M I SCHOTTENSTEIN HOMES INC, PRE 14A, 1998-02-17

M I SCHOTTENSTEIN HOMES INC
PRE 14A, 1998-02-17
OPERATIVE BUILDERS

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
M/I Schottenstein Homes, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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[LOGO]

3 Easton Oval
Columbus, Ohio 43219

March __, 1998

To Our Shareholders:

The Annual Meeting of Shareholders of M/I Schottenstein Homes, Inc. (the
"Company"), will be held at 9:00 a.m. Eastern Daylight Time on Tuesday, April
28, 1998, at the offices of the Company, 3 Easton Oval, Columbus, Ohio. At
this Annual Meeting, in addition to electing a class of directors (which we
do every year - Proposal No. 1), we are also proposing to amend and restate
the Company's Regulations, one of its primary governing documents - Proposal
No. 2. The Board of Directors unanimously believes each of these Proposals is
important to and in the best interests of the Company and accordingly, on
behalf of the Board, I therefore strongly encourage you to vote in favor of
each.

This has been a momentous year for the Company. For the second
consecutive year, and the third time in the last four years, we achieved
record results on nearly every front. Our stock price has risen by more than
100% during the past twelve months. We also achieved a 99% positive homeowner
approval rating, marking the seventh consecutive year with a positive rating
of at least 95% - a standard which we believe to be among the highest in our
industry. Our financial strength has never been better and, as a result, we
just recently announced our first cash dividend. All in all, we were very
pleased with the events of 1997 and look forward to sharing with you these
results and our future outlook at our Annual Meeting.

Proposal No. 2 involves a number of amendments to our Regulations. While
I encourage you to review, in detail, both the proposal and the accompanying
descriptions, we did want to highlight for you our reasons for seeking the
approval of Proposal No. 2.

1. Some of the changes in the Amended and Restated Regulations are
merely technical and designed to clean up certain provisions which are needed
as a result of the Company changing from a Delaware to an Ohio corporation in
1993.

2. Other changes are intended to strengthen the director and officer
indemnification provisions to the fullest extent permitted by Ohio law.

3. Lastly, the remainder of the changes relate to the possibility of a
hostile takeover and are simply intended to give the Company's Board of
Directors more flexibility and encourage would-be suitors

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to negotiate with the directors. Most importantly, the changes give the
shareholders the right to approve any significant acquisition of the
Company's outstanding shares which has not been approved by the Board. Absent
the adoption of Proposal No. 2, the Company's shareholders will have no vote
on a hostile tender offer or similar acquisition.

We believe that the adoption of Proposal No. 2 is in the best interests
of the shareholders and is in line with the corresponding governing documents
of many other publicly owned companies.

Enclosed is a copy of our 1997 Annual Report, notice of the meeting, a
proxy statement and a proxy card. Please record your vote on the card and
return it promptly in the enclosed postage-paid envelope. We look forward to
seeing you at the Annual Meeting.

Sincerely,

Irving E. Schottenstein,
Chief Executive Officer

PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE

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[LOGO]

3 Easton Oval
Columbus, Ohio 43219

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998

To Each Shareholder of M/I Schottenstein Homes, Inc.:

Notice is hereby given that the 1998 Annual Meeting of Shareholders of
M/I Schottenstein Homes, Inc. (the "Company") will be held at 9:00 a.m.
Eastern Daylight Time on April 28, 1998, at the offices of the Company, 3
Easton Oval, Columbus, Ohio, for the following purposes:

1) To elect three (3) directors to serve until the 2001 annual meeting of
shareholders or until their successors have been duly elected and
qualified;

2) To consider and vote upon a proposal to amend and restate the Company's
Regulations in the form attached hereto as Appendix I; and

3) To transact such other business as may properly be brought before the
meeting or any adjournment thereof.

Only shareholders of record at the close of business on March 2, 1998,
will be entitled to notice of, and to vote at, such meeting, or at any
adjournment thereof. A complete list of shareholders entitled to vote at the
meeting will be available for examination by any shareholder at the executive
offices of the Company for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
Annual Meeting.

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It is important that your shares be represented at the Annual Meeting.
Whether or not you intend to be present, please sign, date and send the
enclosed proxy in the envelope provided. Proxies are revocable at any time
and shareholders who are present may withdraw their proxy and vote in person
if they so desire.

By Order of the Board of Directors,

Paul S. Coppel,
Secretary
March __, 1998

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[LOGO]

3 Easton Oval
Columbus, Ohio 43219

PROXY STATEMENT

for the

ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998

March __, 1998

GENERAL

The Annual Meeting of Shareholders of M/I Schottenstein Homes, Inc. (the
"Company") will be held on Tuesday, April 28, 1998 (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. The Company expects that this proxy statement and the
accompanying form of proxy will be mailed on or about March __, 1998, to each
shareholder of record as of March 2, 1998. This proxy statement is furnished
in connection with the solicitation by the Company's Board of Directors (the
"Board") of proxies to be used at such meeting and at any adjournment
thereof. The Annual Report of the Company for the year ended December 31,
1997, including financial statements, is being mailed to all shareholders
together with this proxy statement.

A proxy for use at the Annual Meeting is enclosed. A proxy may be
revoked by a shareholder at any time before it is exercised by filing with
the Company a notice in writing revoking it or by duly executing a proxy
bearing a later date. Proxies also may be revoked by any shareholder present
at the Annual Meeting who expresses a desire to vote his or her shares in
person. Subject to such revocation and except as otherwise stated herein or
in the form of proxy, all proxies duly executed and received prior to, or at
the time of, the Annual Meeting will be voted in accordance with the
specifications of the proxies. If no specification is made, proxies will be
voted for the nominees for election of directors set forth herein, for
Proposals Nos. 2 and 3, and, at the discretion of the proxyholders, on all
other matters that may properly be brought before the Annual Meeting or any
adjournment thereof.

OUTSTANDING SHARES AND VOTING RIGHTS

There were 7,602,161 shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), issued and outstanding on March 2, 1998
(the "Record Date"), which date has been set as the record date for the
purpose of determining shareholders entitled to notice of, and to vote at,
the Annual Meeting. On any matter submitted to a shareholder vote, each
holder of Common Stock will be

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entitled to one vote, in person or by proxy, for each share of Common Stock
registered in his or her name on the books of the Company as of the Record
Date. Under Ohio law and the Company's Regulations, the aggregate number of
votes entitled to be cast by all shareholders present in person or
represented by proxy at the meeting, whether those shareholders vote for,
against or abstain from voting on any matter, will be counted for purposes of
determining the minimum number of affirmative votes required for approval of
such matters, and the total number of votes cast for each of these matters
will be counted for purposes of determining whether sufficient affirmative
votes have been cast. Abstentions, withheld votes and broker non-votes with
respect to any matter will have the same legal effect as a vote against the
matter.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

A class of three directors is to be elected at the Annual Meeting. The
Board has nominated the persons set forth below for election as directors of
the Company at the Annual Meeting. The three nominees receiving the greatest
number of votes cast will be elected to serve until the 2001 Annual Meeting
of Shareholders or until their successors are duly elected and qualified.
Information concerning the nominees and the remaining members of the Board is
set forth below. Irving E. Schottenstein, Kerrii B. Anderson and Norman L.
Traeger will serve until the 1999 Annual Meeting of Shareholders or until
their successors are duly elected and qualified. Steven Schottenstein and
Lewis R. Smoot, Sr. will serve until the 2000 Annual Meeting of Shareholders
or until their successors are duly elected and qualified.

In connection with the Company's repurchase of 702,439 shares of Common
Stock from the Melvin L. Schottenstein family interests, Holly S. Kastan, Amy
D. Schottenstein and Eric J. Schottenstein resigned from the Board of
Directors on August 1, 1997. The resulting vacancies in the classes of
directors standing for election at the 1998 Annual Meeting of Shareholders
and 1999 Annual Meeting of Shareholders were filled by Jeffrey H. Miro and
Kerrii B. Anderson, respectively. The vacancy in the class of directors
standing for election at the 2000 Annual Meetings of Shareholders will be
filled (or the size of such class reduced) prior to such Annual Meeting.

Unless otherwise specified in the accompanying proxy, the shares voted
pursuant thereto will be voted FOR each of the persons named below as
nominees for election as directors.

YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE PERSONS NAMED
BELOW AS NOMINEES FOR ELECTION AS DIRECTORS.

2
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<TABLE>
<CAPTION>
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YEAR FIRST
CURRENT POSITIONS SERVED AS
NAME AGE WITH COMPANY DIRECTOR
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
NOMINEES

Friedrich K. M. Bohm 56 Director, member of Audit
Committee (Chairman), member of
Compensation Committee 1994

Jeffrey H. Miro (1) 56 Director, member of Audit
Committee, member of
Compensation Committee 1998

Robert H. Schottenstein 45 President, Director, member of
Executive Committee, member of
Compensation Committee 1993

DIRECTORS

Kerrii B. Anderson (2) 40 Chief Financial Officer, Senior Vice
President, Director 1998

Irving E. Schottenstein 69 Chief Executive Officer, Director
(Chairman), member of Executive
Committee (Chairman) 1973

Steven Schottenstein 41 Senior Executive Vice President,
Director, member of Executive
Committee 1993

Lewis R. Smoot, Sr. 64 Director, member of Audit
Committee, member of
Compensation Committee
(Chairman), member of Executive
Committee 1993

Norman L. Traeger 58 Director, member of Audit
Committee, member of
Compensation Committee 1997
</TABLE>
- -------------------
(1) Jeffrey H. Miro was elected to the Board of Directors on February 24,
1998, to replace Eric J. Schottenstein, who resigned from the Board on August 1,
1997.
(2) Kerrii B. Anderson was elected to the Board of Directors on February 24,
1998, to replace Amy D. Schottenstein, who resigned from the Board on August 1,
1997.

3
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Irving E. Schottenstein is the father of Robert H. Schottenstein and
Steven Schottenstein.

BUSINESS EXPERIENCE

KERRII B. ANDERSON is Senior Vice President, Chief Financial Officer and
Assistant Secretary of the Company. She became a Senior Vice President in
September 1993 and has been Chief Financial Officer since 1987. She was also
made a Vice President in 1988 and has been Chief Financial Officer of M/I
Financial since 1988. Ms. Anderson currently serves as a director of
Lancaster Colony Corporation.

FRIEDRICH K. M. BOHM has been the Managing Partner and Chief Executive
Officer of NBBJ, the second largest architectural firm in the United States,
since 1987. He is a director, and currently serves as a member of the
executive committee of the Board of Directors, of Huntington National Bank, a
subsidiary of Huntington Bancshares Incorporated, and as a Director of The
Daimler Group and 55 Restaurants, Inc.

JEFFREY H. MIRO has been the Chairman of the law firm of Miro, Weiner
and Kramer, with offices in Bloomfield Hills, Michigan and New York, New York
since 1981. In addition, Mr. Miro is an Adjunct Professor of Law at the
University of Michigan Law School.

IRVING E. SCHOTTENSTEIN has been Chief Executive Officer since August
1986, and a Director of the Company or its predecessors since 1973. He was
President of the Company and its predecessors from 1973 until 1996. He was
also the Chairman of the Board or President of M/I Financial Corp., a
wholly-owned subsidiary of the Company ("M/I Financial), from 1983 until
August 1995. He was a Director of M/I Financial Corp. from 1983 until August
1995.

ROBERT H. SCHOTTENSTEIN has been President since May 1996 and an
Assistant Secretary since March 1991. He served as an Executive Vice
President from February 1994 until May 1996, as a Senior Vice President from
September 1993 until February 1994 and became a Vice President of the Company
in March 1991. He became the Regional Manager for the Cincinnati Division in
April 1994 and for the Midwest Land Operations in November 1992 and served in
such position until May 1996. He began his service with the Company in field
operations and has been responsible for the Ohio Land Division since November
1992. From 1977 to 1991, he was engaged in the private practice of law with
Schottenstein, Zox & Dunn Co., L.P.A. He currently serves as a Director of
Huntington Bancshares Incorporated.

STEVEN SCHOTTENSTEIN has been a Senior Executive Vice President since
May 1996 and an Assistant Secretary since April 1992. He served as an
Executive Vice President from February 1994 until May 1996, as a Senior Vice
President from September 1993 until February 1994 and was a Vice President
from June 1990 until September 1993. He became a Regional Manager for the
Washington, D.C. Region in December 1990, Regional Manager for the Indiana
Region in April 1992 and Regional Manager for the Carolina Region in February
1994 and served in such positions until May 1996.

LEWIS R. SMOOT, SR. has been the President and Chief Executive Officer
of The Smoot Corporation since 1987, a construction contractor and
construction management concern. He currently serves as a Director of
Huntington Bancshares Incorporated.

NORMAN L. TRAEGER founded United Skates of America, a chain of family
fun centers, in 1971 and The Discovery Group, a venture capital firm, in
1983. Mr. Traeger currently owns and manages industrial, commercial and
office real estate and is Vice Chairman of the Board of Trustees of Prescott
College.

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NOMINATION OF DIRECTORS

Nomination for the election of dire ctors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in
the election of directors generally. To nominate one or more persons for
election as a director, the Company's Regulations require that a shareholder
give written notice of his or her intent to make such nomination or
nominations by personal delivery or by United States Mail, postage pre-paid,
to the Secretary of the Company, not later than the close of business on the
seventh day following the date on which shareholders are first given notice
of the meeting at which directors are to be elected. Such notice shall set
forth: 1) the name and address of the person or persons to be nominated; 2)
a representation that the shareholder is a holder of record entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; 3) a description of
all arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; 4)
such other information regarding each nominee proposed by the shareholder as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission (the "SEC"), had the
nominee been nominated, or intended to be nominated, by the Board; and 5) the
consent of each nominee to serve as a director of the Company, if so elected.
The Chairman of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.

BOARD AND COMMITTEE MEETINGS

The Board held four meetings during 1997. All members of the Board
during 1997 attended at least 75% of all meetings of the Board and of the
committees on which they served. The Board does not have a nominating
committee. The full Board selects the nominees for directors. In addition,
two meetings of a special committee consisting solely of the outside
directors were held during 1997 to consider the repurchases of stock from
members of the Melvin L. Schottenstein family interests.

The Board's Audit Committee with respect to the 1997 fiscal year
consisted of Friedrich K. M. Bohm (Chairman), Lewis R. Smoot, Sr. and Norman
L. Traeger. The Audit Committee's responsibilities include reviewing the
Company's audit procedures and policies, reviewing potential conflicts of
interest, monitoring internal controls and financial reporting, selecting the
Company's independent accountants and making recommendations concerning these
matters to the Board. The Audit Committee met four times in 1997.

The Board also has a Compensation Committee, whose members with respect
to the 1997 fiscal year were Lewis R. Smoot, Sr. (Chairman), Friedrich K. M.
Bohm, Lenore S. Sagner (who resigned from the Company on March 17, 1997)
Irving E. Schottenstein, Robert H. Schottenstein (after May 7, 1997) and
Norman L. Traeger. The Compensation Committee's duties include reviewing and
reporting to the Board on specific compensation matters for executive
officers and administering the Company's stock option plan. The Compensation
Committee met four times in 1997.

In March 1995, the Board created the CEO Compensation Subcommittee of
the Compensation Committee (the "Subcommittee"), whose members with respect
to the 1997 fiscal year were Norman L. Traeger (Chairman), Lewis R. Smoot,
Sr. and Holly S. Kastan (who resigned on August 1, 1997), in response to
guidelines published by the Internal Revenue Service regarding the
deductibility of executive officer compensation. The Subcommittee's duties
include developing and administering the plans necessary to ensure that the
compensation paid to the Chief Executive Officer of the Company will be tax
deductible. The Subcommittee met one time in 1997.

5
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Between meetings of the Board or when the Board is not in session, the
Executive Committee may exercise, to the extent permitted by law, all the
powers and duties of the Board. The members of the Executive Committee with
respect to the 1997 fiscal year were Irving E. Schottenstein (Chairman),
Lewis R. Smoot, Sr., Robert H. Schottenstein and Steven Schottenstein.
During 1997, the Executive Committee did not hold any meetings but did take
several written actions without a meeting, which were subsequently ratified
by the Board.

PROPOSAL NO. 2

PROPOSED ADOPTION OF
AMENDED AND RESTATED REGULATIONS

PROPOSAL

The Board proposes that the shareholders adopt Amended and Restated
Regulations in the form attached hereto as Appendix I. The proposed Amended
and Restated Regulations contain several amendments to the current
Regulations. These amendments primarily serve one of three purposes: to
clarify certain provisions of the Regulations and to bring them into stricter
conformity with Ohio law, to provide the Company with additional flexibility
or to provide certain anti-takeover protections to the Company. See
"Protection Against Non-Negotiated Takeovers." The amendments contained
within the proposed Amended and Restated Regulations are discussed in more
detail below. Additions to the current Regulations are highlighted in bold
typeface in the proposed Amended and Restated Regulations attached hereto as
Appendix I. Deletions are marked with a "^".

AMENDMENTS CONTAINED WITHIN THE AMENDED AND RESTATED REGULATIONS

The following summary of the various amendments contained in the Amended
and Restated Regulations does not purport to be complete and is qualified in
its entirety by reference to the Amended and Restated Regulations which are
attached hereto as Appendix I.

A. ADOPT A NON-STATUTORY VERSION OF SECTION 1701.831 OF THE OHIO
GENERAL CORPORATION LAW

Unless an Ohio public corporation's articles or regulations
otherwise provide, Section 1701.831 of the Ohio General Corporation Law
(the "Control Share Acquisition Statute") requires shareholder approval
of any proposed "control share acquisition" of an Ohio public
corporation. A "control share acquisition" is the acquisition, directly
or indirectly, by any person (including any individual, partnership,
corporation, limited liability company, society, association or two or
more persons who have a joint or common interest) of shares of a
corporation that, when added to all other shares of the corporation that
may be voted, directly or indirectly, by the acquiring person, would
entitle such person to exercise or direct the exercise of 20% or more
(but less than 33 1/3%) of the voting power of the corporation in the
election of directors or 33 1/3% or more (but less than a majority) of
such voting power or a majority or more of such voting power. Under the
Control Share Acquisition Statute, the control share acquisition must be
approved in advance by the holders of a majority of the outstanding
voting shares represented at a meeting at which a quorum is present and
by the holders of a majority of the portion of the outstanding voting
shares represented at such a meeting excluding the voting shares owned
by the acquiring shareholder and

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certain "interested shares," including shares owned by officers elected
or appointed by the directors of the corporation and by directors of the
corporation who are also employees of the corporation.

Article TWELFTH of the Company's Articles provides that the
provisions of the Control Share Acquisition Statute shall not apply to
the Company. However, while the Control Share Acquisition Statute does
not directly apply to the Company, the Board believes that it would be
in the best interests of the shareholders to adopt an amendment to the
Company's Regulations pursuant to Section 1701.11(B)(9) of the Ohio
General Corporation Law to provide the Company with substantially the
same protections as are provided by the Control Share Acquisition
Statute.

The proposed Amended and Restated Regulations contain a new article
entitled "ARTICLE IX - CONTROL SHARE ACQUISITION PROVISIONS," which
provides substantially the same protections to the Company as the
Control Share Acquisition Statute, with one very significant difference:
the new Article IX in the Amended and Restated Regulations provides that
a control share acquisition must be approved in advance by the
shareholders ONLY if the Board has not first pre-approved such control
share acquisition (i.e., shareholder approval is not required if the
Board has approved such control share acquisition). The intent of this
provision is to allow negotiated acquisitions, which would otherwise
trigger the shareholder vote requirement of the Control Share
Acquisition Statute, to proceed without the delay and expense associated
with a shareholder meeting. In addition, the Control Share Acquisition
Provisions in the Amended and Restated Regulations provide the Board
with more flexibility in setting a date for the special meeting of
shareholders to consider the proposed control share acquisition than the
Control Share Acquisition Statute. The Board believes that the time
periods set forth in the Control Share Acquisition Statute are
difficult, if not impossible, to comply with in the context of a likely
review of the requisite proxy materials by the Securities and Exchange
Commission. The Board does not believe that the flexibility provided by
the Control Share Acquisition Provisions of the Amended and Restated
Regulations will result in any undue incremental burden to potential
acquirors.

The purpose of the Control Share Acquisition Provisions in the
proposed Amended and Restated Regulations is to give shareholders of the
Company a reasonable opportunity to express their views on a proposed
shift in control which has not been approved by the Company's Board,
thereby reducing the coercion inherent in a hostile takeover. The
Control Share Acquisition Provisions in the proposed Amended and
Restated Regulations grant to the shareholders of the Company the
assurance that they will have adequate time to evaluate the proposal of
the acquiring person, that they will be permitted to vote on the issue
of authorizing the acquiring person's purchase program to go forward in
the same manner and with the same proxy information that would be
available to them if a proposed merger of the Company were before them
and, most importantly, that the interests of all shareholders will be
taken into account in connection with such vote and the probability will
be increased that they will be treated equally regarding the price to be
offered for their shares of Common Stock if the implementation of the
proposal is approved.

The Control Share Acquisition Provisions of the proposed Amended
and Restated Regulations apply not only to traditional tender offers but
also to open market purchases and privately negotiated transactions
which have not been pre-approved by the Board. The procedural
requirements of the Control Share Acquisition Provisions could render
approval of any control share acquisition which has not been
pre-approved by the Board difficult in that a majority of the voting
power of the Company, EXCLUDING "interested shares," must be represented
at the meeting and a majority of such voting power represented at the
meeting must be voted in favor of the acquisition. It is recognized
that any corporate defense against persons seeking to acquire control

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may have the effect of discouraging or preventing offers which some
shareholders might find financially attractive. On the other hand, the
need on the part of the acquiring person to convince the Board and/or
the shareholders of the Company of the value and validity of his offer
may cause such offer to be more financially attractive in order to gain
Board and/or shareholder approval. The Board believes that the potential
benefit of the procedures contemplated by the Control Share Acquisition
Provisions substantially outweighs the disadvantage that shareholders
may not have the opportunity to consider or accept certain offers. See
"PROTECTION AGAINST NON-NEGOTIATED TAKEOVERS."

B. RESTRICT THE ABILITY OF SHAREHOLDERS TO CALL SPECIAL MEETINGS

Ohio law provides that a corporation shall call a special meeting
of its shareholders on the demand of the holders of 25% of all shares
outstanding and entitled to vote at such meeting, unless a higher or
lower percentage is contained in the articles of incorporation or
regulations. Article I(b) of the Company's Regulations provides that
special meetings may be called by shareholders holding an aggregate of
not less than 25% of all shares entitled to vote at the meeting. The
proposed amendment would increase to 50% the voting power required to be
held by shareholders desiring to call a special meeting.

The Board has observed that proxy fights at special meetings have
been utilized by potential acquirors to attempt to undercut the
authority of a board to negotiate on behalf of a corporation and its
shareholders. Where a board has determined that a takeover bid is unfair
or inadequate, some potential acquirors have used the power to call
special shareholders' meetings to remove directors, replace them with
nominees of the acquiror, or to take other actions to reverse prior
actions of the board taken to protect the corporation and its
shareholders. Under present Ohio law, a potential acquiror with a 25%
interest in the Company's Common Stock, or with the ability to solicit
proxies sufficient to represent that number of shares, can put the
Company to the expense of a special meeting, and can place before the
meeting any proposals that the potential acquiror desires, so long as
they are appropriate for shareholder action. During the time between
the calling of the meeting and the date it is held, the Board may feel
constrained to preserve shareholders' freedom of action at the meeting
by foregoing actions the Board might otherwise take in response to an
unfair or inadequate bid.

The proposed amendment to Article I(b) of the Regulations would
strengthen the position of the Board in dealing with potential acquirors.
It would make it more difficult for a potential acquiror opposed to the
position taken by the Board with respect to a bid to initiate the process
of removing the directors and replacing them with nominees disposed to
accept the potential acquiror's offer. Only when the acquiror or group has
acquired or owns at least 50% of the outstanding shares, would the
acquiror or group be able to call a special meeting without the consent of
the Board, the Chairman of the Board, the President or the Vice President
authorized to act in the President's absence, who otherwise have the power
to call such meetings.

The proposed amendment would limit the power of shareholders to call
special meetings, whether to remove, without cause, and replace the
incumbent directors or for other purposes, by raising the required
percentage of shares from 25% to 50% of the outstanding shares. To this
extent, the proposed amendment might make more secure the positions and
decisions of the existing members of the Board. The proposed amendment may
also discourage certain potential acquirors from making unsolicited offers
for control of the Company, if they anticipate that their offer will be

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viewed negatively by the Board. See "PROTECTION AGAINST NON-NEGOTIATED
TAKEOVERS."

C. REDUCE THE MINIMUM NOTICE PERIOD REQUIRED FOR SHAREHOLDER MEETINGS

Ohio law requires that shareholders be provided written notice not
less than seven nor more than 60 days before the date of a shareholder
meeting, unless the corporation's articles or regulations specify a
longer period. The Company's Regulations currently provide for a minimum
notice period of 30 days. The Board proposes to reduce the minimum
notice period for meetings of shareholders from 30 days to seven days.
The purpose of this amendment is primarily for the sake of convenience
and flexibility and to conform to Ohio law. The Board does not currently
anticipate utilizing a notice period of less than 20 days. However, the
Board believes that it is in the best interest of the Company to retain
the maximum flexibility permitted under Ohio law in order to provide for
unforeseen circumstances. Notwithstanding the purpose, the effect of
permitting a shortened notice period may be to hinder non-negotiated
takeovers. See "PROTECTION AGAINST NON-NEGOTIATED TAKEOVERS."

D. RESTRICT THE ABILITY TO NOMINATE DIRECTORS

The Board proposes that Article III(e) of the Company's Regulations
be amended to establish more stringent procedures with respect to the
nomination of persons for election as directors. The amendment provides
that a shareholder intending to nominate a director for election at an
annual meeting of shareholders must give written notice of such
intention to the Company not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting
(or, if the date of annual meeting is changed by more than 30 days from
the anniversary date of the preceding year's annual meeting, within
seven days after the date the Company mails or otherwise gives notice of
the date of the meeting). With respect to an election to be held at a
special meeting of shareholders called for the purpose of electing
directors, a shareholder intending to nominate a director would be
required to give written notice of that intention to the Company within
seven days following the date on which notice of the special meeting was
first mailed to the shareholders by the Company. Article III(e)
currently requires merely that shareholder nominations be made not later
than seven days after the date the Company gives notice of a meeting at
which directors are to be elected.

The proposed amendment requires that any notice of intention to
nominate a director contain certain information about the proposed
nominee and about the shareholder intending to make the nomination.
Current Article III(e) requires, and Article III(e), as amended, would
continue to require, that each shareholder's notice of intent to make a
nomination set forth: (a) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the shareholder is a holder of
record of shares of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed
by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated by the Board; and (e)
the written consent of each nominee to serve as a director of the
corporation if so elected. The proposed amendment also requires that
the shareholder represent that he will continue to hold

<PAGE>

his shares until the meeting at which his proposed nominee is to be
considered and authorizes the Company to require any proposed nominee to
furnish other information reasonably required by the Company to
determine the proposed nominee's qualifications to serve as a director.
It is anticipated that any request by the Company for additional
information will be made or confirmed in writing, and the nominee will
be asked to submit the requested additional information in writing.

The purpose of increasing the amount of advance notice required to
be given by a shareholder of a nomination is to afford the Board a
meaningful opportunity to consider the qualifications of any proposed
nominee and, to the extent deemed necessary or desirable by the Board,
to inform shareholders about such qualifications. This additional time,
it is believed, will further the objectives of the Board to identify
candidates who have the character, experience and proven accomplishments
which provide promise of significant contribution to the Company's
business and to provide the Company's shareholders with sufficient time
to meaningfully consider the candidates' qualifications. The amendment
has not been proposed as the result of specific efforts of which the
Company is aware to nominate or elect any director, to accumulate shares
or to obtain control of the Company by means of a merger, tender offer,
solicitation in opposition of management or otherwise.

While the amendment does not give the Board any power to approve or
disapprove a shareholder nomination, it will preclude a shareholder
nomination from the floor or by other means if the proper procedures are
not followed. Although the Board does not believe that the amendment
will have a significant impact on any attempt by a third party to obtain
control of the Company, it is possible that the amendment may deter a
third party from conducting a solicitation of proxies to elect its own
slate or otherwise attempt to obtain control of the Company or effect a
change in management. See "PROTECTION AGAINST NON-NEGOTIATED TAKEOVERS."

E. LIMIT THE REMOVAL OF DIRECTORS EXCEPT FOR CAUSE

Therefore, the Board proposes to add a provision to the Amended and
Restated Regulations stating that directors may be removed only for
cause.

The effect of the staggered board, when coupled with the new
provision requiring removal for cause and the existing provision of the
Regulations authorizing only the Board to fill vacant directorships,
will preclude a shareholder from removing incumbent directors without
cause and simultaneously gaining control of the Board by filling the
vacancies created by such removal with its own nominees. See "PROTECTION
AGAINST NON-NEGOTIATED TAKEOVERS."

<PAGE>

F. REQUIRE SUPERMAJORITY VOTES TO AMEND CERTAIN PROVISIONS OF THE
REGULATIONS

Currently, Article X of the Regulations provides that the
Regulations can be amended or repealed, or new Regulations adopted, by
the affirmative vote of the holders of a majority of the voting power of
the Company at any meeting called and held for that purpose, or without
a meeting by the written consent of the holders of a majority of the
voting power of the Company.

The Board proposes increasing the vote required at a meeting or by
the written consent of the shareholders from a majority of the voting
power to two-thirds of the voting power of the Company to amend or
repeal the Amended and Restated Regulations, or adopt new Regulations,
with respect to any of the following: (1) the special meeting provisions
set forth in Article I(b) of the Amended and Restated Regulations; (2)
the special meeting notice provisions set forth in Article I(c) of the
Amended and Restated Regulations; (3) the staggered board provisions set
forth in Article III(b) of the Amended and Restated Regulations; (4) the
provisions regarding newly created directorships and vacancies on the
Board set forth in Article III(c) of the Amended and Restated
Regulations; (5) the nomination provisions in Article III(e) of the
Amended and Restated Regulations; (6) the director conflict of interest
provisions of Article III(m) of the Amended and Restated Regulations;
(7) the removal for cause provisions of new Article III(o) of the
Amended and Restated Regulations; (8) the indemnification provisions set
forth in Article VIII of the Amended and Restated Regulations; (9) the
Control Share Acquisition Provisions of new Article IX of the Amended
and Restated Regulations; and (10) amendments to the supermajority
provisions of Article X of the Amended and Restated Regulations. In
addition, the Board proposes increasing the vote required at a meeting
or by the written consent of the shareholders from a majority of the
voting power to 75% of the voting power of the Company to amend or
repeal the change in the number of directors provision in Article III(d)
of the Amended and Restated Regulations.

On all other matters, the required vote will remain a majority of
the voting power of the Company.

The proposed amendment will make it more difficult to amend the
provisions in the Amended and Restated Regulations relating to the
Board and the ability of shareholders to nominate directors or call
special meetings. The proposed amendment will also protect the Control
Share Acquisition Provisions. The aggregate effect of the proposed
amendment likely will make it more difficult for an unfriendly person to
acquire control of the Board through a proxy contest or a tender offer.
Therefore, the proposed amendment may have the effect of discouraging or
preventing offers. See "PROTECTION AGAINST NON-NEGOTIATED TAKEOVERS."

G. ELIMINATE THE REQUIREMENT OF A SHAREHOLDER LIST IN CERTAIN
CIRCUMSTANCES

Article I(h) of the Regulations currently requires that, at least
10 days before every meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical
order and showing the address of each shareholder and the number of
shares registered in the name of each shareholder, be prepared and be
open to examination of any shareholder, for any purpose germane to the
meeting, either at a place within the city where the meeting is to be
held as specified in the meeting notice, or, if not specified in the
notice, at the place where the meeting is to be held.

<PAGE>

The Board recommends that this provision be deleted because it
imposes an unnecessary cost and administrative burden on the Company if
a shareholder meeting is held outside of Columbus, Ohio, and is not
necessary to assure shareholder access to the shareholder list. Under
Ohio law, a shareholder, upon written demand stating the specific
purpose, has the right in person or by agent or attorney at any
reasonable time and for any reasonable and proper purpose to inspect the
record of shareholders. In addition, upon request of any shareholder at
a meeting of shareholders, the Company must produce at such meeting an
alphabetically arranged list, or classified lists, of the shareholders
of record as of the applicable record date, who are entitled to vote,
showing their respective addresses and the number and classes of shares
held by each. Therefore, deletion of Article I(h) will not adversely
affect the rights of shareholders or the ability of an unfriendly person
to wage a proxy contest or make a tender offer.

H. INCREASE THE NUMBER REQUIRED FOR COMMITTEES

Article IV of the Regulations currently authorizes the Board to
create an Executive Committee, a Compensation Committee and an Audit
Committee, each consisting of two or more directors. These provisions
are inconsistent with Ohio law which requires that all Board committees
consist of not less than three directors. Therefore, the Board proposes
to amend Article IV to fix the membership of the Executive, Compensation
and Audit Committees at not less than three directors.

I. CLARIFY CHAIRMAN OF THE BOARD AND PRESIDENT'S DUTIES.

The Regulations currently contain somewhat conflicting provisions
regarding the chairmanship of meetings of shareholders and directors of
the Company. Article I(k) provides that the President shall preside at
all meetings of the shareholders, while Article VII(b) provides that the
Chief Executive Officer shall preside at all meetings of shareholders.
In addition, Article VII(a) provides that the Chairman of the Board
shall preside at all meetings of the Board, while Article VII(b)
provides that the Chief Executive Officer shall preside at all meetings
of the Board.

Currently, Irving E. Schottenstein holds the positions of Chairman
of the Board and Chief Executive Officer, and Robert H. Schottenstein
holds the position of President. The Board believes that it is in the
best interest of the Company to amend the Regulations to clarify that
that Chairman of the Board shall preside at all meetings of the Board,
and that the Chief Executive Officer shall preside at all meetings of
shareholders at which he is present. In the absence of the Chief
Executive Officer, the President shall preside at all meetings of
shareholders.

J. REVISE INDEMNIFICATION PROVISIONS

The Board proposes to amend Article VIII of the Regulations to
provide for the indemnification of the Company's directors and officers
to the fullest extent permitted by Ohio law in order that the Company
may continue to attract and retain qualified outside directors and
officers.

The Amended and Restated Regulations provide that the Company must
indemnify officers and directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement incurred in
connection with any pending, threatened or completed action (whether
criminal, civil, administrative or investigative) by reason of the fact
that such individual is or was a director, officer, employee or agent of
the Company or is or was serving at the request of the

<PAGE>

Company as a director, trustee, officer, employee, member, manager or
agent of another corporation or other entity so long as such individual
acted in good faith and in a manner he reasonably believed was in, or
not opposed to, the best interests of the Company. Unlike the current
Regulations, the Amended and Restated Regulations create a presumption
that a director or officer has acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
the Company. Because of this presumption, the Company believes that a
director or officer will not have the initial burden of showing that he
acted in good faith or in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Company. In addition, the
Amended and Restated Regulations require the Company to advance expenses
on behalf of officers and directors if they agree in writing to repay
such amounts if certain conditions are not met.

The Amended and Restated Regulations state that the indemnification
provided thereby is not exclusive of any other rights to which any
person seeking indemnification may be entitled and provide that the
Company may purchase and maintain insurance or other similar
arrangements on behalf of any person who is or was a director, officer,
employee or agent of the Company, or who is or was serving another
entity at the request of the Company, against any liability asserted
against him and incurred by him in such capacity, or arising out of his
status as such, whether or not the Company would have the obligation or
power to indemnify him under the Amended and Restated Regulations.

The Company is not aware of any current or past indemnification or
liability issues that will or could be presented to the Company in the
event the Amended and Restated Regulations are adopted and the
indemnification provisions are so revised.

K. ELIMINATE ORDER OF BUSINESS REQUIREMENT

Article IX of the current Regulations establishes the order of
business for all shareholder meetings, which order may be changed by the
affirmative vote of the holders of a majority of the shares represented
at a meeting. The Board proposes to delete this provision because it is
inconsistent with other provisions of the Regulations and unnecessarily
restricts the ability of the Board and the chairman of the meeting to
control the conduct of the meeting.

Article IX, for example, provides for the selection of a chairman
and secretary of the meeting while other provisions of the Regulations
provide that the Chief Executive Officer or President shall preside at
all meetings of shareholders and that the Secretary (or in his absence,
a person appointed by the chairman of the meeting) shall act as
secretary of all meetings. Article IX also makes appointment of
inspectors an item of business although the Regulations elsewhere
provide that the inspectors are appointed by the Board or by the
chairman of the meeting.

Since the Ohio General Corporation Law does not contain provisions
regarding the conduct of shareholder meetings or limiting the Board's
authority with respect to this subject, the Board believes that the
Board and the chairman of the meeting should retain the flexibility to
set the agenda and to prescribe other procedures for the conduct of all
shareholder meetings. The Board also believes that the deletion of
Article IX will not adversely affect the rights of shareholders or the
ability of an unfriendly person to wage a proxy contest or make a tender
offer.

<PAGE>

RECOMMENDATION AND VOTE

The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required to adopt the Amended and Restated
Regulations. The Company's executive officers and directors and members of
the Irving E. Schottenstein family, who collectively own, or have voting
power with respect to, approximately 36% of the outstanding shares of Common
Stock, have indicated that they intend to vote FOR adoption of the Amended
and Restated Regulations.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ADOPTION OF
THE AMENDED AND RESTATED REGULATIONS.

PROTECTION AGAINST NON-NEGOTIATED TAKEOVERS

The Company's Regulations provide for a board of directors consisting of
three classes of at least three directors each serving staggered three-year
terms. As a result, approximately one-third of the Board is elected each
year. In addition to providing continuity and stability, the purpose of such
a staggered Board is to permit shareholders two years to consider whether
they want to cede control of the Board to an insurgent in a proxy contest.
The combined effect of the Company's staggered Board and the proposal to
amend and restate the Regulations to include, among other things, provisions
making a non-statutory version of Ohio's Control Share Acquisition Statute
applicable to the Company, reducing the minimum notice period required for a
shareholder meeting, restricting the ability of shareholders to call special
meetings and to nominate directors, limiting the ability to remove directors
except for cause and requiring supermajority votes to amend certain
provisions in the Regulations may have an anti-takeover impact and may make
tender offers, proxy contests and certain mergers more difficult. The Board
believes that it is in the best interest of the Company and its shareholders
to require potential acquirors to negotiate with the Board prior to engaging
in any such transactions.

The Board is not aware of any efforts to obtain control of the Company
or to effect substantial accumulations of the shares of Common Stock of the
Company.

CERTAIN TRANSACTIONS

On March 17, 1997, and August 1, 1997, the Company repurchased an
aggregate of 1,202,439 shares of the Company's Common Stock from members of
the Melvin L. Schottenstein family and trusts for their benefit. The average
purchase price for such repurchase was $11.85 per share, which represented
the closing price of the Company's Common Stock on the respective repurchase
dates. In connection with the August 1, 1997 repurchase, Holly S. Kastan, Amy
D. Schottenstein and Eric J. Schottenstein resigned as members of the
Company's Board. The Company believes that the terms of such repurchase were
fair and in the best interests of the Company and its shareholders.

<PAGE>

MANAGEMENT

The following table sets forth certain information with respect to
certain key employees of the Company.

- -----------------------------------------------------------------------------------
CURRENT POSITIONS YEAR STARTED
NAME AGE WITH COMPANY WITH COMPANY
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul S. Coppel 39 Senior Vice President/General 1994
Counsel and Secretary

Phillip G. Creek 45 Senior Vice President, Treasurer 1993

Gary A. Haarer 54 President 1996
Arizona Region

Robert C. Moesle 46 President 1990
Washington, D.C. Region

Lloyd T. Simpson 52 President 1984
Columbus Region

</TABLE>

BUSINESS EXPERIENCE

PAUL S. COPPEL joined the Company in January 1994 as Senior Vice
President/General Counsel. Mr. Coppel became the Secretary in February 1995.
He became the Secretary of M/I Financial in August 1995. Prior to joining
the Company, Mr. Coppel was engaged in the private practice of law with
Vorys, Sater, Seymour and Pease, Columbus, Ohio from April 1993 until
December 1993; and Schwartz, Kelm, Warren & Rubenstein, Columbus, Ohio from
September 1986 until April 1993.

PHILLIP G. CREEK joined the Company in January 1993 as Vice President
and Treasurer and became a Senior Vice President in September 1993. He
became the Vice President of M/I Financial in August 1995. From 1978 to
1993, Mr. Creek was employed with The Ryland Group, Inc., a national
homebuilder.

GARY A. HAARER joined the Company in November 1996 as President of the
Arizona Region. Prior to joining the Company, Mr. Haarer was employed with
UDC Homes, Inc., a national homebuilder with operations concentrated in
Phoenix, for more than 20 years, most recently as its Executive Vice
President.

ROBERT C. MOESLE joined the Company in December 1990 as Division Manager
of the Washington, D.C. division and became Vice President/Regional
Manager-Washington, D.C. Region in September 1991 and President of the
Washington, D.C. Region in November 1996. He became a Senior Vice President
in September 1993. Prior to joining the Company, Mr. Moesle was employed with
NVR, Inc. and The Ryland Group, Inc., both national homebuilders.

LLOYD T. SIMPSON joined the Company in 1984 and has been President of
the Columbus Region since November 1996. He was Vice President/Regional
Manager-Columbus Region from February 1996

<PAGE>

through November 1996. From 1984 until February 1996, he was the Vice
President/Regional Manager-Ohio Region. Mr. Simpson served as Senior Vice
President from September 1993 until November 1996.

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of the March 2, 1998 record date, the
number and percentage of the outstanding shares of Common Stock held by each
person who, to the knowledge of the Company, beneficially owns more than 5%
of the outstanding shares of Common Stock, by each of the Company's
directors, nominees and Named Executive Officers (as defined below) and by
all of the directors and Named Executive Officers of the Company as a group.
Except as set forth in the footnotes to the table, the shareholders have sole
voting and investment power over such shares. The address of each of the
directors and executive officers is c/o M/I Schottenstein Homes, Inc., 3
Easton Oval, Columbus, Ohio 43219.

<TABLE>
<CAPTION>
------------------------------------------------------------------------
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER OF COMMON STOCK OF CLASS
------------------------------------------------------------------------
<S> <C> <C>
Friedrich K. M. Bohm..................... 5,000 (1)
Jeffrey H. Miro.......................... 2,000 (1)
Irving E. Schottenstein.................. 525,500 (2) 6.9%
Robert H. Schottenstein.................. 578,600 (3) 7.6%
Steven Schottenstein..................... 531,400 (4) 7.0%
Lewis R. Smoot, Sr....................... 2,000 (1)
Norman L. Traeger........................ 15,000 (1)
Kerrii B. Anderson....................... 12,300 (5) (1)
All directors, nominees and executive
officers as a group (7 persons)........ 1,671,800 21.7%

FMR Corp.
82 Devonshire Street................... 868,600 (6) 11.4%
Boston, Massachusetts 02109
Linda S. Fisher.......................... 569,300 (7) 7.5%
11221 Grandon Ridge Circle
Cincinnati, Ohio 45249
Gary L. Schottenstein.................... 563,800 (8) 7.4%
2077 Parkhill Drive
Columbus, OH 43209
------------------------------------------------------------------------
</TABLE>

(1) Less than 1% of the outstanding shares.
(2) Irving E. Schottenstein is the trustee of (i) the Irving and Frankie
Schottenstein Trust which holds 478,300 shares, and (ii) the Steven
Schottenstein Descendants Trust which holds 47,200 shares, and exercises
all rights with regard to such shares. Does not include an aggregate of
2,149,000 shares which are held in trust by Mr. Schottenstein, as
trustee, pursuant to trust agreements dated August 1986, as amended, for
the benefit of Mr. Schottenstein's four children: Robert H.
Schottenstein (550,000 shares), Steven Schottenstein (499,000 shares),
Gary L. Schottenstein (550,000 shares) and Linda S. Fisher (550,000
shares). As trustee, Mr. Schottenstein is empowered to exercise all
rights with regard to such shares, revoke each trust, and with the
agreement of each beneficiary, amend each trust.

16
<PAGE>

(3) 550,000 of these shares are held in trust by Irving E. Schottenstein in
accordance with note 2 above. 2,800 of these shares are held by Robert
H. Schottenstein individually. 16,500 of these shares are held in trust
by Robert H. Schottenstein, as trustee, for the benefit of his children
pursuant to trust agreements dated December 22, 1994. As trustee,
Robert H. Schottenstein is empowered to exercise all rights with regard
to such shares and may be deemed the beneficial owner of such shares.
Includes 9,300 shares of Common Stock that underlie exercisable stock
options.
(4) 499,000 of these shares are held in trust by Irving E. Schottenstein
in accordance with note 2 above. 2,800 of these shares are held by
Steven Schottenstein individually. 20,300 of these shares are held in
trust by Steven Schottenstein, as trustee, for the benefit of his
children pursuant to trust agreements dated December 22, 1994. As
trustee, Steven Schottenstein is empowered to exercise all rights with
regard to such shares and may be deemed the beneficial owner of such
shares. Includes 9,300 shares of Common Stock that underlie exercisable
stock options.
(5) Includes 8,900 shares of Common Stock that underlie exercisable stock
options.
(6) Based on information set forth in a Schedule 13G dated February 14,
1998, which was filed on behalf of FMR Corp. and certain other Fidelity
entities.
(7) 550,000 of these shares are held in trust by Irving E. Schottenstein in
accordance with note 2 above. 2,800 of these shares are held by Linda S.
Fisher individually. 16,500 of these shares are held in trust by Mrs.
Fisher, as trustee, for the benefit of her children pursuant to trust
agreements dated December 22, 1994. As trustee, Mrs. Fisher is
empowered to exercise all rights with regard to such shares and may be
deemed the beneficial owner of such shares.
(8) 550,000 of these shares are held in trust by Irving E. Schottenstein
in accordance with note 1 above. 2,800 of these shares are held by Gary
L. Schottenstein individually. 11,000 of these shares are held in trust
by Gary L. Schottenstein, as trustee, for the benefit of his children
pursuant to trust agreements dated December 22, 1994. As trustee, Gary
L. Schottenstein is empowered to exercise all rights with regard to such
shares and may be deemed the beneficial owner of such shares.

The address of Irving E. Schottenstein, Robert H. Schottenstein, Steven
Schottenstein, Gary L. Schottenstein and Linda S. Fisher is c/o Irving E.
Schottenstein, 3 Easton Oval, Columbus, Ohio 43219.

17
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the annual compensation and other
compensation for each of the fiscal years ended December 31, 1997, 1996 and
1995 for the Company's Chief Executive Officer and for each other executive
officer of the Company (the "Named Executive Officers"):

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ----------------
AWARDS PAYOUTS
------ -------
OTHER SECURITIES
ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($) ($) (1) (2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irving E. Schottenstein 1997 586,406 1,095,582 (3) - - - 62,619
Chief Executive Officer 1996 585,406 857,987 (3) - - - 63,395
1995 575,000 556,518 (3)(4) - - - 63,580

Robert H. Schottenstein 1997 310,406 654,844 (3) - 2,500 - 58,917
President 1996 310,406 698,236 (3) - 4,500 - 4,438
1995 300,000 145,355 (3)(4) - 5,000 - 2,220

Steven Schottenstein 1997 310,406 653,794 (3) - 2,500 - 47,338
Senior Executive Vice 1996 310,406 698,236 (3) - 4,500 - 4,438
President 1995 300,000 145,355 (3)(4) - 5,000 - 2,220

Kerrii B. Anderson 1997 210,406 251,357 - 1,500 53,553(5) 12,953
Senior Vice President, 1996 210,406 250,000 (3) - 4,000 50,638(5) 4,438
Chief Financial Officer 1995 196,154 120,406 (3)(4) - 5,000 48,059(5) 2,220
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The amounts shown represent the individual's share of the Company's
discretionary contribution for 1995, 1996 and 1997, respectively, under
the Company's 401(k) plan as detailed in footnote 2 below. In addition,
such amounts for the 1996 and 1997 fiscal years for each of the Named
Executive Officers other then Irving E. Schottenstein include $1,623 of
long-term disability plan premiums.
(2) "All Other Compensation" for each of the Named Executive Officers for
the 1995, 1996 and 1997 fiscal years includes the individual's share of
the Company's discretionary contribution for 1995, 1996 and 1997 under
the Company's 401(k) plan in the amounts of $2,220, $2,815 and $2,894,
respectively, and, in the case of Irving E. Schottenstein only, the
non-term portion of the premium for a split dollar life insurance policy
of $61,360, $60,580 and $59,725, respectively. "All Other Compensation"
for Robert H. Schottenstein, Steven Schottenstein and Kerrii B. Anderson
for the 1997 fiscal year also includes the non-term portion of the
premium for a split-dollar life insurance policy of $54,400, $42,820 and
$8,435, respectively.
(3) Represents amounts accrued pursuant to bonus incentive plans approved by
the Compensation Committee of the Board, or with respect to the Chief
Executive Officer, the CEO Compensation Subcommittee of the Compensation
Committee.
(4) Includes a discretionary bonus of $10,406.

<PAGE>

(5) Represents compensation pursuant to an executive deferred compensation
plan.

On August 9, 1994, the Company and Irving E. Schottenstein entered into
an employment agreement under which the Company agreed to purchase and
maintain a split-dollar life insurance policy for Mr. Schottenstein in an
amount not less than $1.5 million. In the event Mr. Schottenstein becomes
disabled, he will receive disability payments from the Company for a period
of up to three years, in an annual amount equal to the average of the salary
and bonus earned by Mr. Schottenstein during the three calendar years
preceding his disability. In the event Mr. Schottenstein's employment ends,
he has agreed to serve as a consultant to the Company for a period of two
years for which he will be paid $500,000 per year.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth the nonqualified stock options granted by
the Board during the 1997 fiscal year to each of the Named Executive Officers:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------

POTENTIAL
REALIZABLE VALUE AT
ACCRUED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS (1) FOR OPTION TERM
--------------------------------------------------------- ------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION
GRANTED FISCAL YEAR PRICE DATE 5% 10%
NAME (#) (%) ($/SH) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Irving E. Schottenstein (2) - - - - -
Robert H. Schottenstein 2,500 8.7 10.625 4/1/07 16,705 42,334
Steven Schottenstein 2,500 8.7 10.625 4/1/07 16,705 42,334
Kerrii B. Anderson 1,500 5.2 10.625 4/1/07 10,023 25,400
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The nonqualified stock options granted by the Board are scheduled to
vest at a rate of 20% per year over the first five years and to lapse
after ten years unless sooner exercised or forfeited. All stock options
were granted at the closing market price on the date of grant.
(2) Prior to the termination of the Schottenstein family agreement in August
1997, Irving E. Schottenstein was not eligible to receive stock options.

19
<PAGE>

FISCAL YEAR END OPTION VALUES

The following table sets forth information with respect to unexercised
options held as of the end of the 1997 fiscal year by each of the Named
Executive Officers.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------

NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END

(#) (1) ($)
----------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------- ------------------------------
<S> <C> <C> <C> <C>
Irving E. Schottenstein (2) - - -

Robert H. Schottenstein 9,300 7,700 $64,738 $64,138

Steven Schottenstein 9,300 7,700 $64,738 $64,138

Kerrii B. Anderson 8,900 6,600 $61,538 $55,275
- -----------------------------------------------------------------------------------------------
</TABLE>

(1) The nonqualified stock options granted by the Board are scheduled to
vest at a rate of 20% per year over the first five years and to lapse
after ten years unless sooner exercised or forfeited.
(2) Prior to the termination of the Schottenstein family agreement in
August 1997, Irving E. Schottenstein was not eligible to receive stock
options.

COMPENSATION OF DIRECTORS

Lewis R. Smoot, Sr., Friedrich K. M. Bohm and Norman L. Traeger, the
independent directors on the Board, were paid a fee of $4,000 per quarter
during 1997, plus an additional $1,000 for attending a special meeting of the
Board. Pursuant to a deferred compensation program instituted in 1997,
directors are permitted to designate that payment of the foregoing fees be
made in the common stock of the Company based on the closing price of the
Company's Common Stock on the New York Stock Exchange as of the close of
business at end of month in which board meeting a given Board meeting
occurred.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee with respect to the 1997 fiscal year was
comprised of five members: Lewis R. Smoot, Sr., Friedrich K. M. Bohm, Irving
E. Schottenstein, Robert H. Schottenstein (since May 7, 1997) and Norman L.
Traeger. Irving E. Schottenstein and Robert H. Schottenstein are executive
officers of the Company.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OR THE EXCHANGE ACT THAT MIGHT
INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN
PART, THIS REPORT AND THE GRAPH SET FORTH BELOW UNDER "ELECTION OF DIRECTORS
- -PERFORMANCE GRAPH" SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.

<PAGE>

GENERAL. The Compensation Committee's overall compensation policy
applicable to the Company's executive officers is to provide a compensation
program that is intended to attract and retain qualified executives for the
Company and to provide them with incentives to achieve the Company's goals
and increase shareholder value. The Compensation Committee implements this
policy through establishing salaries, bonuses and stock options. The
Compensation Committee's current policy is not to provide pension or other
retirement plans for the Company's executive officers other than the 401(k)
Plan.

In 1997, the Company reviewed its policy with respect to the executive
officers of the Company. Upon such review, the Company determined that the
Company's executive officers consist of the Chief Executive Officer, the
President, the Senior Executive Vice President and the Chief Financial
Officer.

In addition, in 1997, the Compensation Committee retained Deloitte &
Touche LLP (the "Compensation Consultant") to perform an independent review
of the Company's executive compensation for its Chief Executive Officer,
President and Senior Executive Vice President compared to the practice of
thirteen other public homebuilders. Based on such comparison (factoring in
the Company's relative financial performance), the Compensation Consultant
and the Compensation Committee concluded that the average total compensation
for these three executive officers was commensurate with the average total
compensation paid to comparable executives at comparable companies for 1994,
1995 and 1996.

BASE SALARY. The average base salary paid to the Company's executive
officers is commensurate with the base salaries paid to persons holding
comparable positions with other publicly traded regional and national
homebuilders.

PERFORMANCE BONUS. The Compensation Committee adopted a new performance
bonus program for its President and Senior Executive Vice President in 1996.
The performance bonus that can be earned by such executive officers is based
upon two factors tied to the Company's performance: (i) earning a specified
level of income before income taxes and (ii) achieving a specified homeowner
satisfaction rating as measured by a homeowner survey conducted by the
Company. The total amount that can be earned under the bonus program by such
executive officers has been capped at three times their annual base salary.

Pursuant to this performance bonus program, in order for the President
and the Senior Vice President to earn an performance bonus equivalent to the
bonus earned in the preceding year, the Company's income before income taxes
was required to increase by 10%. If such income had not increased, the
performance bonus level would have decreased. Notwithstanding the fact that,
because of the Company's strong financial performance in 1997, the President
and Senior Executive Vice President would have been entitled to higher
performance bonuses based on this plan, the President and the Senior
Executive Vice President recommended, and the Compensation Committee agreed,
that the President and the Senior Executive Vice President's performance
bonuses for 1997 be capped at $650,000.

The Compensation Committee adopted a new performance bonus program for
the Chief Financial Officer in 1997. The Chief Financial Officer's
performance bonus is based upon the Company's income before income taxes and
is capped at 125% of her annual base salary.

STOCK OPTIONS. It is the Company's intent to award stock options to the
Company's executive officers in amounts reflecting the participant's
position, the ability to influence the Company's overall performance and the
financial performance of the Company. Options are intended to retain and
motivate executive officers to improve the Company's financial results and
stock performance. During 1997, the

<PAGE>

Compensation Committee approved the award of nonqualified stock options
("NQSOs") for 6,500 shares of Common Stock at $10.625 per share to the Named
Executive Officers (see "-- Option Grants in Last Fiscal Year"). The NQSOs
vest at a rate of 20% per year over the first five years and lapse after ten
years unless sooner exercised or forfeited.

CHIEF EXECUTIVE OFFICER COMPENSATION. The Chief Executive Officer's
compensation is determined by a CEO Compensation Subcommittee of the
Compensation Committee. The Chief Executive Officer's base salary for 1997
was at a level commensurate with that paid to chief executive officers of
other publicly-held, regional and national homebuilders.

The performance bonus for the Chief Executive Officer for 1997 was
determined pursuant to the amended Performance-Based Bonus Plan which was
approved by the Company's shareholders at the 1995 annual meeting. The
amended Performance-Based Bonus Plan uses two factors tied to the Company's
performance to determine his performance bonus: (i) earning a specified level
of income before income taxes and (ii) achieving a specified homeowner
satisfaction rating as measured by a homeowner survey conducted by the
Company. The total performance bonus that may be earned by the Chief
Executive Officer under the Performance-Based Bonus Plan was capped at four
times his annual base salary.

SECTION 162(m) COMPLIANCE. Section 162(m) of the Internal Revenue Code
of 1986, as amended, places certain restrictions on the amount of
compensation in excess of $1,000,000 which may be deducted for each executive
officer. The Company proposed the Performance-Based Bonus Plan for approval
by the shareholders and constituted the CEO Compensation Subcommittee of the
Compensation Committee to comply with Section 162(m). The Company believes
that all compensation to executive officers in excess of $1,000,000 will be
fully deductible with respect to the 1997 tax year of the Company.

COMPENSATION COMMITTEE:

FRIEDRICH K. M. BOHM
JEFFREY H. MIRO (SINCE FEBRUARY 24, 1998)
LEWIS R. SMOOT, SR.
IRVING E. SCHOTTENSTEIN
ROBERT S. SCHOTTENSTEIN (SINCE MAY 7, 1997)
NORMAN L. TRAEGER

<PAGE>

PERFORMANCE GRAPH

This chart graphs the Company's performance in the form of cumulative
total return to shareholders from November 3, 1993 (the date the Company
completed its initial public offering) until December 31, 1997 in comparison
to STANDARD AND POOR'S 500 and the cumulative return on the common stock of
seven publicly traded peer issuers, including several of the Company's
principal competitors (the "Peer Group"). The Peer Group includes
Continental Homes Holding Corporation; D.R. Horton, Inc.; Hovnanian
Enterprises, Inc.; Kaufman and Broad Home Corporation; Lennar Corporation;
Toll Brothers, Inc. and Washington Homes, Inc.

COMPARISON OF CUMULATIVE TOTAL RETURN
NOVEMBER 3, 1993 TO DECEMBER 31, 1997

11/3/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M/I Schottenstein Homes, Inc. 100 126.96 48.70 81.74 76.52 130.44
S&P 500 Index 100 101.41 102.75 141.35 173.82 231.81
Peer Group 100 114.11 64.36 108.71 104.01 165.99
- ---------------------------------------------------------------------------------------------------
</TABLE>

(1) Assumes that the value of the common stock of the Company and the indices
was 100 on November 3, 1993 and that all dividends were reinvested.

<PAGE>

SELECTION OF AUDITORS

The Board will select the Company's independent auditors for 1998 based
upon the recommendation of the Audit Committee which is anticipated to be
made in May 1998. Deloitte & Touche LLP were the independent auditors for
1997. A representative of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement, if he or she so
desires, and will be available to respond to appropriate questions.

SHAREHOLDER PROPOSALS

Any proposals of shareholders which are intended to be presented at the
next annual meeting of shareholders must be received by the Company at its
principal executive offices by November __, 1998. Such proposals may be
included in next year's proxy statement if they comply with certain rules and
regulations promulgated by the Securities and Exchange Commission.

EXPENSES OF SOLICITATION

The entire expense of preparing, assembling, printing and mailing the
proxy form and the form of material used in the solicitation of proxies will
be paid by the Company. The Company has engaged MacKenzie Partners, Inc. to
assist in the solicitation of proxies from shareholders at a fee not to
exceed $10,000 plus reimbursement of reasonable out-of-pocket expenses. In
addition, proxies may be solicited personally or by telephone, mail or
telegraph. Officers or employees of the Company may assist with personal or
telephone solicitation and will receive no additional compensation therefor.
The Company will also reimburse brokerage houses and other nominees for their
reasonable expenses in forwarding proxy materials to beneficial owners of the
Common Stock.

OTHER MATTERS

The Board knows of no other matters to be presented at the Annual Meeting.
If any other matter is properly brought before the Annual Meeting, it is the
intention of the persons named in the proxy to vote in their discretion upon
such matters in accordance with their judgment.

You are urged to sign, date and return the enclosed proxy in the envelope
provided. No postage is required if the envelope is mailed from within the
United States. If you subsequently decide to attend the Annual Meeting and
wish to vote your shares in person, you may do so. Your cooperation in giving
this matter your prompt attention is appreciated.

By Order of the Board of Directors,

Paul S. Coppel,
Secretary

<PAGE>

APPENDIX I

AMENDED AND RESTATED
REGULATIONS
OF
M/I SCHOTTENSTEIN HOMES, INC.

ARTICLE I - MEETING OF SHAREHOLDERS

(a) ANNUAL MEETINGS. An annual meeting of shareholders, for the
election of directors, for the consideration of any reports and for the
transaction of such other business as may be brought before the meeting,
shall be held at such time and place, within or without the State of Ohio as
may be specified in the notice. The date of each annual meeting of the
shareholders shall be held no earlier than sixty (60) days, but no later than
two hundred seventy (270) days subsequent to the corporation's year end. The
specific meeting date within such time period shall be determined by the
Board in its sole and absolute authority; provided, however, that each
meeting date shall be within the 13 month period following the last annual
meeting of the Shareholders. If this date shall fall upon a legal holiday,
the meeting shall be held on the next succeeding business day.

(b) SPECIAL MEETINGS. Special meetings of the shareholders of
this corporation shall be called by the Secretary, pursuant to a resolution
of the Board, or upon written direction of the Chairman of the Board, the
President or, in the case of the President's absence, death or disability, a
Vice President authorized to exercise the authority of the President, or upon
written request by shareholders representing 50% of the shares issued and
entitled to vote thereat. Calls for special meetings shall specify the time,
place and object or objects thereof, and no business other than that
specified in the call therefor shall be considered at any such meetings.
Special meetings of the shareholders may be held at such time and place
either within or without the State of Ohio,

(c) NOTICES OF MEETINGS. A written or printed notice of the
annual or any special meetings of the shareholders, stating the time and
place, and in case of special meetings, the objects thereof, shall be given
by the Secretary to each shareholder entitled to vote at such meeting
appearing on the books of the corporation, by mailing the same to his address
as same appears on the records of the corporation or of its Transfer Agent or
Agents, at least SEVEN (7) days, but no more than sixty (60) days, before any
such meeting. Notice of adjournment of a meeting need not be given if the
time and place to which it is adjourned are fixed and announced at the
meeting.

(d) QUORUM. Those shareholders present in person or by proxy
entitling them to exercise a majority of the voting power shall constitute a
quorum for any meeting of shareholders, except when a greater proportion is
required by law, the Articles of Incorporation or these Code of Regulations.
In the event of an absence of a quorum at any meeting or any adjournment
thereof, a majority of those present in person or by proxy and entitled to
vote may adjourn such meeting from time to time. At any adjourned meeting at
which a quorum may be present, any business may be transacted which might
have been transacted at the meeting as originally called.

(e) PLACE OF MEETINGS. The annual or any special meeting of
shareholders may be held at such place or places within or without the State
of Ohio, as may be specified in the notice of any such meetings.

(f) PROXIES. At any meeting of shareholders, any person who is
entitled to attend, or to vote thereat, and to execute consents, waivers or
releases, may be represented at such meeting or vote thereat, and execute
consents, waivers and releases, and exercise any of his other rights, by
proxy or proxies appointed by a writing signed by such person and submitted
to the Secretary at or before such meeting. Voting by proxy or proxies shall
be governed by all of the provisions of Ohio law, including the provisions
relating to the sufficiency of the writing, the duration of the validity of
the proxy or proxies, and the power of substitution and revocation.

<PAGE>

(g) DETERMINING SHAREHOLDERS OF RECORD. The Board may fix in
advance a record date for the determination of the shareholders entitled to
notice of and to vote at any meeting of the shareholders. The record date so
fixed shall not be more than sixty (60) days prior to the date of the
meeting. When a record date is so fixed, only shareholders of record on that
date are entitled to notice of and to vote at the meeting, notwithstanding
any transfer of any shares on the books of the corporation after the record
date. If the Board does not fix such a record date, only persons in whose
names shares entitled to vote stand on the stock records of the corporation
on the close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held, are entitled to vote at the
meeting.

(h) VOTING. At all meetings of the shareholders, every registered
owner of shares entitled to vote may vote in person or by proxy and shall
have one vote for each share standing in his name on the books of the
corporation. The vote at any meeting of the shareholders on any questions
need not be by ballot, unless so directed by the Chairman of the meeting or
required by the Articles of Incorporation. On a vote by ballot, each ballot
shall be signed by the shareholder voting, or by his proxy if there be such
proxy, and it shall state the number of shares voted. At any meeting at
which a quorum is present, all questions and business which shall come before
the meeting shall be determined by the vote of the holders of a majority of
the voting power, except when a different proportion is required by law, the
Articles of Incorporation or these Code of Regulations.

(i) INSPECTORS. The Board, in advance of any meeting of the
shareholders, may appoint one or more inspectors to act at the meeting. If
inspectors are not so appointed, the Chairman presiding at the meeting may
appoint one or more inspectors. If any person so appointed fails to appear
or act, the vacancy may be filled by appointment made by the Board in advance
of the meeting or at the meeting by the Chairman presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at the meeting
with strict impartiality and according to the best of his ability. The
inspectors so appointed shall (i) determine the number of shares outstanding,
the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, (ii) receive votes, ballots,
waivers, releases or consents, (iii) hear and determine all challenges and
questions arising in connection with the right to vote, (iv) count and
tabulate all votes, ballots, waivers, releases or consents, (v) determine and
announce the results of each election or vote and (vi) do such acts as are
proper to conduct each election or vote with fairness to all shareholders.
On request of the Chairman presiding at the meeting, the inspectors shall
make a report in writing of any challenge, question or matter determined by
them and execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the facts stated
and of the vote as certified by them.

(j) CHAIRMAN OF MEETING. The CHIEF EXECUTIVE OFFICER shall
preside at all meetings of the shareholders. IN THE ABSENCE OF THE CHIEF
EXECUTIVE OFFICER, THE PRESIDENT SHALL PRESIDE AT ALL MEETINGS OF THE
SHAREHOLDERS. In the absence of the CHIEF EXECUTIVE OFFICER AND THE PRESIDENT,
the Board may appoint THE CHAIRMAN OF THE BOARD OR any OTHER officer of the
corporation to act as chairman of the meeting.

(k) SECRETARY OF MEETING. The Secretary of the corporation shall
act as Secretary of all meetings of the shareholders; and, in his absence,
the Chairman may appoint any person to act as Secretary of the meeting.

ARTICLE II - SHARES

(a) CERTIFICATES. Certificates evidencing the ownership of shares
of the corporation shall be issued to those entitled to them by transfer or
otherwise. Each certificate for shares shall bear a distinguishing number,
the signature of the Chairman of the Board or the President or a Vice
President and the signature of the Secretary, an Assistant Secretary, the
Treasurer, or an Assistant Treasurer of the corporation, and such recitals as

Appendix I - 2
<PAGE>

may be required by law. If authorized by the Board and to the extent
permitted by, and subject to any conditions imposed under applicable law, the
signatures of any of said officers on the certificates may be facsimile,
engraved, stamped or printed. The certificates for shares shall be of such
tenor and design as the Board from time to time may adopt.

(b) TRANSFERS. The shares of the corporation shall be assignable
and transferable only on the books and records of the corporation or of its
Transfer Agent or Agents by the registered owner, or by his duly authorized
attorney, upon surrender of the certificate duly and properly endorsed with
proper evidence of authority to transfer. The corporation or its Transfer
Agent or Agents shall issue a new certificate for the shares surrendered to
the person or persons entitled thereto.

(c) LOST, STOLEN OR DESTROYED CERTIFICATES. The holder of any
shares in the corporation shall immediately notify the Secretary of any lost,
stolen or destroyed certificate, and the corporation may issue a new
certificate in the place of any certificate alleged to have been lost, stolen
or destroyed. The Board may, at its discretion, require the owner of a lost,
stolen or destroyed certificate or his legal representative to give the
corporation a bond on such terms and with such sureties as it may direct, to
indemnify the corporation against any claim that may be made against it on
account of the alleged lost, stolen or destroyed certificate. The Board may,
however, at its discretion, refuse to issue any such new certificate except
pursuant to legal proceedings in a court having jurisdiction over such matter
pursuant to Ohio law.

(d) FIXING OF RECORD DATE. The Board shall have power to fix in
advance a date not exceeding sixty (60) days preceding the date of any
meeting of shareholders or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any rights in respect of
any change, conversion or exchange of capital stock may be exercised, and in
such cases, such shareholders only as shall be shareholders of record on the
date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividends, or to receive such
allotment of rights, or to exercise the rights in respect of such change,
conversion or exchange of capital stock.

(e) DIVIDENDS. Subject to law and the provisions of the Articles
of Incorporation, if any, the directors may declare dividends upon the
capital stock of the corporation as and when they deem expedient. Before
declaring any dividend, there may be set apart out of any funds of the
corporation available for distribution that amount which the directors in
their discretion think proper for working capital or as a reserve fund to
meet contingencies or for equalizing dividends or for such other purposes as
the directors shall think conducive to the interest of the corporation.

(f) RESTRICTIONS ON TRANSFER. A restriction on the hypothecation,
transfer or registration of transfer of shares of the corporation may be
imposed either by the Articles of Incorporation or by this Code of
Regulations or by an agreement among any number of shareholders or among such
holders and the corporation or by resolution of the Board determining that
restriction is reasonably necessary for compliance with the Securities Act of
1933, as amended. No restriction so imposed shall be binding with respect to
the securities issued prior to the adoption of the restriction unless the
holders of such securities are parties to an agreement or voted in favor of
the restriction. Unless noted conspicuously on the share certificate, a
restriction, even though permitted by this Section, is ineffective except
against a person with actual knowledge of the restriction.

ARTICLE III - DIRECTORS

(a) MANAGEMENT OF CORPORATION. Except where the law, the Articles
of Incorporation or this Code of Regulations requires actions to be
authorized or taken by the shareholders, all of the authority of the
corporation shall be exercised and the property, business, and affairs of the
corporation shall be managed and controlled by, and under the direction of,
its Board.

Appendix I - 3

<PAGE>

(b) NUMBER AND TERM. The number of members of the Board shall be
initially fixed at nine (9) and shall be divided into three classes. The
first class shall be comprised of three directors, and the directors
initially elected to such class shall hold office until the next succeeding
annual meeting of the shareholders and until their successors are duly
elected and qualified. The second class shall be comprised of three
directors, and the directors initially elected to such class shall hold
office until the second succeeding annual meeting of the shareholders and
until their successors are duly elected and qualified. The third class shall
be comprised of three directors, and the directors initially elected to such
class shall hold office until the third succeeding annual meeting of the
shareholders and until their successors are duly elected and qualified.
Thereafter, at each annual meeting of shareholders, directors to succeed
those whose terms are expiring at such annual meeting shall be elected to
hold office until the third succeeding annual meeting of the shareholders and
until their successors are duly elected and qualified.

(c) NEWLY CREATED DIRECTORSHIPS AND VACANCIES. A resignation from
the Board shall be deemed to take effect upon its receipt by the Secretary,
unless some other time is specified therein. The acceptance of any
resignation shall not be necessary to make it effective unless so specified
in the resignation. Newly created directorships resulting from any increase
in the number of directors and any vacancies on the Board resulting from
death, resignation, disqualification, removal or other cause, may be filled
at any duly convened meeting by the affirmative vote of a majority of the
remaining directors then in office, even though the number of then serving
directors is less than a quorum of the Board; provided, however, that any
vacancy resulting from the removal of a director by the shareholders shall be
filled only by the vote of the shareholders entitled to vote for the election
of directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term for which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified. No decrease in the number
of directors constituting the Board shall shorten the term of any incumbent
director.

(d) CHANGE IN NUMBER OF DIRECTORS. The number of directors of the
corporation and the number of directors in each class may be changed either
by the affirmative vote of a majority of the directors or by an affirmative
vote of the holders of record of at least 75% of the voting power of the
corporation at a meeting of the shareholders called for that purpose and for
the purpose of electing directors; PROVIDED, HOWEVER, that the classes shall
be of approximately equal size and in no event shall any class contain more
than six directors. No reduction in the number of directors, either by a
vote of the directors or shareholders, shall of itself have the effect of
shortening the term of any incumbent director.

(e) NOMINATIONS. Nominations for the election of directors may be
made by the Board or a committee appointed by the Board or by any shareholder
entitled to vote in the election of directors generally. However, any
shareholders entitled to vote in the election of directors generally may
nominate one or more persons for election as directors at a meeting only if
written notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
Mail, postage prepaid, to the Secretary of the corporation NOT LESS THAN SIXTY
(60) DAYS NOR MORE THAN NINETY (90) DAYS PRIOR TO THE FIRST ANNIVERSARY OF
THE DATE OF THE PRECEDING YEAR'S ANNUAL MEETING (OR, IF THE DATE OF ANNUAL
MEETING IS CHANGED BY MORE THAN THIRTY (30) DAYS FROM THE ANNIVERSARY DATE OF
THE PRECEDING YEAR'S ANNUAL MEETING OR IN THE CASE OF A SPECIAL MEETING,
WITHIN SEVEN (7) DAYS AFTER THE DATE THE COMPANY MAILS OR OTHERWISE GIVES
NOTICE OF THE DATE OF THE MEETING). Each such notice shall set forth: (a)
the name and address of the shareholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of stock of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission
had the nominee been nominated, or intended to be nominated, by the Board;
and (e) the consent of each nominee to serve as a director of the corporation
if so elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.

Appendix I - 4
<PAGE>

(f) REGULAR MEETINGS. Regular meetings of the Board shall be held
at such frequency and on such dates as the Board may from time to time
designate.

(g) SPECIAL MEETINGS. Special meetings of the Board shall be
called by the Secretary upon written request of the Chairman of the Board,
the President or any two (2) directors.

(h) NOTICE OF MEETINGS. The Secretary shall give written notice
of the time and place of each meeting of the Board, whether regular or
special, to each member of the Board, either by personal delivery or by mail,
telegram, cablegram or other means authorized by law, at least two (2) days
prior to such meeting.

(i) QUORUM. A majority of the Directors in office at the time
shall constitute a quorum at all meetings thereof.

(j) PLACE OF MEETINGS. The Board may hold its meetings at such
place or places within or without the State of Ohio as the Board may from
time to time determine.

(k) COMPENSATION. Directors shall be entitled to receive as
compensation for services rendered and expenses incurred as directors, such
amounts as the Board may determine. Members of any committees created
hereunder or by the Board may be allowed such compensation as the Board may
determine for attending committee meetings.

(l) TELECONFERENCES. Meetings of the Board, or any committee
thereof, may be held through any communications equipment if all persons
participating in such meeting can hear each other, and participation in any
meeting in this manner shall constitute presence at such meeting.

(m) CONFLICTS OF INTEREST. A director of the corporation shall
not be disqualified by his office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or other act of the corporation shall be void or
voidable or in any way affected or invalidated solely by reason of the fact
that any director or any firm, corporation or trust in which such director is
a member or is a beneficiary, shareholder, director, officer or trustee, is
in any way interested in such transaction, contract or other act, provided
that the conditions of Section 1701.60 of the General Corporation Law of
Ohio, as the same now exists or may hereafter be amended, are satisfied. No
director shall be accountable or responsible to the corporation for or in
respect of any such transaction, contract or other act of the corporation or
for any gains or profits realized by him by reason of the fact that he or any
firm of which he is a member or any corporation or trust which he is a
beneficiary, shareholder, director, officer or trustee is interested in such
transaction, contract or other act.

(n) REMOVAL FOR CAUSE. NO DIRECTOR MAY BE REMOVED FROM OFFICE BY
THE SHAREHOLDERS EXCEPT FOR CAUSE WITH THE AFFIRMATIVE VOTE OF THE HOLDERS OF
NOT LESS THAN A MAJORITY OF THE TOTAL VOTING POWER OF THE CORPORATION
ENTITLED TO VOTE IN THE ELECTION OF DIRECTORS.

ARTICLE IV - COMMITTEES

(a) EXECUTIVE COMMITTEE. The Board shall, by resolution or
resolutions passed by a majority of the Board, designate THREE (3) or more of
their number, which shall include the Chairman of the Board, to constitute an
Executive Committee to serve at the pleasure of the Board. The Chairman of
the Board shall be the Chairman of the Executive Committee. The Board is
authorized to remove at any time, without notice, any member of the Executive
Committee, except the Chairman of the Board, and elect another member in his
place and stead.

Appendix I-5

<PAGE>

The Board may appoint one (1) or more directors as alternate members of
the Executive Committee who may take the place of any absent member or
members at any meeting of the Executive Committee.

Except as otherwise provided herein, in the Articles of Incorporation or
by law, the Board may delegate to such Committee, during the interval between
meetings of the Board, authority to exercise all of the powers, or only
specifically enumerated or described powers, of the Board in the management
of the business and affairs of the corporation.

The Executive Committee shall keep full and fair records and accounts of
its proceedings and transactions. All action by the Executive Committee
shall be reported to the Board at its meeting next succeeding such action and
shall be subject to control, revision and alteration by the Board; provided
that no rights of third persons shall be prejudicially affected thereby.

Vacancies on the Executive Committee shall be filled by the Board.

(b) COMPENSATION COMMITTEE. The Board shall appoint the
Compensation Committee, which shall consist of THREE (3) or more directors, a
majority of which are independent directors. For purposes of this section,
an independent director is a director who is not an employee, officer or
former officer of the corporation or a subsidiary or division thereof, or a
relative of a principal executive officer, or who is not an individual member
of an organization acting as an advisor, consultant or legal counsel
receiving compensation on a continuing basis from the corporation in addition
to director's fees. The Board shall designate one (1) of the members as
Chairman of the Committee. The Compensation Committee shall review and
report to the Board on company compensation programs and policies to assure
that they are competitive and provide for internal equity; review and advise
the President on specific compensation matters for officers and top
executives; and perform such other duties as the Board may require.

(c) AUDIT COMMITTEE. The Board shall appoint the Audit Committee,
which shall consist of not less than THREE (3) or more directors who are
independent directors of the corporation. The Board shall designate one (1)
of the members as Chairman of the Committee. The Audit Committee shall
review and report to the Board on the corporation's audit procedures and
policies, make recommendations concerning such policies and procedures, and
perform such other duties as the Board may require.

(d) GENERAL. The Board may by resolution provide for such other
standing committees or special committees as it deems desirable and
discontinue the same at its pleasure. Each such committee shall have such
powers and perform such duties, not inconsistent with law, as may be
delegated to it by the Board. The Board shall appoint the members of any and
all such committees and shall designate the Chairman of each such committee.
Subject to the provisions of this Code of Regulations, committees formed by
the Board shall fix their own rules of procedure and shall meet as provided
by such rules or by resolutions of the Board, and they shall also meet at the
call of the Chairman of the Board, the President, any two members of the
committee, or the sole surviving member of the committee. A majority of the
surviving members of a committee shall be necessary to constitute a quorum.
Any committee, including the Executive Committee, may act in writing, or by
cable or telegraph or by telephone with written confirmation, without a
meeting; but no such action of a committee shall be effective unless
concurred in by all members of the committee.

Appendix I - 6

<PAGE>

ARTICLE V - ELECTION OF OFFICERS

At the first meeting of the Board in each year (at which a quorum
shall be present) held next after the annual meeting of the shareholders, the
Board shall elect the officers of the corporation. Officers may also be
elected at any regular meeting of the Board or at any special meeting called
for such purpose.

ARTICLE VI - OFFICERS

(a) DESIGNATION. The officers of this corporation shall be a
Chairman of the Board, a Chief Executive Officer, a President, one or more
Senior Vice Presidents, one or more Vice Presidents, a Secretary, a
Treasurer, and such other officers as the Board may, from time to time,
elect, all of whom may or may not be directors. The Chairman of the Board
must be a director of the corporation. Any person may hold two or more
offices, except that one person may not simultaneously hold the offices of
President and Secretary. Said officers shall be chosen by the Board and shall
hold office for one (1) year, or until their successors are elected and
qualified.

(b) REMOVAL. Any officer elected by the Board may be removed at
any time, with or without cause, upon vote of the majority of the whole
Board. Any officer appointed not by the Board but by an officer or committee
to which the Board shall have delegated the power of appointment may also be
removed at any time, with or without cause, by the committee or superior
officer (including successors) who made the appointment, or by any committee
or officer upon whom such power of removal may be conferred by the Board.

(c) RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board, the Chairman of the Board, the President, or the
Secretary of the corporation. Any such resignation shall take effect at the
time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.

(d) CONFLICTS OF INTEREST. An officer of the corporation shall
not be disqualified by his office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or other act of the corporation shall be void or
voidable or in any way affected or invalidated solely by reason of the fact
that any officer or any firm, corporation or trust in which such officer is a
member or is a beneficiary, shareholder, director, officer or trustee, is in
any way interested in such transaction, contract or other act, provided that
the conditions of Section 1701.60 of the General Corporation Law of Ohio, as
the same now exists or may hereafter be amended, are satisfied. No officer
shall be accountable or responsible to the corporation for or in respect of
any such transaction, contract or other act of the corporation or for any
gains or profits realized by him by reason of the fact that he or any firm of
which he is a member or any corporation or trust in which he is a
beneficiary, shareholder, director, officer or trustee is interested in such
transaction, contract or other act.

ARTICLE VII - DUTIES OF OFFICERS

(a) CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of directors. He shall exercise, subject to the
control of the Board and the shareholders of the corporation, a general
supervision over the affairs of the corporation, and shall perform generally
all duties incident to the office and such other duties as may be assigned to
him from time to time by the Board.

(b) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
have general control and management of the business affairs and policies of
the corporation. He shall be generally responsible for the proper conduct of
the business of the corporation. Except as otherwise provided by law, the
Articles of Incorporation, this Code of Regulations or resolution of the
Board, the Chief Executive Officer shall possess the

Appendix I - 7

<PAGE>

same power as the President to sign all certificates, contracts, and other
instruments of the corporation. During the absence or disability of the
President, the Chief Executive Officer shall exercise all the powers and
discharge all of the duties of the President. The Chief Executive Officer
shall preside at all meetings of the shareholders. The Chief Executive
Officer shall have such other powers and perform such other duties as from
time to time may be conferred upon him by the Board.

(c) PRESIDENT. The President shall be the principal operating and
administrative officer of the corporation. If there is no Chief Executive
Officer or during the absence or disability of the Chief Executive Officer,
he shall exercise all of the powers and discharge all of the duties of the
Chief Executive Officer. Except as otherwise provided by law, the Articles
of Incorporation, this Code of Regulations or resolution of the Board, the
President shall possess the power to sign all certificates, contracts and
other instruments of the corporation. The President shall, in the absence of
the Chief Executive Officer, preside at all meetings of the shareholders.
The President shall perform all other duties as are incident to his office or
are properly required by him by the Board.

(d) VICE PRESIDENT. The Vice Presidents shall have such powers and
perform such duties as may be assigned to them by the Board or the President.

(e) SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and directors and all other notices
required by law or by this Code of Regulations and, in case of his absence or
refusal or neglect to do so for a period of fifteen (15) days, any such
notice may be given by a person thereunto directed by the President, or by
the directors or shareholders upon whose request the meeting is called as
provided in this Code of Regulations. The Secretary shall record all the
proceedings of the meetings of the corporation and of the directors in a book
to be kept for that purpose and shall perform such other duties as may be
assigned to him by the Board or the President. The Secretary shall have the
custody of the seal of the corporation, if any, and shall affix the same to
all instruments requiring it, when authorized by the directors or the
President, and attest the same.

(f) TREASURER. The Treasurer shall have the custody of the funds
and securities of the corporation which may come into his hands, and shall do
with the same as may be ordered by the Board. When necessary or proper, he
may endorse on behalf of the corporation, for collection, checks, notes and
other obligations. He shall deposit the funds of the corporation to its
credit in such hands and depositories as the Board may, from time to time,
designate. He shall also have such further duties as may be assigned to him
by the Board.

ARTICLE VIII - INDEMNIFICATION

(a) MANDATORY INDEMNIFICATION. THE CORPORATION SHALL INDEMNIFY ANY
OFFICER OR DIRECTOR OF THE CORPORATION WHO WAS OR IS A PARTY OR IS THREATENED
TO BE MADE A PARTY TO ANY THREATENED, PENDING OR COMPLETED ACTION, SUIT OR
PROCEEDING, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE
(INCLUDING, WITHOUT LIMITATION, ANY ACTION THREATENED OR INSTITUTED BY OR IN
THE RIGHT OF THE CORPORATION), BY REASON OF THE FACT THAT HE IS OR WAS A
DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION, OR IS OR WAS SERVING
AT THE REQUEST OF THE CORPORATION AS A DIRECTOR, TRUSTEE, OFFICER, EMPLOYEE,
MEMBER, MANAGER OR AGENT OF ANOTHER CORPORATION (DOMESTIC OR FOREIGN,
NONPROFIT OR FOR PROFIT), LIMITED LIABILITY COMPANY, PARTNERSHIP, JOINT
VENTURE, TRUST OR OTHER ENTERPRISE, AGAINST EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES, FILING FEES, COURT REPORTERS' FEES AND
TRANSCRIPT COSTS), JUDGMENTS, FINES AND AMOUNTS PAID IN SETTLEMENT ACTUALLY
AND REASONABLY INCURRED BY HIM IN CONNECTION WITH SUCH ACTION, SUIT OR
PROCEEDING IF HE ACTED IN GOOD FAITH AND IN A MANNER HE REASONABLY BELIEVED
TO BE IN OR NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION. A PERSON
CLAIMING INDEMNIFICATION UNDER THIS SECTION SHALL BE PRESUMED, IN RESPECT OF
ANY ACT OR OMISSION GIVING RISE TO SUCH CLAIM FOR INDEMNIFICATION, TO HAVE
ACTED IN GOOD FAITH AND IN A MANNER HE REASONABLY BELIEVED TO BE IN OR NOT
OPPOSED TO THE BEST INTERESTS OF THE CORPORATION, AND THE TERMINATION OF ANY
ACTION SUIT OR PROCEEDING BY JUDGMENT, ORDER, SETTLEMENT OR CONVICTION, OR
UPON A PLEA OF NOLO CONTENDERE OR ITS EQUIVALENT, SHALL NOT, OF ITSELF, REBUT
SUCH PRESUMPTION. ANY INDEMNIFICATION UNDER THIS SECTION, UNLESS ORDERED BY
A COURT, SHALL BE MADE BY THE CORPORATION ONLY UPON A DETERMINATION THAT THE
DIRECTOR OR OFFICER HAS MET THE APPLICABLE

Appendix I - 8

<PAGE>

STANDARD OF CONDUCT AND SUCH DETERMINATION SHALL BE MADE BY (i) A MAJORITY
VOTE OF A QUORUM CONSISTING OF DIRECTORS OF THE CORPORATION WHO WERE AND ARE
NOT PARTIES TO, OR THREATENED WITH, ANY SUCH ACTION, SUIT OR PROCEEDING, (ii)
IF SUCH A QUORUM IS NOT OBTAINABLE OR IF A MAJORITY OF A QUORUM OF
DISINTERESTED DIRECTORS SO DIRECTS, IN A WRITTEN OPINION BY INDEPENDENT LEGAL
COUNSEL OTHER THAN AN ATTORNEY, OR A FIRM HAVING ASSOCIATED WITH IT AN
ATTORNEY, WHO HAS BEEN RETAINED BY OR WHO HAS PERFORMED SERVICES FOR OR ANY
PERSON TO BE INDEMNIFIED, WITHIN THE PAST FIVE YEARS, OR (iii) BY THE
SHAREHOLDERS.

(b) INDEMNIFICATION AND ADVANCES FOR EXPENSES. ANYTHING CONTAINED IN
THE REGULATIONS OR ELSEWHERE TO THE CONTRARY NOTWITHSTANDING, TO THE EXTENT
THAT AN OFFICER OR DIRECTOR OF THE CORPORATION HAS BEEN SUCCESSFUL ON THE
MERITS OR OTHERWISE IN DEFENSE OF ANY ACTION, SUIT OR PROCEEDING, HE SHALL BE
PROMPTLY INDEMNIFIED BY THE CORPORATION AGAINST EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES, FILING FEES, COURT REPORTERS' FEES AND
TRANSCRIPT COSTS) ACTUALLY AND REASONABLY INCURRED BY HIM IN CONNECTION
THEREWITH. EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES, FILING
FEES, COURT REPORTERS' FEES AND TRANSCRIPT COSTS) INCURRED IN DEFENDING ANY
ACTION, SUIT OR PROCEEDING SHALL BE PAID BY THE CORPORATION IN ADVANCE OF THE
FINAL DISPOSITION OF SUCH ACTION, SUIT OR PROCEEDING TO OR ON BEHALF OF THE
OFFICER OR DIRECTOR PROMPTLY AS SUCH EXPENSES ARE INCURRED BY HIM IF: (i) IN
RESPECT OF ANY CLAIM, EXCEPT ONE IN WHICH THE ONLY LIABILITY ASSERTED AGAINST
A DIRECTOR IS PURSUANT TO SECTION 1701.95 OF THE OHIO REVISED CODE, THE
CORPORATION RECEIVES AN UNDERTAKING BY OR ON BEHALF OF THE DIRECTOR, IN WHICH
HE AGREES TO REPAY ALL SUCH AMOUNTS IF IT IS PROVED BY CLEAR AND CONVINCING
EVIDENCE IN A COURT OF COMPETENT JURISDICTION THAT HIS ACTION OR FAILURE TO
ACT INVOLVED AN ACT OR OMISSION UNDERTAKEN WITH DELIBERATE INTENT TO CAUSE
INJURY TO THE CORPORATION OR UNDERTAKEN WITH RECKLESS DISREGARD FOR THE BEST
INTERESTS OF THE CORPORATION AND AGREES TO COOPERATE REASONABLY WITH THE
CORPORATION CONCERNING THE ACTION, SUIT, OR PROCEEDING; OR (ii) THE
CORPORATION RECEIVES AN UNDERTAKING BY OR ON BEHALF OF THE DIRECTOR OR
OFFICER IN WHICH HE AGREES TO REPAY ALL SUCH AMOUNTS IF IT ULTIMATELY IS
DETERMINED THAT HE IS NOT ENTITLED TO BE INDEMNIFIED BY THE CORPORATION UNDER
SECTION (a) OF THIS ARTICLE VIII.

(c) ARTICLE VIII NOT EXCLUSIVE. THE INDEMNIFICATION PROVIDED BY THIS
ARTICLE VIII SHALL NOT BE EXCLUSIVE OF, AND SHALL BE IN ADDITION TO, ANY
OTHER RIGHTS TO WHICH ANY PERSON SEEKING INDEMNIFICATION MAY BE ENTITLED
UNDER ANY AGREEMENT, VOTE OF SHAREHOLDERS OR DISINTERESTED DIRECTORS, OR
OTHERWISE, BOTH AS TO ACTION IN HIS OFFICIAL CAPACITY AND AS TO ACTION IN
ANOTHER CAPACITY WHILE HOLDING SUCH OFFICE, AND SHALL CONTINUE AS TO A PERSON
WHO HAS CEASED TO BE AN OFFICER OR DIRECTOR OF THE CORPORATION AND SHALL
INURE TO THE BENEFIT OF THE HEIRS, EXECUTORS, AND ADMINISTRATORS OF SUCH A
PERSON.

(d) INSURANCE. THE CORPORATION MAY PURCHASE AND MAINTAIN INSURANCE OR
FURNISH SIMILAR PROTECTION, INCLUDING BUT NOT LIMITED TO TRUST FUNDS, LETTERS
OF CREDIT, OR SELF-INSURANCE, ON BEHALF OF ANY PERSON WHO IS OR WAS A
DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION, OR IS OR WAS SERVING
AT THE REQUEST OF THE CORPORATION AS A DIRECTOR, TRUSTEE, OFFICER, EMPLOYEE,
MEMBER, MANAGER OR AGENT OF ANOTHER CORPORATION (DOMESTIC OR FOREIGN,
NONPROFIT OR FOR PROFIT), LIMITED LIABILITY COMPANY, PARTNERSHIP, JOINT
VENTURE, TRUST OR OTHER ENTERPRISE, AGAINST ANY LIABILITY ASSERTED AGAINST
HIM AND INCURRED BY HIM IN ANY SUCH CAPACITY, OR ARISING OUT OF HIS STATUS AS
SUCH, WHETHER OR NOT THE CORPORATION WOULD HAVE THE OBLIGATION OR THE POWER
TO INDEMNIFY HIM AGAINST SUCH LIABILITY UNDER THE PROVISIONS OF THIS ARTICLE
VIII.

ARTICLE IX - CONTROL SHARE ACQUISITION PROVISIONS

(a) UNLESS THE DIRECTORS OF THE CORPORATION HAVE PRE-APPROVED A
PROPOSED CONTROL SHARE ACQUISITION, SUCH CONTROL SHARE ACQUISITION SHALL BE
MADE ONLY WITH THE PRIOR AUTHORIZATION OF THE SHAREHOLDERS OF THE CORPORATION
IN ACCORDANCE WITH THIS ARTICLE IX.

(b) UNLESS THE DIRECTORS WAIVE SUCH REQUIREMENT WITH RESPECT TO ANY
PARTICULAR PROPOSED CONTROL SHARE ACQUISITION, ANY PERSON WHO PROPOSES TO
MAKE A CONTROL SHARE ACQUISITION SHALL DELIVER NOTICE (AN "ACQUIRING PERSON
STATEMENT") TO THE CORPORATION AT THE CORPORATION'S PRINCIPAL EXECUTIVE
OFFICES. SUCH ACQUIRING PERSON STATEMENT SHALL SET FORTH ALL OF THE
FOLLOWING:

Appendix I - 9

<PAGE>

(1) THE IDENTITY OF THE ACQUIRING PERSON;

(2) A STATEMENT THAT THE ACQUIRING PERSON STATEMENT IS GIVEN PURSUANT TO
ARTICLE IX;

(3) THE NUMBER OF SHARES OF COMMON STOCK OF THE CORPORATION OWNED,
DIRECTLY OR INDIRECTLY, BY THE ACQUIRING PERSON;

(4) THE RANGE OF VOTING POWER, DESCRIBED IN ARTICLE IX(f)(2)(A)(i), (ii)
OR (iii) HEREOF, UNDER WHICH THE PROPOSED CONTROL SHARE ACQUISITION WOULD,
IF CONSUMMATED, FALL;

(5) A DESCRIPTION IN REASONABLE DETAIL OF THE TERMS OF THE PROPOSED
CONTROL SHARE ACQUISITION; AND

(6) REPRESENTATIONS OF THE ACQUIRING PERSON, TOGETHER WITH A STATEMENT IN
REASONABLE DETAIL OF THE FACTS UPON WHICH THEY ARE BASED, THAT THE
PROPOSED CONTROL SHARE ACQUISITION, IF CONSUMMATED, WILL NOT BE CONTRARY
TO LAW, AND THAT THE ACQUIRING PERSON HAS THE FINANCIAL CAPACITY TO MAKE
THE PROPOSED CONTROL SHARE ACQUISITION.

(c) AS SOON AS REASONABLY PRACTICABLE AFTER RECEIPT OF AN ACQUIRING
PERSON STATEMENT THAT COMPLIES WITH ARTICLE IX(b) HEREOF, THE DIRECTORS SHALL
SET A DATE FOR A SPECIAL MEETING OF SHAREHOLDERS FOR THE PURPOSE OF VOTING ON
THE PROPOSED CONTROL SHARE ACQUISITION, WHICH DATE, UNLESS THE ACQUIRING
PERSON AGREES IN WRITING TO ANOTHER DATE, SHALL BE WITHIN NINETY (90) DAYS
AFTER RECEIPT BY THE CORPORATION OF THE ACQUIRING PERSON STATEMENT; PROVIDED,
THAT IN NO EVENT SHALL SUCH SPECIAL MEETING SHALL BE HELD SOONER THAN THIRTY
(30) DAYS AFTER RECEIPT BY THE CORPORATION OF THE ACQUIRING PERSON STATEMENT
OR LATER THAN ONE HUNDRED AND TWENTY (120) DAYS AFTER RECEIPT BY THE
CORPORATION OF THE ACQUIRING PERSON STATEMENT.

(d) NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS SHALL BE GIVEN AS
PROMPTLY AS REASONABLY PRACTICABLE BY THE CORPORATION TO ALL SHAREHOLDERS OF
RECORD AS OF THE RECORD DATE SET FOR SUCH MEETING, WHETHER OR NOT ENTITLED TO
VOTE THEREAT. SUCH NOTICE SHALL INCLUDE OR BE ACCOMPANIED BY BOTH OF THE
FOLLOWING:

(1) A COPY OF THE ACQUIRING PERSON STATEMENT DELIVERED TO THE
CORPORATION PURSUANT TO THIS ARTICLE IX; AND

(2) A STATEMENT BY THE CORPORATION, AUTHORIZED BY THE DIRECTORS,
OF ITS POSITION OR RECOMMENDATION, OR THAT IT IS TAKING NO POSITION
OR MAKING NO RECOMMENDATION, WITH RESPECT TO THE PROPOSED CONTROL
SHARE ACQUISITION.

(e) UNLESS THE DIRECTORS OF THE CORPORATION HAVE PRE-APPROVED A PROPOSED
CONTROL SHARE ACQUISITION, THE ACQUIRING PERSON MAY MAKE THE PROPOSED CONTROL
SHARE ACQUISITION ONLY IF BOTH OF THE FOLLOWING OCCUR:

(1) THE SHAREHOLDERS OF THE CORPORATION WHO HOLD SHARES OF
THE CORPORATION ENTITLING THEM TO VOTE IN THE ELECTION OF DIRECTORS
AUTHORIZE SUCH ACQUISITION AT THE SPECIAL MEETING HELD FOR THAT
PURPOSE AT WHICH A QUORUM IS PRESENT BY THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE VOTING POWER REPRESENTED AT SUCH MEETING IN PERSON
OR BY PROXY, EXCLUDING THE VOTING POWER OF INTERESTED SHARES. A
QUORUM SHALL BE DEEMED TO BE PRESENT AT SUCH SPECIAL MEETING IF AT
LEAST A MAJORITY OF THE VOTING POWER, AND A MAJORITY OF THE PORTION
OF SUCH VOTING POWER EXCLUDING THE VOTING POWER OF INTERESTED
SHARES ARE REPRESENTED AT SUCH MEETING IN PERSON OR BY PROXY; AND

(2) SUCH ACQUISITION IS CONSUMMATED, IN ACCORDANCE WITH THE
TERMS SO AUTHORIZED, NO LATER THAN THREE HUNDRED SIXTY (360) DAYS
FOLLOWING SHAREHOLDER AUTHORIZATION OF THE CONTROL SHARE
ACQUISITION.

Appendix I - 10

<PAGE>

(f) FOR PURPOSES OF THIS ARTICLE IX, THE FOLLOWING TERMS HAVE
THE FOLLOWING MEANINGS:

(1) "ACQUIRING PERSON" MEANS ANY PERSON WHO HAS DELIVERED AN
ACQUIRING PERSON STATEMENT.

(2) (A) "CONTROL SHARE ACQUISITION" MEANS THE ACQUISITION,
DIRECTLY OR INDIRECTLY, BY ANY PERSON OF SHARES OF THE CORPORATION
THAT, WHEN ADDED TO ALL OTHER SHARES OF THE CORPORATION IN RESPECT
OF WHICH SUCH PERSON MAY EXERCISE OR DIRECT THE EXERCISE OF VOTING
POWER, WOULD ENTITLE SUCH PERSON, IMMEDIATELY AFTER SUCH
ACQUISITION, DIRECTLY OR INDIRECTLY, ALONE OR WITH OTHERS, TO
EXERCISE OR DIRECT THE EXERCISE OF THE VOTING POWER WITHIN ANY OF
THE FOLLOWING RANGES OF SUCH VOTING POWER:

(i) ONE-FIFTH OR MORE BUT LESS THAN ONE-THIRD OF SUCH VOTING
POWER;

(ii) ONE-THIRD OR MORE BUT LESS THAN A MAJORITY OF SUCH VOTING
POWER; OR

(iii) A MAJORITY OR MORE OF SUCH VOTING POWER.

A BANK, BROKER, NOMINEE, TRUSTEE OR OTHER PERSON WHO
ACQUIRES SHARES IN THE ORDINARY COURSE OF BUSINESS FOR THE BENEFIT
OF OTHERS IN GOOD FAITH AND NOT FOR THE PURPOSE OF CIRCUMVENTING
THIS ARTICLE IX SHALL, HOWEVER, BE DEEMED TO HAVE VOTING POWER ONLY
OF SHARES IN RESPECT OF WHICH SUCH PERSON WOULD BE ABLE, WITHOUT
FURTHER INSTRUCTIONS FROM OTHERS, TO EXERCISE OR DIRECT THE
EXERCISE OF VOTES ON A PROPOSED CONTROL SHARE ACQUISITION AT A
MEETING OF SHAREHOLDERS CALLED PURSUANT TO THIS ARTICLE IX.

(B) THE ACQUISITION BY ANY PERSON OF ANY SHARES OF THE
CORPORATION DOES NOT CONSTITUTE A CONTROL SHARE ACQUISITION FOR THE
PURPOSES OF THIS ARTICLE IX IF THE ACQUISITION WAS OR IS
CONSUMMATED IN, RESULTS FROM OR IS THE CONSEQUENCE OF ANY OF THE
FOLLOWING CIRCUMSTANCES:

(i) BY BEQUEST OR INHERITANCE, BY OPERATION OF LAW UPON
THE DEATH OF AN INDIVIDUAL, OR BY ANY OTHER TRANSFER WITHOUT
VALUABLE CONSIDERATION, INCLUDING A GIFT, THAT IS MADE IN GOOD
FAITH AND NOT FOR THE PURPOSE OF CIRCUMVENTING THIS ARTICLE IX;

(ii) PURSUANT TO THE SATISFACTION OF A PLEDGE OR OTHER
SECURITY INTEREST CREATED IN GOOD FAITH AND NOT FOR THE PURPOSE OF
CIRCUMVENTING THIS ARTICLE IX;

(iii) PURSUANT TO A MERGER OR CONSOLIDATION ADOPTED,
OR A COMBINATION OR MAJORITY SHARE ACQUISITION AUTHORIZED, BY
SHAREHOLDER VOTE IN COMPLIANCE WITH THE PROVISIONS OF SECTION
1701.78, 1701.781 OR 1701.83 OF THE OHIO REVISED CODE (OR ANY
SUCCESSORS TO SUCH PROVISIONS) PROVIDED THAT THE CORPORATION IS THE
SURVIVING OR NEW CORPORATION IN THE MERGER OR CONSOLIDATION OR IS
THE ACQUIRING CORPORATION IN THE COMBINATION OR MAJORITY SHARE
ACQUISITION;

(iv) THE PERSON'S BEING ENTITLED, IMMEDIATELY THEREAFTER,
TO EXERCISE OR DIRECT THE EXERCISE OF VOTING POWER WITHIN THE SAME
RANGE THERETOFORE ATTAINED BY THAT PERSON EITHER IN COMPLIANCE WITH
THE PROVISIONS OF THIS ARTICLE IX OR AS A RESULT SOLELY OF THE
CORPORATION'S PURCHASE OF SHARES ISSUED BY IT.

THE ACQUISITION BY ANY PERSON OF SHARES OF THE CORPORATION IN A
MANNER DESCRIBED UNDER ARTICLE IX(f)(2)(B) SHALL BE DEEMED A CONTROL SHARE
ACQUISITION AUTHORIZED PURSUANT TO THIS ARTICLE IX WITHIN THE RANGE OF VOTING
POWER UNDER ARTICLE IX(f)(2)(A)(i), (ii) OR (iii) THAT SUCH PERSON IS
ENTITLED TO EXERCISE AFTER SUCH ACQUISITION, PROVIDED IN THE CASE OF AN
ACQUISITION IN A MANNER DESCRIBED UNDER ARTICLE

Appendix I - 11
<PAGE>

IX(F)(2)(B)(i) OR (ii), THE TRANSFEROR OF SHARES TO SUCH PERSON HAD
PREVIOUSLY OBTAINED ANY AUTHORIZATION OF THE DIRECTORS OR SHAREHOLDERS
REQUIRED UNDER THIS ARTICLE IX IN CONNECTION WITH SUCH TRANSFEROR'S
ACQUISITION OF SHARES OF THE CORPORATION.

(C) THE ACQUISITION OF SHARES OF THE CORPORATION IN GOOD FAITH AND
THE PURPOSE OF CIRCUMVENTING THIS ARTICLE IX FROM ANY PERSON WHOSE CONTROL
SHARE ACQUISITION PREVIOUSLY HAD BEEN APPROVED BY THE DIRECTORS OR AUTHORIZED
BY THE SHAREHOLDERS IN COMPLIANCE WITH THIS ARTICLE IX, OR FROM ANY PERSON
WHOSE PREVIOUS ACQUISITION OF SHARES OF THE CORPORATION WOULD HAVE
CONSTITUTED A CONTROL SHARE ACQUISITION BUT FOR ARTICLE IX(F)(2)(B) OR (C),
DOES NOT CONSTITUTE A CONTROL SHARE ACQUISITION FOR THE PURPOSES OF THIS
ARTICLE IX UNLESS SUCH ACQUISITION ENTITLES THE PERSON MAKING THE
ACQUISITION, DIRECTLY OR INDIRECTLY, ALONE OR WITH OTHERS, TO EXERCISE OR
DIRECT THE EXERCISE OF VOTING POWER IN EXCESS OF THE RANGE OF SUCH VOTING
POWER AUTHORIZED PURSUANT TO THIS ARTICLE IX, OR DEEMED TO BE SO AUTHORIZED
UNDER ARTICLE IX(F)(2)(B).

(3) "INTERESTED SHARES" MEANS THE SHARES OF THE CORPORATION IN
RESPECT OF WHICH ANY OF THE FOLLOWING PERSONS MAY EXERCISE OR
DIRECT THE EXERCISE OF VOTING POWER:

(A) AN ACQUIRING PERSON;

(B) ANY OFFICER OF THE CORPORATION ELECTED OR
APPOINTED BY THE DIRECTORS; OR

(4) "VOTING POWER" MEANS VOTING POWER OF THE CORPORATION IN THE
ELECTION OF DIRECTORS.

ARTICLE X - AMENDMENTS

These Regulations may be adopted, amended or repealed by the
affirmative vote of a majority of the shares empowered to vote thereon at any
meeting called and held for that purpose, notice of which meeting has been
given pursuant to law, or without a meeting by the written consent of the
owners of a majority of the shares of the corporation entitled to vote
thereon; PROVIDED, HOWEVER, THAT THE AFFIRMATIVE VOTE OF THE HOLDERS OF
SHARES ENTITLING THEM TO EXERCISE NOT LESS THAN TWO-THIRDS OF THE VOTING
POWER OF THE CORPORATION, OR TWO-THIRDS OF THE VOTING POWER OF ANY CLASS OR
CLASSES OF SHARES OF THE CORPORATION WHICH ENTITLE THE HOLDERS THEREOF TO
VOTE IN RESPECT OF ANY SUCH MATTER AS A CLASS, SHALL BE REQUIRED, WHETHER AT
ANY MEETING CALLED AND HELD FOR THAT PURPOSE, OR WITHOUT A MEETING IN AN
ACTION BY WRITTEN CONSENT, TO ADOPT, AMEND OR REPEAL ANY OF THE FOLLOWING
PROVISIONS OF THESE REGULATIONS: (1) ARTICLE I(b); (2) ARTICLE I(c); (3)
ARTICLE III(b); (4) ARTICLE III(c); (5) ARTICLE III(e); (6) ARTICLE III(m);
(7) ARTICLE III(n); (8) ARTICLE VIII; (9) ARTICLE IX; OR (10) THIS ARTICLE X;
PROVIDED, FURTHER, THAT THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES
ENTITLING THEM TO EXERCISE NOT LESS THAN 75% OF THE VOTING POWER OF THE
CORPORATION, OR 75% OF THE VOTING POWER OF ANY CLASS OR CLASSES OF SHARES OF
THE CORPORATION WHICH ENTITLE THE HOLDERS THEREOF TO VOTE IN RESPECT OF ANY
SUCH MATTER AS A CLASS, SHALL BE REQUIRED, WHETHER AT ANY MEETING CALLED AND
HELD FOR THAT PURPOSE, OR WITHOUT A MEETING IN AN ACTION BY WRITTEN CONSENT,
TO ADOPT, AMEND OR REPEAL ARTICLE III(d) OF THESE REGULATIONS.

Appendix I - 12

<PAGE>

DETACH HERE

PROXY M/I SCHOTTENSTEIN HOMES, INC.
3 EASTON OVAL, COLUMBUS, OHIO 43219

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS, APRIL 28, 1998.

The undersigned hereby appoints Irving E. Schottenstein and Paul S.
Coppel and each of them, proxies of the undersigned, with full power of
substitution, to attend the Annual Meeting of Shareholders to be held on
April 28, 1998, or any adjournment thereof, and to vote all shares of Common
Stock of M/I Schottenstein Homes, Inc. which the undersigned is entitled to
vote at such Annual Meeting or at any adjournment thereof as set forth below:

THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTIVE IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR: THE ELECTION OF THE NAMED
NOMINEES FOR DIRECTORS AND "FOR" THE PROPOSAL TO AMEND AND RESTATE THE
REGULATIONS. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT THEREOF, OR IF A NOMINEE FOR ELECTION AS A
DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE
WILL NOT SERVE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S)
AS THE DIRECTORS MAY RECOMMEND.

The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders, dated March ___, 1998, the Proxy Statement furnished
therewith, and the Annual Report of the company for the fiscal year ended
December 31, 1997. Any proxy heretofore given to vote the Common Stock which
the undersigned is entitled to vote at the Annual Meeting of Shareholders is
hereby revoked.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
IN THE ENCLOSED ENVELOPE.

(SEE REVERSE SIDE)

<PAGE>

DETACH HERE

/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE.

M/I SCHOTTENSTEIN HOMES, INC.

1. To elect the nominees named
below as directors.
NOMINEES: Friedrich K.M. Bohm, / / MARK HERE FOR
Jeffrey H. Miro and Robert H. ADDRESS CHANGE AND
Schottenstein NOTE AT LEFT

FOR WITHHOLD
/ / / /
Dated:________________, 1998

Signature:
---------------------
/ /
------------------------- Signature:
FOR ALL (Except Nominee(s) ---------------------
written above)
Title:
2. To amend and restate the -------------------------
Regulations of M/I Schottenstein
Homes, Inc. Please sign exactly as your name
or names appear hereon. Joint
FOR AGAINST owners should each sign. Executors,
/ / / / administrators, trustees,
guardians, and others should give
ABSTAIN their full title. Corporations and
/ / partnerships should sign in their
full name by president or other
authorized person.