EXHIBIT 10.21

 

As of January 11, 2006

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Agent

110 East Broward Boulevard, Suite 2050

Fort Lauderdale, Florida 33301

 

  Re: Amendment No. 1 to Loan and Security Agreement

 

Ladies and Gentlemen:

 

Wachovia Bank, National Association, successor by merger to Congress Financial
Corporation (Florida) (“Wachovia”), in its capacity as administrative and
collateral agent (“Agent”) for the Lenders from time to time party to the Loan
Agreement referred to below, the Lenders, Stein Mart, Inc., a Florida
corporation (“Stein Mart”) and Stein Mart Buying Corp., a Florida corporation
(“Buying Corp.”; and together with Stein Mart, being hereinafter referred to
individually as “Borrower” and collectively as “Borrowers”), have entered into
certain financing arrangements pursuant to the Loan and Security Agreement,
dated as of July 18, 2003, by and among Borrowers, Agent, Lenders, Wachovia and
Fleet Retail Finance, Inc., each in its capacity as Arranger, and General
Electric Capital Corporation, in its capacity as Documentation Agent (the “Loan
Agreement”) and all other Financing Agreements at any time executed and/or
delivered in connection therewith or related thereto.

 

Borrowers and Agent have agreed to extend the Renewal Date to January 11, 2011,
to decrease the Maximum Credit as of the date hereof (subject to Borrowers’
right to increase same, as set forth in Section 2.1(e), as amended by this
Amendment), decrease the Applicable Margin and amend various other provisions of
the Loan Agreement in connection with the foregoing, and Lenders are willing to
agree to the foregoing, on and subject to the terms and conditions contained in
this Amendment No. 1 to Loan and Security Agreement (this “Amendment”).

 

In consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, the parties hereto hereby agree as follows:

 

1. Defined Terms. All capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement, unless otherwise defined herein.

 

2. Additional Defined Terms. Section 1 of the Loan Agreement is hereby amended
by adding thereto, in addition and not in limitation, the following defined
terms:

 

“1.6A “Amendment No. 1” shall mean Amendment No. 1 to Loan and Security
Agreement, dated as of January 11, 2006, executed by and among Borrowers, Agent
and Lenders.”

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“1.6B “Amendment No. 1 Closing Date” shall mean January 11, 2006.”

 

“1.8A “Bank Products” shall mean any one or more of the following types or
services or facilities provided to Borrowers by a Bank Product Provider:
(a) credit cards or stored value cards or (b) cash management or related
services, including (i) the automated clearinghouse transfer of funds for the
account of Borrowers pursuant to agreement or overdraft for any accounts of
Borrowers maintained at Wachovia, and (ii) controlled disbursement services, and
(c) Hedge Agreements if and to the extent permitted hereunder.”

 

“1.49A “Hedge Agreement” shall mean an agreement between Borrowers and Wachovia
that is a rate swap agreement, basis swap, forward rate agreement, commodity
swap, forward commodity contracts, interest rate option, forward foreign
exchange agreement, spot foreign exchange agreement, rate cap agreement rate,
floor agreement, rate collar agreement, currency swap agreement, cross-currency
rate swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates,
currency valuations or commodity prices; sometimes being collectively referred
to herein as “Hedge Agreements”.”

 

“1.92 “Wachovia” shall mean Wachovia Bank, National Association (successor by
merger to Congress Financial Corporation (Florida)), in its individual capacity,
and its successors and assigns.”

 

3. Amendment of Certain Defined Terms.

 

(a) The definition of “Affiliate” is hereby amended to increase the percent of
ownership which is provided in subsections (a) and (b) thereof from ten percent
(10%) to twenty percent (20%).

 

(b) Borrowers have requested, and Required Lenders have agreed, that failure of
Jay Stein to own, directly or indirectly, any particular percentage of the
voting power of the outstanding Voting Stock of Stein Mart shall not result in a
Change of Control and, accordingly, the definition of Change of Control set
forth in Section 1.16 of the Loan Agreement is hereby amended by deleting clause
(e) thereof in its entirety and replacing it with the following:

 

“(e) [Intentionally Deleted].”

 

(c) The definition of “Fee Letter” set forth in Section 1.45 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.45 “Fee Letter” shall mean the letter agreement, dated as of Amendment No. 1
Closing Date, by and among Borrowers and Agent, setting forth certain fees
payable by Borrowers to Agent for the benefit of itself and Lenders, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.”

 

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(d) The definition of “Financing Agreements” set forth in Section 1.46 of the
Loan Agreement is hereby amended by adding thereto at the end thereof the
following:

 

“, provided that, in no event shall the term Financing Agreements be deemed to
include any Hedge Agreement.”

 

(e) The definition of “Obligations” set forth in Section 1.67 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.67 “Obligations” shall mean (a) any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Agent or any
Lender and/or any of their Affiliates, arising under this Agreement or any of
the other Financing Agreements, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to such Borrower
under the United States Bankruptcy Code or any similar statute (including the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, or secured or unsecured and (b) and for purposes
only of Section 5.1 hereof and subject to the priority in right of payment set
forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of
every kind, nature and description owing by Borrowers to Wachovia arising under
or pursuant to any Bank Products, whether now existing or hereafter arising.”

 

(f) All references to “Congress” in the Loan Agreement and in the other
Financing Agreements are hereby amended to mean and refer to Wachovia.

 

(g) The definition of “Reserves” set forth in Section 1.83 of the Loan Agreement
is hereby amended by deleting the word “and” following clause (ix) thereof and
substituting a comma therefor and by inserting the following new clause (xi) at
the end of such definition:

 

“and (xi) obligations, liabilities or indebtedness (contingent or otherwise) of
Borrowers to Wachovia arising under or in connection with any Bank Products at
any time provided by Wachovia.”

 

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4. Reduction of Maximum Credit. The definition of “Maximum Credit” set forth in
Section 1.64 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:

 

“1.64 “Maximum Credit” shall mean the amount of $100,000,000 or such other
amount as may be established as the Maximum Credit subsequent to the date
hereof, pursuant to Section 2.1(e) of this Agreement.”

 

5. Borrowers’ Option to Increase Maximum Credit. Section 2.1(e) of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.1(e) Notwithstanding anything to the contrary contained herein, so long as no
Event of Default exists and is continuing, at any time during the term of this
Agreement, Borrowers may request, in writing, that the Maximum Credit be
increased to $150,000,000 (“Revolving Increase Notice”). During the term of this
Agreement, Borrowers shall be permitted to send only one Revolving Increase
Notice. Any increase in the Maximum Credit shall be effective thirty (30) days
after receipt by Agent of the Revolving Increase Notice and in connection with
such increase, Borrowers shall pay to Agent, for the ratable benefit of Lenders,
a fee in the amount of (x) fifteen hundredths of one percent (0.15%) of
$50,000,000 (i.e., $75,000) in the event such increase in the Maximum Credit
occurs on or at any time prior to the second anniversary of the Amendment No. 1
Closing Date and (y) ten hundredths of one percent (0.10%) of $50,000,000 (i.e.,
$50,000) in the event such increase in the Maximum Credit occurs at any time
after the second anniversary of the Amendment No. 1 Closing Date, which fee
shall be fully earned on the date which is thirty days from receipt of the
Revolving Increase Notice and may be charged by Agent to any of Borrowers’
accounts maintained by Agent.”

 

6. Assignment of GE Capital Commitment; Revised Commitments. Immediately prior
to the occurrence of the Amendment No. 1 Closing Date, General Electric Capital
Corporation (“GE Capital”) shall have executed and delivered an Assignment and
Acceptance in favor of Wachovia, pursuant to which, among other things, (a) GE
Capital shall have sold and transferred to Wachovia, and Wachovia shall have
purchased and acquired, 100% of GE Capital’s right, title and interest in and to
GE Capital’s Commitment, and (b) GE Capital shall have resigned as Documentation
Agent under the Loan Agreement; and as a result of the foregoing, GE Capital
shall not be a Lender under the Loan Agreement effective as of the Amendment
No. 1 Closing Date. As a result of the reduction of the Maximum Credit as of the
Amendment No. 1 Closing Date pursuant to this Amendment, the Commitments of the
remaining Lenders (i.e., excluding GE Capital) set forth on Schedule I to the
Loan Agreement are hereby revised by deleting Schedule I attached to the Loan
Agreement in its entirety and substituting therefor the Schedule I attached to
this Amendment.

 

7. Reduction in Interest Rates. The definition of “Applicable Margin” set forth
in Section 1.7 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:

 

“1.7 “Applicable Margin” shall mean, at any time, as to the Interest Rate for
Prime Rate Loans, the Interest Rate for Eurodollar Rate Loans and as to the
Letter of Credit Accommodation fees payable to Agent, for the

 

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benefit of Lenders, pursuant to Section 2.2(b), the applicable percentage (on a
per annum basis) set forth below opposite the Quarterly Average Excess
Availability for the immediately preceding fiscal quarter:

 

    

Quarterly Average Excess Availability

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Applicable

Prime Rate

Margin

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Applicable

Eurodollar

Rate Margin

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(a)

  

$140,000,000 or greater

   0 %   1.00 %

(b)

  

Greater than or equal to $100,000,000 and less than $140,000,000

   0 %   1.25 %

(c)

  

Greater than or equal to $20,000,000 and less than $100,000,000

   1/8 %   1.50 %

(d)

  

Less than $20,000,000

   1/4 %   1.75 %

 

provided, that, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter and shall remain in effect until such date thereafter
as it may be adjusted in accordance with Sections 1.54(b) or 1.54(c) hereof,
(ii) solely for the purposes of the calculation of Quarterly Average Excess
Availability, the amount determined pursuant to clause (a) of the definition of
Excess Availability shall be based solely upon the Borrowing Base of Borrowers,
without regard to the Maximum Credit, and (iii) the Quarterly Average Excess
Availability shall be calculated based upon the average of the amounts of Excess
Availability as of the last Business Day of each of the three (3) fiscal months
during Borrowers’ immediately preceding fiscal quarter.”

 

8. Increased Advance Rate with respect to Eligible Inventory. Clause (a)(i) of
the definition of Borrowing Base set forth in Section 1.10 of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:

 

“(a)(i) seventy-five (75%) percent multiplied by the Value of the Eligible
Inventory of Borrowers or”

 

9. Reduction In Unused Line Fee. Effective as of January 1, 2006, Section 3.2(a)
of the Loan Agreement shall be automatically, without any further required
action by the parties hereto, amended and restated in its entirety to read as
follows:

 

“3.2(a) Borrowers shall pay to Agent, for the ratable benefit of Lenders,
quarterly an unused line fee at a rate equal to twenty hundredths percent
(0.20%) per annum upon the amount by which the Maximum Credit as then in effect
exceeds the average daily principal balance of the outstanding Loans and Letter
of Credit Accommodations during the immediately preceding calendar quarter (or
part thereof) while this Agreement is in effect (commencing with the calendar
quarter ending March

 

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31, 2006) and for so long thereafter as any Obligations are outstanding. Such
fee shall be payable in arrears on the first day of each January, April, July
and October.”

 

10. Confirmation of Grant of Security Interest. To secure payment and
performance of all Obligations (expressly including, without limitation, all
Obligations arising in connection with Bank Products now or hereafter provided
by Wachovia to Borrowers), and confirming and supplementing all security
interests and liens heretofore granted by Borrowers to Agent, for itself and the
benefit of Lenders, and without limitation thereof, each Borrower hereby grants
to Agent, for itself and the benefit of Lenders and Wachovia, in its capacity as
provider of Bank Products to Borrower, a continuing security interest in, a lien
upon, and a right of set off against, and hereby assigns to Agent, for itself
and the benefit of Lenders and Wachovia, in its capacity as provider of Bank
Products to Borrower, as security, all Collateral.”

 

11. Amendment to Cash Dominion Trigger. Section 6.3(a)(ii) of the Loan Agreement
is hereby amended by deleting the fifth sentence thereof in its entirety and
replacing it with the following sentence:

 

“Agent will only instruct the depository banks at which the Blocked Accounts are
maintained to transfer to the Agent Payment Account all funds received or
deposited into the Blocked Account at any time that (A) a Default or Event of
Default shall have occurred and be continuing or (B) Borrower fails at any time
to maintain Excess Availability of at least $15,000,000.”

 

12. Collateral Reporting Trigger. Section 7.1 of the Loan Agreement is hereby
amended by adding thereto a new Section 7.1(c) as follows:

 

“(c) Notwithstanding anything to the contrary set forth in Section 7.1(a),
Borrowers shall have no obligations to deliver to Agent any of the reports or
documents otherwise required to be delivered pursuant to Section 7.1(a) so long
as (i) no Default or Event of Default shall have occurred and be continuing and
(ii) Borrowers have Excess Availability in an amount greater than $80,000,000,
as determined by Agent based upon the monthly financial statements and
accompanying compliance certificate delivered by Borrowers to Agent pursuant to
Section 9.6(a)(i).”

 

13. Inventory Appraisals. Section 7.3(d) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:

 

“(d) upon Agent’s request, Borrowers shall, at their expense, no more than one
(1) time in any twelve (12) month period following the Amendment No. 1 Closing
Date, but at any time or times as Agent may request at Agent’s expense, or at
any time or times as Agent may request at Borrowers’ expense at any time an
Event of Default exists or has occurred and is continuing, deliver or cause to
be delivered to Agent written reports or appraisals as to the Inventory in form,
scope and methodology acceptable to Agent and by an appraiser acceptable to
Agent, addressed to Agent and upon which Agent and Lenders are expressly
permitted to rely, except that, notwithstanding the

 

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foregoing, (i) so long as (A) no Default or Event of Default shall have occurred
and be continuing and (B) with respect to any twelve (12) month period following
the Amendment No. 1 Closing Date, Borrowers have maintained Excess Availability
of at least $100,000,000 at all times during such twelve (12) month period, then
Borrowers shall have no obligation to deliver such Inventory reports or
appraisals to Agent during such twelve (12) month period and (ii) solely for the
purposes of the calculation of Excess Availability pursuant to this
Section 7.3(d), the amount determined pursuant to clause (a) of the definition
of Excess Availability shall be based solely upon the Borrowing Base of
Borrowers and without regard to the Maximum Credit;”

 

14. Borrowers’ Request for Bank Products. Section 6 of the Loan Agreement is
hereby amended by adding thereto a new Section 6.12 as follows:

 

“6.12 Bank Products. Borrowers may request that Wachovia provide Bank Products
to Borrowers and Wachovia may, in its sole discretion, provide Bank Products to
Borrowers. Borrowers shall indemnify and hold Wachovia and its Affiliates
harmless from any and all Obligations now or hereafter owing in connection with
any Bank Products other than for gross negligence or willful misconduct on the
part of any such indemnified Person. This Section 6.12 shall survive the payment
of the Obligations and the termination of this Agreement. Each Borrower
acknowledges and agrees that the obtaining of Bank Products from Wachovia (a) is
in the sole discretion of Wachovia, and (b) is subject to all rules and
regulations of Wachovia. Wachovia, in its capacity as provider of Bank Products,
shall be deemed a party hereto for purposes of any reference in any of the
Financing Agreements to the parties for whom Agent is acting, provided, that,
the rights of Wachovia, in its capacity as provider of Bank Products, hereunder
and under any of the other Financing Agreements (as opposed to its rights as
Agent and Lender hereunder and under the Financing Agreements) shall consist
exclusively of its right to share in payments and collections out of the
Collateral as set forth herein.”

 

15. Capital Stock. Section 9.7(b) (iii) is hereby amended and restated in its
entirety to read as follows in order to address incentive compensation:

 

“(i) the issuance of Capital Stock of any Borrower consisting of common stock
pursuant to an employee stock option or grant employee stock purchase plan or
similar equity plan or 401(k) plans of such Borrower and other grants under
incentive compensation plans for the benefit of its employees, directors and
consultants, provided, that, in no event shall such Borrower be required to
issue, or shall such Borrower issue, Capital Stock pursuant to such employee
stock purchase plan or 401(k) plans or under any incentive compensation plans
for the benefit of its employees, directors and consultants which would result
in a Change of Control or other Event of Default, and”

 

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16. Store Closing. Section 9.7(b)(iv(A) is hereby amended and restated in its
entirety to read as follows in order to provide flexibility to the Company in
closing unprofitable stores:

 

“(A) during any three (3) consecutive year period during the term of this
Agreement, commencing from and after the Amendment No. 1 Closing Date, the
number of retail store locations closed or sold by Borrowers (excluding for the
purposes hereof retail store locations that Borrowers are in the process of
closing as of the Amendment No. 1 Closing Date) minus the number of retail
stores opened by Borrowers during any such three (3) year period, shall not
exceed the amount equal to fifteen (15%) percent of the number of store
locations of Borrowers as of the day immediately preceding the commencement of
any such three (3) year period, but in no event shall the aggregate amount of
all sales at all of the store locations closed or sold by Borrowers during such
three (3) year period exceed $200,000,000,”

 

17. Permitted Prepayments. The introductory paragraph to Section 9.10 of the
Loan Agreement is hereby amended and restated in its entirety, in order to
expressly permit Borrowers to make prepayments, in the ordinary course of their
business, on account of goods purchased by and services rendered to Borrowers:

 

“9.10 Loans, Investments, Etc. Each Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, make any loans or advance money or
property to any person (excluding prepayments by Borrowers, in the ordinary
course of their business, on account of goods purchased by and services rendered
to Borrowers), or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:”

 

18. Permitted Dividends and Redemptions. Section 9.11(b) is hereby amended and
restated in its entirety to read as follows:

 

“(b) Stein Mart may declare and pay dividends with respect to its Capital Stock
and repurchase its Capital Stock; provided, that, as to any such dividend or
Capital Stock repurchase, each of the following conditions is satisfied: (i) as
of the date of such dividend declaration or the making of a commitment with
respect to such Capital Stock repurchase and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing,
(ii) such dividend or such repurchase shall be paid with funds legally available
therefor, and (iii) such dividend and such repurchase shall not violate any law
or regulation or the terms of any indenture, agreement or undertaking to which
any Borrower is a party or by which any Borrower or its property is bound;
except that, in addition to compliance with each of the conditions set forth in
clauses (i), (ii) and (iii) of this Section 9.11(b), if Stein Mart elects to
make dividends and repurchases of Capital Stock in an aggregate amount that
exceeds $16,000,000 in any fiscal year of Borrowers, any such excess dividend
and repurchase shall be subject to, in each instance,

 

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Borrowers having Excess Availability of at least $25,000,000 both at all time
during the sixty (60) consecutive Business Days immediately preceding the date
of declaration of such dividend payment or commitment with respect to such
Capital Stock repurchase and after giving effect thereto (provided that, solely
for the purposes of this Section 9.11(b), the amount determined pursuant to
clause (a) of the definition of Excess Availability shall be based solely upon
Borrowers’ Borrowing Base and without regard to the Maximum Credit); and”

 

19. Transactions with Affiliates. Section 9.12(b) is hereby amended and restated
in its entirety to read as follows:

 

“(a) make any payments (whether by loan or otherwise) of management, consulting
or other fees for management or similar services, or of any Indebtedness for
borrowed money, owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower (collectively, “Affiliate Payments”) that
exceed $500,000 in the aggregate for all such Affiliate Payments in any fiscal
year. The foregoing covenant with respect to Affiliate Payments does not in any
manner limit or affect reasonable compensation (including, without limitation,
the payment of director fees and legal fees and costs) to officers, employees
and directors for services rendered to Borrowers in the ordinary course of
business.”

 

20. Field Examinations. Section 9.20(f) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:

 

“(f) all reasonable out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and such Borrower’s operations, plus a per diem
charge at Agent’s then standard rate for Agent’s examiners in the field and
office (which rate as of the date hereof is $800 per person per day
(collectively, the “Audit Fees”)), except that, notwithstanding the foregoing,
so long as no Event of Default has occurred and is continuing, (i) no such field
examination shall be conducted in any of Borrowers’ fiscal years in which
Borrowers have at all times maintained Excess Availability of at least
$100,000,000 (ii) Borrowers shall pay for all such Audit Fees and costs with
respect to not more than one (1) such field examination performed by Agent in
any of Borrowers’ fiscal years so long as Borrowers have at all times maintained
during such fiscal year Excess Availability of at least $20,000,000, but less
than $100,000,000, (iii) Borrowers shall pay for all such Audit Fees and costs
with respect to not more than three (3) such field examinations performed by
Agent in any of Borrowers’ fiscal years if Borrowers have, at any time during
such fiscal year, maintained Excess Availability of less than $20,000,000,
(iv) from and after the occurrence and during the continuance of any Event of
Default, Borrowers shall pay to Agent, upon demand, all Audit Fees and related
costs for all such field examinations as shall be conducted by Agent in its sole
discretion; and (v)solely for the purposes of the calculation of Excess
Availability pursuant

 

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to this Section 9.20(f), the amount determined pursuant to clause (a) of the
definition of Excess Availability shall be based solely upon the Borrowing Base
of Borrowers and without regard to the Maximum Credit;”

 

21. Term Extension. Section 13.1(a) of the Loan Agreement is hereby amended by
amending and restating the first sentence thereof in its entirety to read as
follows:

 

“13.1(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date five (5) years from the
Amendment No. 1 Closing Date (such date ending on the date five (5) years from
the Amendment No. 1 Closing Date being referred to as the “Renewal Date”);
provided, that, so long as no Default or Event of Default shall have occurred
and be continuing, Borrowers may, at their option (without the consent or
approval of Lenders), extend the term of this Agreement and the other Financing
Agreements to the date that is one (1) year after the Renewal Date (the “Renewal
Extension Date”) by the Administrative Borrower giving Agent notice thereof at
least sixty (60) days prior to the Renewal Date, unless this Agreement and the
other Financing Agreements shall be sooner terminated pursuant to the terms
hereof.”

 

22. Elimination of Early Termination Fee. Section 13.1(c) is hereby deleted in
its entirety and the following is hereby substituted therefor:

 

“[Intentionally Deleted]”

 

23. Representations, Warranties and Covenants. In addition to the continuing
representations, warranties and covenants heretofore made by Borrowers to Agent
and Lenders pursuant to the Loan Agreement and the other Financing Agreements,
each Borrower hereby represents, warrants and covenants with and to Agent and
Lenders as follows (which representations, warranties and covenants are
continuing and shall survive the execution and delivery of this Amendment and
shall be incorporated into and made a part of the Financing Agreements):

 

(a) No Default or Event of Default exists on the date of this Amendment (after
giving effect to the amendments to the Loan Agreement made by this Amendment);
and

 

(b) This Amendment has been duly executed and delivered by each Borrower and is
in full force and effect as of the date hereof, and the agreements and
obligations of each Borrower contained herein constitute its legal, valid and
binding obligations enforceable against such Borrower in accordance with their
respective terms.

 

24. Conditions Precedent. This Amendment shall not become effective unless all
of the following conditions precedent have been satisfied in full, as determined
by Agent:

 

(a) The receipt by Agent of an original (or faxed or electronic copy) of this
Amendment, duly authorized, executed and delivered by Borrowers and all Lenders;

 

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(b) The receipt by Lender of an original (or faxed or electronic copy) of the
Fee Letter (as such defined term is amended pursuant to this Amendment), duly
authorized, executed and delivered by Borrowers; and

 

(c) The receipt by Agent of a Secretary’s Certificate of Directors Resolutions,
evidencing the due authorization and approval of the execution and delivery of
this Amendment and the Fee Letter by the respective Board of Directors of each
Borrower, in form and substance satisfactory to Agent.

 

25. Lender Authorization. All Lenders (as opposed to Required Lenders) have
joined in the execution and delivery of this Amendment as a result of the
reduction in the Applicable Margin and the increase in the advance rate for
Eligible Inventory provided for in this Amendment and as required by
Section 11.3(a) of the Loan Agreement with respect to such amendments,
notwithstanding the fact that all other amendments to the Loan Agreement set
forth herein require approval of only the Required Lenders. The execution and
delivery of this Amendment by all Lenders shall not, however, in any manner be
deemed or constitute an amendment to or modification of such Section 11.3(a).

 

26. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Loan Agreement and the other Financing
Agreements are intended or implied and in all other respects the Loan Agreement
and the other Financing Agreements are hereby specifically ratified, restated
and confirmed by all parties hereto as of the effective date hereof. To the
extent of any conflict between the terms of this Amendment and the Loan
Agreement or any of the other Financing Agreements, the terms of this Amendment
shall control. The Loan Agreement and this Amendment shall be read and construed
as one agreement.

 

27. Further Assurances. At Agent’s request, Borrowers shall execute and deliver
such additional documents and take such additional actions as Agent reasonably
requests to effectuate the provisions and purposes of this Amendment and to
protect and/or maintain perfection of Agent’s and Lenders’ security interests in
and liens upon the Collateral.

 

28. Governing Law. The validity, interpretation and enforcement of this
Amendment in any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise shall be governed by the
internal laws of the State of Florida (without giving effect to principles of
conflicts of law).

 

29. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.

 

30. Counterparts. This Amendment may be executed in any number of counterparts,
but all of such counterparts when executed shall together constitute one and the
same agreement. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart thereof signed by each of the
parties hereto.

 

[SIGNATURE PAGE FOLLOWS]

 

11

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Very truly yours,

STEIN MART, INC.

By:

 

/s/ James G. Delfs

--------------------------------------------------------------------------------

Title:

 

Senior Vice President and Chief Financial Officer

STEIN MART BUYING CORP.

By:

 

/s/ James G. Delfs

--------------------------------------------------------------------------------

Title:

 

Senior Vice President and Chief Financial Officer

 

AGREED TO:

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Agent

By:

 

/s/ Pat Cloninger

--------------------------------------------------------------------------------

Title:

 

Vice President

BANK OF AMERICA, N.A.

By:

 

/s/ Andrea Liporace

--------------------------------------------------------------------------------

Title:

 

Vice President

WELLS FARGO FOOTHILL, INC.

By:

 

/s/ Michael P. Baranowski

--------------------------------------------------------------------------------

Title:

 

Vice President

ISRAEL DISCOUNT BANK OF New York

By:

 

/s/ Robert R. Munoz

--------------------------------------------------------------------------------

Title:

 

Senior Vice President, Chief Lending Officer for Florida

By:

 

/s/ Dilian G. Schulz

--------------------------------------------------------------------------------

Title:

 

First Vice President & Chief Credit Officer for Florida

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SCHEDULE I

 

Commitments

 

Lender

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Commitment as

of Amendment

No. 1 Closing

Date (Maximum

Credit equal to

$100,000,000)

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Commitment if

Maximum Credit

Increased to

$150,000,000

pursuant to

Section 2.1(e)

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Wachovia Bank, National Association

   $ 50,476,000    $ 75,714,286

Bank of America, N.A..

   $ 22,857,000    $ 34,285,714

Wells Fargo Foothill, Inc.

   $ 20,000,000    $ 30,000,000

Israel Discount Bank of New York

   $ 6,667,000    $ 10,000,000     

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Total Commitments

   $ 100,000,000    $ 150,000,000     

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