SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended Commission file number
October 3, 1998 0-20052
STEIN MART, INC.
(Exact name of registrant as specified in its charter)
Florida 64-0466198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1200 Riverplace Blvd., Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
(904) 346-1500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
At November 9, 1998, the latest practicable date, there were 45,367,036
shares outstanding of Common Stock, $.01 par value.
<PAGE>
STEIN MART, INC.
INDEX TO FORM 10-Q
PAGE
PART I - FINANCIAL INFORMATION ----
Item 1. Financial Statements:
Balance Sheets at October 3, 1998, January 3,
1998 and September 27, 1997 3
Statement of Income for the three months and nine
months ended October 3, 1998 and September 27, 1997 4
Statement of Cash Flows for the nine months ended
October 3, 1998 and September 27, 1997 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
PART II - OTHER INFORMATION 13
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 14
2
<PAGE>
<TABLE>
STEIN MART, INC.
BALANCE SHEET
(In Thousands)
<CAPTION>
October 3, January 3, September 27,
1998 1998 1997
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,958 $ 27,979 $ 15,040
Trade and other receivables 5,263 2,518 2,606
Inventories 249,586 175,620 194,033
Prepaid taxes 5,094 - -
Prepaid expenses and other current assets 4,184 2,170 2,899
------------ ------------ ------------
Total current assets 274,085 208,287 214,578
Property and equipment, net 70,045 61,087 60,670
Other assets 3,454 1,230 1,308
------------ ------------ ------------
Total assets $ 347,584 $ 270,604 $ 276,556
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 96,308 $ 65,013 $ 73,955
Accrued liabilities 22,641 21,527 19,644
Income taxes payable - 11,451 64
------------ ------------ ------------
Total current liabilities 118,949 97,991 93,663
Notes payable to banks 58,611 - 25,941
Deferred income taxes 6,810 6,810 5,812
------------ ------------ ------------
Total liabilities 184,370 104,801 125,416
Stockholders' equity:
Preferred stock - $.01 par value; 1,000,000 shares
authorized; no shares outstanding
Common stock - $.01 par value; 50,000,000 shares
authorized; 45,543,386 shares issued and outstanding
at October 3, 1998; 46,010,708 shares issued and
outstanding at January 3, 1998 and 46,439,918 shares
issued and outstanding at September 27, 1997 455 460 464
Paid-in capital 32,456 39,565 45,547
Retained earnings 130,303 125,778 105,129
------------ ------------ ------------
Total stockholders' equity 163,214 165,803 151,140
------------ ------------ ------------
Total liabilities and stockholders' equity $ 347,584 $ 270,604 $ 276,556
============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
STEIN MART, INC.
STATEMENT OF INCOME
(Unaudited)
(In Thousands Except Per Share Amounts)
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------- ---------------------------------
October 3, September 27, October 3, September 27,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 192,138 $ 166,734 $ 575,587 $ 501,725
Cost of merchandise sold 154,532 126,732 438,814 373,375
-------------- -------------- -------------- --------------
Gross profit 37,606 40,002 136,773 128,350
Selling, general and administrative expenses 47,075 36,914 135,496 110,928
Other income, net 2,539 2,250 7,544 6,475
-------------- -------------- -------------- --------------
Income (loss) from operations (6,930) 5,338 8,821 23,897
Interest expense 690 354 1,523 752
-------------- -------------- -------------- --------------
Income (loss) before income taxes (7,620) 4,984 7,298 23,145
Income tax (provision) benefit 2,896 (1,944) (2,773) (9,027)
-------------- -------------- -------------- --------------
Net income (loss) $ (4,724) $ 3,040 $ 4,525 $ 14,118
============== ============== ============== ==============
Earnings (loss) per share:
Basic $ (0.10) $ 0.07 $ 0.10 $ 0.31
============== ============== ============== ==============
Diluted $ (0.10) $ 0.06 $ 0.10 $ 0.30
============== ============== ============== ==============
Weighted average shares outstanding:
Basic 45,655 46,385 45,909 46,112
============== ============== ============== ==============
Diluted 46,137 47,483 46,739 47,293
============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
STEIN MART, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
FOR THE
NINE MONTHS ENDED
---------------------------------
October 3, September 27,
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,525 $ 14,118
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 7,677 6,382
Increase in:
Trade and other receivables (2,745) (315)
Inventories (73,966) (54,853)
Prepaid taxes (5,094) -
Prepaid expenses and other current assets (2,014) (1,025)
Other assets (2,224) (91)
Increase (decrease) in:
Accounts payable 31,295 14,779
Accrued liabilities 1,114 2,457
Income taxes payable (11,451) (3,881)
-------------- --------------
Net cash used in operating activities (52,883) (22,429)
Cash flows used in investing activities:
Net acquisition of property and equipment (16,635) (16,901)
Cash flows from financing activities:
Net borrowings under notes payable to banks 58,611 25,940
Proceeds from exercise of stock options and
related income tax benefits 3,472 7,679
Proceeds from employee stock purchase plan 991 -
Purchase of common stock (11,577) (2,800)
-------------- --------------
Net cash provided by financing activities 51,497 30,819
-------------- --------------
Net decrease in cash and cash equivalents (18,021) (8,511)
Cash and cash equivalents at beginning of year 27,979 23,551
-------------- --------------
Cash and cash equivalents at end of period $ 9,958 $ 15,040
============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 1,298 $ 842
Income taxes paid 17,804 8,530
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
STEIN MART, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month and
nine month periods are not necessarily indicative of the results that may be
expected for the entire year. For further information, refer to the financial
statements and footnotes thereto included in the Stein Mart, Inc. annual report
on Form 10-K for the year ended January 3, 1998.
2. ACCOUNTING CHANGE
The Company adopted AICPA Statement of Position 98-5, Reporting on the Costs of
Start-Up Activities ("SOP 98-5"), effective January 4, 1998. SOP 98-5, issued
April 1998, requires that costs of start-up activities be expensed as incurred.
The Company previously capitalized store pre-opening expenses and amortized such
amounts over the balance of the fiscal year. The after-tax effect of this
accounting change was to increase the loss for the three months ended October 3,
1998 by $404,000 or $0.01 per diluted share and to decrease earnings for the
nine months ended October 3, 1998 by $1,277,000 or $0.03 per diluted share.
3. NOTES PAYABLE TO BANKS
In August 1998, the Company entered into a new credit facility with two banks.
This agreement, which expires June 30, 2001, provides a $60 million revolving
line of credit and a $30 million seasonal line of credit. The seasonal line of
credit is available during the periods March 15 through June 30 and September 15
through December 31 of each year. The agreement includes a $5 million letter of
credit facility which expires on June 30, 1999.
Interest on the outstanding balance is payable quarterly at 1.50% below the
prime rate or .35% over the London Interbank Offering Rate (LIBOR), at the
option of the Company. The Company is obligated to pay a quarterly commitment
fee of 1/8 percent per annum based on the daily average unused balance of the
commitment during the term of the agreement. The agreement also requires the
Company to maintain certain financial ratios and meet certain working capital,
net worth and indebtedness tests for which the Company is in compliance at
October 3, 1998.
6
<PAGE>
STEIN MART, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. STOCK SPLIT
On April 24, 1998, the Board of Directors authorized a two-for-one stock split
that was distributed in the form of a stock dividend on May 22, 1998 to
shareholders of record as of May 8, 1998. In this report, all references to
number of shares and per share amounts have been restated. In addition,
stockholders' equity has been restated to give retroactive recognition to the
stock split in prior periods by reclassifying from paid-in capital to common
stock the $.01 par value of the additional shares arising from the split.
5. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" in the fourth quarter of 1997. Accordingly, in addition to
the restatement for the stock split, the Company has also restated all periods
presented in these financial statements to reflect "basic" and "diluted"
earnings per share. Basic earnings per share is computed by dividing net income
by the weighted average number of common shares outstanding for each period.
Diluted earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding plus common stock equivalents
related to stock options for each period.
A reconciliation of weighted average number of common shares to weighted average
number of common shares plus common stock equivalents is as follows (000's):
<TABLE>
<CAPTION>
For The For The
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number
of common shares 45,655 46,385 45,909 46,112
Stock options 482 1,098 830 1,181
------------ ------------ ------------ ------------
Weighted average number of
common shares plus common
stock equivalents 46,137 47,483 46,739 47,293
============ ============ ============ ============
</TABLE>
6. COMMON STOCK REPURCHASE
During the nine months ended October 3, 1998, the Company repurchased 1,008,500
shares for $11.6 million and during the nine months ended September 27, 1997,
the Company repurchased 212,000 shares for $2.8 million.
7
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
Wherever used, the words "plan", "expect", "anticipate", "believe", "estimate"
and similar expressions identify forward looking statements.
Any such forward-looking statements contained herein are subject to risks and
uncertainties that could cause the Company's actual results of operations to
differ materially from historical results or current expectations. These risks
include, without limitation, ongoing competition from other retailers many of
whom are larger and have greater financial and marketing resources, the
availability of suitable new store sites at acceptable lease terms, changes in
the level of consumer spending or preferences in apparel, adequate sources of
designer and brand-name merchandise at acceptable prices, and the Company's
ability to attract and retain qualified employees to support planned growth.
The Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make clear that any projected
results expressed or implied therein will not be realized.
RESULTS OF OPERATIONS
The information in the following table is presented as a percentage of net sales
for the periods indicated:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
10/3/98 9/27/97 10/3/98 9/27/97
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold 80.4 76.0 76.2 74.4
------------ ------------ ------------- ------------
Gross profit 19.6 24.0 23.8 25.6
Selling, general and administrative expenses 24.5 22.1 23.6 22.1
Other income, net 1.3 1.3 1.3 1.3
------------ ------------ ------------- ------------
Income (loss) from operations (3.6) 3.2 1.5 4.8
Interest expense 0.4 0.2 0.2 0.2
------------ ------------ ------------- ------------
Income (loss) before income taxes (4.0) 3.0 1.3 4.6
Income tax (provision) benefit 1.5 (1.2) (0.5) (1.8)
------------ ------------ ------------- ------------
Net income (loss) (2.5)% 1.8% 0.8% 2.8%
============ ============ ============= ============
</TABLE>
In this report, all references to number of shares and per share amounts have
been restated for the two-for-one stock split described in Note 4 to Financial
Statements.
8
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the three months ended October 3, 1998 compared with the three months ended
September 27, 1997:
Seven stores were opened during the third quarter this year, bringing to 172 the
number of stores in operation this year compared to 144 stores in operation at
the end of the third quarter of 1997.
Net sales for the quarter ended October 3, 1998 were $192.1 million, a 15.2
percent increase over the $166.7 million for the third quarter of 1997.
Comparable store net sales increased 1.8 percent from the third quarter of 1997.
Gross profit for the quarter ended October 3, 1998 was $37.6 million, a 6.0
percent decrease from the $40.0 million for the third quarter of 1997. Gross
profit as a percent of net sales decreased 4.4 percent to 19.6 percent for the
third quarter this year from 24.0 percent for the third quarter last year. This
decrease resulted primarily from increases in markdowns and occupancy costs as a
percent of net sales resulting from lower per store sales productivity.
For the quarter ended October 3, 1998 selling, general and administrative
expenses were $47.1 million, or 24.5 percent of net sales, compared to $36.9
million, or 22.1 percent of net sales for the same 1997 quarter. The $10.2
million increase in selling, general and administrative expenses is primarily
due to the additional stores in operation during the third quarter of 1998 as
compared to the number of stores in operation during the third quarter of 1997.
The increase of 2.4 percent of net sales is primarily due to increased
selling, administrative and advertising expenses as a percent of net sales
resulting from lower per store sales productivity.
Other income, primarily from in-store leased shoe departments, increased to $2.5
million for the third quarter of 1998 compared to $2.3 million for the third
quarter of 1997. The increase resulted from the additional stores operated
during the quarter this year.
Interest expense was $690,000 for the third quarter of 1998 and $354,000 for the
third quarter of 1997. The $336,000 increase in interest expense resulted from
higher average borrowings offset by slightly lower interest rates during the
third quarter this year compared to last year.
Net loss for the third quarter of 1998 was $4.7 million or $0.10 per diluted
share compared to net income of $3.0 million or $0.06 earnings per diluted share
for the third quarter of 1997. The effect on net income of the adoption of SOP
98-5 was to increase the loss for the third quarter of 1998 by $404,000 or $0.01
per diluted share.
9
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 3, 1998 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 27, 1997:
Twenty-one stores were opened during the first nine months of both 1998 and
1997.
Net sales for the first nine months of 1998 were $575.6 million, a 14.7 percent
increase over sales of $501.7 million for the first nine months of 1997.
Comparable store net sales for the first nine months of 1998 increased by 1.6
percent from the first nine months of 1997.
Gross profit for the first nine months of 1998 was $136.8 million or 23.8
percent of net sales compared to $128.4 million or 25.6 percent of net sales for
the same nine month period of 1997. The 1.8 percent decrease in the gross profit
percent resulted primarily from increases in markdowns and occupancy costs as a
percent of net sales due to lower per store sales productivity.
Selling, general and administrative expenses were $135.5 million or 23.6 percent
of net sales for the first nine months of 1998 and $110.9 million or 22.1
percent for the first nine months of 1997. The $24.6 million increase in
selling, general and administrative expenses is primarily due to the additional
stores in operation during the first nine months of 1998 as compared to the
number of stores in operation during the first nine months of 1997. The increase
of 1.5 percent of net sales is primarily due to increased selling and
advertising expenses as a percent of net sales resulting from lower per store
sales productivity.
Other income, primarily from in-store leased shoe departments, increased to $7.5
million for the first nine months of 1998 compared to $6.5 million for the first
nine months of 1997. The increase resulted primarily from the additional stores
operated during the first nine months this year.
Interest expense was $1.5 million for the first nine months of 1998 and $.8
million for the first nine months of 1997. The $.7 million increase in interest
expense resulted from higher average borrowings offset by slightly lower
interest rates during the nine months of 1998 compared to last year. The
increased borrowings were used to fund operating activities and to repurchase
common stock.
Net income for the first nine months of 1998 was $4.5 million or $0.10 per
diluted share compared to net income of $14.1 million or $0.30 per diluted share
for the first nine months of 1997. The effect on net income of the adoption of
SOP 98-5 was to decrease earnings for the first nine months of 1998 by
$1,277,000 or $0.03 per diluted share.
10
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $52.9 million and $22.4 million for
the first nine months of 1998 and 1997, respectively. During the first nine
months of both years inventory levels were increased to provide inventory for
the additional stores in operation. Cash was also used in the first nine months
of 1998 and 1997 to reduce liabilities by $21.0 million and $13.4 million,
respectively. Based on historical cash flow results, operating activities are
expected to produce positive cash flow for the year ending January 2, 1999.
During the first nine months of 1998 and 1997, cash flow used in investing
activities was $16.6 million and $16.9 million, respectively, primarily for
acquisition of fixtures, equipment, and leasehold improvements for new stores
and information system enhancements. Total capital expenditures for 1998 are
projected to be approximately $22.0 million.
Cash flow from financing activities was $51.5 million for the first nine months
of 1998 and $30.8 million for the first nine months of 1997 which reflected in
both periods net borrowing under the Company's revolving credit agreement to
meet seasonal working capital requirements. This year's first nine months
includes $3.5 million of proceeds from the exercise of stock options and related
income tax benefits compared to $7.7 million in last year's first nine months.
This years first nine months also includes $1.0 million of proceeds from the
employee stock purchase plan. During the first nine months of 1998, cash was
used to repurchase 1,008,500 shares of the Company's common stock for $11.6
million and in last year's first nine months 212,000 shares were repurchased for
$2.8 million.
The Company believes that cash flow generated from operating activities, bank
borrowings and vendor credit will be sufficient to fund current and long-term
capital expenditures and working capital requirements.
SEASONALITY AND INFLATION
The Company's business is seasonal in nature with the fourth quarter, which
includes the Christmas selling season, historically accounting for the largest
percentage of the Company's net sales and operating income. Accordingly,
selling, general and administrative expenses are typically higher as a
percentage of net sales during the first three quarters of each year.
Inflation affects the costs incurred by the Company in the purchase of
merchandise, the leasing of its stores, and in certain components of its
selling, general and administrative expenses. The Company has been successful in
offsetting the effects of inflation through the control of expenses during the
past three years. However, there can be no assurance that inflation will not
have a material effect in the future.
11
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 ISSUE
The Company has conducted a comprehensive review of its information technology
systems and other equipment and services to determine those which will be
impacted by the Year 2000 Issue (i.e., the inability of some technology and
equipment to accurately read and process certain dates including all dates in
the Year 2000 and thereafter). Priorities have been established and the
necessary modifications are currently in process for the Company's most
significant operating systems. The Company expects to resolve its Year 2000
issues by mid-1999.
The Company does not expect that the costs of the changes necessary to resolve
the Year 2000 issues will be material to its financial position, results of
operations or cash flows in future periods.
Management believes that it has taken a reasonable approach to resolve the Year
2000 issues. However, there can be no assurance that all of the Company's Year
2000 issues or those of key third parties upon whom the Company relies for goods
and services will be resolved or satisfactorily addressed before the Year 2000
commences. If the Company or its key vendors fail to address the Year 2000
issues in a timely manner, and there are no alternatives available to the
Company, then the Company could experience a material adverse impact on its
results of operations or financial position.
12
<PAGE>
STEIN MART, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10 - Documents Relating to Loan Agreement
1) Loan Agreement effective August 25, 1998
2) $40,000,000 Revolving Promissory Note effective August 25, 1998
3) $20,000,000 Revolving Promissory Note effective August 25, 1998
4) $20,000,000 Seasonal Promissory Note effective August 25, 1998
5) $10,000,000 Seasonal Promissory Note effective August 25, 1998
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
October 3, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Stein Mart, Inc.
Date: November 16, 1998 /s/ John H. Williams, Jr.
----------------------------------------
John H. Williams, Jr.
President, Chief Operating Officer
/s/ James G. Delfs
----------------------------------------
James G. Delfs
Senior Vice President,
Chief Financial Officer
14
LOAN AGREEMENT
THIS AGREEMENT is made as of the 25th day of August, 1998, by and among
STEIN MART, INC. (the "Borrower"), a Florida corporation, BARNETT BANK, N.A.
("Barnett"), SUNTRUST BANK, NORTH FLORIDA, N.A.("SunTrust") and BARNETT BANK,
N.A. (in such capacity, and for so long as it shall serve in such capacity
hereunder, the "Agent"), as agent for Barnett and SunTrust. Barnett and
SunTrust are collectively referred to herein as the "Lenders".
RECITALS
The Borrower wishes to obtain credit from the Lenders on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
ARTICLE I
BORROWING AND PAYMENT
1.01 Revolving Credit Advances.
(a) The Lenders hereby establish a revolving line of credit
(the "Line of Credit") in favor of the Borrower. The Borrower shall be
entitled to borrow, repay and reborrow funds simultaneously from each
Lender on a revolving basis in accordance with the terms hereof during
a period (the "Revolving Period") commencing on the date hereof and
ending on June 30, 2001. The total principal amount owed to all of the
Lenders under the Line of Credit, on a combined basis, shall not at any
time exceed $60,000,000 (the "Revolving Amount") (or such lesser amount
as is set forth herein), and the total principal amount owed to each
Lender under the Line of Credit shall not at any time exceed the
Revolving Share (as defined herein) for such Lender (or such lesser
amount as is set forth herein). For purposes hereof, the following
terms shall have the following meanings: (i) the "Revolving Share" for
each Lender shall mean the amount set forth for such Lender in the
table below; and (ii) the "Revolving Percentage" for each Lender shall
mean the Revolving Share for such Lender expressed as a percentage of
the Revolving Amount. The Revolving Share for each Lender and the
approximate Revolving Percentage for each Lender shall be as follows:
Approximate
Lender Revolving Share Revolving Percentage
------ --------------- ----------------------
Barnett $40,000,000.00 66.6667%
SunTrust $20,000,000.00 33.3333%
(b) The indebtedness under the Line of Credit shall be
evidenced by revolving credit notes (as amended, extended or renewed
from time to time, the "Revolving Notes") of even date herewith
executed by the Borrower in favor of each Lender in the amount of
15
<PAGE>
each Lender_s Revolving Share. The Revolving Notes shall bear interest
at the rate set forth therein and shall be payable as set forth
therein.
(c) The Borrower may request advances under the Line of Credit
by giving the Agent written or telecopied notice, or oral notice with
written confirmation, specifying the date (each, a "Revolving Advance
Date") and amount of such advance (which Revolving Advance Date shall
be a banking business day). The Agent must receive the notice not later
than 11:30 a.m. (Eastern time) on the applicable Revolving Advance
Date. The Agent shall give written, telecopied or oral notice (with
prompt written confirmation in the event of oral notice) of such
request to each of the Lenders promptly upon receipt of such notice.
Except as otherwise set forth herein: (i) each Lender shall be
obligated to fund its proportionate share of the requested advance
based upon each Lender_s Revolving Percentage; and (ii) each Lender
shall transfer an amount equal to its share of the requested advance to
the Agent in immediately available funds not later than 2:00 p.m. on
the applicable Revolving Advance Date. The Agent shall thereafter
credit such funds to an account maintained by the Borrower with the
Agent. Notwithstanding the foregoing, no Lender shall be obligated to
make any advance under the Line of Credit if: (i) a Default or an Event
of Default (as defined herein) has occurred hereunder; (ii) any
condition to advances hereunder has not been satisfied at the time of
the advance; or (iii) such Lender_s commitment to make advances has
expired or terminated. No Lender shall be obligated to make advances on
behalf of any other Lender if such other Lender fails to make any
required advance hereunder.
(d) The Agent may, but shall not be obligated to, advance
funds under the Line of Credit on behalf of any Lender (each, for
purposes of this subparagraph, a "Defaulting Lender") which shall fail
to cause the Agent to receive immediately available funds in the amount
of the Defaulting Lender_s share of the advance on or before 2:00 p.m.
on any Revolving Advance Date. If the Agent makes the advance on behalf
of the Defaulting Lender, the Defaulting Lender shall, on demand, repay
the Agent such advance together with interest thereon at the overnight
federal funds rate plus one percent (1.0%) per annum until paid in
full. A Defaulting Lender shall be deemed to have assigned to the Agent
the right to receive any and all payments due to it with respect to the
advance funded by the Agent until the sum of such payments received by
the Agent is equal to the amount owed to the Agent by such Defaulting
Lender. The foregoing assignment shall be absolute and irrevocable.
Nothing in this subsection shall be deemed to relieve any Lender from
its obligation to fund its share of advances under the Line of Credit
or to prejudice any rights which the Borrower, the Agent or any Lender
may have against any Lender hereunder for the Lender_s failure to make
funds available when required in accordance with this Agreement. The
provisions of this subparagraph shall inure solely to the benefit of
the Agent and the Lenders (other than any Defaulting Lender) and shall
not inure to the benefit of, or be enforceable by, the Borrower.
(d) Notwithstanding any contrary provision set forth herein or
in any other Loan Document (as defined herein): (i) the Borrower shall
not be entitled to obtain any further advances under the Line of Credit
from and after the expiration of the Revolving Period; and
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(ii) the Lenders shall have no further obligation to make advances
under the Line of Credit from and after the expiration of the Revolving
Period.
1.02 Seasonal Credit Advances.
(a) The Lenders hereby establish a seasonal line of credit
(the "Seasonal Line of Credit") in favor of the Borrower. The Borrower
shall be entitled to borrow, repay and reborrow funds simultaneously
from each Lender on a revolving basis in accordance with the terms
hereof during each Seasonal Period (as defined herein). For purposes
hereof, a "Seasonal Period" shall mean: (i) each period commencing on
March 15 of each year and ending on June 30 of such year; (ii) each
period commencing on September 15 of each year and ending on December
31 of such year; and (iii) such other periods as the Lenders may, upon
request of the Borrower, designate as Seasonal Periods by written
notice to the Borrower. No Seasonal Period shall in any event extend
beyond or occur after June 30, 2001. The total principal amount owed to
all of the Lenders under the Seasonal Line of Credit, on a combined
basis, shall not at any time exceed $30,000,000 (the "Seasonal Amount")
during any Seasonal Period, and the total principal amount owed to each
Lender under the Seasonal Line of Credit shall not at any time exceed
the Seasonal Share for such Lender during any Seasonal Period. For
purposes hereof, the following terms shall have the following meanings:
(i) the "Seasonal Share" for each Lender shall mean the amount set
forth for such Lender in the table below; and (ii) the "Seasonal
Percentage"for each Lender shall mean the Seasonal Share for such
Lender expressed as a percentage of the Seasonal Amount. The Seasonal
Share for each Lender and the approximate Seasonal Percentage for each
Lender shall be as follows:
Approximate
Lender Seasonal Share Seasonal Percentage
------ -------------- --------------------
Barnett $20,000,000.00 66.6667%
SunTrust $10,000,000.00 33.3333%
(b) The indebtedness under the Seasonal Line of Credit shall
be evidenced by revolving credit notes (as amended, extended or renewed
from time to time, the "Seasonal Notes") of even date herewith executed
by the Borrower in favor of each Lender in the amount of each Lender_s
Seasonal Share. The Seasonal Notes shall bear interest at the rate set
forth therein and shall be payable as set forth therein.
(c) The Borrower may request advances under the Seasonal Line
of Credit by giving the Agent written or telecopied notice, or oral
notice with written confirmation, specifying the date (each, a
"Seasonal Advance Date") and amount of such advance (which Seasonal
Advance Date shall be a banking business day). The Agent must receive
the notice not later than 11:30 a.m. (Eastern time) on the applicable
Seasonal Advance Date. The Agent shall give written, telecopied or oral
notice (with prompt written confirmation in the event of oral notice)
of such request to each of the Lenders promptly upon receipt of such
notice. Except as otherwise set forth herein: (i) each Lender shall be
obligated to fund its
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proportionate share of the requested advance based upon each Lender's
Seasonal Percentage; and (ii) each Lender shall transfer an amount
equal to its share of the requested advance to the Agent in immediately
available funds not later than 2:00 p.m. on the applicable Seasonal
Advance Date. The Agent shall thereafter credit such funds to an
account maintained by the Borrower with the Agent. Notwithstanding the
foregoing, no Lender shall be obligated to make any advance under the
Seasonal Line of Credit if: (i) a Default or an Event of Default (as
defined herein) has occurred hereunder; (ii) any condition to advances
hereunder has not been satisfied at the time of the advance; or (iii)
such Lender_s commitment to make advances has expired or terminated. No
Lender shall be obligated to make advances on behalf of any other
Lender if such other Lender fails to make any required advance
hereunder. The parties agree that the Borrower shall not be entitled to
obtain any advances under the Seasonal Line of Credit unless: (i) the
outstanding principal balances under the Revolving Notes (on a combined
basis), together with the face amount of outstanding Acceptances (as
defined herein), is $60,000,000; and (ii) all other conditions to
advances under the Seasonal Notes have been satisfied. The parties
further agree that all principal payments under the Revolving Notes and
the Seasonal Notes shall be applied first to the Seasonal Notes for so
long as principal amounts are outstanding thereunder and then to the
Revolving Notes.
(d) The Agent may, but shall not be obligated to, advance
funds under the Seasonal Line of Credit on behalf of any Lender (each,
for purposes of this subparagraph, a "Defaulting Lender") which shall
fail to cause the Agent to receive immediately available funds in the
amount of the Defaulting Lender_s share of the advance on or before
2:00 p.m. on any Seasonal Advance Date. If the Agent makes the advance
on behalf of the Defaulting Lender, the Defaulting Lender shall, on
demand, repay the Agent such advance together with interest thereon at
the overnight federal funds rate plus one percent (1.0%) per annum
until paid in full. A Defaulting Lender shall be deemed to have
assigned to the Agent the right to receive any and all payments due to
it with respect to the advance funded by the Agent until the sum of
such payments received by the Agent is equal to the amount owed to the
Agent by such Defaulting Lender. The foregoing assignment shall be
absolute and irrevocable. Nothing in this subsection shall be deemed to
relieve any Lender from its obligation to fund its share of advances
under the Seasonal Line of Credit or to prejudice any rights which the
Borrower, the Agent or any Lender may have against any Lender hereunder
for the Lender_s failure to make funds available when required in
accordance with this Agreement. The provisions of this subparagraph
shall inure solely to the benefit of the Agent and the Lenders (other
than any Defaulting Lender) and shall not inure to the benefit of, or
be enforceable by, the Borrower.
(e) Notwithstanding any contrary provision set forth herein or
in any other Loan Document (as defined herein): (i) the Borrower shall
not be entitled to obtain any further advances under the Seasonal Line
of Credit from and after June 30, 2001; and (ii) the Lenders shall have
no further obligation to make advances under the Seasonal Line of
Credit from and after such date.
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1.03 Acceptances.
(a) Subject to the terms set forth herein and in that certain
Acceptance Credit Agreement of even date herewith, as amended or
restated from time to time, between the Borrower and Barnett (as
amended or restated from time to time, the "Acceptance Agreement"),
prior to the expiration of the Revolving Period, Barnett shall from
time to time make available to the Borrower an acceptance facility
pursuant to which Barnett may accept drafts drawn upon it by the
Borrower (each an "Acceptance") pursuant to the Acceptance Agreement.
The aggregate face amount of outstanding drafts drawn by the Borrower
and accepted by Barnett pursuant to the Acceptance Agreement shall not
exceed the amounts set forth herein. Barnett shall not be required to
issue any Acceptance which has a maturity date after the expiration of
the Revolving Period. Upon Barnett_s payment of an Acceptance upon
maturity thereof, an advance under the Revolving Notes shall be made to
Barnett to reimburse it for such payment. If any outstanding Acceptance
matures after the expiration of the Revolving Period or if funds are
not then available for advances under the Revolving Notes, the Borrower
shall upon maturity reimburse Barnett for the face amount of the
Acceptance and for such other amounts as may be due in connection
therewith in accordance with the Acceptance Agreement. The parties
acknowledge that Barnett may at any time sell, rediscount or otherwise
dispose of any Acceptances discounted by it.
(b) The parties acknowledge that the Lenders have executed a
Participation Agreement (as amended or restated from time to time, the
"Acceptance Participation Agreement") pursuant to which SunTrust has
purchased a participating interest in each Acceptance. Each Lender's
percentage interest in each Acceptance, after giving effect to the
Acceptance Participation Agreement, is referred to herein as such
Lender's "Acceptance Percentage".
(c) Notwithstanding any contrary provision set forth herein or
in any other Loan Document (as defined herein), the Borrower agrees
that: (i) the aggregate face amount of outstanding Acceptances, on a
combined basis, shall not at any time exceed $25,000,000; (ii) the
outstanding principal amount of the Revolving Notes, on a combined
basis, plus the aggregate face amount of outstanding Acceptances, shall
not at any time exceed the Revolving Amount; and (iii) the outstanding
principal amount of each Lender's Revolving Note, when combined with
the Lender's Acceptance Percentage of the face amount of outstanding
Acceptances, shall not at any time exceed the Lender's Revolving Share.
The Borrower shall not be entitled to obtain any advance under the
Revolving Notes, and Barnett shall not be obligated to create any
Acceptance, if such advance or Acceptance would result in a violation
of the limits set forth in this subparagraph.
1.04 Letters of Credit. Barnett hereby establishes a letter of credit
facility in an amount not to exceed $5,000,000.00 for the issuance of standby
and commercial letters of credit (the "Letters of Credit"). From time to time
prior to June 30, 1999, Barnett, upon the Borrower_s request, may issue Letters
of Credit. The parties hereto acknowledge that SunTrust will not participate in
the issuance of Letters of Credit hereunder. The Borrower shall give Barnett at
least one business day_s notice prior to requesting the issuance of any Letter
of Credit, and shall, with such request, fill
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out an application in form acceptable to Barnett and execute such terms,
conditions and reimbursement agreements (each, a "Reimbursement Agreement")
concerning such Letter of Credit as Barnett may require. The amount available
under the letter of credit facility shall be reduced by the face amount of
outstanding Letters of Credit (together with the amount of drafts under Letters
of Credit no longer outstanding for which Barnett has not been reimbursed). No
Letter of Credit shall be issued which could be drawn on after the expiration of
the Revolving Period. In the event of a draw on a Letter of Credit, an advance
under the Revolving Notes or, if advances are available thereunder, under the
Seasonal Notes, shall be made to the extent that amounts are then available for
borrowing under such notes to reimburse Barnett for such draw. If any draw is
made under any Letter of Credit after the expiration of the Revolving Period or
if funds are not then available for advances under such notes, the Borrower
shall immediately upon demand reimburse Barnett for the amount of the draw
together with interest thereon and such other amounts as may be due under any
applicable Reimbursement Agreement. As to any Letter of Credit issued, the
Borrower agrees to pay Barnett upon demand any applicable fees quoted by Barnett
on or before the issuance of the Letter of Credit, including, without
limitation, issuance fees and negotiation fees. Barnett shall not in any event
be required to issue a Letter of Credit after the occurrence of a Default or
Event of Default hereunder.
1.05 Payments. The Borrower shall make all payments under the Notes (as
defined herein) to the Agent for the account of the Lenders. All payments of
principal and interest under the Notes shall, except as otherwise specifically
set forth herein, be allocated among the Lenders on a pro rata basis in
accordance with each Lender_s Revolving Percentage or Seasonal Percentage, as
the case may be. The Agent shall in all events remit all such amounts to the
Lenders by wire transfer as promptly as practicable after receipt of the same.
Unless all of the Lenders direct otherwise, all payments hereunder or under the
Notes received by the Agent shall be applied first to fees payable to the Agent
hereunder for its own account, then to fees payable hereunder to the Agent for
the account of the Lenders, then to the costs and expenses as to which the
Lenders have jointly directed payment, then to accrued interest under the Notes,
then to principal under the Notes and then to all other amounts due under the
Loan Documents (as defined herein).
1.06 Fees.
(a) The Borrower shall pay the Agent (for the account of the
Lenders pro rata in accordance with each Lender_s Revolving Percentage)
a commitment fee on the daily average unused amount of the Line of
Credit during the Revolving Period until the expiration or termination
of the Revolving Period at the rate of one eighth of one percent
(0.125%) per annum (calculated on the basis of a 365 day year). The
Borrower shall pay the fee quarterly in arrears within 15 days after
each September 30, December 31, March 31, and June 30 during the term
of Revolving Period and on the termination or expiration of the Line of
Credit.
(b) The Borrower shall pay the Agent (for the account of the
Lenders pro rata in accordance with each Lender_s Seasonal Percentage)
a commitment fee on the daily average unused amount of the Seasonal
Line of Credit during each Seasonal Period at the rate of one-eighth of
one percent (0.125%) per annum (calculated on the basis of a 365 day
year). The
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Borrower shall pay the fee quarterly in arrears within 15 days after
each September 30, December 31, March 31, and June 30 during the term
of the Seasonal Line of Credit and on the termination or expiration of
the Seasonal Line of Credit.
(c) The Borrower has paid the Agent, for the Agent_s own
account, a fee of $6,000 on or before the date hereof. The Borrower
shall pay the Agent, for the Agent_s own account, an additional fee of
$6,000 per year commencing one year from the date hereof and continuing
thereafter on each annual anniversary of such date until all
Indebtedness (as defined herein) has been paid in full.
1.07 Other Documents and Related Terms.
(a) The Borrower's obligations under the Revolving Notes, the
Seasonal Notes, the Acceptance Agreement and the Reimbursement
Agreements shall be unconditionally guaranteed by Stein Mart Buying
Corp. (the "Guarantor") pursuant to a Guaranty of Payment (as amended
or restated from time to time, the "Guaranty") of even date herewith.
(b) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Indebtedness" shall mean all obligations of the
Borrower to the Lenders now or hereafter due under the Notes
and the other Loan Documents.
(ii) "Loan Documents" shall mean and include this
Loan Agreement (as amended or restated from time to time), the
Revolving Notes, the Seasonal Notes, each Letter of Credit,
each Reimbursement Agreement, each Acceptance, the Acceptance
Agreement, the Guaranty and all documents related to the
foregoing documents.
(iii) "Notes" shall mean the Revolving Notes and the
Seasonal Notes.
(iv) "Subsidiary" shall mean and include any
partnership, corporation or other entity if the Borrower at
any time on or after the date hereof directly or indirectly
owns or controls a majority of the equity or voting interests
in such partnership, corporation or entity.
ARTICLE II
CONDITIONS
2.01 Conditions to Closing. The obligation of the Lenders to make
advances or otherwise extend credit hereunder on the date hereof is subject,
without limitation, to satisfaction of the following conditions precedent:
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(a) The Borrower_s representations and warranties set forth in
this Agreement and in the Loan Documents shall be true and correct in
all material respects on and as of the date hereof.
(b) On the date hereof the Borrower shall be in compliance in
all material respects with all the terms and provisions set forth in
this Agreement on its part to be observed or performed, and no Default
or Event of Default shall have occurred. For purposes of this
Agreement, "Default" shall mean any Event of Default set forth in
Article VI hereof whether or not any requirement for notice or lapse of
time in connection with such event has been satisfied.
(c) The Lenders shall have received on or before the date
hereof in form reasonably satisfactory to them: (i) the duly executed
Loan Documents; (ii) such evidence of corporate authorization from the
Borrower and the Guarantor as the Lenders may require; (iii) good
standing certificates indicating that the Borrower and the Guarantor
are in good standing in Florida; and (iv) certified articles of
incorporation and bylaws of the Borrower and the Guarantor.
2.02 Conditions to Advances. The obligation of the Lenders, after the
date hereof, if any, to make advances hereunder, under the Notes or otherwise or
to issue Letters of Credit or create Acceptances, is subject to satisfaction of
the following conditions precedent:
(a) The Borrower_s representations and warranties set forth in
this Agreement and in the Loan Documents shall be true and correct in
all material respects on and as of the date of each such advance or, as
the case may be, on the date that any such Letter of Credit is issued
or Acceptance created.
(b) On the date of each such advance or, as the case may be,
on the date that any such Letter of Credit is issued or Acceptance
created, the Borrower shall be in compliance in all material respects
with all the terms and provisions set forth in this Agreement to be
observed or performed by it, and no Default or Event of Default shall
have occurred.
2.03 Other Documents. The Lenders shall have received on or before the
date hereof or the date of any advance hereunder or, as the case may be, on the
date that any such Letter of Credit is issued or Acceptance created, such other
documents or items as the Lenders may reasonably request.
ARTICLE III
AFFIRMATIVE COVENANTS
3.01 Financial Statements of the Borrower. The Borrower will deliver to
the Lenders the following:
(a) Within forty-five (45) days after the end of each quarter
of the Borrower_s fiscal year, the Borrower_s financial statements as
of the end of and for such period in reasonable detail, setting forth
in consolidated and comparative form the corresponding
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figures for that date and period and for the corresponding date and
accounting period in the preceding fiscal year, certified by the
Borrower_s chief financial officer.
(b) Within ninety (90) days after the end of each fiscal year
of the Borrower, financial statements as of the end of and for such
year of the Borrower in reasonable detail, setting forth in
consolidated and comparative form the corresponding figures for that
date and period and for the corresponding date and period in the
preceding fiscal year, certified by independent certified public
accountants of recognized standing selected by the Borrower and
acceptable to the Lenders, whose certificate shall be satisfactory to
the Lenders in scope and substance.
(c) Within ninety (90) days after the end of each fiscal year
of the Borrower, total comparable store sales for the Borrower_s
comparable stores for such fiscal year and for the prior fiscal year,
in form reasonably satisfactory to the Lenders, certified by the
Borrower_s chief financial officer. The Borrower shall calculate total
comparable store sales in a manner that is consistent with past
practices.
(d) Within thirty (30) days of either Lender's request,
consolidating financial statements of the Borrower as of the most
recent quarterly or annual fiscal period for which consolidated
financial statements have been delivered hereunder, certified by the
Borrower_s chief financial officer.
(e) Within 45 days after the end of each fiscal quarter of the
Borrower, a compliance certificate certified to the Lenders by the
Borrower_s chief financial officer in form satisfactory to the Lenders
showing compliance in all respects with the Loan Documents.
(f) Within 90 days after the end of each fiscal year of the
Borrower, projected financial statements certified to the Lenders by
the Borrower_s chief financial officer showing projected income
statements for the ensuing one-year period.
(g) Promptly upon receipt thereof, copies of all other
detailed reports (if any) (including, without limitation, any
management letters disclosing or addressing any material accounting or
other issues submitted to the Board of Directors) submitted to the
Borrower or any Subsidiary by independent certified public accountants
in connection with each annual or interim audit or review of the books
of the Borrower or any Subsidiary by such accountants.
(h) With each delivery required under subparagraph (b) above,
a written statement of the independent certified public accountants who
shall have certified the financial statements of the Borrower that in
making the examination necessary for such certification they have
obtained no knowledge of any Default or Event of Default in the
fulfillment of any of the terms, covenants, or conditions of Section
4.08 of this Agreement.
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(i) Promptly upon the occurrence of any Default under the
provisions of Article IV, which has continued for more than five (5)
business days after a senior officer of the Borrower has actually
learned of such Default, a written notice to the Lenders thereof,
specifying the nature thereof.
(j) Immediately upon the occurrence of any event or the
discovery of any fact (peculiar to Borrower as opposed to the retail
business or economy as a whole) which in the good faith judgment of the
chief executive officer or chief financial officer portends or
indicates a probable material and adverse change in the Borrower_s
financial condition, a written notice thereof specifying the nature
thereof.
(k) Promptly upon becoming available, a copy of all: (i)
reports, registration statements and other materials filed with the
Securities and Exchange Commission; (ii) all offering circulars made in
connection with any distribution or sale of the Borrower_s securities;
and (iii) all notices, proxy statements and other materials mailed or
distributed to the Borrower_s shareholders.
(l) Such other material information as the Lenders may from
time to time reasonably request.
3.02 Accounting Terms and Financial Information. All accounting terms
not specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistently applied, as promulgated on the date
of this Agreement and in accordance with changes in generally accepted
accounting principles adopted after the date of this Agreement. Except where
otherwise specified, all financial information submitted pursuant to this
Agreement shall be prepared in accordance with such principles, and the Borrower
and its Subsidiaries will maintain books of account in accordance with such
principles. The books of account shall disclose the information necessary for
determining whether the Borrower has satisfied any provisions or requirements of
this Agreement.
3.03 Taxes and Other Charges. Each of the Borrower and its Subsidiaries
will pay and discharge or cause to be paid and discharged all taxes, charges,
liabilities or claims of any type at any time assessed against or incurred by
the Borrower or any Subsidiary, or which could become a lien against the
Borrower or any Subsidiary or any of their properties. Nothing in this
subsection shall require the payment of any inchoate lien or any such sum if the
Borrower or any Subsidiary promptly notifies the Lenders and by appropriate
proceedings contests the same in good faith and so long as the Borrower or such
Subsidiary, if so requested by either Lender, creates a funded reserve equal to
the amount so claimed or assessed.
3.04 Insurance. The Borrower and its Subsidiaries will maintain
adequate insurance with responsible insurers with coverage normally obtained by
businesses similar to that of the Borrower or the Subsidiaries but covering at
least: (i) damage to physical property from fire and other hazards for the full
insurable value of such property; (ii) liability on account of injury to
persons; and (iii) insurance against theft, forgery or embezzlement or other
illegal acts of officers or employees in reasonable amounts. If requested by
either Lender, the Borrower will provide the Lenders, within
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ninety (90) days after the end of each of its fiscal years, a certificate of the
Borrower specifying the types and amounts of insurance in force and the insurers
of each risk covered by such insurance.
3.05 Maintenance of Corporate Existence. The Borrower and its
Subsidiaries will do or cause to be done all things necessary to preserve and
keep in full force and effect their existence, franchises, rights and privileges
as corporations under the laws of their states of incorporation and any other
jurisdiction where any failure to do so could have a material adverse effect on
the Borrower and its Subsidiaries taken as a whole. Each will do or cause to be
done all things necessary to preserve and keep in full force and effect its
right to own property and to operate all aspects of its business in a manner not
less favorable to it than those now in existence except where any failure to do
so would not have a material adverse effect on the Borrower and its Subsidiaries
taken as a whole.
3.06 Use of Proceeds. The funds borrowed under the Notes shall be used
for any bona fide corporate purpose not inconsistent with this Agreement. All
such funds shall be retained by the Borrower and shall not be loaned or
distributed to the Borrower_s shareholders without the Lenders' prior written
consent.
3.07 Executive Officers. The Borrower will use its reasonable efforts
to cause Jay Stein and John H. Williams, Jr. to remain engaged in the active
management of the Borrower and perform duties substantially similar to those
presently performed by such persons. In the event of the retirement, termination
or death of any such person, such person shall be replaced by a person having,
in the good faith determination of the Borrower's Board of Directors, the
appropriate level of business experience and expertise.
3.08 Notice of Litigation. Promptly after the commencement thereof, the
Borrower shall furnish the Lenders notice of any action, suit or proceeding
before any court or governmental department commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any Subsidiary
which seeks to recover, and in the Borrower's reasonable judgment is likely to
result in the recovery of, more than $250,000 not covered by insurance, or which
seeks any injunctive relief against the Borrower or any Subsidiary.
3.09 Notice of ERISA Requirements. As soon as possible and in any event
within thirty (30) days after the Borrower knows or has reason to know that any
reportable event, material accumulated funding deficiency, material prohibited
transaction, disqualification or termination (as such terms are defined in the
Employee Retirement Income and Security Act of 1974, as amended) with respect to
any Plan has occurred, the Borrower shall furnish the Lenders with the statement
of the chief financial officer of the Borrower setting forth details as to such
event and the action which the Borrower proposes to take with respect thereto,
together with a copy of the notice of such event to the Pension Benefit Guaranty
Corporation. For purposes of this Agreement, "Plan" shall mean any employee
benefit plan maintained in whole or in part for employees of the Borrower or its
Subsidiaries which is subject to the provisions of Title IV of the Employee
Retirement Income Security Act of 1974, as amended from time to time, or subject
to the minimum funding standards under Section 412 of the Internal Revenue Code
of 1986, as amended from time to time.
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3.10 Other Events. The Borrower shall promptly notify the Lenders of
any material default under or material violation of any material agreement, law
or regulation to which the Borrower or any Subsidiary is a party or by which it
is bound. Each of the Borrower and its Subsidiaries shall promptly perform all
of its material obligations under any material agreements to which it is a party
and shall use its best efforts to ensure compliance by other parties with such
agreements.
3.11 Compliance with Laws. Each of the Borrower and its Subsidiaries
shall comply at all times with all statutes, regulations, orders and judgments
to which it is subject except where any failure to so comply will not have a
material adverse effect on the Borrower and its Subsidiaries taken as a whole.
3.12 Inspection. Upon a Default or Event of Default which has occurred
and is continuing, whenever either Lender deems it necessary or convenient, the
Borrower will permit each Lender or any agent designated by either Lender to
have free and complete access at reasonable times, but in no event longer than
five (5) business days after any request, to the books, records, properties,
charter, bylaws, minutes, books and records of the Borrower and its
Subsidiaries, and to make copies thereof or extracts therefrom, all at such
reasonable times and as often as either Lender may reasonably request. The
Borrower covenants that it will prevent any occurrence which would inhibit
either Lender's free access to such books, records, and property as provided
above.
3.13 Deposits. Each of the Borrower and its Subsidiaries shall maintain
their principal depository relationships with the Agent. The parties acknowledge
that the Borrower and its Subsidiaries may maintain separate depository accounts
with other financial institutions in locations other than Jacksonville, Florida
for the banking convenience of any stores located in such locations. The
Borrower and its Subsidiaries shall transfer substantially all funds held in
such other accounts to the Borrower_s account with the Agent no less frequently
than weekly.
3.14 Year 2000 Compliance. The Borrower will promptly notify the Agent
if the Borrower discovers or determines that any Material Computer Application
(as defined herein) will not be Year 2000 compliant on a timely basis, except to
the extent that such failure could not reasonably be expected to have a material
adverse effect on the business, operations, creditworthiness or financial
condition of the Borrower (or any of its Subsidiaries). For purposes hereof, the
term "Material Computer Application" shall mean any computer application that is
material to the business or operations of the Borrower (or any of its
Subsidiaries).
3.15 Further Assurances. If at any time counsel for the Agent
reasonably believes that any Loan Document requires clarification, correction or
amendment to implement its intended purposes, then the Borrower shall, within
ten (10) days after written notice of such opinion from the Agent, do all things
and matters reasonably necessary to correct, clarify, or amend the documents as
requested by the Agent. However, this section shall impose no obligation on the
Borrower to agree to a substantive change in the Loan Documents.
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ARTICLE IV
NEGATIVE COVENANTS
4.01 Liens. Neither the Borrower nor any Subsidiary will create, incur,
assume or suffer to exist any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets, whether now or
hereafter owned, or enter into or suffer to exist any conditional sales
contracts or other title retention agreements except for Permitted Liens.
"Permitted Liens" shall mean:
(a) the lien of ad valorem and other taxes not yet due and payable;
(b) liens arising out of pledges, deposits, or other amounts
owed under workmen_s compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar
legislation, or to secure payment of premiums for insurance purchased
in the usual course of operations or in connection with self-insurance
or to secure the performance of bids, tenders or trade contracts
incurred in the ordinary course of operations and not in connection
with the borrowing of money;
(c) deposits for indemnity bonds and other bonds required in
the ordinary course of business, and not in connection with borrowed
money;
(d) inchoate materialmen_s, suppliers_, operators_,
mechanics_, workmen_s, repairmen_s, employees_, carriers_,
warehousemen_s or attorneys_ liens or other like statutory liens
arising in the ordinary course of business and securing obligations (i)
which are not delinquent or (ii) the amounts or validity of which are
being contested in good faith as to which the Borrower has provided
written notice to the Lenders (provided that no notice need be given if
the aggregate amount of such liens does not exceed $10,000) and has, if
requested by the Lenders, established appropriate funded reserves;
(e) deposits made by the Borrower or any Subsidiary in the ordinary
course of business;
(f) liens of the Lenders arising in the ordinary process of
either Lender's collection of instruments;
(g) statutory landlord_s liens, and contractual landlord_s
liens created prior to this date provided that amounts secured thereby
are not past due by more than 60 days;
(h) any other liens on the Borrower_s inventory and accounts
receivable securing, as to all such liens on a combined basis, not more
than $500,000 in the aggregate;
(i) as to assets other than the Borrower_s inventory and
accounts receivable, liens and encumbrances securing, as to all such
liens and encumbrances on a combined basis, not more than $500,000.00
in the aggregate (including all indebtedness under capitalized leases)
as to the Borrower and its Subsidiaries on a combined basis; and
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(j) any liens hereafter granted to the Lenders under the Loan
Documents.
4.02 Obligations. Neither the Borrower nor any Subsidiary is or will
become directly or indirectly obligated in any way for any obligation for
borrowed money except Permitted Obligations. Neither the Borrower nor any
Subsidiary is or will become responsible for the obligations of any other
person, directly or indirectly, whether by agreement to purchase the obligations
of any other person or by guaranty, endorsement, surety agreement or otherwise,
except endorsements of negotiable instruments for collection in the ordinary
course of business. Notwithstanding the foregoing, each of the Borrower and the
Guarantor shall be entitled to guarantee obligations of the other. "Permitted
Obligations" shall mean:
(a) The Indebtedness;
(b) Those obligations giving rise to Permitted Liens (so long
as the amount of such obligations does not exceed any limitations set
forth in Section 4.01);
(c) Customer deposits in the ordinary course of business;
(d) Other obligations of the Borrower arising in the ordinary
course of business in the aggregate not to exceed an aggregate amount
of $1,000,000, provided that no such obligation shall be for borrowed
money.
4.03 Merger; Consolidation; Sale of Substantial Assets. Neither the
Borrower nor any Subsidiary will merge into or with, consolidate with, or sell
all or a substantial part of its assets to, any other person or entity (except
for mergers of any Subsidiary into the Borrower). The Borrower shall immediately
notify the Lenders in writing if: (a) the Borrower, any Subsidiary or any other
person has entered into a letter of intent or a definitive agreement which, upon
consummation, will result in a violation of this section; or (b) any transaction
prohibited herein has occurred.
4.04 Loans and Investments. Neither the Borrower nor any Subsidiary
will purchase any stock, securities or evidence of indebtedness, or make or
permit to exist any loans or advances to, or make any investment or acquire any
interest in, any other corporation, partnership or other entity or person except
as expressly set forth herein. Notwithstanding the foregoing, for so long as no
Event of Default has occurred, the Borrower: (a) may make and maintain loans,
advances and investments in and to other persons and entities so long as the
aggregate amount thereof, on a combined basis, does not exceed $2,000,000 at any
one time; and (b) may, in addition, at any time make short-term investments in
commercial paper or marketable securities rated AA or better by Moody_s
Investors Services. Neither the Borrower nor any Subsidiary shall enter into
partnership or joint venture agreements with any other person or entity.
4.05 Nature of Business. Neither the Borrower nor any Subsidiary will
engage in any business if, as a result, the general nature of the business in
which it would then be engaged, taken as a whole, would be substantially changed
from the general nature of the business engaged in by it on the date of this
Agreement.
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4.06 Sale and Leaseback. Neither the Borrower nor any Subsidiary will
enter into any arrangement with any person or entity providing for the leasing
by the Borrower or such Subsidiary of property which has been sold or is to be
sold or transferred by the Borrower or such Subsidiary to such person or entity
(except to the extent that the fair market value of all such property so sold or
transferred, on a combined basis, does not exceed $1,000,000).
4.07 Pension Plan Funding Deficiency. Neither the Borrower nor any
Subsidiary shall incur or suffer to exist any material accumulated funding
deficiency within the meaning of the Employee Retirement Income Security Act of
1974 or incur any material liability to the Pension Benefit Guaranty Corporation
(or any successor) established thereunder in connection with any Plan which is
not satisfied within ten days after the determination thereof.
4.08 Financial Covenants. The Borrower and its Subsidiaries shall
comply at all times with the following financial covenants. Each of the
financial covenants shall be calculated on a consolidated basis for the Borrower
and its Subsidiaries.
(a) The Borrower_s Cash Flow Coverage Ratio shall not be less
than 1.2 to 1 as of the first day of any fiscal quarter. For purposes
hereof, the Cash Flow Coverage Ratio shall mean the Borrower_s Adjusted
Income (as defined herein) divided by its Fixed Charges (as defined
herein). This computation will be made using a moving average of four
fiscal quarters which will include the fiscal quarter just ended
together with the three fiscal quarters immediately preceding such
quarter. For purposes hereof, the following terms shall have the
following meanings:
(i) "Adjusted Income" shall mean: (aa) the Borrower_s
consolidated net income before interest, income taxes,
depreciation and amortization; plus (bb) the Borrower_s
consolidated lease and rental expenses; less (cc) the
Borrower_s consolidated capital expenditures; and less (dd)
all dividends paid by the Borrower.
(ii) "Fixed Charges" shall mean all of the following
of the Borrower calculated on a consolidated basis: (aa)
current maturities of long term debt; (bb) interest expenses;
and (cc) lease and rental expenses.
(b) The ratio of the Borrower_s consolidated current assets to
consolidated current liabilities shall at no time be less than: (i) 2
to 1 at the end of each fiscal quarter (other than the last quarter)
during each fiscal year of the Borrower; and (ii) 1.7 to 1 at the end
of each fiscal year of the Borrower. "Current assets" and "current
liabilities" shall have the following meanings:
(i) "Current assets" shall mean the aggregate amount
of all assets of an entity that may properly be classified as
current assets in accordance with generally accepted
accounting principles, not including, however, (aa) any
deferred assets, (bb) any prepaid items such as insurance,
taxes, interest, commissions, rents, royalties and similar
items, and (cc) any amounts owed to such entity by officers,
directors, employees, stockholders or subsidiaries or other
affiliates of such entity.
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(ii) "Current liabilities" shall mean all
indebtedness of an entity that may properly be classified as
current liabilities in accordance with generally accepted
accounting principles including, without limitation,
indebtedness payable on demand or within a period of one year
from the date of the creation thereof (excluding any
indebtedness renewable or extendible at the option of the
debtor, absolutely or conditionally, for a period or periods
extending to more than one year after such date, whether or
not actually so renewed or extended) plus current maturities
of long term debt.
(c) The Borrower shall not allow its ratio of Debt to Tangible
Net Worth to exceed: (i) 2.0 to 1 at the end of each fiscal quarter
(other than the last quarter) during each fiscal year of the Borrower;
or (ii) 1.5 to 1 at the end of each fiscal year of the Borrower.
"Tangible Net Worth" and "Debt" shall have the following meanings:
(i) "Tangible Net Worth" shall mean the aggregate of
the following:
(aa) The gross book value as shown by the
books of the Borrower and its Subsidiaries, on a
consolidated basis, of all real and personal
property, including leasehold improvements, but
excluding: (1) any property located outside the
United States or its territorial possessions; (2) all
intangible personal property including, without
limitation, licenses, patents, patent applications,
copyrights, trademarks, trade names, good will, going
concern value, experimental or organizational
expense, treasury stock and unamortized discount; and
(3) all investments in or loans to any shareholder,
officer, director, employee or other affiliate;
less the sum of the following items (bb), (cc) and
(dd);
(bb) all reserves for depletion,
depreciation and amortization of properties as shown
by the books of the Borrower or any subsidiary and
all other proper reserves which in accordance with
generally accepted accounting principles should be
set aside in connection with the business of the
Borrower or any Subsidiary;
(cc) all obligations which under generally
accepted accounting principles are shown or should be
shown on the balance sheet as liabilities; and
(dd) all increases in book value of any real
estate or tangible personal property of the Borrower
or any Subsidiary attributable to a reappraisal or
other write-up of assets.
(ii) "Debt" shall mean: (aa) any indebtedness or
liability for borrowed money and any other indebtedness or
liability, evidenced by notes, debentures, bonds or similar
obligations; and (bb) all other obligations which under
generally accepted
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accounting principles are shown or should be shown on the
Borrower_s or any subsidiary_s balance sheet as liabilities.
4.09 Subsidiaries. The Borrower shall not create or acquire any
Subsidiary without the Lenders' prior written consent. Notwithstanding the
foregoing and notwithstanding any contrary provision set forth herein, the
Borrower may create and maintain subsidiary corporations (the "Permitted
Subsidiaries") on the following terms and conditions: (a) the Borrower shall
hold 100% of each Permitted Subsidiary_s capital stock subject to no liens,
claims or encumbrances of any kind (other than liens in favor of the Lenders);
(b) neither the Borrower nor any Permitted Subsidiary shall issue or create any
options, warrants or other rights to obtain any capital stock of any Permitted
Subsidiary; (c) the Borrower shall not transfer any assets to any Permitted
Subsidiary other than inventory, trademarks, service marks and trade names owned
by the Borrower; (d) each Permitted Subsidiary shall retain ownership of its
marks and names and shall not permit any person or entity, other than the
Borrower, to obtain any rights or other interests in such marks or names; (e)
each Permitted Subsidiary shall at all times provide the Borrower with the full
and free right to use such marks and names pursuant to a license agreement which
is satisfactory in all material respects to the Lenders. The Borrower shall not
be entitled to create any additional Permitted Subsidiaries after the occurrence
of a Default or an Event of Default hereunder. As of the date hereof, the only
Permitted Subsidiary is the Guarantor.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants, and so long as this Agreement is
in effect or any part of the Indebtedness remains unpaid, shall continue to
represent and warrant at all times, that:
5.01 Corporate Status. Each of the Borrower and its Subsidiaries is a
corporation duly incorporated and validly existing under and by virtue of its
state of incorporation. Each of the Borrower and its Subsidiaries is duly
licensed and qualified in all other states and jurisdictions wherein the nature
of the business transacted by it (in the opinion of its counsel) makes such
licensing or qualification as a foreign corporation necessary, if any, except
where any failure to be so licensed and qualified will not have a material
adverse effect on the Borrower and its Subsidiaries taken as a whole. Each of
the Borrower and its Subsidiaries holds in full force and effect all permits,
licenses and franchises necessary for it to carry out its operations in
conformity with all applicable laws and regulations except where any failure to
hold such permits, licenses and franchises will not have a material adverse
effect on the Borrower and its Subsidiaries taken as a whole
5.02 Authorization, Conflicts and Validity. The execution and delivery
of this Agreement and each of the other Loan Documents to which the Borrower is
or will be a party and the performance by the Borrower of all of its obligations
thereunder: (a) have been duly authorized by all requisite corporate action; (b)
will not violate or be in conflict with (i) any provision of applicable law
(including, without limitation, any applicable usury or similar law); (ii) any
order, rule or regulation of any court or other governmental authority; (iii)
any provision of its certificate of incorporation or bylaws, including any
amendments thereto, or any resolution with continuing effect adopted by its
Board of Directors or shareholders; or (iv) any provision of any shareholders_
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agreement or trust respecting securities of its issue or related rights; (c)
will not violate, be in conflict with, result in a breach of or constitute a
default (with or without the giving of notice or the passage of time or both)
under any material instrument, indenture, agreement or other obligation to which
it is a party or by which it or any of its assets and properties is or may be
bound or subject; and (d) except as specifically contemplated by this Agreement
or any other Loan Documents, will not result in the creation or imposition of
any lien, charge or encumbrance of any nature upon any of its assets and
properties. This Agreement and the other Loan Documents to which it is or will
be a party when executed and delivered will be, legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms and provisions.
5.03 Consents. No consent, approval or authorization of, or
registration, declaration or filing with, any governmental authority or other
person (including, without limitation, the shareholders of the Borrower) is
required as a condition precedent, concurrent or subsequent to or in connection
with the due and valid execution, delivery and performance by the Borrower of
this Agreement or any other Loan Document to which it is or will be a party, or
the legality, validity, binding effect or enforceability of any of the
respective representations, warranties, covenants and other terms and provisions
thereof. Each franchise, license, certificate, authorization, approval or
consent from any governmental authority material to the conduct of the business
and operations of the Borrower or any Subsidiary or required for the
acquisition, ownership, improvement, operation or maintenance by the Borrower or
any Subsidiary of any material portion of the assets and properties it now owns,
operates or maintains, has been obtained and validly granted, is in full force
and effect and constitutes valid and sufficient authorization therefor.
5.04 Financial Statements. The Borrower has heretofore made available
to the Lenders financial statements as of and for the fiscal year ending January
3, 1998, and the period ending July 4, 1998. Those financial statements fairly
present the financial condition of the Borrower and the results of its
operations as of the dates thereof. Those financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except for changes, if
any, stated in the related accountants_ reports.
5.05 Changes in Financial Condition. Since July 4, 1998, there has been
no material adverse change in the assets or the financial condition of the
Borrower from that set forth or reflected in the financial statements as of that
date. The Borrower is current in the payment of all of its debts and in the
performance of all of its obligations except for those contested in good faith.
5.06 Legal or Administrative Proceedings. There are no material
actions, suits, investigations or proceedings by any person or entity pending or
threatened against the Borrower or any Subsidiary or to which the Borrower or
any Subsidiary is a party involving the possibility of any judgment or liability
not fully covered by insurance or by adequate reserves set up on the books of
the Borrower or such Subsidiary which, if adversely determined, could reasonably
be expected to have a material adverse effect on the Borrower and the
Subsidiaries taken as a whole.
5.07 Assets. The Borrower has good, marketable title to all of its
assets reflected in the financial statements dated July 4, 1998, and such assets
are free and clear of all liens, charges and encumbrances except as shown on
those financial statements.
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5.08 Losses. Since the date of the financial statements already
delivered to the Lenders, no material loss, damage, destruction or taking of any
of the physical properties of the Borrower or any Subsidiary has occurred which
has not been fully restored or replaced, or which is not fully covered by
insurance, and neither the property nor business has been adversely affected in
any substantial way as the result of any accident, strike, lockout, combination
of workmen, embargo, riot, war, act of God or public enemy. Neither the Borrower
nor any of its officers are aware of any material adverse fact or likelihood
concerning the conditions or future prospects of the Borrower or any Subsidiary
which has not been fully disclosed in writing to the Lenders except for those
that may affect similar companies in similar ways.
5.09 Corporate Restrictions. Neither the Borrower nor any Subsidiary is
a party to any contract or subject to any charter or other corporate restriction
which would materially and adversely affect its property or business, or its
ability to perform its obligations under the Loan Documents.
5.10 Taxes. The Borrower has filed all federal and state tax returns
which are required to be filed, and has paid all taxes as shown on the returns
and on all assessments received by it to the extent that the taxes have become
due. Proper and accurate amounts have been withheld by the Borrower from its
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective governmental agencies.
5.11 Default. There exists as of the date hereof no Default or Event of
Default.
5.12 Other Representations. All warranties and representations of
the Borrower contained in any of the Loan Documents are true and accurate.
5.13 Subsidiaries. The Borrower owns no Subsidiaries, other than the
Guarantor, as of the date of this Agreement.
5.14 Offering of Notes. Neither the Borrower nor any agent acting for
it has offered the Notes or any similar obligation of the Borrower for sale to
or solicited any offers to buy the Notes or any similar obligation of the
Borrower from any person other than the Lenders. Neither the Borrower nor any
agent acting for the Borrower will take any action which would subject the
issuance of the Notes to the provisions of Section 5 of the Securities Act of
1933, as amended, or the provisions of the blue sky laws of any jurisdiction.
5.15 ERISA. No Plan has incurred any material accumulated funding
deficiency within the meaning of the Employee Retirement Income Security Act of
1974, and neither the Borrower nor any Subsidiary has incurred any material
liability to the Pension Benefit Guaranty Corporation (or any successor) in
connection with any Plan.
5.16 Purpose of the Borrower. The Borrower does not own any "margin
security" within the meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System. None of the proceeds of the loan by the
Lenders to the Borrower will be used for the purpose of purchasing or carrying
any margin security or for the purpose of reducing or retiring any
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indebtedness which was originally incurred to purchase or carry a margin
security or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U, as now in effect or as it
may hereafter be amended. Neither the Borrower nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation U or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Securities Exchange Act of 1934,
in each case as in effect now or as the same may hereafter be amended.
5.17 Year 2000 Compliance. The Borrower will: (a) initiate a review and
assessment of all aspects of the business and operations of the Borrower and its
Subsidiaries that could be adversely affected by the Year 2000 Problem (as
defined herein); (b) develop a plan and time line for addressing the Year 2000
Problem on a timely basis; and (c) implement that plan in accordance with such
time line. The Borrower reasonably believes that all computer applications that
are material to the business and operations of the Borrower or any Subsidiary
will on a timely basis be able to perform properly date sensitive functions
before, on and after January 1, 2000, except to the extent that a failure to do
so could not reasonably be expected to have a material adverse effect on the
business, operations, creditworthiness or financial condition of the Borrower or
any Subsidiary. For purposes hereof, the term "Year 2000 Problem" shall mean the
risk that any computer application used by the Borrower or any Subsidiary may
not recognize or perform date sensitive functions on or after January 1, 2000.
ARTICLE VI
EVENTS OF DEFAULT
6.01 Events of Default. Each of the following events shall constitute
an "Event of Default" hereunder:
(a) if the Borrower defaults in the payment when due of any
principal, interest or other amount under any Note, under any
Reimbursement Agreement or under the Acceptance Agreement, and such
default is not cured within ten days after the occurrence thereof; or
(b) if the Borrower or any Subsidiary defaults: (i) in any
payment of principal of or interest on any other obligation in excess
of $250,000 beyond any period of grace provided with respect thereto or
(ii) in the performance or observance of any other agree ment, term, or
condition contained in any agreement for borrowed money under which any
such obligation is created if the effect of such default is to cause,
or permit the holder or holders of such obligation (or trustee on
behalf of such holder or holders) to cause, such obligation to become
due prior to its stated maturity, except, in either case, for
obligations disputed in good faith if the Lenders are promptly notified
thereof and, if requested by the Lenders, funded reserves are
established in amounts which in the Lenders' opinion are sufficient to
pay the total amount in dispute; or
(c) if any statement, representation or warranty made by the
Borrower or any Subsidiary herein or in any writing now or hereafter
furnished in connection with or pursuant
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to the Loan Documents or in connection with any audit shall be false in
any material respect; or
(d) if the Borrower defaults in any material respect in the
performance or observance of any agreement or covenants contained in
Articles III and IV hereof; or
(e) if the Borrower or any Subsidiary defaults in any material
respect in the performance or observance of any other agreement,
covenant, term or condition contained herein or in any other Loan
Document and such default shall not have been remedied within the grace
period therein provided or, if no grace period is specified, within 30
days after written notice thereof is sent by the Lenders to the
Borrower; or
(f) if the Borrower or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as they
become due; or
(g) if any order, judgment or decree is entered under the
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction adjudicating the Borrower or any Subsidiary bankrupt or
insolvent, except that no Event of Default shall exist unless such
order remains unstayed and in effect for more than 45 days; or
(h) if the Borrower or any Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of a trustee,
receiver, custodian, liquidator, or similar official, of the Borrower
or any Subsidiary or of any substantial part of the assets of the
Borrower or any Subsidiary, or commences a voluntary case under the
Bankruptcy Code of the United States or commences any proceedings
relating to the Borrower or any Subsidiary under bankruptcy, insolvency
or moratorium laws of any jurisdiction, whether now or hereafter in
effect; or
(i) if any such petition or application is filed, or any such
proceedings are commenced, against the Borrower or any Subsidiary and
if the Borrower or any Subsidiary by any act indicates its approval
thereof, consent thereto, or acquiescence therein, or an order is
entered in an involuntary case under the Bankruptcy Code of the United
States, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator, or similar official, or
approving the petition in any proceedings, and such order remains
unstayed and in effect for more than 30 days; or
(j) if any order is entered in any proceedings against the
Borrower or any Subsidiary decreeing the dissolution or split-up of the
Borrower or any Subsidiary.
6.02 Remedies. If an Event of Default under Section 6.01(d) shall occur
and Borrower shall not have demonstrated by affidavit, financial statements (if
such Event of Default relates to a financial covenant), or other evidence to the
satisfaction of the Lenders that such Event of Default has been cured as of the
date the Lenders elect to exercise their rights under this section, or if an
Event of Default under any other subsection of Section 6.01 shall occur, the
Agent may, subject to
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Section 7.03 hereof, by notice to the Borrower, effective upon receipt, declare
the entire unpaid principal amount then outstanding under the Loan Documents,
all interest accrued and unpaid under the Loan Documents and all other
Indebtedness of the Borrower to the Lenders under this Agreement or any of the
other Loan Documents to be forthwith due and payable. (For the purposes hereof,
receipt of any notice given under this Section 6.02 shall be deemed to have
occurred: (i) three business days after deposited in the mail with proper
postage affixed if sent by mail; or (ii) when actually delivered to the
appropriate address if sent by courier or by hand). Thereupon, the then
outstanding principal amount under the Loan Documents, all such accrued interest
and all such other Indebtedness shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower, and the Agent, on behalf of the
Lenders (or any of them) may immediately enforce payment of all such amounts and
exercise any or all of the rights and remedies of the Agent and the Lenders
under this Agreement and other Loan Documents, including without limitation the
right to resort to any or all collateral securing any obligations under the Loan
Documents and exercise any or all of the rights of a secured party pursuant to
the Uniform Commercial Code of Florida and other applicable similar statutes in
other jurisdictions.
6.03 Termination of Rights to Advances; Automatic Acceleration.
Notwithstanding anything herein to the contrary, (a) the Borrower_s right, if
any, to obtain any additional advances or credit under the Notes or other Loan
Documents shall automatically terminate upon the initiation against the Borrower
or any Subsidiary of any proceeding under the Federal Bankruptcy Code, or upon
the occurrence of any Event of Default described in subparagraphs (f), (g), (h),
(i) or (j) of Section 6.01, and (b) all Indebtedness shall automatically be and
become immediately due and payable upon the occurrence of any Event of Default
described in subparagraphs (g), (h) or (i) of Section 6.01.
ARTICLE VII
THE AGENT
7.01 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 7.05 and
the first sentence of Section 7.06 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any Loan Party or any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by the
Borrower or any Guarantor (each, a "Loan Party") or the satisfaction
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of any condition or to inspect the property (including the books and records) of
any Loan Party or any of its Subsidiaries or affiliates; (d) shall not be
required to initiate or conduct any litigation or collection proceedings under
any Loan Document; and (e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
7.02 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper person or persons, and upon advice and statements of legal counsel
(including counsel for any Loan Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof. As to any matters not
expressly provided for by this Agreement, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Lenders. However, the Agent shall not
be required to take any action that exposes the Agent to personal liability or
that is contrary to any Loan Document or applicable law or unless it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking any such action.
7.03 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 7.02 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Lenders.
However, unless and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Lenders.
7.04 Rights as Lender. With respect to its commitments and the credit
extended by it hereunder, Barnett (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. Barnett (and
any successor acting as Agent) and its affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to, make investments
in, provide services to, and generally engage in any kind of lending, trust, or
other business with any Loan Party or any of its Subsidiaries or affiliates as
if it were not acting as Agent, and Barnett (and any successor acting as Agent)
and its affiliates may accept fees and other consideration from any Loan Party
or any of its Subsidiaries or affiliates for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
37
<PAGE>
7.05 Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed hereunder, but without limiting the obligations of the
Borrower hereunder) ratably in accordance with their respective Revolving
Percentages, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys'
fees), or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Agent (including by any Lender) in any
way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by the Agent under any Loan
Document (including any of the foregoing arising from the negligence of the
Agent). However, no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the person
or entity to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for its ratable share of any
costs or expenses payable by the Borrower hereunder to the extent that the Agent
is not promptly reimbursed for such costs and expenses by the Borrower. The
agreements contained in this Section shall survive payment in full of the Loans
and all other amounts payable under this Agreement.
7.06 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Loan Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any Loan
Party or any of its Subsidiaries or affiliates that may come into the possession
of the Agent or any of its affiliates.
7.07 Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Lenders shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
United States of America having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become vested with all
the rights, powers, discretion, privileges, and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article VII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
7.08 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and
38
<PAGE>
is signed by the Borrower and all of the Lenders (and, if Article VII or the
rights or duties of the Agent are affected thereby, by the Agent).
7.09 Right of Set-off and Adjustments.
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its affiliates) is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Notes held by such Lender,
regardless of whether such Lender shall have made any demand under this
Agreement or such Notes and although such obligations may be unmatured.
Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender. However, the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this subparagraph are in
addition to other rights and remedies (including, without limitation,
other rights of set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of the amounts owing to it under the
Notes, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, or
otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such
other Lender's Notes, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in
such portion of each such other Lender's Notes, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders. However, if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that any Lender so purchasing a
participation from a Lender pursuant to this Section may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the
amount of such participation.
ARTICLE VIII
MISCELLANEOUS
8.01 Expenses. The Borrower agrees to pay, and save the Lenders
harmless against liability for the payment of, all out-of-pocket expenses
arising in connection with this transaction (including any renewals or
modifications relating hereto), including any state documentary stamp taxes or
other taxes (including interest and penalties, if any) which may be determined
to be payable in respect to the execution and delivery of any Loan Documents
executed in connection with this Agreement or any such renewal or modification.
The Borrower acknowledges that it has participated
39
<PAGE>
with the Lenders in establishing the structure of this transaction and that it
has independently determined the amount of documentary stamp and other taxes due
in connection herewith. The Borrower has not relied upon representations of the
Lenders or its counsel in calculating the amount of such taxes, and the Borrower
shall be liable for any additional taxes (including interest and penalties)
which may be due in connection with this transaction or any renewals hereof. If
an Event of Default shall occur, the Borrower shall also pay all of each
Lender's costs of collection including the employee travel expenses of either
Lender, court costs and fees of attorneys and legal assistants (whether incurred
in connection with trial or appellate proceedings). The Borrower authorizes each
Lender to make advances under the Note and to debit its deposit accounts to pay
all expenses.
8.02 Survival of Representations and Warranties. All representations
and warranties contained herein or made in writing by the Borrower in connection
herewith shall survive the execution and delivery of the Loan Documents.
8.03 Successors and Assigns. All covenants and agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. The Borrower shall not be entitled to assign
its rights hereunder. The Lenders may, without the Borrower_s consent, assign
all or part of their rights hereunder or grant participations therein. The
Lenders may disclose to any such assignee or participant such information
concerning the Borrower as the Lenders deem appropriate.
8.04 Notices. All communications provided for hereunder shall be sent
by first class mail, by courier, by hand, or by certified mail as follows or to
such other address with respect to any party as such party shall notify the
others in writing:
To the Lenders: Barnett Bank, N.A.
50 North Laura Street
Jacksonville, Florida 32202
Attn: Corporate Banking Group
SunTrust Bank, North Florida, N.A.
200 West Forsyth Street
Jacksonville, Florida 32202
Attn: Corporate Banking
To the Agent: Barnett Bank, N.A.
50 North Laura Street
Jacksonville, Florida 32202
Attn: Corporate Banking Group
40
<PAGE>
To the Borrower: Stein Mart, Inc.
1200 Riverplace Blvd.
Jacksonville, Florida 32207
Attn: Chief Financial Officer
Each such notice shall be deemed given: (i) three business days after deposited
in the mail with proper postage affixed if sent by mail; and (ii) when actually
delivered to the appropriate address if sent by courier or by hand.
8.05 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida.
8.06 Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
8.07 Counterparts. This Agreement may be executed simultaneously in
several counterparts. Each counterpart shall be deemed an original.
8.08 Remedies Cumulative. All rights and remedies of the Lenders
hereunder are cumulative and in addition to any rights and remedies which the
Lenders may have under the laws of Florida. Each Lender's exercise of any one
right or remedy against one party hereto will not deprive the Lenders of any
right or remedy against that party or any other parties hereto. No right, power
or remedy conferred upon or reserved to the Lenders under this Agreement or any
other of the Loan Documents is exclusive of any other right, power or remedy in
any of the Loan Documents, but each and every such right, power and remedy shall
be cumulative and concurrent and shall be in addition to any other right, power
and remedy given hereunder or under any other Loan Documents, or now or
hereafter existing at law, in equity or by statute.
8.09 Delay or Omission. No delay or omission of either Lender to
exercise any right, power or remedy under any of the Loan Documents or accruing
upon any Event of Default shall exhaust or impair any such right, power or
remedy or shall be construed to waive any such Event of Default or to constitute
acquiescence therein. Every right, power and remedy given to the Lenders under
any of the Loan Documents may be exercised from time to time and as often as may
be deemed expedient by the Lenders.
8.10 No Waiver of One Default to Affect Another. No waiver of any
Default or Event of Default hereunder shall extend to or affect any subsequent
Default or Event of Default or any other Default or Event of Default then
existing, or impair any rights, powers or remedies consequent thereon.
8.11 Changes. No term of any Loan Document may be changed, waived,
discharged or terminated orally, or by any action or inaction, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
41
<PAGE>
8.12 Severability. If any portion of any Loan Document is declared void
by any court as illegal or against public policy, the remainder of the Loan
Documents in question shall continue in full effect.
8.13 Lost or Damaged Note. Upon receipt by the Borrower of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Note (the "Lost Note") and of an indemnity agreement reasonably satisfactory
to the Borrower, the Borrower will make and deliver to the applicable Lender a
new Note of like tenor, date and principal amount in lieu of the Lost Note.
8.14 Survival of Obligations Upon Termination of Financing Arrangement.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of the financing under this
Agreement shall in any way affect or impair the obligations, duties, and
liabilities of the Borrower or the rights of the Lenders relating to any
transaction or event occurring prior to such termination. All undertakings,
agreements, indemnifications, covenants, warranties and representations
contained in the Loan Documents shall survive such termination or cancellation.
This Agreement supersedes and replaces any commitment letter relating to the
Indebtedness.
8.15 Prior Credit Facility. This Agreement supersedes and replaces that
certain Loan Agreement (the "Prior Loan Agreement") dated as of June 29, 1993,
as amended from time to time, between the Borrower and Barnett, and the Borrower
shall not be entitled, from and after the date hereof, to obtain further credit
under the Prior Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
STEIN MART, INC.
By: /s/ James G. Delfs
---------------------------------------
Its: Senior Vice President - C.F.O.
--------------------------------------
BARNETT BANK, N.A.,
as agent
By: /s/ Susan S. Delgado
---------------------------------------
Its: Vice President
--------------------------------------
42
<PAGE>
BARNETT BANK, N.A.
By: /s/ Susan S. Delgado
---------------------------------------
Its: Vice President
--------------------------------------
SUNTRUST BANK, NORTH FLORIDA, N.A.
By: /s/ C.W. Buckkoh
---------------------------------------
Its: First Vice President
--------------------------------------
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by James G. Delfs the
Senior Vice President - C.F.O. of Stein Mart, Inc., on behalf of the
corporation, in Camden County, Georgia.
/s/ V. Thomas Fountain
-------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
43
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by Susan S. Delgado the
Vice President of Barnett Bank, N.A., as agent, on behalf of
the bank, in Camden County, Georgia.
/s/ V. Thomas Fountain
-------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by Susan S. Delgado the
Vice President of Barnett Bank, N.A., on behalf of the bank, in
Camden County, Georgia.
/s/ V. Thomas Fountain
-------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
44
<PAGE>
REVOLVING PROMISSORY NOTE
(Barnett)
$40,000,000.00
August 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, STEIN MART, INC., a Florida
corporation (the "Borrower"), hereby promises to pay to the order of BARNETT
BANK, N.A. (the "Lender"), whose address is 50 North Laura Street, Jacksonville,
Florida 32202, the principal sum of Forty Million and 00/100 Dollars
($40,000,000.00) together with interest on the outstanding principal balance
hereof at the rate provided herein. All such payments of principal and interest
shall be made in lawful money of the United States in immediately available
funds at the office of the Agent (as defined herein), now located at 50 North
Laura Street, Jacksonville, Florida, 32202, or at such other office as the Agent
may designate in writing. This Note is one of the Revolving Notes described in
the Loan Agreement (as amended or restated from time to time, the "Loan
Agreement") of even date herewith by and among the Borrower, Barnett Bank, N.A.,
SunTrust Bank, North Florida, N.A. and Barnett Bank, N.A., as agent (in such
capacity and for so long as it shall serve in such capacity under the Loan
Agreement, the "Agent"). Capitalized terms used and not otherwise defined herein
shall have the meanings assigned thereto in the Loan Agreement. This Note shall
be governed by the following provisions:
1. Advances. The Borrower may borrow, repay and reborrow principal
amounts hereunder during the Revolving Period subject to the terms contained
herein and in the Loan Agreement. Notwithstanding the foregoing, the outstanding
principal balance hereof shall not exceed the amounts set forth in the Loan
Agreement. The Borrower shall not be permitted to obtain further advances
hereunder from and after the expiration of the Revolving Period.
2. Payments.
(a) The Borrower shall pay all accrued interest hereunder on
the first day of each July, October, January and April during the term
hereof.
(b) The Borrower shall pay all outstanding principal
hereunder, together with all then accrued and unpaid interest, on June
30, 2001.
3. Interest.
(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 5.99844% per annum. The
rate of interest shall be adjusted on each Interest Rate Adjustment
Date (as defined herein) so that interest shall accrue at the Adjusted
Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes
of this paragraph, the following terms shall have the following
meanings:
45
<PAGE>
(i) "Adjusted Libor Rate" for each Interest Period
shall mean a rate that is 0.35% per annum over the applicable
Libor Rate. The Libor Rate for each Interest Period shall mean
the offered rate for deposits in United States dollars in the
London Interbank market for a one month period which appears
on the Libor Rate Reference Page (as defined herein) as of
11:00 a.m. (London time) on the day that is two London Banking
Days (as defined herein) preceding the first Banking Business
Day (as defined herein) of the Interest Period. If at least
two such offered rates appear on the Libor Rate Reference
Page, the rate will be the arithmetic mean of such offered
rates.
(ii) "Banking Business Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in Charlotte, North Carolina, are closed for business.
(iii) "Interest Period" shall mean each period
commencing on each Interest Rate Adjustment Date and ending on
the next Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean the
first day of September, 1998, and the first day of each
calendar month thereafter.
(v) "Libor Rate Reference Page" shall mean any of the
following reference pages or sources (as selected from time to
time by the Agent in its discretion): (aa) the Reuters Screen
LIBO Page; (bb) the Dow Jones Telerate Page 3750; or (cc) such
other index or source as the Agent may in its sole discretion
select showing rates offered for United States dollar deposits
in the London Interbank market.
(vi) "London Banking Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in London, England are closed for business.
(b) Notwithstanding the foregoing subparagraph (a), the
Borrower may elect for interest to accrue on all outstanding principal
under the Revolving Notes for periods of one calendar month each (each,
an "Alternate Interest Period") at an Alternate Interest Rate (as
defined herein). The Borrower may make such election by providing
telephonic notice thereof to the Agent at least two business days
before the commencement of the Alternate Interest Period. The notice
shall be provided to such individual at such telephone number as the
Agent may from time to time specify, and the Agent's internal records
as to the delivery and contents of such notice shall be conclusive
evidence thereof. The notice shall state the date upon which the
Alternate Interest Period shall commence (which shall in all events be
the first day of a calendar month). If the Borrower duly elects for
interest to accrue hereunder at the Alternate Interest Rate, then
interest shall accrue at the Alternate Interest Rate on the outstanding
principal amount of the Revolving Notes during the applicable Alternate
Interest Period. Any election hereunder shall be irrevocable during the
term of the Alternate Interest Period. At the expiration of the
Alternate Interest Period, interest shall
46
<PAGE>
accrue at the rate set forth in subparagraph (a) above except to the
extent that the Borrower duly elects for interest to thereafter accrue
at the Alternate Interest Rate. For purposes hereof, the Alternate
Interest Rate shall mean a rate equal to the Prime Rate (as defined
herein) less 1.50% per annum. The Prime Rate shall be the interest rate
announced from time to time by Barnett Bank, N.A. (or any successor
thereto) as its prime rate. For purposes of this Note, any change in
the Prime Rate shall be effective as of the Agent's opening of business
on the effective date of the change.
(c) Interest shall be calculated on the basis of a 365 day
year (based upon the actual number of days elapsed).
(d) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable usury
laws. If any interest is received or charged by any holder hereof in
excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(e) Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth
notwithstanding the provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty.
5. Application of Payments. All payments hereunder shall be applied in
the manner set forth in the Loan Agreement.
6. Default. If any Event of Default or Default (as defined in the Loan
Agreement) shall occur, any obligation of the Lender to make advances hereunder
shall be terminated without notice to the Borrower. In addition, if any Event of
Default shall occur, the outstanding principal of this Note, all accrued and
unpaid interest hereunder and all other amounts payable under this Note shall be
and become forthwith due and payable in the manner set forth in the Loan
Agreement without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. Sixty (60) days after
the earlier to occur of (i) the date of a payment default hereunder which has
not been cured, or (ii) the date of an acceleration of all sums due hereunder
after the occurrence of an Event of Default, all outstanding principal
hereunder, and accrued and unpaid interest and other charges hereunder, shall
bear interest until paid at a default rate (the "Default Rate") equal to the
lower of: (i) two percent (2%) per annum above the Prime Rate in effect from
time to time (in which case the Default Rate shall change on each date that the
Prime Rate changes); or (ii) the highest rate permissible under Florida law.
7. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all costs incurred by it in connection with the collection of
this Note during the continuance of any Event of Default. Such costs include,
without limitation, fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. All such
parties further agree to indemnify and hold the Lender harmless against
liability for the payment of state documentary stamp taxes,
47
<PAGE>
intangible taxes or other taxes (including interest and penalties, if any),
excluding income or service taxes of the Lender, which may be determined to be
payable with respect to this transaction.
8. Miscellaneous. The Borrower shall make all payments hereunder in
lawful money of the United States at the Agent's address set forth in the Loan
Agreement or at such other place as the Agent may designate in writing. The
remedies of the Lender as provided herein shall be cumulative and concurrent,
and may be pursued singly, successively or together, at the sole discretion of
the Lender and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of the Lender, including specifically any failure
to exercise any right, remedy or recourse, shall be effective, unless set forth
in a written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release of
any subsequent right, remedy or recourse as to any subsequent event. This Note
shall be construed and enforced in accordance with Florida law and shall be
binding on the successors and assigns of the parties hereto. The term "Lender"
as used herein shall mean any holder of this Note. The Lender may, at its
option, round any or all fractional amounts under Section 3 upwards to the next
higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand,
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note; (ii) agrees to any substitution, addition or release of any party or
person primarily or secondarily liable hereon; and (iii) agrees that the Lender
shall not be required first to institute any suit, or to exhaust its remedies
against the Borrower or any other person or party to become liable hereunder, or
against any collateral in order to enforce payment of this Note.
STEIN MART, INC.
By: /s/ James G. Delfs
---------------------------------------
Its: Senior Vice President - C.F.O.
--------------------------------------
(CORPORATE SEAL)
48
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by James G. Delfs the
Sr. V.P. - C.F.O. of Stein Mart, Inc., a Florida corporation, on behalf of the
corporation, in Camden County, Georgia.
/s/ V. Thomas Fountain
------------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
49
<PAGE>
REVOLVING PROMISSORY NOTE
(SunTrust)
$20,000,000.00 August 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, STEIN MART, INC., a Florida
corporation (the "Borrower"), hereby promises to pay to the order of SUNTRUST
BANK, NORTH FLORIDA, N.A. (the "Lender"), whose address is 200 West Forsyth
Street, Jacksonville, Florida 32202, the principal sum of Twenty Million and
00/100 Dollars ($20,000,000.00) together with interest on the outstanding
principal balance hereof at the rate provided herein. All such payments of
principal and interest shall be made in lawful money of the United States in
immediately available funds at the office of the Agent (as defined herein), now
located at 50 North Laura Street, Jacksonville, Florida, 32202, or at such other
office as the Agent may designate in writing. This Note is one of the Revolving
Notes described in the Loan Agreement (as amended or restated from time to time,
the "Loan Agreement") of even date herewith by and among the Borrower, Barnett
Bank, N.A., SunTrust Bank, North Florida, N.A. and Barnett Bank, N.A., as agent
(in such capacity and for so long as it shall serve in such capacity under the
Loan Agreement, the "Agent"). Capitalized terms used and not otherwise defined
herein shall have the meanings assigned thereto in the Loan Agreement. This Note
shall be governed by the following provisions:
1. Advances. The Borrower may borrow, repay and reborrow principal
amounts hereunder during the Revolving Period subject to the terms contained
herein and in the Loan Agreement. Notwithstanding the foregoing, the outstanding
principal balance hereof shall not exceed the amounts set forth in the Loan
Agreement. The Borrower shall not be permitted to obtain further advances
hereunder from and after the expiration of the Revolving Period.
2. Payments.
(a) The Borrower shall pay all accrued interest hereunder on
the first day of each July, October, January and April during the term
hereof.
(b) The Borrower shall pay all outstanding principal
hereunder, together with all then accrued and unpaid interest, on June
30, 2001.
3. Interest.
(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 5.99844% per annum. The
rate of interest shall be adjusted on each Interest Rate Adjustment
Date (as defined herein) so that interest shall accrue at the Adjusted
Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes
of this paragraph, the following terms shall have the following
meanings:
50
<PAGE>
(i) "Adjusted Libor Rate" for each Interest Period
shall mean a rate that is 0.35% per annum over the applicable
Libor Rate. The Libor Rate for each Interest Period shall mean
the offered rate for deposits in United States dollars in the
London Interbank market for a one month period which appears
on the Libor Rate Reference Page (as defined herein) as of
11:00 a.m. (London time) on the day that is two London Banking
Days (as defined herein) preceding the first Banking Business
Day (as defined herein) of the Interest Period. If at least
two such offered rates appear on the Libor Rate Reference
Page, the rate will be the arithmetic mean of such offered
rates.
(ii) "Banking Business Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in Charlotte, North Carolina, are closed for business.
(iii) "Interest Period" shall mean each period
commencing on each Interest Rate Adjustment Date and ending on
the next Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean the
first day of September, 1998, and the first day of each
calendar month thereafter.
(v) "Libor Rate Reference Page" shall mean any of the
following reference pages or sources (as selected from time to
time by the Agent in its discretion): (aa) the Reuters Screen
LIBO Page; (bb) the Dow Jones Telerate Page 3750; or (cc) such
other index or source as the Agent may in its sole discretion
select showing rates offered for United States dollar deposits
in the London Interbank market.
(vi) "London Banking Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in London, England are closed for business.
(b) Notwithstanding the foregoing subparagraph (a), the
Borrower may elect for interest to accrue on all outstanding principal
under the Revolving Notes for periods of one calendar month each (each,
an "Alternate Interest Period") at an Alternate Interest Rate (as
defined herein). The Borrower may make such election by providing
telephonic notice thereof to the Agent at least two business days
before the commencement of the Alternate Interest Period. The notice
shall be provided to such individual at such telephone number as the
Agent may from time to time specify, and the Agent's internal records
as to the delivery and contents of such notice shall be conclusive
evidence thereof. The notice shall state the date upon which the
Alternate Interest Period shall commence (which shall in all events be
the first day of a calendar month). If the Borrower duly elects for
interest to accrue hereunder at the Alternate Interest Rate, then
interest shall accrue at the Alternate Interest Rate on the outstanding
principal amount of the Revolving Notes during the applicable Alternate
Interest Period. Any election hereunder shall be irrevocable during the
term of the Alternate Interest Period. At the expiration of the
Alternate Interest Period, interest shall
51
<PAGE>
accrue at the rate set forth in subparagraph (a) above except to the
extent that the Borrower duly elects for interest to thereafter accrue
at the Alternate Interest Rate. For purposes hereof, the Alternate
Interest Rate shall mean a rate equal to the Prime Rate (as defined
herein) less 1.50% per annum. The Prime Rate shall be the interest rate
announced from time to time by Barnett Bank, N.A. (or any successor
thereto) as its prime rate. For purposes of this Note, any change in
the Prime Rate shall be effective as of the Agent's opening of business
on the effective date of the change.
(c) Interest shall be calculated on the basis of a 365 day
year (based upon the actual number of days elapsed).
(d) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable usury
laws. If any interest is received or charged by any holder hereof in
excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(e) Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth
notwithstanding the provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty.
5. Application of Payments. All payments hereunder shall be applied in
the manner set forth in the Loan Agreement.
6. Default. If any Event of Default or Default (as defined in the Loan
Agreement) shall occur, any obligation of the Lender to make advances hereunder
shall be terminated without notice to the Borrower. In addition, if any Event of
Default shall occur, the outstanding principal of this Note, all accrued and
unpaid interest hereunder and all other amounts payable under this Note shall be
and become forthwith due and payable in the manner set forth in the Loan
Agreement without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. Sixty (60) days after
the earlier to occur of (i) the date of a payment default hereunder which has
not been cured, or (ii) the date of an acceleration of all sums due hereunder
after the occurrence of an Event of Default, all outstanding principal
hereunder, and accrued and unpaid interest and other charges hereunder, shall
bear interest until paid at a default rate (the "Default Rate") equal to the
lower of: (i) two percent (2%) per annum above the Prime Rate in effect from
time to time (in which case the Default Rate shall change on each date that the
Prime Rate changes); or (ii) the highest rate permissible under Florida law.
7. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all costs incurred by it in connection with the collection of
this Note during the continuance of any Event of Default. Such costs include,
without limitation, fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. All such
parties further agree to indemnify and hold the Lender harmless against
liability for the payment of state documentary stamp taxes,
52
<PAGE>
intangible taxes or other taxes (including interest and penalties, if any),
excluding income or service taxes of the Lender, which may be determined to be
payable with respect to this transaction.
8. Miscellaneous. The Borrower shall make all payments hereunder in
lawful money of the United States at the Agent's address set forth in the Loan
Agreement or at such other place as the Agent may designate in writing. The
remedies of the Lender as provided herein shall be cumulative and concurrent,
and may be pursued singly, successively or together, at the sole discretion of
the Lender and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of the Lender, including specifically any failure
to exercise any right, remedy or recourse, shall be effective, unless set forth
in a written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release of
any subsequent right, remedy or recourse as to any subsequent event. This Note
shall be construed and enforced in accordance with Florida law and shall be
binding on the successors and assigns of the parties hereto. The term "Lender"
as used herein shall mean any holder of this Note. The Lender may, at its
option, round any or all fractional amounts under Section 3 upwards to the next
higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand,
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note; (ii) agrees to any substitution, addition or release of any party or
person primarily or secondarily liable hereon; and (iii) agrees that the Lender
shall not be required first to institute any suit, or to exhaust its remedies
against the Borrower or any other person or party to become liable hereunder, or
against any collateral in order to enforce payment of this Note.
STEIN MART, INC.
By: /s/ James G. Delfs
---------------------------------------
Its: Senior Vice President - C.F.O.
--------------------------------------
(CORPORATE SEAL)
53
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by James G. Delfs the
Sr. V.P. - C.F.O. of Stein Mart, Inc., a Florida corporation, on behalf of the
corporation, in Camden County, Georgia.
/s/ V. Thomas Fountain
------------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
54
<PAGE>
SEASONAL PROMISSORY NOTE
(Barnett)
$20,000,000.00 August 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, STEIN MART, INC., a Florida
corporation (the "Borrower"), hereby promises to pay to the order of BARNETT
BANK, N.A. (the "Lender"), whose address is 50 North Laura Street, Jacksonville,
Florida 32202, the principal sum of Twenty Million and 00/100 Dollars
($20,000,000.00) together with interest on the outstanding principal balance
hereof at the rate provided herein. All such payments of principal and interest
shall be made in lawful money of the United States in immediately available
funds at the office of the Agent (as defined herein), now located at 50 North
Laura Street, Jacksonville, Florida, 32202, or at such other office as the Agent
may designate in writing. This Note is one of the Seasonal Notes described in
the Loan Agreement (as amended or restated from time to time, the "Loan
Agreement") of even date herewith by and among the Borrower, Barnett Bank, N.A.,
SunTrust Bank, North Florida, N.A. and Barnett Bank, N.A., as agent (in such
capacity and for so long as it shall serve in such capacity under the Loan
Agreement, the "Agent"). Capitalized terms used and not otherwise defined herein
shall have the meanings assigned thereto in the Loan Agreement. This Note shall
be governed by the following provisions:
1. Advances. During each Seasonal Period, the loan evidenced by this
Note shall be a revolving loan. The Borrower may borrow, repay and reborrow
principal amounts hereunder during each Seasonal Period subject to the terms
contained herein and in the Loan Agreement. Notwithstanding the foregoing, the
outstanding principal balance hereof shall not exceed the amounts set forth in
the Loan Agreement. The Borrower shall not be permitted to obtain further
advances hereunder during any period that is not a Seasonal Period. The Borrower
shall not in any event be entitled to obtain further advances hereunder from and
after June 30, 2001.
2. Payments.
(a) The Borrower shall pay all outstanding principal
hereunder, together with all then accrued and unpaid interest,
immediately upon the expiration of each Seasonal Period.
(b) The Borrower shall pay all then outstanding principal
hereunder, together with all then accrued and unpaid interest, on June
30, 2001.
3. Interest.
(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 5.99844% per annum. The
rate of interest shall be adjusted on each Interest Rate Adjustment
Date (as defined herein) so that interest shall accrue at the Adjusted
Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes
of this paragraph, the following terms shall have the following
meanings:
55
<PAGE>
(i) "Adjusted Libor Rate" for each Interest Period
shall mean a rate that is 0.35% per annum over the applicable
Libor Rate. The Libor Rate for each Interest Period shall mean
the offered rate for deposits in United States dollars in the
London Interbank market for a one month period which appears
on the Libor Rate Reference Page (as defined herein) as of
11:00 a.m. (London time) on the day that is two London Banking
Days (as defined herein) preceding the first Banking Business
Day (as defined herein) of the Interest Period. If at least
two such offered rates appear on the Libor Rate Reference
Page, the rate will be the arithmetic mean of such offered
rates.
(ii) "Banking Business Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in Charlotte, North Carolina, are closed for business.
(iii) "Interest Period" shall mean each period
commencing on each Interest Rate Adjustment Date and ending on
the next Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean the
first day of September, 1998, and the first day of each
calendar month thereafter.
(v) "Libor Rate Reference Page" shall mean any of the
following reference pages or sources (as selected from time to
time by the Agent in its discretion): (aa) the Reuters Screen
LIBO Page; (bb) the Dow Jones Telerate Page 3750; or (cc) such
other index or source as the Agent may in its sole discretion
select showing rates offered for United States dollar deposits
in the London Interbank market.
(vi) "London Banking Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in London, England are closed for business.
(b) Notwithstanding the foregoing subparagraph (a), the
Borrower may elect for interest to accrue on all outstanding principal
under the Seasonal Notes for periods of one calendar month each (each,
an "Alternate Interest Period") at an Alternate Interest Rate (as
defined herein). The Borrower may make such election by providing
telephonic notice thereof to the Agent at least two business days
before the commencement of the Alternate Interest Period. The notice
shall be provided to such individual at such telephone number as the
Agent may from time to time specify, and the Agent's internal records
as to the delivery and contents of such notice shall be conclusive
evidence thereof. The notice shall state the date upon which the
Alternate Interest Period shall commence (which shall in all events be
the first day of a calendar month). If the Borrower duly elects for
interest to accrue hereunder at the Alternate Interest Rate, then
interest shall accrue at the Alternate Interest Rate on the outstanding
principal amount of the Seasonal Notes during the applicable Alternate
Interest Period. Any election hereunder shall be irrevocable during the
term of the
56
<PAGE>
Alternate Interest Period. At the expiration of the Alternate Interest
Period, interest shall accrue at the rate set forth in subparagraph (a)
above except to the extent that the Borrower duly elects for interest
to thereafter accrue at the Alternate Interest Rate. For purposes
hereof, the Alternate Interest Rate shall mean a rate equal to the
Prime Rate (as defined herein) less 1.50% per annum. The Prime Rate
shall be the interest rate announced from time to time by Barnett Bank,
N.A. (or any successor thereto) as its prime rate. For purposes of this
Note, any change in the Prime Rate shall be effective as of the Agent's
opening of business on the effective date of the change.
(c) Interest shall be calculated on the basis of a 365 day
year (based upon the actual number of days elapsed).
(d) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable usury
laws. If any interest is received or charged by any holder hereof in
excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(e) Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth
notwithstanding the provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty.
5. Application of Payments. All payments hereunder shall be applied in
the manner set forth in the Loan Agreement.
6. Default. If any Event of Default or Default (as defined in the Loan
Agreement) shall occur, any obligation of the Lender to make advances hereunder
shall be terminated without notice to the Borrower. In addition, if any Event of
Default shall occur, the outstanding principal of this Note, all accrued and
unpaid interest hereunder and all other amounts payable under this Note shall be
and become forthwith due and payable in the manner set forth in the Loan
Agreement without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. Sixty (60) days after
the earlier to occur of (i) the date of a payment default hereunder which has
not been cured, or (ii) the date of an acceleration of all sums due hereunder
after the occurrence of an Event of Default, all outstanding principal
hereunder, and accrued and unpaid interest and other charges hereunder, shall
bear interest until paid at a default rate (the "Default Rate") equal to the
lower of: (i) two percent (2%) per annum above the Prime Rate in effect from
time to time (in which case the Default Rate shall change on each date that the
Prime Rate changes); or (ii) the highest rate permissible under Florida law.
7. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all costs incurred by it in connection with the collection of
this Note during the continuance of any Event of Default. Such costs include,
without limitation, fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. All such
parties further agree to indemnify
57
<PAGE>
and hold the Lender harmless against liability for the payment of state
documentary stamp taxes, intangible taxes or other taxes (including interest and
penalties, if any), excluding income or service taxes of the Lender, which may
be determined to be payable with respect to this transaction.
8. Miscellaneous. The Borrower shall make all payments hereunder in
lawful money of the United States at the Agent's address set forth in the Loan
Agreement or at such other place as the Agent may designate in writing. The
remedies of the Lender as provided herein shall be cumulative and concurrent,
and may be pursued singly, successively or together, at the sole discretion of
the Lender and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of the Lender, including specifically any failure
to exercise any right, remedy or recourse, shall be effective, unless set forth
in a written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release of
any subsequent right, remedy or recourse as to any subsequent event. This Note
shall be construed and enforced in accordance with Florida law and shall be
binding on the successors and assigns of the parties hereto. The term "Lender"
as used herein shall mean any holder of this Note. The Lender may, at its
option, round any or all fractional amounts under Section 3 upwards to the next
higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand,
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note; (ii) agrees to any substitution, addition or release of any party or
person primarily or secondarily liable hereon; and (iii) agrees that the Lender
shall not be required first to institute any suit, or to exhaust its remedies
against the Borrower or any other person or party to become liable hereunder, or
against any collateral in order to enforce payment of this Note.
STEIN MART, INC.
By: /s/ James G. Delfs
---------------------------------------
Its: Senior Vice President - C.F.O.
--------------------------------------
(CORPORATE SEAL)
58
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by James G. Delfs the
Sr. V.P. - C.F.O. of Stein Mart, Inc., a Florida corporation, on behalf of the
corporation, in Camden County, Georgia.
/s/ V. Thomas Fountain
------------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
59
<PAGE>
SEASONAL PROMISSORY NOTE
(SunTrust)
$10,000,000.00 August 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, STEIN MART, INC., a Florida
corporation (the "Borrower"), hereby promises to pay to the order of SUNTRUST
BANK, NORTH FLORIDA, N.A. (the "Lender"), whose address is 200 West Forsyth
Street, Jacksonville, Florida 32202, the principal sum of Ten Million and 00/100
Dollars ($10,000,000.00) together with interest on the outstanding principal
balance hereof at the rate provided herein. All such payments of principal and
interest shall be made in lawful money of the United States in immediately
available funds at the office of the Agent (as defined herein), now located at
50 North Laura Street, Jacksonville, Florida, 32202, or at such other office as
the Agent may designate in writing. This Note is one of the Seasonal Notes
described in the Loan Agreement (as amended or restated from time to time, the
"Loan Agreement") of even date herewith by and among the Borrower, Barnett Bank,
N.A., SunTrust Bank, North Florida, N.A. and Barnett Bank, N.A., as agent (in
such capacity and for so long as it shall serve in such capacity under the Loan
Agreement, the "Agent"). Capitalized terms used and not otherwise defined herein
shall have the meanings assigned thereto in the Loan Agreement. This Note shall
be governed by the following provisions:
1. Advances. During each Seasonal Period, the loan evidenced by this
Note shall be a revolving loan. The Borrower may borrow, repay and reborrow
principal amounts hereunder during each Seasonal Period subject to the terms
contained herein and in the Loan Agreement. Notwithstanding the foregoing, the
outstanding principal balance hereof shall not exceed the amounts set forth in
the Loan Agreement. The Borrower shall not be permitted to obtain further
advances hereunder during any period that is not a Seasonal Period. The Borrower
shall not in any event be entitled to obtain further advances hereunder from and
after June 30, 2001.
2. Payments.
(a) The Borrower shall pay all outstanding principal
hereunder, together with all then accrued and unpaid interest,
immediately upon the expiration of each Seasonal Period.
(b) The Borrower shall pay all then outstanding principal
hereunder, together with all then accrued and unpaid interest, on June
30, 2001.
3. Interest.
(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 5.99844% per annum. The
rate of interest shall be adjusted on each Interest Rate Adjustment
Date (as defined herein) so that interest shall accrue at the Adjusted
Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes
of this paragraph, the following terms shall have the following
meanings:
60
<PAGE>
(i) "Adjusted Libor Rate" for each Interest Period
shall mean a rate that is 0.35% per annum over the applicable
Libor Rate. The Libor Rate for each Interest Period shall mean
the offered rate for deposits in United States dollars in the
London Interbank market for a one month period which appears
on the Libor Rate Reference Page (as defined herein) as of
11:00 a.m. (London time) on the day that is two London Banking
Days (as defined herein) preceding the first Banking Business
Day (as defined herein) of the Interest Period. If at least
two such offered rates appear on the Libor Rate Reference
Page, the rate will be the arithmetic mean of such offered
rates.
(ii) "Banking Business Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in Charlotte, North Carolina, are closed for business.
(iii) "Interest Period" shall mean each period
commencing on each Interest Rate Adjustment Date and ending on
the next Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean the
first day of September, 1998, and the first day of each
calendar month thereafter.
(v) "Libor Rate Reference Page" shall mean any of the
following reference pages or sources (as selected from time to
time by the Agent in its discretion): (aa) the Reuters Screen
LIBO Page; (bb) the Dow Jones Telerate Page 3750; or (cc) such
other index or source as the Agent may in its sole discretion
select showing rates offered for United States dollar deposits
in the London Interbank market.
(vi) "London Banking Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial
banks in London, England are closed for business.
(b) Notwithstanding the foregoing subparagraph (a), the
Borrower may elect for interest to accrue on all outstanding principal
under the Seasonal Notes for periods of one calendar month each (each,
an "Alternate Interest Period") at an Alternate Interest Rate (as
defined herein). The Borrower may make such election by providing
telephonic notice thereof to the Agent at least two business days
before the commencement of the Alternate Interest Period. The notice
shall be provided to such individual at such telephone number as the
Agent may from time to time specify, and the Agent's internal records
as to the delivery and contents of such notice shall be conclusive
evidence thereof. The notice shall state the date upon which the
Alternate Interest Period shall commence (which shall in all events be
the first day of a calendar month). If the Borrower duly elects for
interest to accrue hereunder at the Alternate Interest Rate, then
interest shall accrue at the Alternate Interest Rate on the outstanding
principal amount of the Seasonal Notes during the applicable Alternate
Interest Period. Any election hereunder shall be irrevocable during the
term of the
61
<PAGE>
Alternate Interest Period. At the expiration of the Alternate Interest
Period, interest shall accrue at the rate set forth in subparagraph (a)
above except to the extent that the Borrower duly elects for interest
to thereafter accrue at the Alternate Interest Rate. For purposes
hereof, the Alternate Interest Rate shall mean a rate equal to the
Prime Rate (as defined herein) less 1.50% per annum. The Prime Rate
shall be the interest rate announced from time to time by Barnett Bank,
N.A. (or any successor thereto) as its prime rate. For purposes of this
Note, any change in the Prime Rate shall be effective as of the Agent's
opening of business on the effective date of the change.
(c) Interest shall be calculated on the basis of a 365 day
year (based upon the actual number of days elapsed).
(d) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable usury
laws. If any interest is received or charged by any holder hereof in
excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(e) Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth
notwithstanding the provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty.
5. Application of Payments. All payments hereunder shall be applied in
the manner set forth in the Loan Agreement.
6. Default. If any Event of Default or Default (as defined in the Loan
Agreement) shall occur, any obligation of the Lender to make advances hereunder
shall be terminated without notice to the Borrower. In addition, if any Event of
Default shall occur, the outstanding principal of this Note, all accrued and
unpaid interest hereunder and all other amounts payable under this Note shall be
and become forthwith due and payable in the manner set forth in the Loan
Agreement without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. Sixty (60) days after
the earlier to occur of (i) the date of a payment default hereunder which has
not been cured, or (ii) the date of an acceleration of all sums due hereunder
after the occurrence of an Event of Default, all outstanding principal
hereunder, and accrued and unpaid interest and other charges hereunder, shall
bear interest until paid at a default rate (the "Default Rate") equal to the
lower of: (i) two percent (2%) per annum above the Prime Rate in effect from
time to time (in which case the Default Rate shall change on each date that the
Prime Rate changes); or (ii) the highest rate permissible under Florida law.
7. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all costs incurred by it in connection with the collection of
this Note during the continuance of any Event of Default. Such costs include,
without limitation, fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. All such
parties further agree to indemnify
62
<PAGE>
and hold the Lender harmless against liability for the payment of state
documentary stamp taxes, intangible taxes or other taxes (including interest and
penalties, if any), excluding income or service taxes of the Lender, which may
be determined to be payable with respect to this transaction.
8. Miscellaneous. The Borrower shall make all payments hereunder in
lawful money of the United States at the Agent's address set forth in the Loan
Agreement or at such other place as the Agent may designate in writing. The
remedies of the Lender as provided herein shall be cumulative and concurrent,
and may be pursued singly, successively or together, at the sole discretion of
the Lender and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of the Lender, including specifically any failure
to exercise any right, remedy or recourse, shall be effective, unless set forth
in a written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release of
any subsequent right, remedy or recourse as to any subsequent event. This Note
shall be construed and enforced in accordance with Florida law and shall be
binding on the successors and assigns of the parties hereto. The term "Lender"
as used herein shall mean any holder of this Note. The Lender may, at its
option, round any or all fractional amounts under Section 3 upwards to the next
higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand,
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note; (ii) agrees to any substitution, addition or release of any party or
person primarily or secondarily liable hereon; and (iii) agrees that the Lender
shall not be required first to institute any suit, or to exhaust its remedies
against the Borrower or any other person or party to become liable hereunder, or
against any collateral in order to enforce payment of this Note.
STEIN MART, INC.
By: /s/ James G. Delfs
---------------------------------------
Its: Senior Vice President - C.F.O.
--------------------------------------
(CORPORATE SEAL)
63
<PAGE>
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of August, 1998, by James G. Delfs the
Sr. V.P. - C.F.O. of Stein Mart, Inc., a Florida corporation, on behalf of the
corporation, in Camden County, Georgia.
/s/ V. Thomas Fountain
------------------------------------
Notary Public, State and County
aforesaid
Print Name: V. Thomas Fountain
Notary Public,
Camden County, Ga.
My Commission Expires:
January 16, 2000
[Notary Seal]
64
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet and condensed consolidated
statement of income found on the Company's Form 10-Q for the nine months
ended October 3, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-2-1999
<PERIOD-START> JAN-4-1998
<PERIOD-END> OCT-3-1998
<CASH> 9958
<SECURITIES> 0
<RECEIVABLES> 6518
<ALLOWANCES> 1255
<INVENTORY> 249586
<CURRENT-ASSETS> 274085
<PP&E> 115627
<DEPRECIATION> 45582
<TOTAL-ASSETS> 347584
<CURRENT-LIABILITIES> 118949
<BONDS> 0
0
0
<COMMON> 455
<OTHER-SE> 162759
<TOTAL-LIABILITY-AND-EQUITY> 347584
<SALES> 575587
<TOTAL-REVENUES> 583131
<CGS> 438814
<TOTAL-COSTS> 574310
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1523
<INCOME-PRETAX> 7298
<INCOME-TAX> 2773
<INCOME-CONTINUING> 4525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4525
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
