintain at all times
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 2.0 to 1.0.
6.13 Maintenance of Liquidity Ratio. Maintain at all times
during the Commitment Period a Liquidity Ratio of not less than (a) from the
date hereof through and including December 31,
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1998, 0.90 to 1.0; (b) from January 1, 1999 through and including December 31,
1999, 0.95 to 1.0; and (c) from January 1, 2000 and thereafter, 1.05 to 1.0.
6.14 Maintenance of Overall Leverage Ratio. Maintain at
all times during the Commitment Period (a) a ratio of Consolidated Tangible Net
Worth to Subordinated Indebtedness of not less than 1.0 to 1.0, and (b) a ratio
of Consolidated Liabilities to Consolidated Tangible Net Worth not in excess of
(i) from the date hereof through and including December 31, 1998, 3.1 to 1.0,
and (ii) from January 1, 1999 and thereafter, 3.0 to 1.0.
6.15 Maintenance of EBITDA to Consolidated Interest
Incurred Ratio. Maintain at all times during the Commitment Period a ratio of
EBITDA to Consolidated Interest Incurred of not less than 1.70 to 1.0.
6.16 Guaranties of Wholly-Owned M/I Ancillary Businesses.
Upon the request of the Agent on behalf of the Required Banks, cause each of the
M/I Ancillary Businesses that is wholly-owned by the Borrower or by any
Subsidiary, that has total assets of at least $200,000.00 and that is not
precluded by law from executing a Guaranty to execute a Guaranty in favor of the
Banks and the Agent with respect to the Indebtedness of the Borrower hereunder.
SECTION 7. NEGATIVE COVENANTS
Borrower hereby agrees that, from the date hereof and so long
as the Commitment remains in effect, any portion of any Note or Reimbursement
Obligation remains outstanding and unpaid, any Standby L/C remains outstanding
that is not fully collateralized with cash in a manner satisfactory to Agent, or
any other amount is owing to Agent or any Bank hereunder, Borrower shall not,
nor shall it permit any of its Subsidiaries or, in the case of subsections 7.1,
7.2, 7.3 and 7.21, permit any M/I Ancillary Business that is wholly-owned by the
Borrower or by any Subsidiary to, directly or indirectly:
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7.1 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness except:
(a) Indebtedness in respect of the Notes;
(b) Indebtedness of Borrower and M/I Financial Corp.
under the M/I Financial Corp. Loan Agreement, which shall not exceed the
aggregate principal amount of $40,000,000 at any time;
(c) Subordinated Indebtedness of Borrower, subject to
the limitations of subsection 6.14 hereof;
(d) Secured Indebtedness in respect of capitalized
lease obligations and purchase money obligations within the limitations set
forth in subsection 7.2(c) hereof; provided, however, that the aggregate amount
of any such secured Indebtedness at any one time outstanding shall not exceed
$10,000,000 on a consolidated basis;
(e) Indebtedness of Borrower and its Subsidiaries
arising out of or under unpaid reimbursement and guaranty obligations in respect
of payments actually made by (i) issuers or otherwise on all drafts or
borrowings under standby letters of credit and (ii) bonding companies on
Construction Bonds, as each is permitted by subsection 7.3(a) hereof, provided
payment of said Indebtedness is not yet due, and further provided that the
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;
(g) Indebtedness of Borrower with respect to loans
from any of the Subsidiaries of Borrower; provided that the amount of such loans
from M/I Financial Corp. shall not exceed $5,000,000 at any time that the
aggregate principal amount of the Loans outstanding is less than the aggregate
principal amount of the Loans available pursuant to subsection 2.1 hereof;
(h) Indebtedness of any wholly-owned Subsidiary of
Borrower, or Indebtedness of Bellwood L.L.C. or Xxxxx Xxxxx
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Xxxxxx, X.X.X., with respect to loans from Borrower or from any other
Subsidiaries of Borrower; provided that each such Subsidiary shall have
delivered to each of the Banks, prior to the making of any such loans, its
respective Guaranty conforming to the requirements of this Agreement; and
provided further that any such Indebtedness of Bellwood L.L.C. and Xxx 0 - 0000,
X.X.X. shall not, on a combined basis after the elimination of any intercompany
loans between Bellwood L.L.C. and Lot 5 - 1997, L.L.C., in the aggregate exceed
$25,000,000; and
(i) Indebtedness of Borrower and/or 601RS, Inc. not
in excess of $5,000,000 secured by a Lien permitted by subsection 7.2(j) hereof.
7.2 Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether owned or
hereafter acquired, except:
(a) Liens in favor of Agent, for the ratable benefit
of Banks, including without limitation Liens in favor of Agent on Borrower's
real property inventory situated in the State of Indiana to secure the
Indebtedness to Banks;
(b) Liens granted by M/I Financial Corp. on mortgage
notes receivable, which Liens secure Indebtedness permitted under subsection
7.1(b) hereof not in excess of $40,000,000;
(c) Liens securing Indebtedness permitted under
subsection 7.1(d) hereof; provided, however, that (i) such Liens do not at any
time encumber any property other than the property financed by such secured
Indebtedness, and (ii) the Indebtedness secured thereby shall not exceed the
cost or fair market value, whichever is lower, of the property being acquired on
the date of acquisition;
(d) Liens for taxes and special assessments not yet
due or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of Borrower
and its Subsidiaries in accordance with GAAP;
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(e) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of Borrower and its
Subsidiaries in accordance with GAAP;
(f) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(g) (i) deposits to secure the performance of: bids;
trade contracts (other than for borrowed money or the purchase price of property
or services); leases; statutory and other obligations required by law; surety,
appeal and performance bonds (including Construction Bonds); and other
obligations of a like nature incurred in the ordinary course of business; and
(ii) Liens in favor of surety bond companies pursuant to indemnity agreements to
secure the reimbursement obligations of Borrower or any Subsidiary on
Construction Bonds, provided (A) the Liens securing Construction Bonds shall be
limited to the assets of, as appropriate, Borrower or such Subsidiary at, and
the rights of, as appropriate, Borrower or such Subsidiary arising out of, the
projects that are the subject of the Construction Bonds, (B) the Liens shall not
attach to any real estate, and (C) the aggregate amount of such Liens at any
time shall not exceed the dollar amount of Construction Bonds then outstanding,
and in any event shall not exceed the amount of reimbursement obligations on
Construction Bonds permitted to Borrower pursuant to subsection 7.3(a) hereof;
(h) Liens of landlords, arising solely by operation
of law, on fixtures and moveable property located on premises leased in the
ordinary course of business; provided, however, that the rental payments secured
thereby are not yet due; and
(i) Liens arising as a result of a judgment or
judgments against Borrower or any of its Subsidiaries which do not in the
aggregate exceed $500,000 at any one time outstanding, which are being
diligently contested in good faith, which are not the subject of any attachment,
levy or enforcement proceeding,
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and as to which appropriate reserves have been established in accordance with
GAAP.
(j) a first priority Lien on an aircraft owned by
601RS, Inc. from time to time to secure the Indebtedness of 601RS, Inc. and/or
Borrower not in excess of $5,000,000.
7.3 Limitation on Contingent Obligations. Agree to or
assume, guarantee, indorse or otherwise in any way be or become responsible or
liable for, directly or indirectly, any Contingent Obligation, including but not
limited to Contingent Obligations incurred as a general partner in any limited
partnership or general partnership, except:
(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 including the 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 $11,500,000 at any one time outstanding on a
consolidated basis, which $11,500,000 limitation shall not include any
obligations in connection with Standby L/Cs; and (iii) reimbursement obligations
not in excess of $20,000,000 at any one time outstanding on a consolidated basis
under Construction Bonds;
(b) Contingent Obligations consisting of (i)
guaranties by Borrower of M/I Financial Corp.'s lease obligations in an amount
not to exceed $1,000,000 in any period of 12 consecutive months,(ii) Borrower's
obligations under the M/I Financial Corp. Loan Agreement in a principal amount
not to exceed $40,000,000, 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);
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(c) Contingent Obligations related to Indebtedness of
joint ventures in which Borrower has made Investments in Joint Ventures as
permitted by subsection 7.9(e) hereof and in which Borrower is a partner, member
or shareholder; provided, however, that the aggregate amount of such Contingent
Obligations at any one time outstanding pursuant to this subsection 7.3(c) shall
not exceed (i) $10,000,000 less (ii) the aggregate amount of secured and
unsecured Indebtedness then outstanding pursuant to subsection 7.1(d) hereof;
and
(d) other Contingent Obligations of Borrower which do
not in the aggregate at any one time outstanding exceed $2,000,000, subject to
the limitations of subsection 7.9(l) hereof.
7.4 Limitation on Fundamental Changes. Enter into any
transaction of merger, consolidation, amalgamation or reorganization (including
without limitation any election to be taxed as an S Corporation), or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or,
except for the sale of land, lots and houses from inventory in the ordinary
course of business, convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
business or assets, whether now owned or hereafter acquired, or make any
material change in the method by which it conducts business, except any
Subsidiary of Borrower may be (i) merged, amalgamated or consolidated with or
into Borrower or any wholly-owned Subsidiary of Borrower, or (ii) liquidated,
wound up or dissolved into, or all or substantially all of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Borrower or any
wholly-owned Subsidiary of Borrower; provided, however, that, in the case of
such a merger, liquidation or consolidation, Borrower or such wholly-owned
Subsidiary, as the case may be, shall be the continuing or surviving
corporation.
7.5 Limitation on Acquisitions. Except for the
acquisition of land, lots and houses in the ordinary course of business to the
extent not otherwise prohibited hereunder, acquire all or any material part of
the business or assets of, any Person without the prior written consent of the
Required Banks.
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7.6 Limitation on Dividends and Distributions. Make any
distributions or 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 or any of its Subsidiaries (each of the foregoing a
"Stockholder Payment"), except (a) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, Borrower and any of its
Subsidiaries may make Stockholder Payments in a total 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, 1997 plus
(ii) $800,000.00; and (b) any Subsidiary of Borrower may declare and pay
dividends or make distributions, and such dividends or distributions shall not
be considered Stockholder Payments. 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 any such Stockholder
Payments are made, the cumulative Stockholder Payments previously made plus the
Stockholder Payments made during the current month would not in the aggregate
exceed the amount permitted by clause (a), above.
7.7 Limitation on Certain Real Property Expenditures.
Purchase or acquire any Eligible Raw Land and Land Under Development by the
expenditure of cash, the incurrence of Indebtedness, as a result of Investment
in Joint Venture(s), or otherwise, if as a result of such purchase or
acquisition the aggregate cost of all the foregoing then owned by Borrower and
its Subsidiaries (including their pro rata share of any undeveloped land that
constitutes part of an Investment in Joint Venture) shall at any time exceed (a)
as to undeveloped land only, 40% of the sum of (i) Consolidated Tangible Net
Worth and (ii) Subordinated Indebtedness; and (b) as to the sum of undeveloped
land and land under development, 100% of the sum of (i) Consolidated Tangible
Net Worth and (ii) Subordinated Indebtedness; provided further, that the
aggregate cost of any individual tract of land acquired by Borrower or any of
its
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Subsidiaries, or their pro rata share of any tract that constitutes part of an
Investment in Joint Venture may not exceed $4,000,000 except for land holdings
set forth on Exhibit H attached hereto and except for Bellwood (as hereinafter
defined); and, provided further, that the aggregate cost (net of any cash
received from the sale of land or lots) to Borrower and all of its Subsidiaries
with respect to the purchase or acquisition and the development of the 522-acre
tract of land located in Prince Xxxxxxx County, Virginia near Manassas,
Virginia, which tract is referred to from time to time, and herein, as
"Bellwood," shall not at any time exceed $25,000,000. For purposes of this
subsection 7.7, the cost of undeveloped land and land under development shall be
determined in accordance with GAAP. Further, for purposes of this subsection
7.7, any tract of land shall cease to be classified as undeveloped land after
(i) commencement of the development of such tract into residential lots in good
faith and provided the development thereof is completed over a period of not
more than one year, or (ii) such tract is the subject of a valid, noncontingent
contract of sale with a person who is not an Affiliate or Subsidiary and who is
satisfactory to the Required Banks in their sole discretion, provided the sale
contemplated by such contract is to be completed not more than two years after
the date of the contract. In the event the development of any tract is
discontinued for a period of 60 days or longer or not completed within one year,
such tract shall automatically be deemed to be undeveloped land.
7.8 Limitation on Speculative Houses and Eligible Model
Houses. Permit the aggregate cost, as determined in accordance with GAAP on a
consolidated basis, of (a) Speculative Houses owned by Borrower and its
Subsidiaries to exceed $27,500,000 at any one time outstanding, of which not
more than $5,000,000 may consist of attached (including townhouse condominiums
and condominiums) single family homes, or (b) Eligible Model Houses owned by
Borrower and its Subsidiaries to exceed $30,000,000 at any one time outstanding,
of which not more than $3,000,000 may consist of attached (including townhouse
condominiums and condominiums) single family homes.
7.9 Limitation on Investments. Make or commit to make any
advance, loan, extension of credit or capital contribution to, or purchase of
any stock, bonds, note, debenture or other security
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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., 601RS,
Inc., M/I Homes, Inc., M/I Homes Construction, Inc., Xxx 0 - 0000, X.X.X.,
Xxxxxxxx X.X.X., Xxxxx Xxxx - 0000, L.L.C. or Chevy Chase Villas, L.L.C. or any
other Subsidiary created with the consent of the Required Banks hereafter;
provided that the aggregate cost (net of any repayments, distributions or
dividends) of investments by Borrower and all of the Subsidiaries in Bellwood
L.L.C. shall not at any time exceed $25,000,000; and provided further that the
aggregate cost (net of any repayments, distributions or dividends) of
investments by Borrower and all of the Subsidiaries in Xxx 0 - 0000, X.X.X.
shall not at any time exceed $25,000,000;
(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 $27,500,000;
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
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decisions with respect to development of undeveloped land owned by such joint
venture) shall require the consent and approval of Borrower; and provided
further, however, that no such investment may be made if it causes or results
(singly or with other actions or events) in (i) any violation of subsection 7.3
hereof or any other covenant or condition hereof, or (ii) any other Default or
Event of Default;
(f) first mortgage loans made in the ordinary course
of M/I Financial Corp.'s business to natural persons for the purchase of
residential real property;
(g) second mortgage loans made in the ordinary course
of M/I Financial Corp.'s business to natural persons for the purchase of
residential real property, provided that such second mortgage loans (i) shall be
made only in connection with a specific financing program to natural persons who
have a first mortgage loan from M/I Financial Corp. with respect to the same
real property, and (ii) shall not in the aggregate exceed $4,000,000 at any one
time outstanding;
(h) first mortgage loans made in the ordinary course
of M/I Financial Corp.'s business to natural persons for the purpose of
refinancing an existing first mortgage loan, provided that the amount of such
refinancing mortgage loans shall not exceed $5,000,000 in the aggregate at any
one time outstanding;
(i) investments by M/I Financial Corp. in the stock
of Xxxxxx Xxx to the extent required for M/I Financial Corp. to sell mortgages
to Xxxxxx Mae, but the amount of such investments in Xxxxxx Xxx 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;
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(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 $1,500,000 in the
aggregate;
(l) investments in, advances to, and Contingent
Obligations related to the obligations of, the M/I Ancillary Businesses in an
amount not to exceed $100,000 in the aggregate; and
(m) other investments or advances directly related to
the Borrower's business, provided that the aggregate amount of such investments
and advances shall not at any time exceed $2,000,000.00 in the aggregate.
7.10 Limitation on Operating Leases. Enter into or renew
any Operating Lease if as a result thereof: (a) the aggregate rentals payable by
Borrower and all of its Subsidiaries under all Operating Leases on a
consolidated basis, except for any Operating Lease with respect to the Office
Building, would exceed in any period of 12 consecutive months the aggregate
amount of $4,200,000; or (b) the term of (i) any Operating Lease with respect to
Eligible Model Houses and furnishings for Eligible Model Houses would exceed
three years, and (ii) any other Operating Lease, except for any Operating Lease
with respect to the Office Building, would exceed five years, provided that so
long as the initial term or any renewal of an Operating Lease included within
this clause (b) does not exceed five years or three years, as appropriate, the
aggregate of the initial term and all renewals of such Operating Lease may
exceed five years or three years, as appropriate, if any right of renewal is
solely at the option of the Borrower or its Subsidiaries; or (c) the aggregate
rentals payable by Borrower and all of its Subsidiaries under all Operating
Leases with respect to the Office Building would exceed, for the periods set
forth below, the amounts that correspond to such periods, as set forth below:
Aggregate
Rentals Per
Year of the Operating Lease Lease Year
--------------------------- ----------
Beginning with Lease Year 1 $1,131,576.00
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Aggregate
Rentals Per
Year of the Operating Lease Lease Year
--------------------------- ----------
Through and including Lease Year 5
Beginning with Lease Year 6 $1,217,693.00
Through and including Lease Year 10
Beginning with Lease Year 11 $1,275,104.00
Through and including Lease Year 15
Beginning with Lease Year 16 Through
and including Lease Year 20 $1,303,810.00
7.11 Transactions with Affiliates and Officers.
(a) Except for (i) any consulting agreements or
employment agreements to which Borrower is a party and which were in effect as
of Xxxxx 0, 0000, (xx) 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 7.9(c) hereof; or
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(c) pay any fees or expenses to, or reimburse or
assume any obligation for the reimbursement of any expenses incurred by, any
Affiliate or any officer or director thereof, except as may be permitted in
accordance with clauses (a) and (b) of this subsection 7.11.
7.12 Sale and Leaseback. Enter into any arrangement with
any Person providing for the leasing by Borrower or any of its Subsidiaries of
real or personal property which has been or is to be sold or transferred by
Borrower or any of its Subsidiaries to such Person or to any other Person to
whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Borrower or any of its Subsidiaries;
provided, however, that such arrangements shall be permitted with respect to
Eligible Model Houses, so long as any such arrangement with respect to Eligible
Model Houses does not result in: (a) the creation of a lease which is required
to be capitalized in accordance with GAAP; (b) the initial term of such
arrangement plus any options or renewals exercisable by lessor or lessee
exceeding three years; or (c) the violation of any term, condition or covenant
hereof, including without limitation subsection 7.10 hereof.
7.13 Limitation on Payments of Subordinated Indebtedness
and Modification of Subordination Agreements.
Without the prior written consent of the Required Banks,
(a) repay, prepay, purchase, redeem, or otherwise
acquire any of its Subordinated Indebtedness; or
(b) make any other payments, including without
limitation payment of interest, on any Subordinated Indebtedness if an Event of
Default exists or if such payment would cause an Event of Default to occur; or
(c) permit the modification, waiver or amendment of
any of the terms of any Subordinated Indebtedness; or
(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
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agreement with respect to any Subordinated Indebtedness; provided, however,
nothing contained in this subsection 7.13 shall prevent Borrower from making
regularly scheduled payments on any Subordinated Indebtedness if no Event of
Default exists and the payment would not cause an Event of Default to occur.
With respect to the Subordinated Indebtedness pursuant to the BankBoston
Agreement, "regularly scheduled payments" shall mean only (i) on August 29,
2004, the payment of the principal balance of the Fixed Rate Senior Subordinated
Note made by the Borrower to the order of BankBoston, N.A. on August 29, 1997 in
the principal face amount of $50,000,000 and each other note executed and
delivered by the Borrower in exchange or replacement for such note pursuant to
the BankBoston Agreement (collectively, the "BankBoston Notes"); and (ii) on
each February 28, May 29, August 29 and November 29 (or within any applicable
cure period) during the term of the BankBoston Notes beginning with November 29,
1997, interest on the BankBoston Notes.
The parties hereby agree that this clarification regarding
what payments of Subordinated Indebtedness pursuant to the BankBoston Agreement
constitute "regularly scheduled payments" is not intended to modify the rights
and obligations of BankBoston, N.A. (including any of its successors and
assigns) and the Borrower, or the rights of the Banks and the Agent, pursuant to
or arising out of the Subordinated Indebtedness pursuant to the BankBoston
Agreement; provided that nothing herein shall be construed to be a consent by
the Banks (in their capacity as Banks under this Agreement) and the Agent to any
payment of any Subordinated Indebtedness that is prohibited by this Agreement.
7.14 Sale of Subsidiary Securities. Sell any security,
debt or equity of any Subsidiary, or permit any Subsidiary to sell or issue any
security, debt or equity to any Person other than Borrower or any Bank;
provided, however, Borrower may sell through M/I Financial Corp. mortgage loans
on a non-recourse basis, subject to Mortgage Loan Repurchase Obligations;
provided further, however, that this subsection 7.14 shall not prohibit
Indebtedness of any Subsidiary permitted under subsection 7.1 hereof.
7.15 Construction on Real Property Not Owned. Make
investments in construction on real property that is not then owned by Borrower
or a Subsidiary; provided, however, that
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Borrower and its Subsidiaries may make investments in construction on such real
property if the contract price for the land, plus the cost of investment in
construction less any related Customer Deposits with respect to all such real
property does not in the aggregate exceed $1,000,000 at any one time
outstanding.
7.16 Limitation on Subsidiaries. Create any Subsidiaries
without the prior written consent of the Required Banks, provided that nothing
in this subsection 7.16 shall prevent investments in the M/I Ancillary
Businesses to the extent permitted in subsection 7.9(l).
7.17 Limitation on Location of Attached Houses. Construct
or make investments in construction of any attached (including townhouse
condominiums and condominiums) single family houses in any area outside of the
Washington, D.C. Market.
7.18 Limitation on Rental Houses. Permit investments in
Rental Houses, determined in accordance with GAAP, to exceed $500,000 in
aggregate at any time.
7.19 Limitation on Investments in Commercial Real Estate.
Permit investments (including investments attributed to Borrower's pro rata
share of land owned by partnerships in which Borrower is a general or limited
partner or by limited liability companies of which Borrower is a member) in
commercial real estate (including raw land, land under development and
commercial Developed Lots), determined in accordance with GAAP, to exceed
$1,500,000 in the aggregate at any one time outstanding; provided, however, that
any investments permitted by subsection 7.9(k) hereof shall not be included in
the $1,500,000 investment limitation of this subsection 7.19.
7.20 Limitation on Uncommitted Land. Permit the ratio of
(a) Uncommitted Land to (b) the sum of Borrower's (i) Consolidated Tangible Net
Worth, and (ii) Subordinated Indebtedness to exceed at any one time: (A) from
the date hereof through and including December 31, 1998, 1.40 to 1.0; (B) from
January 1, 1999 through and including December 31, 1999, 1.35 to 1.0; (C) from
January 1, 2000 through and including December 31, 2000, 1.30 to 1.0; (D) from
January 1, 2001 through and including December 31, 2001, 1.25 to 1.0; and (E)
from January 1, 2002 and thereafter, 1.20 to 1.0.
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7.21 Limitation on Negative Pledges. Enter into any
agreement other than this Agreement which prohibits or limits the ability of
Borrower, any of its Subsidiaries or any of the M/I Ancillary Businesses that
are wholly-owned by the Borrower or by any Subsidiary to create, incur, assume
or suffer to exist any Lien upon any of its assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether now owned or
hereafter acquired.
7.22 Limitation on Standby L/Cs. Have drawn and undrawn
Standby L/Cs outstanding at any time in an amount in excess of the amounts
permitted at such time by subsection 2.13 hereof for (a) Standby L/Cs, including
those issued for the purpose of satisfying bonding requirements, and (b) Standby
L/Cs, exclusive of those issued for the purpose of satisfying bonding
requirements, respectively.
7.23 HNB Joint Ventures Letter of Credit Agreement. Modify
or amend the HNB Joint Ventures Letter of Credit Agreement in any way without
the written consent of the Required Banks.
SECTION 8. OPTIONAL SECURITY
Notwithstanding any other provision of this Agreement, from
time to time if Agent requests and Borrower consents, Borrower may grant to
Agent, for the pro rata benefit of Banks, mortgages on specific parcels of real
property owned by Borrower in the State of Indiana, each securing Borrower's
Indebtedness to Banks hereunder. Unless an Event of Default has occurred and is
continuing, each such mortgage shall be released by Agent upon Borrower's sale
of the subject real property, without the requirement of any payment to Agent
(other than reimbursement of costs incurred) or the consent of any Banks. If an
Event of Default that has not been waived by all Banks has occurred and is
continuing, Agent shall release any such mortgage(s) only upon (a) payment to
Agent for the pro rata benefit of Banks (in accordance with the pro rata
distribution as described in Section 9 hereof with respect to distribution of
Proceeds after Default) of the amount secured by such mortgage(s) and (b) the
consent of all Banks.
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SECTION 9. DEFAULTS, EVENTS OF DEFAULT; DISTRIBUTION OF
PROCEEDS AFTER EVENT OF DEFAULT
Upon the occurrence of any of the following events:
(1) Borrower shall fail to pay any principal of any
Note or make any reimbursement (including payment of Reimbursement Obligations)
in connection with any Standby L/C when due in accordance with the terms
thereof; or
(2) Borrower shall fail to pay (a) any interest on
any Note or in connection with any Standby L/C, or (b) any fee, charge or other
amount payable hereunder, within three days after Agent or any Bank notifies
Borrower that such interest, fee or amount has become due in accordance with the
terms thereof or hereof and has not been paid; or Borrower shall fail to comply
with the provisions of any one or more of subsections 6.4, 6.5, 7.4, 7.5, 7.10,
7.12, 7.13, 7.14, 7.16, 7.17, 7.21, 7.22 or the limitations set forth in 7.9(j)
hereof; or
(3) any representation or warranty made or deemed
made by Borrower herein or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection
herewith or therewith, shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(4) Borrower shall default in the observance or
performance of any covenant or agreement contained in (a) subsection 6.3 hereof
and such default remains uncured for five days (notice to Borrower from Agent or
any Bank of such default is not required), (b) subsections 6.2(c), 6.2(d), 6.6,
6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.9
(other than failure to comply with the limitations of 7.9(j)), 7.11, 7.15, 7.18,
7.19 or 7.20 hereof and such default remains uncured ten days after Agent or any
Bank notifies Borrower that such default has occurred, (c) subsection 6.9 hereof
and such default remains uncured for ten days after Agent or any Bank notifies
Borrower that such default has occurred, provided, that for any default under
subsection 6.9 for which cure cannot reasonably be accomplished within ten days,
if cure is commenced within such ten-day period, Borrower may have an additional
period of up to 30 days after notice to cure such
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default before it is an Event of Default, (d) any one or more of subsections
6.1(b), 6.2(a) or 6.2(b) hereof and such default remains uncured 15 days after
Agent or any Bank notifies Borrower that such default has occurred, or (e) any
other provision of this Agreement (including without limitation subsections
6.1(a), 6.2(e), 6.7 and 6.8 hereof) which default shall remain uncured 30 days
after Agent or any Bank notifies Borrower that such a default has occurred,
which notice shall specify the nature of the default; or
(5) (a) Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (i) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or
Borrower or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (b) there shall be commenced against Borrower or
any of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (a) above which (i) results in the entry of an order for
relief or any such adjudication or appointment, and (ii) remains undismissed,
undischarged or unbonded for a period of 60 days; or (c) there shall be
commenced against Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (d) Borrower or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clauses (a), (b) or (c) above; or (e) Borrower
or any of its Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
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(6) Borrower or any Subsidiary of 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 beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Contingent Obligation
was created, and the aggregate principal amount then outstanding of all such
Indebtedness and Contingent Obligations of Borrower and all Subsidiaries exceeds
$500,000.00, 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 or any Subsidiary of
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
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
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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 Xxxxxx X. Xxxxxxxxxxxxx, the Marital Trusts of Xxxxxx X. Xxxxxxxxxxxxx, and
the immediate families of Xxxxxx X. Xxxxxxxxxxxxx and Xxxxxx X. Xxxxxxxxxxxxx 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 the Indebtedness related thereto is in
any way not fully subordinate to 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
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Financial Corp. (including without limitation the obligations with respect to
the M/I Financial Corp. Loan Agreement);
then, and in any such event, (a) if such event is an Event of Default specified
in paragraph (5) above, the Commitment, if still outstanding, shall
automatically and immediately terminate and the full amount of all outstanding
Revolving Credit Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and/or the Notes shall immediately become due
and payable, (b) if such event is any other Event of Default and is continuing,
either or both of the following actions may be taken: (i) with the consent of
the Required Banks Agent may, or upon the request of the Required Banks Agent
shall, by notice to Borrower, declare the Commitment to be terminated forthwith,
whereupon the Commitment shall immediately terminate and Agent shall have the
rights set forth in subsection 2.14(b) hereof with respect to the Standby L/Cs
upon the termination of the Commitment; and (ii) with the consent of the
Required Banks Agent may, or upon the request of the Required Banks Agent shall,
by notice of default to Borrower, declare the full amount of all outstanding
Revolving Credit Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable, and (c)
if such event is any payment Event of Default, then, in addition to the rights
given to Agent in clause (b), each Bank may, by notice of default to Borrower
and each other Bank, declare the full amount of all of the obligations owing by
Borrower to such Bank pursuant to the Revolving Credit Loans (with accrued
interest thereon) and all other amounts owing to such Bank under this Agreement
and the Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above in this
Section 9, presentment, demand, protest and all other notices of any kind are
hereby expressly waived. Additionally, Agent and each Bank may exercise any and
all other rights and remedies available to Agent and each Bank at law or in
equity to the extent not inconsistent with the rights specifically granted to
Agent and each Bank hereunder.
Notwithstanding any provisions concerning distribution of
payments to the contrary in this Agreement, so long as any Event of Default
exists that has not been waived by all Banks, each Bank shall share in any
payments or proceeds, including
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proceeds of any collateral, received by Agent or any Bank (including without
limitation proceeds received by HNB with respect to Guaranteed HNB Joint
Ventures Letters of Credit) made or received at any time from and after any
Event of Default ("Proceeds after Default") in an amount equal to the Proceeds
after Default multiplied by such Bank's Total Commitment Percentage as set forth
on Schedule 1 hereto as such Schedule may be amended from time to time;
provided, however, if any one or more of the Bank(s) has not made any funding
when required hereunder, the distribution of Proceeds after Default shall be
adjusted so that each Bank shall receive Proceeds after Default in an amount
equal to (a) the Proceeds after Default multiplied by (b) the percentage
(rounded to five decimal places) of the total amount outstanding funded by all
Banks that such Bank has actually funded (including the amount of such Bank's
participation in outstanding Standby L/Cs). If necessary, Agent and each Bank
shall use the adjustments procedure set forth in subsection 11.8(a) hereof to
make the appropriate distributions to Banks as set forth in this paragraph of
this Section 9.
SECTION 10. THE AGENT
10.1 Appointment. Each Bank hereby irrevocably designates
and appoints Bank One, NA as Agent of such Bank under this Agreement and each of
the Notes and the Guaranties, and each Bank hereby irrevocably authorizes Bank
One, NA, as Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement, the Notes and the Guaranties and to exercise such
powers and perform such duties as are expressly delegated to Agent by the terms
of this Agreement, the Notes and the Guaranties, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement or any Note or Guaranty, Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Note or Guaranty or otherwise exist against Agent.
10.2 Delegation of Duties. Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible
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for the negligence or misconduct of any agents or attorneys-in-fact selected
by it with reasonable care.
10.3 Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any Note or Guaranty
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by Borrower or any of Borrower's Subsidiaries
or any officer thereof contained in this Agreement or any Note or Guaranty or in
any certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any Note
or Guaranty or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Notes or the Guaranties, or
for any failure of Borrower or any of Borrower's Subsidiaries to perform its
obligations hereunder or thereunder. Agent shall be under no obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement, the Notes, or the
Guaranties, or to inspect the properties, books or records of Borrower or any of
Borrower's Subsidiaries.
10.4 Reliance by Agent. Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, Guaranty, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to
Borrower or any of Borrower's Subsidiaries), independent accountants and other
experts selected by Agent. Agent may deem and treat the payee of any Note as the
owner thereof for all purposes. Agent shall be fully justified in failing or
refusing to take any action under this Agreement, the Notes or the Guaranties
unless it shall first receive such advice or concurrence of the Required Banks
or, in the case of items set forth in subsection 11.1 hereof that require
written consent of all Banks, all Banks as it deems appropriate or it shall
first be
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indemnified to its satisfaction by all Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement, the Notes and the Guaranties in
accordance with a request of the Required Banks or, in the case of items set
forth in subsection 11.1 hereof that require written consent of all Banks, all
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all Banks and all future holders of the Notes.
10.5 Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Agent has received notice from any Bank or Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". If Agent receives such a notice, Agent
shall give notice thereof to Banks. Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Banks or, in the case of items set forth in subsection 11.1 hereof that require
written consent of all Banks, all Banks; provided that, unless and until Agent
shall have received such directions, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall reasonably deem advisable in the best
interests of Banks.
10.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower and Borrower's Subsidiaries shall be deemed to
constitute any representation or warranty by Agent to any Bank. Each Bank
represents to Agent that it has, independently and without reliance upon Agent
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Borrower and Borrower's Subsidiaries and made its own decision to make its
extensions of credit hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon Agent or any
other Bank, and based on
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such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, the Notes and the Guaranties, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of Borrower and Borrower's Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
Agent hereunder, Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of Borrower or any
of Borrower's Subsidiaries which may come into the possession of Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification. Each Bank agrees to indemnify Agent
in its capacity as such (to the extent not reimbursed by Borrower and any of
Borrower's Subsidiaries and without limiting the obligation of Borrower and
Borrower's Subsidiaries to do so), ratably according to the respective amounts
of its original (a) Revolving Credit Loan Commitment Percentage, in the case of
Revolving Credit Loans, and (b) L/C Commitment Percentage, in the case of
Standby L/Cs, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against Agent in any way relating to or arising out of this Agreement,
the Notes, the Guaranties or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted by Agent
under or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
10.8 Bank One in Its Individual Capacity. Bank One and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Borrower or any of
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Borrower's Subsidiaries as though Bank One were not the Agent hereunder. With
respect to its loans made or renewed by it and any Note issued to it and with
respect to any Standby L/C issued by it either as Bank One or Agent, Bank One
shall have the same rights and powers under this Agreement as any Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" shall include Bank One in its individual capacity.
10.9 Successor Agent. Agent may resign as agent upon 30
days' notice to the Banks. If Agent shall resign as agent under this Agreement,
then the Required Banks shall appoint from among the Banks a successor agent for
the Banks, whereupon such successor agent shall succeed to the rights, powers
and duties of Agent, and the term "Agent" shall mean such successor agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation hereunder as agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Agent and Borrower may, from
time to time, with the written consent of the Required Banks, enter into written
amendments, supplements or modifications for the purpose of adding any
provisions to this Agreement or the Notes or changing in any manner the rights
of Banks or Borrower hereunder or thereunder, and with the consent of the
Required Banks, Agent on behalf of Banks may execute and deliver to Borrower a
written instrument waiving, on such terms and conditions as Agent may specify in
such instrument, any of the requirements of this Agreement, the Notes or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall extend the
final maturity of any Note, or reduce the rate or extend the time of payment of
interest or fees thereon or reduce the principal amount thereof, or change the
amount or terms of any Bank's Revolving Credit Loan or L/C Commitment
Percentage, or change the Borrowing Base, or amend, modify, change any provision
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of the Guaranties, or release any Guaranties, or amend, modify or change any
provision of this subsection, or reduce the percentage specified in the
definition of Required Banks, or consent to the assignment or transfer by
Borrower of any of its rights and obligations under this Agreement, or consent
to the modification or termination of any subordination agreement or provisions
that evidence Subordinated Indebtedness, or consent to the release of any
collateral (except as provided in Section 8 hereof with respect to collateral
that is the subject of a mortgage in the State of Indiana), or amend, modify or
change any other provision of this Agreement that requires the consent of all
Banks, in each case without the written consent of all Banks. Any such waiver
and any such amendment, supplement or modification shall be binding upon
Borrower, Agent and each Bank, and all future holders of the Notes. In the case
of any waiver, Borrower, Agent and each Bank shall be restored to their former
position and rights hereunder and under the outstanding Notes, and any Default
or Event of Default waived shall be deemed to be cured and not continuing; but
no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing or by telecopy
or other electronic facsimile and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or when
deposited in the United States mail, Registered or Certified, Return Receipt
Requested, postage prepaid, or, in the case of telecopy or other electronic
facsimile notice, when receipt confirmed by sender's electronic facsimile
machine, addressed as follows in the case of Borrower, Agent and each Bank, or
to such other address as may be hereafter notified by the respective parties
hereto and any future holders of any Note:
Borrower: M/I Schottenstein Homes, Inc.
0 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxxx
with a copy to: Xxxxxxx X. Creek
Facsimile: (000) 000-0000
with a copy to: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
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Agent and/or
Bank One: Bank One, NA
000 Xxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
HNB: The Huntington National Bank
00 Xxxxx Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: R.H. Friend
Facsimile: (000) 000-0000
First Chicago: The First National Bank of Chicago
One First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
NCB: National City Bank
000 Xxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
BKB: BankBoston, N.A.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
Fifth Third: The Fifth Third Bank of Columbus
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
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STB: SunTrust Bank, Central Florida, N.A.
Mail Code 0-1108
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
11.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Agent or any Bank, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and, except for rights the
exercise of which require consent of the Required Banks or all Banks, as
appropriate, under this Agreement, not exclusive of any rights, remedies, powers
and privileges provided by law.
11.4 Participants.
(a) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other financial institutions ("Participants")
participating interests in any Revolving Credit Loan owing to such Bank, any
Note held by such Bank, any interest (including any Reimbursement Obligation) in
any Standby L/C with respect to such Bank, any Revolving Credit Loan Commitment
of such Bank, or any other interest of such Bank hereunder; provided, however,
that upon the sale of any participating interest the selling Bank shall provide
promptly to Borrower and Agent notice of such sale; and provided further,
however, that no Participant's consent shall be required to approve any
amendments, waivers or other modifications of this Agreement or of any document
contemplated by this Agreement, and no participation agreement shall provide any
Participant with such rights. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof, and such Bank
shall remain the holder of any such Note for all purposes under this Agreement,
and, except as
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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
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) Except for the sale of participating interests as
described in this subsection 11.4 and the assignments as described in subsection
11.7 hereof, 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
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occurrence of a Default or an Event of Default that has not been waived by all
Banks, Borrower's consent to such sale or assignment shall not be required.
11.5 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes and shall remain in
full force and effect until this Agreement is terminated, all Standby L/Cs are
cancelled or are fully collateralized with cash in a manner satisfactory to
Agent and all indebtedness (including Reimbursement Obligations with respect to
Standby L/Cs that are not fully collateralized with cash) created or evidenced
by this Agreement and/or each Note is paid in full.
11.6 Payment of Expenses and Taxes. Borrower agrees:
(a) to pay or reimburse Agent and each Bank for all
its out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Notes, the Guaranties, the Standby L/Cs and
any other documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, including without limitation the
reasonable fees and disbursements of counsel to Agent and each Bank; and
(b) to pay or reimburse Agent and each Bank for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, the Guaranties, the
Standby L/Cs and any such other documents, including without limitation the
reasonable fees and disbursements of counsel to Agent and each Bank.
11.7 Successors and Assigns; Assignment.
(a) 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
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its sole discretion; and provided further that the rights of each Bank to
transfer or assign its rights and/or obligations hereunder shall be limited as
set forth below in part (b) of this subsection 11.7. Notwithstanding the above
(including anything set forth in part (b) of this subsection 11.7), nothing
herein shall restrict, prevent or prohibit any Bank from (A) pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such Bank
from such Federal Reserve Bank, (B) granting assignments in such Bank's Loans
and/or Commitment hereunder to its parent company and/or to any affiliate of
such Bank or to any existing Bank or affiliate thereof, or (C) selling
participations as set forth in subsection 11.4 hereof.
(b) In addition to the assignments permitted by
subsection 11.7(a), each Bank may, with the prior written consent of the
Borrower and the Agent (provided that no consent of the Borrower shall be
required during the existence and continuation of an Event of Default), which
consent shall not be unreasonably withheld or delayed, assign all or a portion
of its rights and obligations hereunder pursuant to an assignment agreement
substantially in the form of Exhibit J attached hereto and made a part hereof
(the "Assignment Agreement") to one or more Eligible Assignees; provided that
(i) any such assignment shall be in a minimum aggregate amount of the lesser of
(a) $10,000,000 or any larger amount which is an even multiple of $1,000,000 or
(b) the remaining amount of the Commitment held by such Bank, and (ii) each such
assignment shall be of a constant, not varying, percentage of all of the
assigning Bank's rights and obligations under the Commitment being assigned. Any
assignment under this subsection 11.7(b) shall be effective upon satisfaction of
the conditions set forth above and delivery to the Agent of a duly executed
Assignment Agreement together with a transfer fee of $3,500 payable to the Agent
for its own account. Upon the effectiveness of any such assignment, the assignee
shall become a "Bank" for all purposes of this Agreement and the other documents
contemplated hereby and, to the extent of such assignment, the assigning Bank
shall be relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. The Borrower agrees that upon notice of
any such assignment and surrender of the appropriate Note , it will promptly
provide to the assigning Bank and to the assignee separate promissory notes in
the amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is
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given in substitution for and replacement of the original Note or any
replacement notes thereof).
By executing and delivering an Assignment Agreement
in accordance with this subsection 11.7(b), the assigning Bank thereunder and
the assignee thereunder shall be deemed to confirm to and agree with each other
and the other parties hereto as follows: (i) such assigning Bank warrants that
it is the legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim and the assignee warrants that it is an Eligible
Assignee; (ii) except as set forth in clause (i) above, such assigning Bank
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement, any of the other documents contemplated hereby or any other
instrument or document furnished pursuant hereto or thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any of the other documents contemplated hereby or any other
instrument or document furnished pursuant hereto or thereto or the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under this Agreement, any of the other documents
contemplated hereby or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment Agreement; (iv) such assignee
confirms that it has received a copy of this Agreement, the other documents
contemplated hereby and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment Agreement; (v) such assignee will independently and without reliance
upon the Agent, such assigning Bank 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 decisions in taking or not taking action under this
Agreement and other documents contemplated hereby; (vi) such assignee appoints
and authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement or any other document contemplated thereby as are
delegated to the Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
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by the terms of this Agreement and the other documents contemplated hereby are
required to be performed by it as a Bank.
11.8 Adjustments; Set-off.
(a) If any Bank (a "benefited Bank") shall at any
time receive any payment of all or part of its Loans or Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in paragraph (5) of Section 9
hereof, or otherwise) in a greater proportion than any such payment to any other
Bank in respect of such other Bank's Loans or Reimbursement Obligations owing to
it, or interest thereon, such benefited 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 benefited 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 benefited 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
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
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bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
receiver, custodian or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Bank prior to the making, filing or issuance of, or service
upon such Bank of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. Each Bank agrees
promptly to notify Borrower and, if set-off is made against Borrower's
Subsidiaries, its Subsidiaries after any such set-off and application made by
such Bank, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
11.9 WAIVER OF JURY TRIAL. AGENT, EACH BANK AND BORROWER,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THE AGREEMENT OR
ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THE AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY OF THEM. NONE OF AGENT, ANY BANK OR BORROWER SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY OF AGENT, ANY BANK OR BORROWER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
11.10 Confidentiality. Agent and each Bank shall hold all
confidential information obtained pursuant to the requirements of the Agreement
which has been identified as such by Borrower in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with the Agreement or as reasonably required
by any bona fide Participant or prospective
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Participant in connection with any contemplated participation therein or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process. Without limiting the foregoing, it is expressly
understood that such confidential information which, at the time of disclosure
is in the public domain or which, after disclosure, other than disclosure by
Agent or any Bank, becomes part of the public domain or information which is
obtained by Agent or any Bank prior to the time of disclosure and identification
by Borrower under this subsection, or information received by Agent or any Bank
from a third party shall not be subject to the confidentiality requirements of
this subsection 11.10. Nothing in this subsection or otherwise shall prohibit
Agent or any Bank from disclosing any confidential information to any other Bank
in connection with the Loans contemplated by this Agreement or render it liable
in connection with any such disclosure.
11.11 Counterparts; Effective Date. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement shall become
effective upon the receipt by Agent and each Bank of executed counterparts of
this Agreement by each of the parties hereto.
11.12 Governing Law. This Agreement, the Notes and the
rights and obligations of the parties under this Agreement and the Notes shall
be governed by, and construed and interpreted in accordance with, the local laws
of the State of Ohio.
11.13 Headings. The headings of the Sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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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_________________________________
Xxxxxx X. Xxxxxxxxxxxxx
Title: President and Assistant Secretary
BANK ONE, NA,
as Agent and as a Bank
By_________________________________
Xxxxxx X. Xxxx
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By_________________________________
Print: R. H. Friend
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By_________________________________
Print: __________________________
Title: __________________________
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NATIONAL CITY BANK
By_________________________________
Xxxxx X. Xxxxxxx
Title: Senior Vice President
BANKBOSTON, N.A.
By_________________________________
Xxxxx X. Xxxx
Title: Director
THE FIFTH THIRD BANK OF COLUMBUS
By_________________________________
Xxxx X. Xxxxxx
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By______________________________________
Print: _______________________________
Title: _______________________________
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