STEIN MART INC
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>q1stquarter2002credamend2.txt
<DESCRIPTION>SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
<TEXT>
                                                                     EXHIBIT 10a








                                SECOND AMENDMENT


                                       TO


                           REVOLVING CREDIT AGREEMENT


                           dated as of April 30, 2002



                                      among


                                STEIN MART, INC.
                                   as Borrower


                            THE LENDERS PARTY HERETO


                                       and


                                  SUNTRUST BANK
                             as Administrative Agent


                               FLEET NATIONAL BANK
                              as Syndication Agent


                            FIRST UNION NATIONAL BANK
                             as Documentation Agent



================================================================================


                   SUNTRUST ROBINSON HUMPHREY CAPITAL MARKETS,
                  A DIVISION OF SUNTRUST CAPITAL MARKETS, INC.
                        as Lead Arranger and Book Manager





{OR498371;5}
<PAGE>


                                SECOND AMENDMENT
                                       TO
                           REVOLVING CREDIT AGREEMENT
                           --------------------------


         THIS SECOND  AMENDMENT  TO REVOLVING  CREDIT  AGREEMENT  (this  "Second
Amendment")  is made and entered into as of April 30,  2002,  by and among STEIN
MART, INC., a Florida corporation (the "Borrower"),  the several banks and other
financial  institutions  from time to time party  hereto  (the  "Lenders"),  and
SUNTRUST  BANK,  in its  capacity as  Administrative  Agent for the Lenders (the
"Administrative Agent").

                              W I T N E S S E T H:
                              --------------------

         WHEREAS,  the Borrower,  the Lenders and the  Administrative  Agent are
parties to that certain Revolving Credit  Agreement,  dated as of June 28, 2001,
as amended by that certain First Amendment to Revolving Credit Agreement,  dated
as of November 9, 2001 (as amended, the "Existing Credit Agreement");

         WHEREAS,  pursuant  to  the  Existing  Credit  Agreement,  the  Lenders
severally,  to the extent of their respective  Commitments on a ratable basis up
to the  total  of each  Lender's  Commitment,  established  for the  Borrower  a
$135,000,000 senior revolving credit facility with a $10,000,000 swingline and a
$10,000,000  letter of credit  sub-facility  thereunder,  all upon the terms and
conditions,  and subject to the  limitations,  set forth in the Existing  Credit
Agreement;

         WHEREAS, the Borrower,  as of the end of the fiscal year ended February
2, 2002, was not in compliance with a certain  financial  covenant  contained in
the Existing Credit Agreement,  in particular that covenant contained in Section
6.2  (Fixed  Charge  Coverage  Ratio),  and  such   non-compliance   would  have
constituted  an Event of Default  under the  Existing  Credit  Agreement  if not
waived by the Lenders and the Administrative Agent as provided herein;

         WHEREAS,  the Borrower has requested the Lenders and the Administrative
Agent (a) to waive the Borrower's  non-compliance  with the foregoing  financial
covenant  for the fiscal year ended  February 2, 2002 (but for no future  fiscal
period) and the Event of Default  arising from such  non-compliance,  and (b) to
amend the  foregoing  financial  covenant,  as well as certain  other  covenants
contained  in the  Existing  Agreement,  and the Lenders and the  Administrative
Agent  have  agreed to do so, but only upon the terms and  conditions  set forth
herein; and

         WHEREAS,  the parties  hereto have  consulted  with,  and  obtained the
representation  and advice of, their respective legal counsel with regard to the
terms  and  conditions  of this  Second  Amendment,  and each  party has had the
opportunity to participate fully in the drafting of this Second Amendment.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  herein  contained,   the  Borrower,  the  Required  Lenders  and  the
Administrative Agent agree as follows:


                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

         Section 1.1 Certain Definitions. Unless otherwise defined herein or the
context  otherwise  requires,  the  following  terms  as  used  in  this  Second
Amendment,  including  the  preamble and  recitals,  have the meanings set forth
below:

                  "Amended  Credit  Agreement"  shall mean the  Existing  Credit
         Agreement, as further amended hereby.

                  "Effective  Date" shall have the meaning assigned to such term
         in Article IV.


{OR498371;5}
<PAGE>


         Section  1.2  Other  Definitions.   Unless  otherwise  defined  herein,
capitalized  terms used herein  (including  the above  recitals) and not defined
herein  shall have the meanings  assigned to such terms in the  Existing  Credit
Agreement.

                                   ARTICLE II

                     AMENDMENTS TO EXISTING CREDIT AGREEMENT
                     ---------------------------------------

         Except as  otherwise  set forth in Section  2.15,  effective  as of the
Effective  Date, the Existing  Credit  Agreement is hereby amended in accordance
with this Article II as follows:

         Section  2.1  Amendment  to Section  1.1 -  Definitions.  Section 1.1 -
Definitions of "ARTICLE I - DEFINITIONS;  CONSTRUCTION"  of the Existing  Credit
Agreement is hereby amended to delete the  definitions of the terms  "Applicable
Margin",  "Applicable  Percentage" and "Loan Documents" in their entirety and to
insert the following new definitions for such terms in their place:

                  "Applicable  Margin" shall mean, as of any date,  with respect
         to all Eurodollar  Borrowings and Base Rate  Borrowings  outstanding on
         such date, the  percentage  per annum  designated in the "Pricing Grid"
         attached hereto as Schedule I as applicable to Eurodollar Borrowings or
         Base Rate Borrowings, as the case may be, based on the Borrower's ratio
         of Consolidated  Adjusted Debt to Consolidated  EBITDAR. The Applicable
         Margin for  Eurodollar  Borrowings  shall  initially  be 1.875% and the
         Applicable  Margin for Base Rate  Borrowings  shall initially be .875%;
         provided,  however,  that upon delivery to the Administrative  Agent of
         the  financial  statements  required  by Section  5.1(a) or (b) and the
         compliance  certificate  required  by  Section  5.1(c)  for the  fiscal
         quarter ending May 4, 2002 and for each fiscal quarter thereafter,  the
         Applicable  Margin  shall  be  reset to the  percentage  designated  in
         Schedule I based on the Borrower's ratio of Consolidated  Adjusted Debt
         to  Consolidated  EBITDAR for the preceding  four fiscal quarter period
         then ending, measured quarterly, such Applicable Margin being effective
         as  of  the  second   Business   Day   following   the  date  that  the
         Administrative   Agent   receives   such   financial   statements   and
         certificate;  provided  further,  however,  that  if at  any  time  the
         Borrower shall have failed timely to deliver such financial  statements
         and certificate,  the Applicable Margin for Eurodollar Borrowings shall
         be 2.25% and the Applicable  Margin for Base Rate  Borrowings  shall be
         1.25% until such time as such financial  statements and certificate are
         delivered,  at which time the Applicable  Margin shall be determined as
         provided above.

                  "Applicable  Percentage"  shall  mean,  as of any  date,  with
         respect to the commitment  fee, the percentage per annum  designated in
         the  "Pricing  Grid"  attached  hereto  as  Schedule  I  based  on  the
         Borrower's ratio of Consolidated Adjusted Debt to Consolidated EBITDAR.
         The Applicable Percentage shall initially be 0.40%; provided,  however,
         that  upon  delivery  to the  Administrative  Agent  of  the  financial
         statements  required  by  Section  5.1(a)  or (b)  and  the  compliance
         certificate  required by Section  5.1(c) for the fiscal  quarter ending
         May 4, 2002 and for each  fiscal  quarter  thereafter,  the  Applicable
         Percentage  shall be reset to the  percentage  designated in Schedule I
         based  on  the  Borrower's  ratio  of  Consolidated  Adjusted  Debt  to
         Consolidated  EBITDAR for the preceding four fiscal quarter period then
         ending, measured quarterly,  such Applicable Percentage being effective
         as  of  the  second   Business   Day   following   the  date  that  the
         Administrative   Agent   receives   such   financial   statements   and
         certificate;  provided  further,  however,  that  if at  any  time  the
         Borrower shall have failed timely to deliver such financial  statements
         and  certificate,  the Applicable  Percentage shall be 0.50% until such
         time as such financial  statements and  certificate  are delivered,  at
         which time the  Applicable  Percentage  shall be determined as provided
         above.

                  "Loan Documents" shall mean, collectively, this Agreement, the
         Notes  (if  any),  the LC  Documents,  all  Notices  of  Borrowing  and
         Borrowing   Availability   Certificates,   the   Subsidiary   Guarantee
         Agreement,  the  Indemnity  and  Contribution  Agreement,  the Security
         Agreement and any and all other instruments,  agreements, documents and
         writings executed in connection with any of the foregoing.
{OR498371;5}
                                       2
<PAGE>


         Section  2.2  Amendment  to Section  1.1 -  Definitions.  Section 1.1 -
Definitions of "ARTICLE I - DEFINITIONS;  CONSTRUCTION"  of the Existing  Credit
Agreement is hereby  amended to insert the following new  definitions  for "Cash
Dividend and  Redemption  Conditions",  "Collateral",  "Collateral  Exceptions,"
"Excess Availability", "Excess Borrowing Availability" and "Security Agreement":

                  "Cash  Dividend  and  Redemption  Conditions"  shall  have the
         meaning set forth in Section 7.5.

                  "Collateral"   shall  mean  a  collective   reference  to  the
         "Collateral"  which is  identified  in, and at any time will be covered
         by, the Security Agreement.

                  "Collateral Exceptions" shall mean (a) Permitted Encumbrances,
         (b) the  following  which are not in the  aggregate  material as to the
         Collateral taken as a whole:  (i) goods in transit,  (ii) goods located
         outside of the United States, and (iii) goods located in a jurisdiction
         which has not adopted the UCC (as that term is defined in the  Security
         Agreement) or a version thereof, and (c) any Lien of the Administrative
         Agent for the benefit of the Lenders on any bank accounts, balances and
         deposits of the Borrower which has not been perfected by an appropriate
         control agreement or other permitted method of perfection under the UCC
         (unless such Bank accounts, balances and deposits are being held by the
         Administrative Agent).

                   "Excess   Availability"  shall  mean,  for  any  period,  the
         Aggregate Revolving Commitments minus the sum of outstanding Borrowings
         and LC Exposure.

                  "Excess  Borrowing  Availability"  shall mean, for any period,
         the Borrowing  Availability minus the sum of outstanding Borrowings and
         LC Exposure.

                  "Security   Agreement"  shall  mean  the  Security  Agreement,
         substantially  in the form of Exhibit F, made by the  Borrower in favor
         of the Administrative Agent for the benefit of the Lenders.

         Section  2.3  Amendment  to  Section  2.3  -  Procedure  for  Revolving
Borrowings.  The  first  sentence  of  Section  2.3 -  Procedure  for  Revolving
Borrowings of "ARTICLE II - AMOUNT AND TERMS OF THE COMMITMENTS" of the Existing
Credit  Agreement is hereby  amended to delete such sentence in its entirety and
to insert the following new sentence in its place:

                  The  Borrower  shall  give the  Administrative  Agent  written
         notice (or  telephonic  notice  promptly  confirmed in writing) of each
         Revolving Borrowing,  substantially in the form of Exhibit 2.3 attached
         hereto (a "Notice of Revolving Borrowing"),  (a) prior to 11:00 a.m. on
         the requested  date of each Base Rate  Borrowing and (b) prior to 11:00
         a.m.  three  (3)  Business  Days  prior to the  requested  date of each
         Eurodollar Borrowing.

         Section  2.4  Amendment  to Section  2.5(a) - Procedure  for  Swingline
Borrowing,  Etc. The first  sentence of Section 2.5(a) - Procedure for Swingline
Borrowing of "ARTICLE II - AMOUNT AND TERMS OF THE  COMMITMENTS" of the Existing
Credit  Agreement is hereby  amended to delete such sentence in its entirety and
to insert the following new sentence in its place:

                  The  Borrower  shall  give the  Administrative  Agent  written
         notice (or  telephonic  notice  promptly  confirmed in writing) of each
         Swingline  Borrowing  ("Notice of Swingline  Borrowing") prior to 11:00
         a.m. on the requested date of each Swingline Borrowing.

         Section  2.5  Amendment to Section 2.6(a) - Funding of  Borrowings. The
first sentence of Section 2.6(a) - Funding of Borrowings of "ARTICLE II - AMOUNT
AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby amended
to delete such sentence in its entirety and to insert the following new sentence
in its place:

{OR498371;5}
                                       3
<PAGE>


                  Each  Lender  will make  available  each Loan to be made by it
         hereunder on the proposed date thereof by wire transfer in  immediately
         available funds by 1:00 p.m. to the Administrative Agent at the Payment
         Office;  provided,  that  Swingline  Loans will be made as set forth in
         Section 2.5.

         Section  2.6  Amendment to Section 2.11(b) - Optional Prepayments.  The
first sentence of Section 2.11(b) - Optional Prepayments of "ARTICLE II - AMOUNT
AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby amended
to delete such sentence in its entirety and to insert the following new sentence
in its place:

                  The Borrower shall have the right at any time and from time to
         time to prepay any Borrowing,  in whole or in part,  without premium or
         penalty,  by giving  irrevocable  written notice (or telephonic  notice
         promptly  confirmed  in writing) to the  Administrative  Agent no later
         than (i) in the case of prepayment of any Eurodollar  Borrowing,  11:00
         a.m.  not  less  than  three  (3)  Business  Days  prior  to  any  such
         prepayment,  (ii)  in the  case  of any  prepayment  of any  Base  Rate
         Borrowing,  11:00 a.m. on the date of such prepayment, and (iii) in the
         case of Swingline  Borrowings,  prior to 11:00 a.m. on the date of such
         prepayment.

         Section 2.7 Addition of New Section 4.16 - Security Agreement. "ARTICLE
IV - REPRESENTATIONS  AND WARRANTIES" of the Existing Credit Agreement is hereby
amended to add the following new Section 4.16 - Security Interest:

                  Section  4.16  Security  Interest.   Upon  the  execution  and
         delivery  of the  Security  Agreement  and the  filing  of a  financing
         statement  with  the  Florida  Secured   Transactions   Registry,   the
         Administrative  Agent shall have a valid,  perfected first priority and
         enforceable   Lien  on  the   Collateral   except  for  the  Collateral
         Exceptions.

         Section 2.8 Addition of New Section 5.12 - Security Agreement. "ARTICLE
V - AFFIRMATIVE COVENANTS" of the Existing Credit Agreement is hereby amended to
add the following new Section 5.12 - Security Agreement:

                  Section 5.12 Security  Agreement.  The Borrower (a) will grant
         the Administrative Agent a valid,  perfected first priority (except for
         the Collateral  Exceptions) and  enforceable  Lien on the Collateral as
         security for the  Obligations  by  executing  an  agreement  reasonably
         acceptable to the Administrative Agent and substantially in the form of
         Exhibit F, and (b) will deliver simultaneously  therewith any documents
         and other items  reasonably  requested by the  Administrative  Agent in
         connection therewith to properly evidence and perfect such Lien.

         Section 2.9 Addition of New Section 5.13 - Further Assurances. "ARTICLE
V - AFFIRMATIVE COVENANTS" of the Existing Credit Agreement is hereby amended to
add the following new Section 5.13 - Further Assurances:

                  Section  5.13  Further  Assurances.  The  Borrower  will make,
         execute, endorse, acknowledge and deliver any amendments, modifications
         or supplements hereto and restatements hereof and any other agreements,
         instruments  or documents,  and take any and all such  actions,  as may
         from time to time be reasonably  requested by the Administrative  Agent
         or the  Required  Lenders to perfect  and  maintain  the  validity  and
         priority of the Liens granted pursuant to the Security Agreement and to
         effect,   confirm  or  further  assure  or  protect  and  preserve  the
         interests,  rights and  remedies  of the  Administrative  Agent and the
         Lenders under this Agreement and the other Loan  Documents  (including,
         without limitation, any and all instruments necessary or appropriate to
         effect the pledge of the Collateral to the Administrative Agent for the
         benefit of the Lenders).

         Section 2.10 Amendment to Section 6.1 -  Consolidated  Adjusted Debt to
Consolidated  EBITDAR  Ratio.  Section  6.1  -  Consolidated  Adjusted  Debt  to
Consolidated  EBITDAR Ratio of "ARTICLE VI
{OR498371;5}
                                       4
<PAGE>


FINANCIAL  COVENANTS" of  the  Existing Credit Agreement  is  hereby  amended to
delete such Section in its entirety and to insert the following  new Section 6.1
in its place:

                  Section 6.1 Consolidated Adjusted Debt to Consolidated EBITDAR
         Ratio.  The Borrower and its  Subsidiaries  will have, as of the end of
         each fiscal quarter of the Borrower, commencing with the fiscal quarter
         ending June 30,  2001, a  Consolidated  Adjusted  Debt to  Consolidated
         EBITDAR Ratio of not greater than:

         -------------------------------------- --------------------------------
                      Fiscal Quarter                     Required Ratio

         -------------------------------------- --------------------------------
          The fiscal quarters ending on June
          30, 2001, September 29, 2001 and                  3.25:1.0
                     February 2, 2002
         -------------------------------------- --------------------------------
             Each fiscal quarter ending after
           February 2, 2002 and on or prior to              3.75:1.0
                     November 2, 2002
         -------------------------------------- --------------------------------
             Each fiscal quarter ending after
                     November 2, 2002                       3.25:1.0
         -------------------------------------- --------------------------------

         in  each  case, calculated  on  a  rolling  four-quarter  basis  as  to
         Consolidated EBITDAR.

         Section 2.11  Amendment to Section 6.2 - Fixed Charge  Coverage  Ratio.
Section 6.2 - Fixed Charge Coverage Ratio of "ARTICLE VI FINANCIAL COVENANTS" of
the Existing  Credit  Agreement is hereby  amended to delete such Section in its
entirety and to insert the following new Section 6.2 in its place:

                  Section 6.2 Fixed Charge Coverage Ratio.  The Borrower and its
         Subsidiaries  will have,  as of the end of each  fiscal  quarter of the
         Borrower,  commencing  with the fiscal  quarter ending June 30, 2001, a
         Fixed Charge Coverage Ratio of not less than:

         -------------------------------------- --------------------------------
                      Fiscal Quarter                     Required Ratio

         -------------------------------------- --------------------------------
          The fiscal quarters ending on June
          30, 2001, September 29, 2001 and                  2.00:1.0
                     February 2, 2002
         -------------------------------------- --------------------------------
             Each fiscal quarter ending after
           February 2, 2002 and on or prior to              1.50:1.0
                     November 2, 2002
         -------------------------------------- --------------------------------
             Each fiscal quarter ending after
                     November 2, 2002                       1.75:1.0
         -------------------------------------- --------------------------------

         in  each  case, calculated  on  a  rolling  four-quarter  basis  as  to
         Consolidated EBITDAR.

         Section 2.12  Amendment to Section 7.5 - Restricted  Payments.  Section
7.5 - Restricted  Payments of "ARTICLE VII - NEGATIVE COVENANTS" of the Existing
Credit Agreement is hereby amended to delete such Section in its entirety and to
insert the following new Section 7.5 in its place:

                  Section 7.5  Restricted  Payments.  The Borrower will not, and
         will not permit its  Subsidiaries  to, declare or make, or agree to pay
         or make,  directly  or  indirectly,  any  dividend  on any class of its
         stock,  or make any  payment on account  of, or set apart  assets for a
         sinking  or  other  analogous  fund  for,  the  purchase,   redemption,
         retirement,  defeasance or other  acquisition  of, any shares of common
         stock or  Indebtedness  subordinated to the Obligations of the Borrower
         or any options, warrants, or other rights to purchase such common stock
         or such  Indebtedness,  whether now or hereafter  outstanding  (each, a
         "Restricted Payment"), except for (a) dividends payable by

{OR498371;5}
                                       5
<PAGE>


         the  Borrower  solely in shares of any class of its common  stock,  (b)
         Restricted  Payments  made  by any  Subsidiary  to the  Borrower  or to
         another   Subsidiary   and  (c)  cash  dividends  paid  on,  and   cash
         redemptions  of,  the  common  stock of  the  Borrower  which  from the
         Closing  Date  through  December  29,  2001  do not exceed  $22,500,000
         (provided, that the sum of all  Restricted Payments in fiscal year 2001
         do not exceed $26,000,000).  Commencing  on May 5, 2002, cash dividends
         paid on, and cash  redemptions  of, the common  stock  of the  Borrower
         shall not exceed 15% of  Consolidated  Net Income (if greater  than $0)
         earned during the immediately  preceding fiscal quarter, provided, that
         (i) no Default or Event of Default has  occurred and is  continuing  at
         the  time such  dividend  is paid or  redemption  is made,  and (ii) if
         Restricted  Payments in any fiscal  quarter are less  than permitted in
         such  fiscal  quarter,  the excess  permitted  amount for  such  fiscal
         quarter may be carried forward to  the next succeeding  fiscal quarter,
         provided  further,  that if (i) the  Borrower's  Fixed Charge  Coverage
         Ratio for the fiscal  quarter  ending on November 2, 2002 shall  not be
         less than 1.75:1.00,  calculated on a rolling four-quarter  basis as to
         Consolidated  EBITDAR,  as  reflected  in  the  compliance  certificate
         required by Section 5.1(a) for such fiscal quarter,  (ii) the  Borrower
         shall have Excess  Availability  of not less than 15% of  its Aggregate
         Revolving Commitments at each point in time  through December 15, 2002,
         and (iii) the Borrower shall have  Excess Borrowing Availability of not
         less  than 15% of its  Borrowing  Availability  at each  point in  time
         through  December  15,  2002  (collectively,  the "Cash   Dividend  and
         Redemption Conditions"),  then  as of December 16, 2002, cash dividends
         paid on, and cash redemptions of, the  common stock of the Borrower may
         be  increased  to 25% of  Consolidated  Net Income (if greater than $0)
         earned  during  the  immediately  preceding  fiscal  quarter,  provided
         further,  however, that if the Cash  Dividend and Redemption Conditions
         are not satisfied,  then cash dividends  shall  not exceed $750,000 per
         fiscal  quarter  commencing  with the fiscal quarter  in which the Cash
         Dividend and Redemption Conditions are not satisfied.

         Section 2.13 Redesignation of Existing Section 8.1(o) as Section 8.1(p)
and  Addition  of New  Section  8.1(o).  Section  8.1(o) - Events of  Default of
"ARTICLE  VIII  -  EVENTS  OF  DEFAULT"  of the  Existing  Agreement  is  hereby
redesignated  as Section  8.1(p) and said  Section is hereby  amended to add the
following new Section 8.1(o):

                  (o) any material provision of the Security Agreement shall for
         any reason  cease to be valid and binding on, or  enforceable  against,
         the Borrower or shall cease to give the Administrative Agent the Liens,
         rights,  powers and privileges purported to be created thereby in favor
         of the  Administrative  Agent for the  benefit of the  Lenders,  or the
         Borrower  shall so state in  writing,  or the  Borrower  shall  seek to
         terminate  the Security  Agreement in violation of the terms thereof or
         any of its covenants and agreements thereunder; or

         Section 2.14 Amendment to Section  10.2(b)(vii)  - Waiver;  Amendments.
Section 10.2(b)(vii) - Waiver;  Amendments of "ARTICLE X - MISCELLANEOUS" of the
Existing Credit Agreement is hereby amended by deleting the term "collateral" in
Section 10.2(b)(vii) and substituting the term "Collateral" in its place.

         Section  2.15  Amendment  to Schedule I - Pricing  Grid.  The  Existing
Credit  Agreement  is hereby  amended to insert the  following  new Schedule I -
Pricing Grid:


                       [Pricing Grid appears on next page]





{OR498371;5}
                                       6
<PAGE>


                                                         SCHEDULE I

                                  PRICING GRID

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

Consolidated Adjusted          Applicable Margin           Applicable Percentage
   Debt to EBITDAR                (per annum)                   (per annum)
--------------------- ------------------ ---------------- ----------------------
                             Base           Eurodollar          Commitment
                             Rate                                  Fee
--------------------- ------------------ ---------------- ----------------------
        <3.00x               0.75%             1.75%              0.375%
--------------------- ------------------ ---------------- ----------------------
  =>3.00x to <3.25x          0.875%            1.875%             0.40%
--------------------- ------------------ ---------------- ----------------------
  =>3.25x to <3.50x          1.00%             2.00%              0.40%
--------------------- ------------------ ---------------- ----------------------
       =>3.50x               1.25%             2.25%              0.50%
--------------------- ------------------ ---------------- ----------------------

                  Notwithstanding any other provisions of this Second Amendment,
         the new Pricing Grid set forth above shall be effective and  applicable
         on and after February 2, 2002.

                                   ARTICLE III

                    CONSENT AND WAIVER OF COVENANT VIOLATION
                    ----------------------------------------

         Section  3.1  Consent and  Waiver.  Under the terms and  conditions  of
Section 6.2 - Fixed Charge Coverage Ratio of "ARTICLE VI - FINANCIAL  COVENANTS"
of the  Existing  Credit  Agreement,  the  Borrower  and its  Subsidiaries  were
required  to  have,  as of the  end of  each  fiscal  quarter  of the  Borrower,
commencing with the fiscal quarter ending June 30, 2001, a Fixed Charge Coverage
Ratio of not less than 2.0:1.0, calculated on a rolling four-quarter basis as to
Consolidated EBITDAR. The Borrower acknowledges and agrees that the Borrower and
its Subsidiaries  were not in compliance with this covenant as at fiscal quarter
end February 2, 2002 and, as a result  thereof,  the Borrower has requested that
the Lenders waive such covenant non-compliance for such period. In consideration
of the  covenants  and  agreements  set  forth  in this  Second  Amendment,  the
Administrative  Agent  and the  Lenders,  pursuant  to  Section  10.2(b)  of the
Existing Credit Agreement,  hereby agree, effective retroactively to February 2,
2002, upon the Effective Date, to waive the Borrower's  non-compliance  with the
Fixed Charge  Coverage  Ratio  covenant set forth in Section 6.3 of the Existing
Credit Agreement for the fiscal quarter ended February 2, 2002;  provided,  that
the Borrower shall be in full  compliance  with the Fixed Charge  Coverage Ratio
covenant  (as  modified as set forth in Section  2.11) for each  fiscal  quarter
ending after February 2, 2002.

         Section 3.2 No Future Waiver.  The waiver set forth in Section 3.1 is a
one-time waiver, applicable only to the Borrower's non-compliance with the Fixed
Charge  Coverage Ratio covenant set forth in Section 6.2 of the Existing  Credit
Agreement  for the fiscal  quarter  ended  February  2,  2002,  and shall not be
construed  to be (a) a waiver as to future  compliance  with  Section 6.2 of the
Amended Credit  Agreement,  (b) a waiver of any Default or Event of Default that
may now or  hereafter  exist,  or (c) an  amendment  of or  modification  to the
Existing  Credit  Agreement.  The  Administrative  Agent and the Lenders  hereby
reserve  all of their  rights,  powers and  remedies  under the  Amended  Credit
Agreement, after giving effect to this Second Amendment, and applicable law.


                                   ARTICLE IV

                           CONDITIONS TO EFFECTIVENESS
                           ---------------------------

         This  Second  Amendment  shall be and become  effective  as of the date
hereof  (the  "Effective  Date")  when all of the  conditions  set forth in this
Article  IV  shall  have  been  satisfied,   as  reasonably  determined  by  the
Administrative Agent, and thereafter,  this Second Amendment shall be known, and
may be referred to, as the "Second Amendment":


{OR498371;5}
                                       7
<PAGE>


         Section 4.1 Approval by Required  Lenders.  The Required  Lenders shall
have  approved  the  modifications  and  amendments  set  forth  in this  Second
Amendment,  such approval to be evidenced by such Required Lenders' execution of
counterparts of this Second Amendment as set forth in Section 4.2.

         Section 4.2 Execution of Counterparts.  The Administrative  Agent shall
have received (including by telecopy) counterparts of this Second Amendment that
shall have been duly  executed  on behalf of the  Borrower,  the  Administrative
Agent and the Required Lenders.

         Section 4.3 Legal  Details,  Etc. All  documents  executed or submitted
pursuant  hereto shall be reasonably  satisfactory  in form and substance to the
Administrative  Agent and its counsel prior to or by the time of closing.  Prior
to or by the time of closing,  the  Administrative  Agent and its counsel  shall
have received all  information,  legal  opinions and other  documents,  and such
counterpart originals or such certified or other copies of such originals as the
Administrative  Agent or its  counsel  may  reasonably  request,  and all  legal
matters incident to the transactions contemplated by this Second Amendment shall
be reasonably satisfactory to the Administrative Agent and its counsel.

         Section 4.4 Payment of Waiver/Modification Fee. The Borrower shall have
paid to the Administrative  Agent a  waiver/modification  fee in connection with
this Second  Amendment in an amount equal to 0.25%  multiplied  by the aggregate
Commitments,  such fee being  for the  account  of each  Consenting  Lender  (as
defined  below)  and  payable  pro rata  based on the  ratio of such  Consenting
Lender's   Commitment  to  the  aggregate  of  all  such   Consenting   Lenders'
Commitments;  provided,  that such fee shall be  payable  only to those  Lenders
(each, a "Consenting Lender," and collectively,  the "Consenting  Lenders") that
shall have returned  (including via telecopy addressed to C. William Buchholz at
904-632-2874  with  delivery of  original to follow as required by Section  5.5)
executed  signature  pages to this  Second  Amendment  on or before the close of
business on May 13, 2002, as directed by the Administrative Agent.

         Section 4.5 Payment of Other Fees and Expenses. The Borrower shall have
paid all  reasonable  out-of-pocket  costs and  expenses  of the  Administrative
Agent,  including the reasonable fees,  charges and disbursements of counsel for
the  Administrative  Agent,  in connection with the  preparation,  execution and
delivery of this Second Amendment.

         Section 4.6 Receipt of Documentation.  The Administrative Agent (or its
counsel) shall have received the  following,  each of which shall be in form and
substance reasonably satisfactory to the Administrative Agent (and its counsel):

                  (a)      a duly executed  Security  Agreement substantially in
         the form of Exhibit F attached to this Second Amendment;

                  (b) a certificate  of the Secretary or Assistant  Secretary of
         each Loan Party,  attaching and certifying  copies of its bylaws and of
         the resolutions of its boards of directors,  authorizing the execution,
         delivery and  performance  of the Loan Documents to which it is a party
         and  certifying  the name,  title and true signature of each officer of
         such Loan Party executing the Loan Documents to which it is a party;

                  (c) certified copies of the articles of incorporation or other
         charter  documents of each Loan Party,  together with  certificates  of
         good standing or existence,  as may be available  from the Secretary of
         State of the jurisdiction of incorporation of such Loan Party;

                  (d) a favorable  written opinion of Kirschner & Legler,  P.A.,
         counsel to the Loan Parties,  addressed to the Administrative Agent and
         each of the Lenders, drafted in accordance with the Report on Standards
         for   Opinions  of  Florida   Counsel  for  Business  and  Real  Estate
         Transactions (June 1997) and covering such matters relating to the Loan
         Parties,  the Loan Documents and the transactions  contemplated therein
         as the  Administrative  Agent or the Required  Lenders shall reasonably
         request including, without limitation, the validity, enforceability and
         perfection of the Lenders' security interest in the Collateral;



{OR498371;5}
                                       8
<PAGE>


                  (e)   certified    copies   of   all   consents,    approvals,
         authorizations,  registrations  or  filings  required  to  be  made  or
         obtained  by each  Loan  Party in  connection  with the  Loans  and any
         transaction being financed with the proceeds of the Loans;

                  (f) if any of the  Collateral is at any time located or stored
         on any premises leased by the Borrower or in any warehouse not owned by
         the Borrower, copies of waivers, in form approved by the Administrative
         Agent,  delivered to each landlord or warehouseman  involved,  together
         with a letter from Borrower to such landlord or warehouseman requesting
         such landlord or  warehouseman  to  subordinate  any existing or future
         Lien of said landlord or warehouseman on the Collateral to the security
         interest of the Administrative Agent for the benefit of Lenders in such
         Collateral  (the Borrower  shall use  reasonable  efforts to obtain the
         requested  waivers,  which  shall not  include  making  any  burdensome
         concessions  to such  landlord or  warehouseman,  but it shall not be a
         requirement to the effectiveness of this Second Amendment that any such
         landlord or warehouseman favorably respond to such request); and

                  (g)  UCC  searches  in  the  appropriate  filing  offices  for
         perfection  of security  interests  in  inventory  and  accounts in the
         jurisdictions  of each of the  locations  specified  on Schedule  4.14,
         together  with  copies  of all  financing  statements  on  file in such
         jurisdictions  (with all  attachments) and evidence that no Liens exist
         on the  Collateral  or any other assets or  properties of any such Loan
         Party (other than Liens permitted by Section 7.2), and judgment and tax
         lien searches in the  jurisdiction  of the chief  executive  office and
         state of incorporation or formation of each Loan Party.

         Section 4.7 Filing of  Financing  Statement.  The  Borrower  shall have
authorized  the filing of, and  Collateral  Agent shall have filed,  a financing
statement with the Florida Secured  Transactions  Registry to perfect a security
interest in the Collateral.


                                    ARTICLE V

                                  MISCELLANEOUS
                                  -------------

         Section  5.1  Representations  and  Warranties.   The  Borrower  hereby
represents and warrants to the Administrative  Agent and the Lenders that, after
giving  effect  to this  Second  Amendment,  (a)  the  execution,  delivery  and
performance of this Second  Amendment has been duly  authorized by all requisite
action of the  Borrower,  corporate  or  otherwise,  (b) no  Default or Event of
Default  exists  under the  Existing  Credit  Agreement or any of the other Loan
Documents, (c) all representations,  warranties covenants and Agreements of each
Loan Party set forth in the Loan  Documents are true and correct in all material
respects on and as of the date hereof (except for those which  expressly  relate
to an earlier date), (d) since the date of the most recent financial  statements
of the  Borrower  described  in  Section  5.1(a) or (b) of the  Existing  Credit
Agreement,  there  has  been no  change  which  has had or could  reasonably  be
expected  to have a Material  Adverse  Effect,  and (e) the Loan  Documents  are
legal,  valid and binding  obligations  of the  respective  Loan Parties and are
enforceable by the Administrative Agent and the Lenders, as applicable,  against
such Loan  Parties in  accordance  with their  respective  terms in all material
respects.

         Section 5.2  Cross  References.  References  in this  Second  Amendment
to any Section  are,  unless otherwise specified, to such Section of this Second
Amendment.

         Section 5.3  Instrument  Pursuant to Existing  Credit  Agreement.  This
Second  Amendment  is a  document  executed  pursuant  to  the  Existing  Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered  and applied in  accordance  with the terms and  provisions  of the
Existing Credit Agreement.

         Section 5.4  Loan Documents.  The Borrower  hereby  confirms and agrees
that the Loan  Documents are, and shall continue to be, in full force and effect
and hereby  ratify and approve in all  respects  their  obligations  thereunder,
except that, upon the effectiveness of, and on and after the date of this Second
Amendment,  all  references  in each Loan  Document to the  "Credit  Agreement",
"thereunder", "thereof" or words of like import referring to the Existing Credit
Agreement shall mean the Amended Credit Agreement.
{OR498371;5}
                                       9
<PAGE>


         Section 5.5 Acknowledgment of Outstanding Obligations. The Loan Parties
hereby  acknowledge,  certify  and agree that  pursuant to the  Existing  Credit
Agreement,  (i) Lenders  have made  Eurodollar  Loans to the  Borrower  that are
outstanding  as of  the  date  hereof  in  the  aggregate  principal  amount  of
$50,000,000.00 and  Base Rate  Loans to the  Borrower that are outstanding as of
the  date hereof  in the  aggregate principal  amount of $2,000,000.00, (ii) the
Administrative  Agent  has  made  Swingline  Loans  to  the  Borrower  that  are
outstanding  as of  the  date  hereof  in  the  aggregate  principal  amount  of
$10,000,000.00 and (iii)  the  Issuing  Bank  has  issued  Letters of  Credit on
behalf of or for the  account of the  Borrower in the  aggregate  face amount of
$2,064,080.00; the Borrower's  obligation to  pay the outstanding  amounts under
such  Existing  Agreement to the Lenders,  the  Administrative  Agent and/or the
Issuing Bank is not subject to any defense, claim,  counterclaim,  setoff, right
of recoupment,  abatement or other determination  whatsoever;  including without
limitation,  any usury or lender liability claim or defense,  arising out of the
Loans or the issuance of any Letter of Credit or any past  relationship  between
or among the Borrower,  the Lenders, the Administrative Agent and/or the Issuing
Bank that can be asserted by the Borrower  either to reduce or eliminate  all or
any part of its liability for the Obligations or to seek  affirmative  relief or
damages of any kind or nature from the Lenders,  the Administrative Agent and/or
the Issuing Bank. The Loan Parties further  acknowledge  that to the extent that
any such claim should in fact exist, including without limitation,  any usury or
lender liability claim, it is being fully,  finally,  and irrevocably  released.
The Loan Parties hereby acknowledge and agree that but for the execution of this
Agreement  an Event of Default  would have  existed  under the  Existing  Credit
Agreement  as  referenced  in Section  3.1 hereof and that the  Lenders  and the
Administrative  Agent were under no  obligation  whatsoever to  restructure  the
Loans or any of the Loan Documents. In consideration of the terms and conditions
of this Second Amendment,  made at the Borrower's  request,  the Loan Parties on
behalf of themselves and their  respective  successors and assigns hereby fully,
finally and irrevocably  release the Lenders,  the Administrative  Agent and the
Issuing   Bank,   and  their   respective   officers,   directors,   affiliates,
subsidiaries,   parents,  representatives,   agents,  shareholders,   attorneys,
employees,  predecessors,  successors and assigns  (collectively,  the "Released
Parties")  from  any and all  defenses,  counterclaims,  offsets,  cross-claims,
claims and demands of any kind or nature  existing as of the date of this Second
Amendment, including without limitation, any usury or lender liability claims or
defenses, whether known or unknown, and whenever and howsoever arising, relating
to the Loans or the Letters of Credit, or any past relationship between the Loan
Parties and any of the Released  Parties.  In addition,  the Loan Parties hereby
agree not to commence,  join in, prosecute,  or participate in any suit or other
proceeding in a position  adverse to that of any of the Released Parties arising
directly or  indirectly  from any of the  foregoing  matters.  The Loan  Parties
further agree that, from and after the effective date hereof,  the Loans and the
Letters  of  Credit  are and  shall  continue  to be  governed  by the terms and
provisions  of the Existing  Credit  Agreement,  as modified and amended by this
Second Amendment.

         Section 5.6 Counterparts; Facsimile Signatures; Effectiveness of Second
Amendment.  This Second  Amendment  may be  executed in one or more  counterpart
copies,  each of which  constitutes  an original,  but all of which,  when taken
together, shall constitute one agreement binding upon all of the parties hereto.
Further,  the parties may execute  facsimile copies of this Second Amendment and
the facsimile  signature of any such party shall be deemed an original and fully
binding on said  party;  provided,  however,  any party  executing  this  Second
Amendment by facsimile signature agrees to promptly provide an original executed
copy of this  Second  Amendment  to the  Administrative  Agent.  Notwithstanding
execution of this Second  Amendment by the  Borrower,  the Guarantor and each of
the Required Lenders party hereto,  this Second Amendment shall not be or become
effective  and  binding  upon the parties  until  executed  and  accepted by the
Administrative Agent in its capacity as such on behalf of the Lenders.

         Section 5.7 Governing Law; Etc. This Second Amendment shall be governed
by and  construed in  accordance  with the  applicable  terms and  provisions of
Section  10.5 - Governing  Law;  Jurisdiction;  Consent to Service of Process of
"ARTICLE X - MISCELLANEOUS"  of the Existing Credit  Agreement,  which terms and
provisions are incorporated herein by reference.

         Section 5.8 No Other Modifications.  Except as hereby amended, no other
term,  condition or provision of the Existing  Credit  Agreement shall be deemed
modified  or  amended,  and this  Second  Amendment  shall not be  considered  a
novation.


{OR498371;5}
                                       10
<PAGE>


         Section 5.9  Successors  and Assigns.  This Second  Amendment  shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

         Section 5.10 Complete Agreement.  This Second Amendment constitutes the
complete  agreement  between the  parties  hereto with regard to the matters set
forth  herein  and   incorporates   all  prior   discussions,   agreements   and
representations made in respect of such matters.




                        [Signatures follow on next page]




















{OR498371;5}
                                       11
<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Second
Amendment  to be  executed  [under  seal in the case of the  Borrower]  by their
respective duly authorized officers as of the day and year first above written.

                                             STEIN MART, INC.


                                             By: /s/ James G. Delfs
                                                 -------------------------------
                                                 Name:  James G. Delfs
                                                 Title: Chief Financial Officer

                                             [SEAL]




                                             SUNTRUST BANK
                                             as Administrative Agent, as
                                             Issuing Bank, as Swingline Lender
                                             and as a Lender



                                             By: /s/ C. William Buchholz
                                                 -------------------------------
                                                 Name:  C. William Buchholz
                                                 Title: Director

                                             Revolving Commitment: $30,000,000

                                             Swingline Commitment: $10,000,000










{OR498371;5}                           S-1
<PAGE>


                                             FLEET NATIONAL BANK, as a Lender



                                             By: /s/ Linda Alto
                                                 -------------------------------
                                                 Name:  Linda Alto
                                                 Title: Director


                                             Revolving Commitment: $25,000,000










{OR498371;5}
                                      S-2
<PAGE>


                                             WACHOVIA BANK, N.A., as a Lender
                                             (formerly known as First Union
                                             National Bank)


                                             By: /s/ Miriam Howard
                                                 -------------------------------
                                                 Name:  Miriam Howard
                                                 Title: Vice President


                                             Revolving Commitment: $25,000,000










{OR498371;5}
                                      S-3
<PAGE>


                                             US BANK NATIONAL ASSOCIATION,
                                             as a Lender


                                             By: /s/ Amanda Smith
                                                 -------------------------------
                                                 Name:  Amanda Smith
                                                 Title: Assistant Vice President


                                             Revolving Commitment: $10,000,000










{OR498371;5}
                                      S-4
<PAGE>


                                             CAROLINA FIRST BANK, as a Lender



                                             By: /s/ Charles D. Chamberlain
                                                 -------------------------------
                                                 Name:  Charles D. Chamberlain
                                                 Title: Executive Vice President


                                             Revolving Commitment: $10,000,000










{OR498371;5}
                                      S-5
<PAGE>


                                             COMPASS BANK, as a Lender



                                             By: /s/ Joseph D. Sistare III
                                                 -------------------------------
                                                 Name:  Joseph D. Sistare III
                                                 Title: Vice President


                                             Revolving Commitment: $10,000,000










{OR498371;5}
                                      S-6
<PAGE>


                                             REPUBLIC BANK, as a Lender



                                             By: /s/ Brigitta Lawton
                                                 -------------------------------
                                                 Name:  Brigitta Lawton
                                                 Title: Senior Vice President


                                             Revolving Commitment: $10,000,000










{OR498371;5}
                                      S-7
<PAGE>


                                             ISRAEL DISCOUNT BANK LIMITED, as
                                             a Lender



                                             By: /s/ Roberto Munoz
                                                 -------------------------------
                                                 Name:  Roberto Munoz
                                                 Title: First Vice President


                                             Revolving Commitment: $7,500,000










{OR498371;5}
                                      S-8
<PAGE>


                                             REGIONS BANK, as a Lender



                                             By: /s/ Anthony D. Nigro
                                                 -------------------------------
                                                 Name:  Anthony D. Nigro
                                                 Title: Vice President


                                             Revolving Commitment: $7,500,000










{OR498371;5}
                                      S-9
<PAGE>


                              JOINDER OF GUARANTOR
                              --------------------

         The undersigned,  as Guarantor under that certain Subsidiary  Guarantee
Agreement,  dated  as of June  28,  2001  (the  "Guarantee"),  in  favor  of the
Administrative Agent, on behalf of the Lenders, hereby acknowledges and consents
to, and agrees to be bound by, the foregoing modifications and amendments to the
Existing Credit  Agreement as set forth in this Second  Amendment and to each of
the other terms and  conditions  thereof,  and agrees that its  Guarantee  shall
continue in full force and effect and binding upon and  enforceable  against the
undersigned  in  accordance  with its terms from and after the date hereof.  The
undersigned  hereby further  acknowledges and agrees that its obligations  under
the Guarantee are not subject to any off-set, defense or counterclaim whatsoever
and  hereby  waives  any and  all  defenses  of any  nature  whatsoever,  legal,
equitable or otherwise,  which the  undersigned may now have with respect to the
undersigned's obligations under said Guarantee.

         Dated as of the 30th day of April, 2002.

                                             STEIN MART BUYING CORP.


                                             By: /s/ James G. Delfs
                                                 -------------------------------
                                                 Name:  James G. Delfs
                                                 Title: Senior Vice President/
                                                        CFO

                                             [SEAL]










{OR498371;5}
                                      S-10
<PAGE>


                                                                       EXHIBIT F


                                    SECURITY  AGREEMENT  dated as of  April  30,
                                    2002 (this "Agreement"), between STEIN MART,
                                    INC., a Florida  corporation (the "Debtor"),
                                    and  SUNTRUST   BANK,   a  Georgia   banking
                                    corporation,  as  administrative  agent (the
                                    "Administrative  Agent")  for the Lenders as
                                    defined in the Credit Agreement  referred to
                                    below (in such capacity, "Secured Party").


         Reference is made to the Revolving Credit  Agreement,  dated as of June
28,  2001,  as amended by that  certain  First  Amendment  to  Revolving  Credit
Agreement,  dated as of November 9, 2001, and as further amended by that certain
Second Amendment to Revolving Credit Agreement,  dated as of the date hereof (as
further  amended,  supplemented  or otherwise  modified  from time to time,  the
"Credit  Agreement"),  among Debtor, the lenders from time to time party thereto
(the   "Lenders")  and  SunTrust  Bank,  a  Georgia  banking   corporation,   as
Administrative Agent for the Lenders, swingline lender and issuing bank (in such
capacity,  the "Issuing  Bank").  Capitalized  terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

         The Lenders  have agreed to make Loans to Debtor,  and the Issuing Bank
has agreed to issue  Letters of Credit for the account of Debtor,  pursuant  to,
and upon the terms and  subject  to the  conditions  specified  in,  the  Credit
Agreement.  The  obligations of the Lenders to continue to make Loans and of the
Issuing Bank to continue to issue  Letters of Credit are  conditioned  on, among
other things,  the  execution and delivery by Debtor of a Security  Agreement in
the form hereof. As consideration therefor and in order to induce the Lenders to
continue  to make Loans and the Issuing  Bank to  continue  to issue  Letters of
Credit, Debtor is willing to execute this Security Agreement.

         Accordingly, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

         SECTION 1.1. Definitions.  As  used in  this  Agreement, the  following
terms  have  the following meanings (and terms not defined herein shall have the
same meaning as assigned to them in the Credit Agreement):

         "Account" means any "account," as  such  term is defined in Chapter 679
of the UCC, and, in any event, shall include,  without limitation,  any right of
the  Debtor to  payment  of a  monetary  obligation,  whether  or not  earned by
performance,  (i) for property that has been or is to be sold, leased, licensed,
assigned,  or  otherwise  disposed  of,  (ii)  for  services  rendered  or to be
rendered,  or  (iii)  arising  out of the  use of a  credit  or  charge  card or
information contained on or for use with the card.

         "Collateral"  has  the  meaning   specified  in  Section  2.1  of  this
Agreement.

         "Collateral Exceptions" shall have the meaning assigned to such term in
the Credit Agreement.

         "Inventory" means all "inventory," as such  term is defined  in Chapter
679 of the UCC, and, in any event, shall include,  without  limitation,  each of
the  following,  (a) all  goods,  merchandise  or  personal  property,  wherever
located, held by Debtor for sale or lease or to be furnished under a contract of
service,  (b)  all  raw  materials,  work-in-process  and  finished  goods,  (c)
inventory covered by a warehouse receipt,  bill of lading or other negotiable or
non-negotiable   document  and  (d)  all  goods  that  have  been  returned  to,
repossessed by, or stopped in transit by the Debtor.

         "Obligations"  means and  includes  the  "Obligations"  as such term is
defined in the Credit Agreement.

         "Proceeds" means any "proceeds," as such term is defined in Chapter 679
of the UCC and, in any event, shall include,  but not be limited to, (a) any and
all  proceeds of any  insurance,  indemnity,  warranty,  or guaranty  payable to
Debtor from time to time with respect to any of the Collateral,  (b) any and all
payments (in any form whatsoever) made or due and payable to Debtor from time to
time in connection with any requisition, confiscation, condemnation, seizure,

{OR498808;3}                          F-1
<PAGE>


or forfeiture of all or any part of the Collateral by any Governmental Authority
(or  any  Person  acting,  or  purporting  to  act,  for  or on  behalf  of  any
Governmental  Authority),  and (c) any and all other  amounts  from time to time
paid or payable under or in connection with any of the Collateral.

         "Revised  Article 9" means Revised Article 9 of the Uniform  Commercial
Code  included  in the 1998  official  text of the  Uniform  Commercial  Code as
approved by the American Law  Institute in 1998 and the National  Conference  of
Commissioners on Uniform State Laws in 1999.

         "UCC" shall mean the Florida  Uniform  Commercial  Code as set forth in
Chapters 671 through 680, Florida Statutes, as the same may be amended from time
to time.

         SECTION 1.2. Other Definitional  Provisions.  References to "Sections,"
"subsections,"  "Exhibits," and "Schedules"  shall be to Sections,  subsections,
Exhibits  and  Schedules,  respectively,  of  this  Agreement  unless  otherwise
specifically  provided.  All definitions contained in this Agreement are equally
applicable to the singular and plural forms of the terms defined. All references
to statutes and  regulations  shall  include any  amendments of the same and any
successor statutes and regulations. References to particular sections of the UCC
should be read to refer also to parallel sections of the Uniform Commercial Code
as  enacted  in each  state or  other  jurisdiction  where  any  portion  of the
Collateral  is or may be located.  Terms used  herein,  which are defined in the
UCC, unless otherwise defined herein or in the Credit Agreement,  shall have the
meanings determined in accordance with the UCC.


                                   ARTICLE II

                                SECURITY INTEREST
                                -----------------

         SECTION 2.1. Security Interest.  As collateral  security for the prompt
payment and performance in full when due of the  Obligations  (whether at stated
maturity, by acceleration,  or otherwise),  Debtor hereby pledges and assigns to
Secured  Party,  and grants to Secured  Party a continuing  lien on and security
interest in, all of Debtor's right, title, and interest in and to the following,
whether  now  owned or  hereafter  arising  or  acquired  and  wherever  located
(collectively, the "Collateral"):

         (a) all Accounts;

         (b) all Inventory;

         (c) to the extent not  encumbered  above,  all of the right, title  and
interest  of Debtor  in and  to  the goods  or other  property represented by or
securing the Accounts;

         (d) all rights of  Debtor as an  unpaid lienor,  including  stoppage in
transit, replevin and reclamation;

         (e) all  monies,   bank   accounts,   balances,   credits,    deposits,
collections,  drafts, bills, notes, securities, and other property of every kind
and nature (whether  tangible or intangible) now owned or hereafter  acquired by
Debtor,  including  without  limitation,  all such  property  at any time in the
actual or  constructive  possession  of (or in transit to) Secured  Party or its
correspondents or agents in any capacity or for any purpose;

         (f) all books, records, ledger cards and other property relating to (a)
through (e) above,  including  computer  programs,  tapes and  related  software
(subject,  however, to Debtor's right to obtain copies of same from time to time
upon request); and

         (g) all  products  and  Proceeds,  in  cash or otherwise, of any of the
property described in the foregoing clauses (a) through (f).


{OR498808;3}                          2
<PAGE>


Notwithstanding  anything  to the  contrary  contained  in this  Agreement,  the
Obligations  secured under this Agreement  shall not exceed an aggregate  amount
equal to the  greatest  amount  that  would not  render  Debtor's  indebtedness,
liabilities  or  obligations  under this  Agreement  subject to avoidance  under
Sections 544, 548 or 550 of the Federal  Bankruptcy Code or subject to being set
aside or annulled under any applicable state law relating to fraud on creditors;
provided,  however,  that, for purposes of the immediately  preceding clause, it
shall be presumed that the Obligations  secured hereunder do not equal or exceed
any aggregate  amount which would render Debtor's  indebtedness,  liabilities or
obligations  under  this  Agreement  subject to being so  avoided,  set aside or
annulled,  and the  burden  of  proof  to the  contrary  shall  be on the  party
asserting to the contrary. Subject to but without limiting the generality of the
foregoing  sentence,  the provisions of this Agreement are severable and, in any
legally  binding action or proceeding  involving any state  corporate law or any
bankruptcy,  insolvency  or other laws of general  application  relating  to the
enforcement  of  creditors'  rights and  general  principles  of equity,  if the
indebtedness,  liabilities or obligations of Debtor hereunder would otherwise be
held or determined to be void, invalid or unenforceable on account of the amount
of its  indebtedness,  liabilities or obligations  under this  Agreement,  then,
notwithstanding  any other  provision  of this  Agreement to the  contrary,  the
amount of such  indebtedness,  liabilities  or  obligations  shall,  without any
further action by Debtor,  Secured Party or any other Person,  be  automatically
limited and reduced to the  greatest  amount which is valid and  enforceable  as
determined in such action or proceeding.

         SECTION 2.2.  Debtor Remains  Liable.  Notwithstanding  anything to the
contrary   contained   herein,   (a)  Debtor  shall  remain   liable  under  the
documentation  included  in the  Collateral  to the extent set forth  therein to
perform all of its duties and  obligations  thereunder  to the same extent as if
this Agreement had not been  executed,  (b) the exercise by Secured Party of any
of its rights or remedies  hereunder  shall not  release  Debtor from any of its
duties or obligations under such documentation, (c) Secured Party shall not have
any  obligation  under any of such  documentation  included in the Collateral by
reason of this  Agreement,  and (d)  Secured  Party  shall not be  obligated  to
perform any of the  obligations  of Debtor  thereunder  or to take any action to
collect or enforce any claim for payment assigned hereunder.

         SECTION  2.3.  Authorization.   Debtor  hereby  irrevocably  authorizes
Secured Party at any time and from time to time to file in any  jurisdiction any
initial financing  statements,  continuation  statements and amendments  thereto
that (a)  indicated  the  Collateral,  and (b)  contain  any  other  information
required  by part 5 of Revised  Article 9 of the state or  jurisdiction  for the
sufficiency or filing office acceptance of any financing statement or amendment,
including  whether  Debtor is an  organization,  the type of  organization,  any
organization  identification  number or federal employee  identification  number
issued to Debtor. Debtor agrees to furnish any such information to Secured Party
promptly upon request.  Debtor also ratifies its authorization for Secured Party
to have filed in any jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.

         SECTION 2.4. Waiver.  DEBTOR HEREBY IRREVOCABLY  WAIVES, TO THE FULLEST
EXTENT  PERMITTED  UNDER  APPLICABLE  LAW, ALL OF ITS RIGHT, IF ANY, TO FILE ANY
CORRECTION  STATEMENT,  AMENDMENT OR  TERMINATION  FINANCING  STATEMENT WITH ANY
JURISDICTION RELATING TO THE COLLATERAL.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

         To induce  Secured  Party and the Lenders to enter into this  Agreement
and the Credit Agreement, Debtor represents and warrants as follows:

         SECTION 3.1. Location of Inventory; Third Parties in Possession. All of
the  Inventory  is located  at the places  specified  in  Schedule  3.1 or is in
transit.  Schedule  3.1  correctly  identifies  the  landlords,   mortgagees  or
warehousemen,  if any, of each location  identified in Schedule 3.1.  Except for
the Persons  identified on Schedule 3.1, no Person other than Debtor and Secured
Party has  possession of any of the  Collateral  other than common  carriers and
Persons operating storage  facilities while goods are in the process of delivery
from the supplier  thereof.  Except as set forth above in this Section 3.1, none
of the Collateral  has been located in any location  within the past four months
other than as set forth on Schedule 3.1 for Debtor.
{OR498808;3}                          3
<PAGE>


         SECTION 3.2. Office Locations;  Fictitious Names; Tax I.D. Number.  The
principal  place of  business  and the  chief  executive  office  of  Debtor  is
identified on Schedule 3.1.  Schedule 3.1 also sets forth all other places where
Debtor  keeps its books and records and all other  locations  where Debtor has a
place of business.  Debtor does not do business and has not done business during
the past five (5) years under any trade name or fictitious  business name except
as  disclosed  on  Schedule  3.2.  Debtor's  United  States  federal  income tax
identification  number  and state  organizational  identification  number is set
forth on Schedule 3.2.

         SECTION 3.3. Ownership.  Debtor is the absolute owner of the Collateral
free and clear of all Liens  and security  interests  whatsoever  except for the
security  interest  granted Secured  Party by this Agreement and  except for the
Collateral Exceptions.

         SECTION  3.4  Priority.  That  by  virtue  of  this  Agreement  and the
perfection of said security  interest in accordance  with the provisions of this
Agreement,  and the execution  and delivery of any lien waiver or  subordination
agreements, if applicable, Secured Party has a valid, enforceable, perfected and
first priority  security  interest in the  Collateral  except for the Collateral
Exceptions.


                                   ARTICLE IV

                                    COVENANTS
                                    ---------

         Debtor  covenants  and agrees that, as long as the  Obligations  or any
part thereof are  outstanding or any Lender has any Commitment  under the Credit
Agreement, Debtor will perform and observe each of the following covenants:

         SECTION 4.1. Accounts.  Debtor shall, in  accordance with its customary
business  practices,  endeavor  to  collect or cause to be  collected  from each
account  debtor under its  Accounts,  as and when due, any and all amounts owing
under such Accounts.  Without the prior written consent of Secured Party, Debtor
shall not,  except in the  ordinary  course of business and in no event when any
Default exists,  (a) grant any extension of time for any payment with respect to
any of the Accounts  beyond sixty (60) days after such  payment's due date,  (b)
compromise,  compound,  or  settle  any of the  Accounts  for less than the full
amount thereof,  (c) release, in whole or in part, any Person liable for payment
of any of the  Accounts,  (d) allow any  credit or  discount  for  payment  with
respect to any Account other than trade or other customary  discounts granted in
the ordinary  course of business,  or (e) release any Lien or guaranty  securing
any Account unless the Account has been paid.

         SECTION 4.2. Further Assurances;  Exceptions to Perfection. At any time
and from  time to time,  upon the  request  of  Secured  Party,  and at the sole
expense of Debtor,  Debtor shall  promptly  execute and deliver all such further
agreements,  documents,  and instruments and take such further action as Secured
Party may  reasonably  deem necessary or appropriate to preserve and perfect its
security interest in the Collateral and carry out the provisions and purposes of
this Agreement or to enable Secured Party to exercise and enforce its rights and
remedies  hereunder with respect to any of the Collateral.  Without limiting the
generality of the  foregoing,  Debtor shall upon  reasonable  request by Secured
Party (a) execute  and deliver to Secured  Party such  financing  statements  as
Secured  Party  may from time to time  require,  (b) take  such  action  after a
Default as Secured  Party may request from time to time,  (c) deliver to Secured
Party all  Collateral  the  possession  of which is  necessary  to  perfect  the
security  interest  therein,  duly endorsed and/or  accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured  Party,  and (d)  execute  and  deliver  to  Secured  Party  such  other
agreements,  documents,  and instruments as Secured Party may reasonably require
to perfect and maintain the validity,  effectiveness,  and priority of the Liens
intended to be created by this Agreement or any other Loan Document.

         SECTION 4.3. Third Parties in Possession of Collateral.  Except for the
Collateral  Exceptions,  Debtor shall not permit any third Person (including any
landlord,  warehouseman,  bailee,  agent,  consignee,  or processor) to hold any
Collateral,  unless Debtor  shall:  (i) notify such third Person of the security
interests  created hereby;  (ii) deliver to Secured Party copies of waivers,  in
form approved by Secured Party, delivered to such Person, together with a letter
{OR498808;3}                          4
<PAGE>


from Debtor to such Person requesting such Person to subordinate any existing or
future Lien of said Person on the Collateral to the security interest of Secured
Party for the  benefit of Lenders  in the  Collateral;  and (iii) take all other
actions Secured Party  reasonably deems necessary to perfect and protect its and
Debtor's interests in such Collateral pursuant to the requirements of the UCC of
the  applicable   jurisdiction  where  such  landlord,   warehouseman,   bailee,
consignee,  agent,  processor,  or other third Person is located  (including the
filing of financing statements in the proper jurisdictions naming the applicable
third  Person as debtor  and  Debtor as secured  party and  notifying  the third
Person's  secured  lenders of Debtor's  interest in such  Collateral  before the
third Person receives possession of the Collateral in question).

         SECTION  4.4. Corporate  Changes.  Debtor  shall  not  change its name,
identity,  corporate structure,  its United States tax identification  number or
state  organizational  identification  number in any manner  that might make any
financing statement filed in connection with this Agreement seriously misleading
unless  Debtor  shall have given  Secured  Party not less than  thirty (30) days
prior written notice thereof and shall have taken all action  reasonably  deemed
necessary or desirable by Secured Party to protect its Liens with the perfection
and priority thereof required by the Loan Documents. Debtor shall not change its
principal place of business, chief executive office, or the place where it keeps
its books and  records  unless it shall have given  Secured  Party not less than
thirty (30) days prior  written  notice  thereof and shall have taken all action
deemed necessary or desirable by Secured Party to cause its security interest in
the Collateral to be perfected with the priority required by the Loan Documents.

         SECTION  4.5. Inventory.  Debtor  shall  keep the  Inventory  at (or in
transit  to) any of the  locations  specified  on  Schedule  3.1 for such Debtor
hereto or, upon not less than thirty (30) days prior  written  notice to Secured
Party,  at such  other  places  within the  United  States of America  where all
actions required to perfect Secured Party's security interest in such Collateral
with the priority required by the Loan Documents shall have been taken.

         SECTION 4.6.  Warehouse Receipts Non-Negotiable.  Debtor agrees that if
any warehouse  receipt or receipt in the nature of a warehouse receipt is issued
in respect of any portion of the Collateral,  such warehouse  receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
673.1041  of the UCC)  unless  such  warehouse  receipt or receipt in the nature
thereof is delivered to Secured Party.

         SECTION  4.7  Maintenance  and Use of  Collateral.  Debtor  does hereby
further covenant with Secured Party as follows:

               (a) That  the  Collateral  will  be   used  solely  for  business
         purposes.

               (b) That Debtor will defend the Collateral against the claims and
         demands  of all persons at any time  claiming  the same or any interest
         therein.

               (c) That  Debtor has not and shall not grant to any Person  other
         than Secured Party a security  interest or any  other interest or claim
         in the Collateral, except for the Collateral Exceptions.

               (d) That  there is not now and will not be filed in the future in
         any jurisdiction any financing statement listing any  Person other than
         Secured Party as a secured party covering any or all of the  Collateral
         except for the Collateral Exceptions.

               (e) That, except for the Collateral  Exceptions,  Debtor will not
         permit any  Liens or  security  interests  other than  Secured  Party's
         security interest,  to attach to any of the Collateral,  permit  any of
         the Collateral  to be levied upon under legal process,  permit anything
         to be done that may impair the value of  any of the  Collateral  or the
         security  intended  to be afforded  by  this  Agreement,  or permit the
         Collateral  to  be  or  to  become  a  fixture  (and  it  is  expressly
         covenanted,  warranted  and agreed  that the  Collateral,  and any part
         thereof,  whether  affixed to any  realty or not,  shall  be and remain
         personal  property),  or to  become  an  accession  to  other  goods or
         property.


{OR498808;3}                          5
<PAGE>


               (f) That  Debtor  will not  sell,  transfer,  lease or  otherwise
         dispose of any of the  Collateral or any interest  therein or  offer to
         do so without the prior written  consent  of Secured  Party;  provided,
         however, that as long as the Secured Party  has not accelerated the due
         date of the Obligations following  an Event of Default, it may sell its
         Inventory in the normal and ordinary course of its business.

               (g) That except for matters not  material to Debtor,  Debtor will
         not  use  the  Collateral  or  permit  the  Collateral  to  be  used in
         violation of any statute or ordinance and  Debtor shall further  comply
         with all statutes, regulations and ordinances applicable  to the use or
         its ownership of the Collateral and to its business.

               (h)  That  Debtor  will  pay  promptly  when  due all  taxes  and
         assessments  upon the  Collateral  or for its use  or operation or upon
         any note or notes or other writing evidencing the  Obligations,  or any
         of  them,  or  will  contest  such  taxes  and  assessments  by  proper
         proceeding in good faith.

               (i) That during the term of this Agreement, Debtor shall cause to
         be maintained on the Collateral  insurance in an amount at least  equal
         to the amount  of the  Obligations  and shall cause Secured Party to be
         noted as  a loss  payee on said  policies.  At the  request  of Secured
         Party, Debtor shall promptly deliver to  Secured Party said policies of
         insurance along with certificates  reflecting  Secured Party  as a loss
         payee and  providing  for  not less  than  thirty  (30) days  notice to
         Secured Party prior to expiration  or cancellation of same, and Secured
         Party shall be entitled to retain in its  possession  said policies  or
         certificates.

               (j) That Debtor will maintain the  Collateral  in good  condition
         and repair in the ordinary  course of its business  and shall undertake
         and  perform  such other  functions  as may be  necessary  to  keep and
         maintain the Collateral in good condition and repair.


                                    ARTICLE V

                             RIGHTS OF SECURED PARTY
                             -----------------------

         SECTION 5.1. Power of Attorney.  TO THE EXTENT  PERMITTED BY APPLICABLE
LAW, DEBTOR HEREBY  IRREVOCABLY  CONSTITUTES AND APPOINTS  SECURED PARTY AND ANY
OFFICER  OR AGENT  THEREOF,  WITH FULL  POWER OF  SUBSTITUTION,  AS ITS TRUE AND
LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF
SUCH DEBTOR OR IN ITS OWN NAME,  TO TAKE,  AFTER THE  OCCURRENCE  AND DURING THE
CONTINUANCE  OF AN EVENT OF DEFAULT,  ANY AND ALL ACTIONS AND TO EXECUTE ANY AND
ALL DOCUMENTS AND  INSTRUMENTS  WHICH SECURED PARTY AT ANY TIME AND FROM TIME TO
TIME DEEMS  NECESSARY TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND,  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING,  DEBTOR HEREBY GIVES SECURED PARTY THE
POWER  AND  RIGHT  ON  BEHALF  OF  DEBTOR  AND IN ITS OWN  NAME TO DO ANY OF THE
FOLLOWING  AFTER  THE  OCCURRENCE  AND  DURING  THE  CONTINUANCE  OF AN EVENT OF
DEFAULT, WITHOUT NOTICE TO, OR THE CONSENT OF, DEBTOR:

               (a) to  demand,  sue for,  collect,  or  receive,  in the name of
         Debtor or in Secured  Party's  own name,  any money or  property at any
         time payable or receivable on account of or in  exchange for any of the
         Collateral   and,  in  connection  therewith,  endorse  checks,  notes,
         drafts,  acceptances,  money orders,  documents  of title, or any other
         instruments  for the  payment  of money  under  the  Collateral  or any
         policy of insurance;

               (b) to pay or  discharge  taxes,  Liens,  or  other  encumbrances
         levied or placed on or threatened against the Collateral;

               (c) to notify post office  authorities  to change the address for
         delivery of Debtor's  mail to an address  designated  by  Secured Party
         and to receive, open, and dispose of mail addressed to Debtor;


{OR498808;3}                          6
<PAGE>


               (d) (i) to direct  account  debtors and any other parties  liable
         for any payment under any of the Collateral  to make payment of any and
         all monies due and to become due  thereunder  directly to Secured Party
         or as Secured Party shall  direct  (Debtor  agrees that if any Proceeds
         of any  Collateral  (including  payments  made in  respect of Accounts)
         shall be received by Debtor while a Default  exists,  such Debtor shall
         promptly  deliver such  Proceeds to  Secured  Party with any  necessary
         endorsements,  and until such Proceeds  are delivered to Secured Party,
         such Proceeds shall be held in trust by  such Debtor for the benefit of
         Secured  Party  and shall not be  commingled  with  any other  funds or
         property of such Debtor);  (ii) to receive  payment  of and receipt for
         any and all monies,  claims and other amounts due  and to become due at
         any time in respect of or arising out of  any Collateral; (iii) to sign
         and endorse any invoices,  freight  or express bills,  bills of lading,
         storage or  warehouse  receipts,  drafts against debtors,  assignments,
         proxies, stock powers,  verifications,  and  notices in connection with
         accounts  and other  documents  relating  to  the  Collateral;  (iv) to
         commence and  prosecute any suit,  action,  or  proceeding at law or in
         equity  in   any  court  of  competent   jurisdiction  to  collect  the
         Collateral  or  any part  thereof  and to  enforce  any other  right in
         respect  of  any  Collateral;  (v)  to  defend  any  suit,  action,  or
         proceeding  brought against such Debtor with respect to any Collateral;
         (vi) to  settle,  compromise, or adjust any suit, action, or proceeding
         described  above and, in connection therewith,  to give such discharges
         or releases as  Secured Party may deem  appropriate;  (vii) to exchange
         any  of  the   Collateral   for  other   property   upon   any  merger,
         consolidation, reorganization, recapitalization, or other  readjustment
         of the issuer thereof and, in connection therewith, deposit  any of the
         Collateral with any committee,  depositary, transfer  Agent, registrar,
         or other  designated  agency  upon  such  terms  as  Secured  Party may
         determine;  (viii) to add or release any  guarantor,  indorser, surety,
         or other party to any  of the  Collateral;  (ix) to renew,  extend,  or
         otherwise  change  the terms and  conditions of any of the  Collateral;
         (x) to  make,  settle,  compromise,  or  adjust  any  claims  under  or
         pertaining to any of the Collateral (including claims under any  policy
         of insurance);  and (xi) to sell, transfer,  pledge,  convey, make  any
         agreement  with  respect  to,  or  otherwise  deal  with   any  of  the
         Collateral as fully and  completely  as though  Secured  Party were the
         absolute owner thereof for all purposes, and to do, at Secured  Party's
         option and such Debtor's  expense,  at any time, or from time  to time,
         all acts and things which  Secured  Party deems  necessary to  protect,
         preserve, maintain, or realize upon the Collateral and  Secured Party's
         security interest therein.

         THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE  UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11
HEREOF.  Secured  Party  shall be  under no duty to  exercise  or  withhold  the
exercise of any of the rights,  powers,  privileges,  and options  expressly  or
implicitly  granted to Secured Party in this Agreement,  and shall not be liable
for any failure to do so or any delay in doing so. Neither Secured Party nor any
Person  designated  by Secured  Party shall be liable for any act or omission or
for any error of judgment or any mistake of fact or law,  except any of the same
resulting from its or their gross negligence or willful  misconduct.  This power
of attorney is conferred on Secured Party solely to protect, preserve, maintain,
and realize upon its security  interest in the  Collateral.  Secured Party shall
not be responsible  for any decline in the value of the Collateral and shall not
be required to take any steps to preserve  rights  against  prior  parties or to
protect, preserve, or maintain any Lien given to secure the Collateral.

         SECTION 5.2. Assignment by Secured Party. Secured Party and each Lender
may at any time assign or otherwise  transfer all or any portion of their rights
and  obligations  under this Agreement and the other Loan Documents  (including,
without  limitation,  the  Obligations)  to any  other  Person,  to  the  extent
permitted by, and upon the conditions  contained in, the Credit  Agreement,  and
such Person shall thereupon  become vested with all the benefits thereof granted
to Secured Party or the Lenders, as applicable, herein or otherwise.

         SECTION 5.3. Possession;  Reasonable Care. Secured Party may, from time
to time,  in its sole  discretion,  appoint one or more agents to hold  physical
custody,  for the account of Secured Party, of any or all of the Collateral that
Secured  Party has a right to  possess.  Secured  Party  shall be deemed to have
exercised  reasonable care in the custody and  preservation of the Collateral in
its possession if the Collateral is accorded  treatment  substantially  equal to
that which  Secured Party accords its own  property,  it being  understood  that
Secured Party shall not have any  responsibility  for (a) ascertaining or taking
action with respect to calls, conversions,  exchanges,  maturities,  tenders, or
other matters relative to any Collateral, whether or not Secured Party has or is
deemed to have knowledge of such matters,  or (b) taking any necessary  steps to
preserve rights against any parties with respect to any Collateral.
{OR498808;3}                          7
<PAGE>


                                   ARTICLE VI

                                     DEFAULT
                                     -------

         SECTION 6.1 Events of  Default.  The  occurrence  of one or more of the
following  events shall  constitute a default under this  Agreement  ("Events of
Default"):

               (a) The  occurrence  of an  Event of  Default  under  the  Credit
         Agreement.

               (b) The failure of Debtor to keep, observe or perform any term or
         condition of this Agreement required hereunder to be kept, observed  or
         performed by Debtor which continues  beyond any grace periods  provided
         herein.

         SECTION 6.2. Rights and  Remedies.  If an Event of Default  shall  have
occurred  and be  continuing, Secured Party shall have  the following rights and
remedies:

               (a) In  addition  to all other  rights  and  remedies  granted to
         Secured  Party in this  Agreement or in any  other Loan  Document or by
         applicable  law,  Secured  Party  shall  have  all of  the  rights  and
         remedies  of a  secured  party  under the UCC  (whether  or not the UCC
         applies to the affected  Collateral).  Without  limiting the generality
         of the  foregoing,  Secured Party  may (i) without  demand or notice to
         Debtor or any other person,  collect,  receive,  or take  possession of
         the Collateral or any part thereof and for that purpose  Secured  Party
         may enter upon any  premises  on  which the  Collateral  is located and
         remove the Collateral  therefrom  or render it inoperable,  and/or (ii)
         sell,  lease,  or  otherwise  dispose  of the  Collateral,  or any part
         thereof, in one or more parcels at  public or private sale or sales, at
         Secured  Party's  offices or elsewhere,  for  cash,  on credit,  or for
         future  delivery,  and upon such  other terms as Secured Party may deem
         commercially  reasonable  or  otherwise  as may  be  permitted  by law.
         Secured  Party shall have the right at any  public sale or sales,  and,
         to the extent  permitted  by  applicable  law, at any  private  sale or
         sales,  to bid (which bid may be, in whole or in part,  in  the form of
         cancellation of indebtedness) and  become a purchaser of the Collateral
         or any part thereof free of any  right or equity of  redemption  on the
         part  of  Debtor,  which  right  or  equity  of  redemption  is  hereby
         expressly  waived  and  released  by such  Debtor.  Upon the request of
         Secured  Party,  such Debtor shall assemble  the Collateral and make it
         available to Secured  Party at any  place  designated  by Secured Party
         that is reasonably convenient to  such Debtor and Secured Party. Debtor
         agrees that  Secured  Party shall not be  obligated  to give  more than
         five (5) days prior  written notice of the time and place of any public
         sale or of  the time after  which any  private  sale may take place and
         that such notice  shall constitute  reasonable  notice of such matters.
         Secured Party shall not  be obligated to make any sale of Collateral if
         it shall  determine not to do so, regardless of the fact that notice of
         sale of  Collateral  may have been given.  Secured  Party may,  without
         notice or  publication, adjourn any public or private sale or cause the
         same to be adjourned  from time to time by announcement at the time and
         place fixed  for sale, and such sale may,  without further  notice,  be
         made at the time  and place to which the same was so adjourned.  Debtor
         shall be liable for  all  reasonable  expenses  of  retaking,  holding,
         preparing for sale, or the like, and  all reasonable  attorneys'  fees,
         legal expenses, and other costs and expenses incurred by Secured  Party
         in  connection   with  the  collection  of  the  Obligations  and   the
         enforcement  of Secured  Party's rights  under this  Agreement.  Debtor
         shall remain liable for any  deficiency if  the Proceeds of any sale or
         other  disposition of the Collateral  applied  to the  Obligations  are
         insufficient to pay the  Obligations in full.  Secured  Party may apply
         the  Collateral  against  the  Obligations  as  provided in  the Credit
         Agreement.  Debtor  waives  all rights of  marshaling,  valuation,  and
         appraisal in respect of  the Collateral. Any cash held by Secured Party
         as  Collateral  and all  cash  proceeds  received  by Secured  Party in
         respect of any  sale of, collection from, or other realization upon all
         or any part of  the Collateral may, in the discretion of Secured Party,
         be held by  Secured  Party as  collateral  for, and then or at any time
         thereafter  applied  in whole or in part by Secured Party against,  the
         Obligations  in the  order  permitted  by  the  Credit  Agreement.  Any
         surplus of such cash or cash proceeds  and interest accrued thereon, if
         any, held by Secured Party and  remaining  after payment in full of all
         the Obligations shall be promptly  paid over to Debtor or to whomsoever
         may be  lawfully  entitled  to  receive  such
{OR498808;3}                          8
<PAGE>


         surplus;  provided  that Secured  Party shall  have  no  obligation  to
         invest  or  otherwise  pay  interest  on  any  amounts  held  by  it in
         connection  with or pursuant to this Agreement.

               (b) Secured Party may cause any or all of the Collateral  held by
         it  to be  transferred  into the name of  Secured  Party or the name or
         names of Secured Party's nominee or nominees.

               (c) Secured Party may exercise any and all rights and remedies of
         Debtor  under or in  respect  of  the  Collateral,  including,  without
         limitation,  any and  all  rights of  Debtor  to  demand  or  otherwise
         require  payment of  any amount under,  or performance of any provision
         of, any of the Collateral.

               (d) Secured Party may collect or receive all money or property at
         any time payable or receivable on account of or in exchange  for any of
         the Collateral, but shall be under no obligation to do so.

               (e) On any  sale  of the  Collateral,  Secured  Party  is  hereby
         authorized  to comply with any  limitation or  restriction  with  which
         compliance is necessary, in the opinion of Secured Party's  counsel, in
         order to avoid any violation of  applicable  law or in  order to obtain
         any required approval of the purchaser or  purchasers by any applicable
         Governmental Authority.

         SECTION 6.3. Private Sales. Debtor recognizes that Secured Party may be
unable  to  effect a public  sale of any or all of the  Collateral  by reason of
certain  prohibitions  contained  in the laws of any  jurisdiction  outside  the
United  States or in the  Securities  Act of 1933,  as amended from time to time
(the  "Securities  Act")  and  applicable  state  securities  laws,  but  may be
compelled to resort to one or more private sales  thereof to a restricted  group
of purchasers who will be obliged to agree,  among other things, to acquire such
Collateral  for  their own  account  for  investment  and not with a view to the
distribution or resale  thereof.  Debtor  acknowledges  and agrees that any such
private  sale may result in prices and other terms less  favorable to the seller
than if such sale were a public sale and,  notwithstanding  such  circumstances,
agrees that any such  private  sale shall,  to the extent  permitted  by law, be
deemed to have been made in a commercially  reasonable  manner.  Neither Secured
Party nor the Lenders  shall be under any  obligation  to delay a sale of any of
the  Collateral  for the period of time  necessary  to permit the issuer of such
securities  to  register  such  securities  under  the laws of any  jurisdiction
outside the United  States,  under the  Securities  Act, or under any applicable
state  securities laws, even if such issuer would agree to do so. Debtor further
agrees to do or cause to be done, to the extent that such Debtor may do so under
applicable law, all such other reasonable acts and things as may be necessary to
make such  sales or resales of any  portion or all of the  Collateral  valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions,  decrees, or awards of any and all courts,  arbitrators,  or
governmental  instrumentalities,  domestic or foreign,  having jurisdiction over
any such sale or sales, all at such Debtor's expense.


                                   ARTICLE VII

                                  MISCELLANEOUS
                                  -------------

         SECTION 7.1. No Waiver;  Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in  exercising,  and no course of dealing
with respect to, any right,  power,  or  privilege  under this  Agreement  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
right,  power, or privilege  under this Agreement  preclude any other or further
exercise  thereof or the exercise of any other right,  power, or privilege.  The
rights and  remedies  provided  for in this  Agreement  are  cumulative  and not
exclusive of any rights and remedies provided by law.

         SECTION 7.2. Successors and Assigns.  This  Agreement  shall be binding
upon and inure to the benefit of Debtor and Secured  Party and their  respective
successors  and  assigns,  except that no Debtor may assign any of its rights or
obligations  under this Agreement  without the prior written  consent of Secured
Party,  and Secured Party may not appoint a successor as Secured Party except in
accordance with the Credit Agreement.

{OR498808;3}                          9
<PAGE>


         SECTION 7.3. Amendment;  Entire Agreement. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS  EMBODY THE FINAL,  ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDES  ANY AND ALL  PRIOR  COMMITMENTS,  AGREEMENTS,  REPRESENTATIONS,  AND
UNDERSTANDINGS,  WHETHER WRITTEN OR ORAL,  RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,  OR
SUBSEQUENT ORAL  AGREEMENTS OR DISCUSSIONS OF THE PARTIES  HERETO.  THERE ARE NO
UNWRITTEN  ORAL  AGREEMENTS  AMONG THE PARTIES  HERETO.  THE  PROVISIONS OF THIS
AGREEMENT MAY BE AMENDED OR WAIVED ONLY BY AN  INSTRUMENT  IN WRITING  SIGNED BY
THE PARTIES HERETO.

         SECTION 7.4. Notices.  All notices  and other  communications  provided
for in  this  Agreement  shall  be given  or made in accordance  with the Credit
Agreement.

         SECTION 7.5. Governing  Law. THIS AGREEMENT  SHALL BE  GOVERNED BY, AND
CONSTRUED IN ACCORDANCE  WITH, THE LAWS  OF THE STATE OF  FLORIDA AND APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.

         SECTION 7.6. Headings.  The  headings, captions, and arrangements  used
in   this   Agreement  are  for  convenience  only  and  shall  not  affect  the
interpretation of this Agreement.

         SECTION 7.7. Survival   of   Representations   and    Warranties.   All
representations  and  warranties  made in this  Agreement or in any  certificate
delivered  pursuant  hereto  shall  survive the  execution  and delivery of this
Agreement,   and  no   investigation   by  Secured   Party   shall   affect  the
representations and warranties or the right of Secured Party to rely upon them.

         SECTION 7.8. Counterparts.  This  Agreement  may  be  executed  in  any
number of  counterparts,  each of  which shall be deemed an original, but all of
which together shall constitute one and the same agreement.

         SECTION 7.9. Waiver of Bond.  In the event  Secured Party seeks to take
possession of any or all of the  Collateral by judicial  process,  Debtor hereby
irrevocably  waives any bonds and any surety or security  relating  thereto that
may be required by applicable law as an incident to such possession,  and waives
any demand for possession prior to the commencement of any such suit or action.

         SECTION 7.10. Severability.  Any  provision of this Agreement  which is
determined   by  a  court  of  competent   jurisdiction   to  be  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining   provisions  of  this   Agreement,   and  any  such   prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

         SECTION 7.11. Termination.  If  all of the Obligations  shall have been
paid and performed in full and all  Commitments of Secured Party and the Lenders
shall have expired or terminated,  Secured Party shall, upon the written request
of Debtor,  execute and  deliver to Debtor a proper  instrument  or  instruments
acknowledging  the release and termination of the security  interests created by
this  Agreement,  and shall duly  assign and deliver to Debtor,  as  applicable,
(without  recourse  and  without any  representation  or  warranty)  such of the
Collateral as may be in the  possession of Secured Party and has not  previously
been sold or  otherwise  applied  pursuant  to this  Agreement;  notwithstanding
anything to the  contrary  contained  in this  Agreement,  if the payment of any
amount of the Obligations is rescinded,  voided or must otherwise be refunded by
Secured Party or any Lender upon the insolvency, bankruptcy or reorganization of
the Debtor or any other Loan Party or otherwise for any reason whatsoever,  then
the  security   interests  created  by  this  Agreement  will  be  automatically
reinstated and become automatically  effective and in full force and effect, all
to the extent that and as though such payment so rescinded,  voided or otherwise
refunded had never been made and such release and  termination  of such security
interest had never been given.


{OR498808;3}                          10
<PAGE>


         SECTION 7.12. Filing Fees and Documentary Stamp Taxes. Debtor shall pay
all costs of filing any  financing  statement  and all other costs of perfecting
the security  interest  granted  hereunder.  Additionally,  Debtor shall pay all
documentary stamps, intangible tax, as well as all other taxes and penalties due
on any notes  evidencing  any of the  Obligations  and Debtor  further agrees to
indemnify  and hold  Secured  Party  harmless  from and against any and all such
documentary stamps, intangible taxes and penalties.

         SECTION 7.13.  WAIVER OF JURY TRIAL. EACH PARTY HERETO HERBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY  LITIGATION  DIRECTLY  OR  INDIRECTLY  ARISING OUT OF,
UNDER OR IN CONNECTION  WITH THIS  AGREEMENT OR THE OTHER LOAN  DOCUMENTS.  EACH
PARTY  HERETO (A)  CERTIFIES  THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF  LITIGATION,  SEEK TO ENFORCE THE FOREGOING  WAIVER AND (B)
ACKNOWLEDGES  THAT IT AND THE OTHER  PARTIES  HERETO HAVE BEEN  INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.13.



                        [Signature follows on next page]










{OR498808;3}                          11
<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first written above.

                                              DEBTOR:

                                              STEIN MART, INC.


                                              By: /s/ James G. Delfs
                                                  ------------------------------
                                                  Name:  James G. Delfs
                                                  Title: Chief Financial Officer




                                              SECURED PARTY:

                                              SUNTRUST BANK, as Administrative
                                              Agent


                                              By: /s/ C. William Buchholz
                                                  ------------------------------
                                                  Name:  C. William Buchholz
                                                  Title: Director










{OR498808;3}                          S-1

</TEXT>
</DOCUMENT>
