Exhibit 10.1

STEIN MART, INC.

2001 OMNIBUS PLAN

OPTION AWARD AGREEMENT

(Linda McFarland Farthing)

THIS AGREEMENT is made and entered into as of the date set forth on the
signature page hereof by and between STEIN MART, INC., a Florida corporation
(“Company”), and Farthing of the Company whose signature is set forth on the
signature page hereof (“Farthing”).

W I T N E S S E T H

WHEREAS, the Company has adopted the Stein Mart, Inc. 2001 Omnibus Plan
(“Plan”), the terms of which, to the extent not stated herein, are specifically
incorporated by reference in this Agreement;

WHEREAS, the purpose of the Plan is to permit Awards under the Plan to be
granted to certain Farthings of the Company and its Affiliates and to further
specify the terms and conditions under which such individuals may receive such
Awards;

WHEREAS, Farthing is now employed or engaged by the Company or an Affiliate in a
Farthing capacity and the Company desires him or her to remain in such capacity,
and to secure or increase his or her ownership of Shares in order to increase
his or her incentive and personal interest in the success and growth of the
Company; and

WHEREAS, defined terms used herein and not otherwise defined herein shall have
the meanings set forth in the Plan.

NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:

1) Option Grant. (a) Subject to the terms and conditions set forth herein, the
Company hereby grants to Farthing an option (the “Option”) to purchase from the
Company all or any part of the aggregate number of Shares (hereinafter referred
to as the “Option Stock”) set forth on the signature page hereof, at the
purchase price per Share set forth on the signature page hereof. The options
shall be subject to the following restrictions on exercise and sale of shares:

 

  a) Vesting: The Options shall vest immediately, in their entirety;

 

  b) Termination. The Option shall not be exercisable after the earlier to occur
of (i) seven years from this date; or (ii) 90 days following Ms. Farthing’s
ceasing to be either an executive officer or a member of the Board of Directors
of the Company; and

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  c) Sale of Option Shares. The shares acquired in exercise of the options shall
not be sold by Farthing until the earlier to occur of (i) one year from the date
hereof; or (ii) a change of control of the Company.

Absence of Farthing on leave approved by a duly elected officer of the Company,
other than Farthing, shall not be considered a termination of employment during
the period of such leave. The Option may be exercised in whole or in part (but
any exercise shall be for whole Shares) by notice in writing to the Company. The
aggregate purchase price for the Shares for which the Option is exercised shall
be paid to the Company at the time of exercise in cash, Shares registered in the
name of Farthing, or by a combination thereof, all as provided on the signature
page hereof. The approval of the board of directors of the Company is required
in order for Shares held by Farthing for fewer than six months to be used in
payment of the exercise price of the Option. Unless otherwise provided on the
signature page hereof, the Option shall not be an Incentive Stock Option for
purposes of Section 422 of the Code. Unless otherwise provided on the signature
page hereof, the Option shall not have the “reload feature” described in
Section 6.1 of the Plan, as of the date of grant.

(b) If the purchase price may be paid wholly or partly in Shares, any Shares
tendered in payment thereof shall be free of all adverse claims and duly
endorsed in blank by Farthing or accompanied by stock powers duly endorsed in
blank. Shares tendered shall be valued at Fair Market Value on the date on which
the Option is exercised. As used herein, “Fair Market Value” means the per Share
closing price on the date in question in the principal market in which the
Shares are then traded or, if no sales of Shares have taken place on such date,
the closing price on the most recent date on which selling prices were quoted;
provided, however, that for any Option that is not an Incentive Stock Option,
the Committee in its discretion may elect to determine Fair Market Value with
respect to such Shares, based on the average of the closing prices, as of the
date of determination and a period of up to 20 trading days immediately
preceding such date. If such proviso is to be applicable, the signature page
hereof sets forth the number of trading days in such period.

2. Nontransferability of Option. This Option is not transferable other than by
will or by the laws of descent and distribution. The Option may be exercised
during the life of Farthing only by Farthing (or his/her legal representative).

3. Exercise of Option. (a) Except as provided herein, the Option shall be
exercisable only prior to the Expiration Date

(b) If Farthing’s employment with the Company and all Affiliates is terminated
because of death or Total Disability (as such terms are defined below) on or
after the Initial Exercise Date, then notwithstanding anything herein to the
contrary, Farthing or, in the case of his death, his Beneficiary (as defined
herein) shall be entitled to exercise the Option until twelve months after the
date of termination until the Expiration Date. If such a termination of
employment occurs prior to the Initial Exercise Date, Farthing, or in the case
of his death, his Beneficiary, shall be entitled to exercise the Option to the
extent, if any, as the Committee may determine.

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(c) If Farthing’s employment with the Company is terminated on or after the
Initial Exercise Date for any reason other than Cause (as defined below), death
or Total Disability, Farthing shall be entitled to exercise the Option, to the
extent exercisable pursuant to paragraph 1(b) above. If such a termination of
employment occurs prior to the Initial Exercise Date, Farthing shall be entitled
to exercise the Option during such 90-day period to the extent, if any, as the
Committee may determine.

(d) As used herein, “Cause” means theft or destruction of property of the
Company or any Affiliate, disregard of Company rules or policies, or conduct
evidencing willful or wanton disregard of the interest of the Company. Such
determination shall be made by the Committee based on information presented by
the Company and Farthing and shall be final and binding on all parties hereto.

(e) If Farthing’s employment with the Company is terminated for Cause, Farthing
shall have no right to exercise any portion of any Option not yet exercised as
of the date of such termination for Cause.

4. Beneficiary. (a) The person whose name appears on the signature page hereof
after the caption “Beneficiary” or any successor designated by Farthing in
accordance herewith (the person who is Farthing’s Beneficiary at the time of his
death herein referred to as the “Beneficiary”) shall be entitled to exercise the
Option, to the extent it is exercisable, after the death of Farthing. Farthing
may from time to time revoke or change his Beneficiary without the consent of
any prior Beneficiary by filing a new designation with the Committee. The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to Farthing’s death, and in no
event shall any designation be effective as of a date prior to such receipt.

(b) If no such Beneficiary designation is in effect at the time of a Farthing’s
death, or if no designated Beneficiary survives Farthing or if such designation
conflicts with law, Farthing’s estate shall be entitled to exercise the Option,
to the extent it is exercisable after the death of Farthing. If the Committee is
in doubt as to the right of any person to exercise the Option, the Company may
refuse to recognize such exercise, without liability for any interest or
dividends on the Option Stock, until the Committee determines the person
entitled to exercise the Option, or the Company may apply to any court of
appropriate jurisdiction and such application shall be a complete discharge of
the liability of the Company therefor.

5. No Rights As Stockholder. Farthing shall have no rights as a holder of the
Option Stock until the issuance of a certificate for the Option Stock.

6. Tax Withholding. (a) It shall be a condition of the obligation of the Company
to issue Option Stock to Farthing or the Beneficiary, and Farthing agrees, that

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Farthing shall pay to the Company upon its demand, such amount as may be
requested by the Company for the purpose of satisfying its liability to withhold
federal, state, or local income or other taxes incurred by reason of the
exercise of the Option.

(b) If the Option is not an Incentive Stock Option, Farthing may elect to have
the Company withhold that number of Shares of Option Stock otherwise issuable to
Farthing upon exercise of the Option or to deliver to the Company a number of
Shares, in each case, having a Fair Market Value on the Tax Date (as defined
below) equal to the minimum amount required to be withheld as a result of such
exercise. The election must be made in writing and must be delivered to the
Company prior to the Tax Date. If the number of shares so determined shall
include a fractional share, Farthing shall deliver cash in lieu of such
fractional share. All elections shall be made in a form approved by the
committee and shall be subject to disapproval, in whole or in part by the
Committee. As used herein, Tax Date means the date on which Farthing must
include in his gross income for federal income tax purposes the fair market
value of the Option Stock over the purchase price therefor.

7. Adjustments in Event of Change in Shares. In the event that the Committee
shall determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of securities of the Company, or
other similar corporate transaction or event affects the Shares issuable on
exercise of the Option, such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in such manner as it may deem equitable, adjust the number and
type of Shares awarded pursuant to this Agreement, or the terms, conditions, or
restrictions of this Agreement; provided, however, that with respect to Awards
of Incentive Stock Options no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provision thereto; and provided further, that the number
of Shares subject to any Award payable or denominated in Shares shall always be
a whole number.

8. Powers of Company Not Affected. The existence of the Option shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any combinations, subdivision or reclassification of the Shares or any
reorganization, merger, consolidation, business combination, exchange of Shares,
or other change in the Company’s capital structure or its business, or any issue
of bonds, debentures or stock having rights or preferences equal, superior or
affecting the Option Stock or the rights thereof or dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise. Nothing in this Agreement shall confer upon Farthing any
right to continue in the employment of the Company or any Affiliate, or
interfere with or limit in any way the right of the Company or any Affiliate to
terminate Farthing’s employment at any time.

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9. Interpretation by Committee. Farthing agrees that any dispute or disagreement
which may arise in connection with this Agreement shall be resolved by the
Committee, in its sole discretion, and that any interpretation by the Committee
of the terms of this Agreement or the Plan and any determination made by the
Committee under this Agreement or the Plan may be made in the sole discretion of
the Committee and shall be final, binding, and conclusive. Any such
determination need not be uniform and may be made differently among Farthings
awarded Option Stock.

10. Miscellaneous. (a) This Agreement shall be governed and construed in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed therein between residents thereof.

(b) This Agreement may not be amended or modified except by the written consent
of the parties hereto.

(c) The captions of this Agreement are inserted for convenience of reference
only and shall not be taken into account in construing this Agreement.

(d) Any notice, filing or delivery hereunder or with respect to Option Stock
shall be given to Farthing at either his usual work location or his home address
as indicated in the records of the Company, and shall be given to the Committee
or the Company at 1200 Riverplace Boulevard, Jacksonville, Florida 32202,
Attention Corporate Secretary. All such notices shall be given by first class
mail, postage prepaid, or by personal delivery.

(e) This Agreement shall be binding upon and inure to the benefit of the Company
and its successors and assigns and shall be binding upon and inure to the
personal benefit of Farthing, the Beneficiary and the personal representative(s)
and heirs of Farthing.

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officer, and Farthing has hereunto affixed his hand, all on the
day and year set forth below.

 

STEIN MART, INC. By:  

/s/ Jay Stein

  Jay Stein, President and CEO  

/s/ Linda Mc Farland Farthing

  Linda McFarland Farthing

This Option is a Non-Qualified Stock Option

No. of Shares of Option Stock: Two Hundred Thousand (200,000)

Purchase Price Per Share: $8.56

Grant Date: August 27, 2007

Initial Exercise Date: August 27, 2007

Expiration Date: August 26, 2014

 

PLEASE PRINT BENEFICIARY INFORMATION

Beneficiary:  

 

Address of Beneficiary:

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Beneficiary Tax Identification No. or Social Security No.: