Usance Letter of Credit

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

B.   Borrower has asked the Bank to issue, at any time and from time to time, irrevocable standby letters of credit (the "Letters of Credit") in favor of the beneficiaries identified by Borrower (the “Beneficiaries”) in a form customarily used or otherwise approved by the Bank in an aggregate amount not to exceed $8,750,000 (the “Commitment”).

C.   The Letters of Credit will be issued by the Bank pursuant to this Agreement, whereby Borrower will agree, among other things, to reimburse the Bank for all amounts drawn by the Beneficiaries pursuant to the Letters of Credit.

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

SECTION 1.1   Definitions

E.   Unless otherwise defined herein, terms that are defined in the Syndicated Credit Agreement and used herein shall have the meanings ascribed to them in the Syndicated Credit Agreement and the following terms shall have the following meanings:

F.   " Bank " shall mean Regions Bank, an Alabama banking corporation, and its successors and assigns.

G.   " Beneficiaries " shall have the meaning stated in the Recitals.

H.   “Borrower " shall mean M/I Homes, Inc., a corporation organized under the laws of Ohio, and its successors and assigns.

I.   " Business Day " shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions are required or authorized to close in the city where drawings under the Letters of Credit are to be made.

J.   " Commitment " shall have the meaning stated in the Recitals.

K.   “ Control and Pledge Agreement ” shall mean that certain Deposit Account Control Agreement and Security Agreement of even date herewith executed by Borrower and the Bank.

L.   " Credit Agreement " or " this Agreement " shall mean this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more instruments entered into pursuant to the applicable provisions hereof.

M.   " Drawing " shall mean a drawing under the Letters of Credit.

N.   " Event of Default " shall have the meanings stated in Section 5.1.  An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing.

O.   “ Fee Letter ” shall mean the letter from the Bank to the Borrower dated as of July 27, 2009 relating to certain fees payable by the Borrower in respect of the transactions provided for in this Agreement as it may be amended, modified, restated or supplemented from time to time.

P.   " Financing Documents " shall mean the Letters of Credit, this Agreement, the Control and Pledge Agreement and all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Bank and including all other pledges, powers of attorney, consents, assignments, contracts, notices, agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of Borrower, or any employee of Borrower (in each case, to the extent relating to the Obligations), and delivered to the Bank in connection with this Agreement or the transactions contemplated thereby.  Any reference in this Agreement or any other Financing Document to a Financing Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Financing Document as the same may be in effect at any and all times such reference becomes operative.

Q.   " Letter of Credit Exposure " shall mean the sum of (i) the aggregate Stated Amount of all Letters of Credit outstanding at such time and (ii) the aggregate amount of all Reimbursement Obligations related to the Letters of Credit outstanding at such time.

R.   " Letters of Credit " shall have the meaning stated in the Recitals.

S.   “ Minimum Coverage Amount ” shall mean, at any time, 105% of the Letter of Credit Exposure.

T.   " Obligations " shall mean (1) all Letters of Credit commissions, fees, charges and costs becoming due and payable under this Agreement in accordance with the terms thereof; (2) all amounts becoming due and payable under this Agreement in accordance with the terms thereof as reimbursement of sums paid by the Bank under the Letters of Credit; (3) all interest becoming due and payable under this Agreement in accordance with the terms thereof; (4) all amounts becoming due and payable under this Agreement in accordance with the terms thereof upon the occurrence and continuance of an Event of Default under this Agreement; (5) all amounts becoming due and payable by Borrower under this Agreement as reimbursement of increased cost to the Bank caused by changes in law or regulations or in the interpretation thereof; (6) all other amounts payable by Borrower under this Agreement or any of the other Financing Documents; and (7) all renewals and extensions of any or all of the Obligations of Borrower described in clauses (1) through (6) above (including without limitation any renewal or extension of, and any substitute for, the Letters of Credit), whether or not any renewal or extension agreement is executed in connection therewith.

U.   " Prime Rate " shall mean that rate of interest designated by the Bank from time to time as its “prime rate,” it being expressly understood and agreed that the “prime rate” is merely an index rate used by the Bank to establish lending rates and is not necessarily the Bank’s most favorable lending rate and that changes in the “prime rate” are discretionary with the Bank.

V.   " Reimbursement Obligations " shall have the meaning stated in Section 2.2.

W.   " Stated Amount " shall mean the maximum amount available to be drawn under the Letters of Credit, as reduced from time to time and reinstated from time to time pursuant to the terms and conditions of the Letters of Credit.

X.   " Stated Expiration Date " shall mean the date on which the Letters of Credit will expire by their terms unless terminated sooner upon the occurrence of any early termination event specified therein.

Y.   " Syndicated Credit Agreement " shall mean that certain Second Amended and Restated Credit Agreement effective as of October 6, 2006, executed by Borrower, the other parties signatory thereto, JP Morgan Chase Bank, N.A., as Agent for itself and for the lenders and the other lenders signatory thereto, as amended, restated or supplemented from time to time.

Z.   " Termination Date " shall mean August 31, 2010.

SECTION 1.2   General Rules of Construction

AA.   For all purposes of this Agreement, except as otherwise expressly provided, or unless the context otherwise requires:

(a)   Defined terms in the singular shall include the plural as well as the singular and vice versa.

(b)   The definitions in the recitals are incorporated into this Agreement.

(c)   All accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with generally accepted accounting principles.  All references herein to "generally accepted accounting principles" refer to such principles as they exist at the date of application thereof.

(d)   All references in this instrument to designated "articles", "sections" and other subdivisions are to the designated articles, sections and subdivisions of this instrument as originally executed.

(e)   The terms "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular article, section or other subdivision.

(f)   All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

(g)   The term "person" shall include any individual, corporation, partnership, joint venture, limited liability company, association, trust, unincorporated organization and any government or any agency or political subdivision thereof.

SECTION 1.3   Effect of Headings and Table of Contents

BB.   The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 1.4   Separability Clause

CC.   If any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 1.5   Governing Law

DD.   This Agreement shall be construed in accordance with and governed by the laws of the State of Alabama.

SECTION 1.6   Counterparts

EE.   This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 2.1   Issuance of Letters of Credit

(a)   Subject to and upon the terms and conditions herein set forth, so long as no Event of Default has occurred and is continuing, the Bank will, at any time and from time to time on and after the Closing Date and prior to the Termination Date, and upon request by Borrower in accordance with the provisions of Section 2.1(b) hereof, issue for the account of Borrower the Letters of Credit denominated in U.S. dollars and in a form customarily used or otherwise approved by the Bank.  In no event shall the aggregate Stated Amount of the Letters of Credit exceed the Commitment.  Notwithstanding the foregoing:

(i)   No Letter of Credit shall be issued that by its terms expires later than the Termination Date; provided, however, that such Letter of Credit may expire by its terms on a date later than the Termination Date so long as the Control and Pledge Agreement is in effect and Borrower maintains the Minimum Coverage Amount.

(ii)   The Bank shall be under no obligation to issue any Letter of Credit if, at the time of such proposed issuance, any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain the Bank from issuing such Letter of Credit, or any requirement of law applicable to the Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Bank shall prohibit, or request that the Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Bank with respect to such Letter of Credit any restriction or reserve or capital requirement (for which the Bank is not otherwise compensated) not in effect on the Closing Date, or any unreimbursed loss, cost or expense that was not applicable, in effect or known to the Bank as of the Closing Date and that the Bank in good faith deems material to it.  The Bank agrees that, as promptly as practicable as it becomes aware of any circumstances that may prevent the Bank from issuing any Letter of Credit pursuant to this clause (ii), the Bank shall notify Borrower and describe such circumstances in reasonable detail, and the Bank shall, to the extent not inconsistent with the Bank’s internal policies of general application and in accordance with applicable law, use reasonable commercial efforts to take such actions as would allow the Bank to issue Letters of Credit in accordance with this Agreement notwithstanding the existence of any circumstances described in this clause (ii).

(iii)   No Letter of Credit shall be issued if the Stated Amount upon issuance, when added to the aggregate Letter of Credit Exposure at such time, would exceed the Commitment.

(iv)   Notwithstanding any other provisions to the contrary set forth herein, Letters of Credit deemed issued hereunder may contain a statement to the effect that such credit is issued for the account of any subsidiary or affiliate of Borrower providing that notwithstanding such statement, Borrower shall be the actual account party for all purposes of this Agreement for such Letters of Credit and such statement shall not affect Borrower’s reimbursement obligations hereunder with respect to such Letters of Credit.

(b)   Whenever Borrower desires the issuance of a Letter of Credit, Borrower will give the Bank written notice not later than 11:00 a.m., Birmingham, Alabama time, three Business Days (or such shorter period as is acceptable to the Bank in any given case) prior to the requested date of issuance thereof.  Each such notice (each, a “Letter of Credit Notice”) shall be irrevocable, shall be given in the form specified by the Bank, and shall specify (i) the requested date of issuance, which shall be a Business Day, (ii) the requested Stated Amount and expiry date of the Letter of Credit, and (iii) the name and address of the requested beneficiary or beneficiaries of the Letter of Credit.  Borrower will also complete any application procedures and documents reasonably required by the Bank in connection with the issuance of any Letter of Credit.  In the event of any conflict between the provisions of any application and the provisions of this Agreement, the provisions of this Agreement shall govern.  The renewal or extension of any outstanding Letter of Credit shall, for purposes of this Section 2.1, be treated in all respects as the issuance of a new Letter of Credit.

SECTION 2.2   Reimbursement

Borrower agrees to reimburse the Bank (a "Reimbursement Obligation"), within three (3) Business Days after demand therefor, for all sums paid by the Bank under the Letter of Credit, together with interest thereon during the period from the date of payment thereof by the Bank until receipt by the Bank of reimbursement therefor, at an annual rate equal to the Prime Rate in effect from time to time during such period.

SECTION 2.3   Fees for Maintenance of Letters of Credit

(a)   For the issuance of the Letters of Credit, Borrower agrees to pay to the Bank such fees set forth in the Fee Letter.

(b)   Borrower shall pay to the Bank such commissions, draw fees, transfer fees and other fees and charges incurred in connection with the issuance and administration of each Letter of Credit as are customarily charged from time to time by the Bank for the performance of such services in connection with similar letters of credit, or as may be otherwise agreed to by the Bank (including all courier fees associated with such Letters of Credit), but without duplication of amounts payable under Section 2.3(a).

SECTION 2.4   Increased Costs

(a)   If, after the date of delivery of this Agreement, any change in any law or regulation or in the interpretation, administration or enforcement thereof by any Governmental Authority charged with the administration thereof or any action by any Governmental Authority (whether or not constituting or resulting from such change) shall either

(i)   impose, modify or deem applicable any reserve, assessment, special deposit or similar requirement against letters of credit issued by the Bank or

(ii)   impose on the Bank any other condition (including without limitation any capital adequacy requirement) regarding this Agreement or the Letters of Credit,

and the result of any such event shall be to increase the cost to the Bank of issuing or maintaining the Letters of Credit (which increase in cost shall be the result of the Bank's reasonable allocation of the aggregate of such cost increases resulting from such events and shall be calculated without giving effect to any participation granted in the Letters of Credit), then, upon demand by the Bank, Borrower shall immediately pay to the Bank from time to time, as specified by the Bank in writing, additional amounts which shall be sufficient to compensate the Bank for such increased costs.

(b)   The Bank shall deliver to Borrower a reasonably detailed certificate showing the basis for such increased costs incurred by the Bank as a result of any event referred to in subsection (a) of this Section, and such certificate shall be presumptive evidence as to the amount thereof provided that such determination is made in good faith.  In making the determination contemplated by such certificate, the Bank may make such reasonable estimates, assumptions, allocations and the like that the Bank deems to be appropriate.  If the Bank claims any amount payable under this Section 2.4, the Bank shall use reasonable commercial efforts (consistent with its internal policy and legal and regulatory restrictions) efforts to minimize such increased costs.

SECTION 2.5   Place and Time of Payments

(a)   All payments by Borrower to the Bank hereunder shall be made in lawful currency of the United States and in immediately available funds to the Bank at its hand delivery address set forth in Section 6.1 or at such other address within the continental United States as shall be specified by the Bank by notice to Borrower.

(b)   All amounts payable by Borrower to the Bank hereunder for which a payment date is expressly set forth herein (including without limitation payments due pursuant to Sections 2.2 and 2.3) shall be payable without notice or written demand by the Bank.  All amounts payable by Borrower to the Bank hereunder for which no payment date is expressly set forth herein shall be payable on written demand by the Bank to Borrower.

(c)   The Bank may, at its option, send written notice to Borrower of amounts payable pursuant to Sections 2.2 and 2.3, but the failure to send such notice shall not affect or excuse Borrower's obligation to make payment of the amounts required by such Sections on the due date specified in such Sections.

(d)   Payments which are due on a day which is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate.

SECTION 2.6   Late Payments

FF.   With respect to all amounts payable to the Bank by Borrower pursuant to this Article (a) which are not paid on the due date, in the case of amounts payable on a specified date, or (b) which are not paid within 3 Business Days of written notice to Borrower, in the case of amounts payable on demand, Borrower agrees to pay to the Bank on demand interest at a variable per annum rate equal to the Prime Rate plus four percent (4%), for each day from the specified date of payment, or the date of written demand for payment, as the case may be, to the date payment is made.

SECTION 2.7   Computation of Charges

GG.   The interest, fees and charges provided for in this Agreement based upon annual rates shall be computed on the basis of