EXHIBIT 10.1

as of June 16, 2008

Movado Group, Inc.
650 From Road,
Paramus, NJ 07652

Dear Sir or Madam:

We are pleased to advise you that Bank of America, N. A., successor by merger to
Fleet National Bank (the “Bank”) hereby agrees to consider requests from Movado
Group, Inc. (the “Company”) from time to time, for short-term loans (“Loans”)
and documentary letters of credit for the importation of merchandise inventory
(“Letters of Credit”).  Any extension of credit hereunder (whether a Loan or a
Letter of Credit) shall be made available at the sole discretion of the Bank but
in any event subject to the following: (a) the Bank shall have determined that
money market conditions are favorable for it to acquire loan assets, (b) the
Bank shall continue to be satisfied with the Borrower’s business, financial
condition and prospects and the condition and prospects of the industry in which
the Borrower is engaged, (c) the Bank shall have received Company’s most current
quarterly and annual financial statements and any other financial information
regarding the Company which the Bank shall reasonably request from time to time,
and (d) the Company shall have maintained and be maintaining a satisfactory
relationship with the Bank and:

Loan and Letters of Credit Requests:  Each request for a Loan and/or Letter of
Credit will be, at the Bank’s option, reviewed by the Bank and an independent
credit analysis and assessment will be made each time a request is received.  In
the event that the Bank agrees to lend pursuant to any such request by the
Company, any such Loan shall be evidenced by the promissory note enclosed with
this letter (the “Note”) and be subject to the conditions therein contained and
in any other documentation in form and substance satisfactory to the Bank.  The
Bank may respond to any request for a Loan or Letter of Credit for a stated
amount with a Loan or Letter of Credit for a different amount, date or maturity,
or may decline to respond entirely.

Maximum Amount of Loans and Letters of Credit: The aggregate amount of Loans and
Letters of Credit at any time outstanding shall not exceed $20,000,000 and the
maximum amount of Letters of Credit at any time outstanding shall not exceed
$2,000,000.

Expiration and Maturity Date: Requests for extensions of credit must be made on
or before June 16, 2009.  All Loans will be payable in full on June 16,
2009.  All Letters of Credit shall expire no later than 180 days from issuance.

Interest Rate: Loans shall bear interest, at the Company’s election, at a rate
per annum equal to either (i) a fluctuating rate equal to the Prime Rate, or
(ii) such other fixed rate as may be agreed upon between the Company and the
Bank for an interest period which is also then agreed upon (a Loan bearing
interest at this rate is sometimes called an “Agreed Rate Loan”).  The term
“Prime Rate” shall be as defined in the Note.  Interest shall be payable monthly
in arrears based on a 360-day year and, for Agreed Rate Loans, on the last day
of the applicable Interest Period.

Letter of Credit Fees:  Letters of Credit shall be issued at the Bank’s standard
fees and charges in effect from time to time therefor.

Additional provisions:

All obligations of the Company owing to the Bank shall continue to be
unconditionally guaranteed by all active domestic subsidiaries of the Company
(collectively, the “Guarantors”) pursuant to the Bank’s standard form of
guarantee (collectively, the “Guarantees”).

The Company shall continue to provide the following to the Bank:

-
The consolidated and consolidating balance sheet for the Company and its
subsidiaries, consolidated and consolidating statement of income and
consolidated statement of cash flow: (i) audited and certified without
qualification by accountants satisfactory to the Bank, within 120 days of fiscal
year end and (ii) certified by the Company’s chief financial officer, within 75
days of the last day of each fiscal quarter.

-           Notices of defaults under any credit facilities or financial
obligations of Borrower in excess of $5,000,000.

-
Such other statements and reports as shall be reasonably requested by the Bank.

This letter agreement replaces, supersedes, amends and restates in its entirety
the letter agreement from the Bank to the Company dated June 15, 2007 and all
previous letters on this subject matter.

If the terms of this letter are acceptable to you, please indicate your
acceptance by signing and returning the enclosed copy of this letter and
documentation to the Bank on or before June 16, 2008.  This letter shall be
unenforceable against the Bank unless so signed and returned on or before such
date.

 

 
 

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Please contact us if you have any questions.  We look forward to continuing our
relationship.

Very truly yours,

BANK OF AMERICA, N. A.
successor by merger to Fleet National Bank

By:     /s/ Rich Williams _
                        Name:  Rich Williams
                        Title:    Credit Products Officer

ACCEPTED AND AGREED
ON JUNE 16, 2008

MOVADO GROUP, INC.

By:     /s/ John C. Burns                                                      
Name:   John C.
Burns                                                                
Title:      VP, Treasurer                                           

Guarantor signatures on next page

 

 
 

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Each of the guarantors indicated below hereby consents to this letter agreement
and reaffirms its continuing liability to the Bank under its respective
guarantees dated as of June 26, 2003, in respect of the above letter agreement
and all the documents, instruments and agreements executed pursuant thereto or
in connection therewith, without offset, defense or counterclaim (any such
offset, defense or counterclaim as may exist being hereby irrevocably waived by
each such guarantor).

MOVADO RETAIL GROUP, INC.,
a New Jersey Corporation

By:     /s/ Timothy F. Michno
Name: Timothy F. Michno
Title:   General Counsel

MOVADO LLC,
a Delaware Limited Liability Company

By:     /s/ Timothy F. Michno
Name: Timothy F. Michno
Title:   General Counsel

 

 
 

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BANK OF AMERICA, N.A.
AMENDED AND RESTATED
PROMISSORY NOTE

$20,000,000.00  As of June 16, 2008

No later than June 16, 2009 (the “Maturity Date”), for value received, MOVADO
GROUP, INC., having its principal office at 650 From Road, Paramus, New Jersey
07652 (the “Borrower”), promises to pay to the order of BANK OF AMERICA, N.A.,
successor by merger to Fleet National Bank, having an office at 1185 Avenue of
the Americas, New York, New York, 10036 (the “Bank”), at such office of the Bank
or at such other place as the holder hereof may from time to time appoint in
writing, in lawful money of the United States of America in immediately
available funds, the principal sum of TWENTY MILLION and 00/100 Dollars
($20,000,000.00) Dollars or such lesser amount as may then be the aggregate
unpaid principal balance of all loans made by the Bank to the Borrower hereunder
(each a “Loan” and collectively the “Loans”) as shown on the books and records
of the Bank.  The Borrower also promises to pay interest (computed on the basis
of a 360 day year for actual days elapsed) at said office in like money on the
unpaid principal amount of each Loan from time to time outstanding at a rate per
annum, to be elected by the Borrower at the time each Loan is made, equal to
either (i) a fluctuating rate equal to the Prime Rate, which rate will change
when and as the Prime Rate changes and which such changes in the rate of
interest resulting from changes in the Prime Rate shall take effect immediately
without notice or demand of any kind (a Loan bearing interest at this rate is
sometimes hereinafter called a “Prime Loan”), or (ii) a fixed rate as may be
agreed upon between the Borrower and the Bank (an “Agreed Rate”) for an Interest
Period which is also then agreed upon (a Loan bearing interest at this rate is
sometimes hereinafter called an “Agreed Rate Loan”); provided, however, that (a)
no Interest Period with respect to an Agreed Rate Loan shall extend beyond the
Maturity Date, (b) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day and (c) if prior to the end of any such Interest Period
of an Agreed Rate Loan the Borrower and the Bank fail to agree upon a new
Interest Period therefor so as to maintain such Loan as an Agreed Rate Loan
within the pertinent time set forth in Section 1 hereof, such Agreed Rate Loan
shall automatically be converted into a Prime Loan at the end of such Interest
Period and shall be maintained as such until a new Interest Period therefor is
agreed upon.  Interest on each Loan shall be payable monthly on the first day of
each month commencing the first such day to occur after a Loan is made hereunder
and, together with unpaid principal, on the Maturity Date.  Interest on Agreed
Rate Loans shall also be payable on the last day of each Interest Period
applicable thereto. The Borrower further agrees that upon and during the
continuance of an Event of Default and/or after any stated or any accelerated
maturity of Loans hereunder, all Loans shall bear interest (computed daily) at,
(i) with respect to Agreed Rate Loans, a rate equal to the greater of 2% per
annum in excess of the rate then applicable to Agreed Rate Loans and 2% per
annum in excess of the rate then applicable to Prime Loans, payable no later
than the Maturity Date, and (ii) with respect to Prime Loans, a rate equal to 2%
per annum in excess of the rate then applicable to Prime Loans, payable no later
than the Maturity Date.  Furthermore, if the entire amount of any principal
and/or interest required to be paid pursuant to this Note is not paid in full
within ten (10) days after the same is due, the Borrower shall further pay to
the Bank a late fee equal to five percent (5%) of the required payment.  In no
event shall interest payable hereunder be in excess of the maximum rate of
interest permitted under applicable law. If any payment to be so made hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, to the extent permitted by
applicable law, interest thereon shall be payable at the then applicable rate
during such extension.

All payments made in connection with this Note shall be in lawful money of the
United States in immediately available funds without counterclaim or setoff and
free and clear of and without any deduction or withholding for, any taxes or
other payments. All such payments shall be applied first to the payment of all
fees, expenses and other amounts due to the Bank (excluding principal and
interest), then to accrued interest, and the balance on account of outstanding
principal; provided, however, that after the occurrence of and during the
continuance of an Event of Default, payments will be applied to the obligations
of the Borrower to the Bank as the Bank determines in its sole discretion. The
Borrower hereby expressly authorizes the Bank to record on the attached schedule
the amount and date of each Loan, the rate of interest thereon, Interest Period
thereof and the date and amount of each payment of principal.  All such
notations shall be presumptive as to the correctness thereof; provided, however,
the failure of the Bank to make any such notation shall not limit or otherwise
affect the obligations of the Borrower under this Note.

In consideration of the granting of the Loans evidenced by this Note, the
Borrower hereby agrees as follows:

1. Loan Requests. Requests for Prime Loans and Agreed Rate Loans may be made up
until 1 p.m. on the date the Loan is to be made.  Any request for a Loan must be
written.  The Bank shall have no obligation to make any Loan hereunder.

2. Prepayment.  The Borrower may prepay any Prime Loan at any time in whole or
in part without premium or penalty.  Each such prepayment shall be made together
with interest accrued thereon to and including the date of prepayment.  The
Borrower may prepay an Agreed Rate Loan only upon at least three (3) Business
Days prior written notice to the Bank (which notice shall be irrevocable) and
any such prepayment shall occur only on the last day of the Interest Period for
such Agreed Rate Loan.

3. Indemnity; Yield Protection. The Borrower shall pay to the Bank, upon request
of the Bank, such amount or amounts as shall be sufficient (in the reasonable
opinion of the Bank) to compensate it for any loss, cost, or reasonable expense
incurred as a result of: (i) any payment of an Agreed Rate Loan on a date other
than the last day of the Interest Period for such Loan; (ii) any failure by
Borrower to borrow an Agreed Rate Loan on the date specified by Borrower’s
written notice; (iii) any failure of Borrower to pay an Agreed Rate Loan on the
date for payment specified in Borrower’s written notice.  Without limiting the
foregoing, Borrower shall pay to Bank a “yield maintenance fee” in an amount
computed as follows:  The current rate for United States Treasury securities
(bills on a discounted basis shall be converted to a bond equivalent) with a
maturity date closest to the term chosen pursuant to the Fixed Rate Election as
to which the prepayment is made, shall be subtracted from Cost of Funds in
effect at the time of prepayment.  If the result is zero or a negative number,
there shall be no yield maintenance fee.  If the result is a positive number,
then the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the term chosen pursuant to the
Fixed Rate Election as to which the prepayment is made.  Said amount shall be
reduced to present value calculated by using the above referenced United States
Treasury securities rate and the number of days remaining in the term chosen
pursuant to the Fixed Rate Election as to which prepayment is made.  The
resulting amount shall be the yield maintenance fee due to Bank upon the payment
of an Agreed Rate Loan.  Each reference in this paragraph to “Fixed Rate
Election” shall mean the election by Borrower of Loan to bear interest based on
an Agreed Rate.  If by reason of an Event of Default, the Bank elects to declare
the Loans and/or the Note to be immediately due and payable, then any yield
maintenance fee with respect to an Agreed Rate Loan shall become due and payable
in the same manner as though the Borrower has exercised such right of
prepayment.

For the purpose of this Section 3 the determination by the Bank of such losses
and reasonable expenses shall in the absence of manifest error, be conclusive if
made reasonably and in good faith.

4. Increased Costs.  If the Bank reasonably determines that the effect of any
applicable law or government regulation, guideline or order or the
interpretation thereof by any governmental authority charged with the
administration thereof (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or continuing Agreed Rate Loans hereunder or to reduce the
amount of any payment of principal or interest receivable by the Bank thereon,
then the Borrower will pay to the Bank such additional amounts as the Bank may
reasonably determine to be required to compensate the Bank for such additional
costs or reduction.  Any additional payment under this section will be computed
from the effective date at which such additional costs have to be borne by the
Bank.  A certificate as to any additional amounts payable pursuant to this
Section 4 setting forth the basis and method of determining such amounts shall
be conclusive, absent manifest error, as to the determination by the Bank set
forth therein if made reasonably and in good faith.  The Borrower shall pay any
amounts so certified to it by the Bank within 10 days of receipt of any such
certificate.

5. Warranties and Representations.  The Borrower represents and warrants
that:  a) it is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is qualified to do
business and is in good standing under the laws of every state where its failure
to so qualify would have a material and adverse effect on the business,
operations, property or other condition of the Borrower; b) the execution,
issuance and delivery of this Note by the Borrower are within its corporate
powers and have been duly authorized, and the Note is valid, binding and
enforceable in accordance with its terms, and is not in violation of law or of
the terms of the Borrower’s Certificate of Incorporation or By-Laws and does not
result in the breach of or constitute a default under any indenture, agreement
or undertaking to which the Borrower is a party or by which it or its property
may be bound or affected; c) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Borrower of
this Note, except those as have been obtained; d) the financial statements of
the Borrower heretofore furnished to the Bank are complete and correct in all
material respects and fairly represent the financial condition of the Borrower
and its subsidiaries as at the dates thereof and for the periods covered
thereby, which financial condition has not materially, adversely, changed since
the date of the most recently dated balance sheet heretofore furnished to the
Bank; e) no Event of Default (as hereinafter defined) has occurred and no event
has occurred which with the giving of notice or the lapse of time or both would
constitute an Event of Default; f) the Borrower shall not use any part of the
proceeds of any Loan to purchase or carry any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or to
extend credit to others for the purpose of purchasing or carrying any margin
stock; g) there is no pending or, to the knowledge of the Borrower, threatened
action or proceeding affecting the Borrower before any court, governmental
agency or arbitrator which, if determined adversely to the Borrower would have a
materially adverse effect on the financial condition or operations of the
Borrower except as described in the financial statements of the Borrower
heretofore furnished to the Bank; and h) on the occasion of the granting of each
Loan all representations and warranties contained herein shall be true and
correct and with the same force and effect as though such representations and
warranties had been made on and as of the date of the making of each such Loan.

6. Events of Default.  Upon the occurrence of any of the following specified
events of default (each an “Event of Default”): a) default in making any payment
of principal, interest, or any other sum payable under this Note when due; or b)
default by the Borrower or any Guarantor (i) of any other obligation hereunder
or (ii) in the due payment of any other obligation owing to the Bank under this
Note or c) default by Borrower or any Guarantor in the due payment of any other
indebtedness for borrowed money or default in the observance or performance of
any covenant or condition contained in any agreement or instrument evidencing,
securing, or relating to any such indebtedness, which causes or permits the
acceleration of the maturity thereof, provided that the aggregate amount of such
indebtedness shall be $5,000,000 or more; or d) any representation or warranty
made by the Borrower herein or in any certificate furnished by the Borrower in
connection with the Loans evidenced hereby or pursuant to the provisions hereof,
proves untrue in any material respect; or e) the Borrower or any Guarantor
becomes insolvent or bankrupt, is generally not paying its debts as they become
due, or makes an assignment for the benefit of creditors, or a trustee or
receiver is appointed for the Borrower or any Guarantor or for the greater part
of the properties of the Borrower or any Guarantor with the consent of the
Borrower or any such Guarantor, or if appointed without the consent of the
Borrower or any such Guarantor, such trustee or receiver is not discharged
within 30 days, or bankruptcy, reorganization, liquidation or similar
proceedings are instituted by or against the Borrower or any Guarantor under the
laws of any jurisdiction, and if instituted against the Borrower or any such
Guarantor are consented to by it or remain undismissed for 30 days, or a writ or
warrant of attachment or similar process shall be issued against a substantial
part of the property of the Borrower or any Guarantor not in the possession of
the Bank and same shall not be released or bonded within 30 days after levy; or
f) any garnishment, levy, writ or warrant of attachment or similar process shall
be issued and served against the Bank, which garnishment, levy, writ or warrant
of attachment or similar process relates to property of the Borrower or any
Guarantor in the possession of the Bank; or h) the Bank shall have determined,
in its reasonable discretion, that one or more conditions exist or events have
occurred which have resulted or may result in a material adverse change in the
business, properties or financial condition of the Borrower or any Guarantor as
determined in the reasonable discretion of the Bank or one or more other
conditions exist or events have occurred with respect to the Borrower or any
Guarantor which the Bank deems materially adverse; then, in any such event, and
at any time thereafter, if any Event of Default shall then be continuing, the
Bank may declare the principal and the accrued interest in respect of all Loans
under this Note to be, whereupon the Note shall become, immediately due and
payable without presentment, protest or other notice of any kind, all of which
are expressly waived by the Borrower.

7. Set off.  At any time, without demand or notice (any such notice being
expressly waived by the Borrower), the Bank may setoff any and all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the control of Bank of
America Corporation and its successors or assigns, or in transit to any of them,
or any part thereof and apply same to any of the Liabilities or obligations of
the Borrower or any Guarantor even though unmatured and regardless of the
adequacy of any other collateral securing the Liabilities.  ANY AND ALL RIGHTS
TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LIABILITIES, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER
OR ANY GUARANTOR ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  The
term “Liabilities” shall include this Note and obligations and liabilities of
the Borrower to the Bank under this Note, now or hereafter existing, arising
directly between the Borrower and the Bank or acquired by assignment,
conditionally or as collateral security by the Bank, absolute or contingent,
joint and/or several, secure or unsecured, due or not due, contractual or
tortious, liquidated or unliquidated, arising by operation of law or otherwise,
direct or indirect, including, but without limiting the generality of the
foregoing, indebtedness, obligations or liabilities to the Bank of the Borrower
as a member of any partnership, syndicate, association or other group, and
whether incurred by the Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise.

8. Definitions.  As used herein:

(a) “Business Day” means a day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required to
close under the laws of the State of New York and to the extent “Business Day”
is used in the context of any other specific city it shall mean any date on
which commercial banks are open for business in that city.

(b) “Cost of Funds” means the per annum rate of interest which the Bank is
required to pay, or is offering to pay, for wholesale liabilities, adjusted for
reserve requirements and such other requirements as may be imposed by federal,
state or local government and regulatory agencies, as reasonably determined by
the Bank.

(c) “Guarantors” shall mean all active domestic subsidiaries of the Borrower.

(d) “Interest Period” means that period selected by the Borrower, within the
limitations of the first paragraph of this Note, during which an Agreed Rate
Loan may bear interest at an Agreed Rate.

(e) “Loan Documents” means this Note, and each document, instrument or agreement
executed pursuant hereto or thereto or in connection herewith or therewith.

(f) “Prime Rate” means the variable per annum rate of interest so designated
from time to time by the Bank as its prime rate.  The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate being charged to
any customer.

9. Miscellaneous.

(a)           The Borrower shall pay on demand all reasonable expenses of the
Bank in connection with the preparation, administration, default, collection,
waiver or amendment of this Note or any of the other Loan Documents, and/or in
connection with Bank’s exercise, preservation or enforcement of any of its
rights, remedies or options hereunder and/or thereunder, including, without
limitation, fees of outside legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the Liabilities or any collateral therefor, and the amount of
all such expenses shall, until paid, bear interest at the rate applicable to
principal hereunder (including any default rate) and be an obligation secured by
any collateral.

(b)           No modification or waiver of any provision of this Note shall be
effective unless such modification or waiver shall be in writing and signed by a
duly authorized officer of the Bank, and the same shall then be effective only
for the period and on the conditions and for the specific instances specified in
such writing.  No failure or delay by the Bank in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any rights, power or privilege.

(c)           Borrower hereby waives presentment, notice of protest, notice of
dishonor, and any and all other notices or demands except as otherwise expressly
provided for herein.

(d)           This Note and the other Loan Documents shall be construed in
accordance with and governed by the laws of the State of New York (excluding the
laws applicable to conflicts or choice of law). The Borrower agrees that any
suit for the enforcement of this Note or any of the other Loan Documents may be
brought in the courts of the State of New York or any Federal court sitting
therein and consents to the nonexclusive jurisdiction of such court and service
of process in any such suit being made upon the Borrower by mail at the address
set forth in the first paragraph of this Note.  The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient forum.

                       (e)        The Bank may at any time pledge all or any
portion of its rights under this Note and the other Loan Documents to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341.  No such pledge or enforcement thereof shall
release the Bank from its obligations under any of such Loan Documents.

(f)           All agreements between the Borrower (and each Guarantor and each
other party obligated for payment on this Note) and the Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Bank for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law.  As used herein, the term “applicable law”
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Note shall be governed by such new law as of its
effective date.  In this regard, it is expressly agreed that it is the intent of
the Borrower and the Bank in the execution, delivery and acceptance of this Note
to contract in strict compliance with the laws of the State of New York from
time to time in effect.  If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or of any of the Loan Documents at the time
of performance of such provision shall be due, shall involve transcending the
limit of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever the Bank should ever receive as interest
an amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest.  This provision shall
control every other provision of the Loan Documents between the Borrower, each
Guarantor, each other party obligated on this Note and the Bank.

(g)           ARBITRATION AND WAIVER OF JURY TRIAL

(i)       THIS PARAGRAPH CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS
BETWEEN THE PARTIES, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING
BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (i)
THE LOAN DOCUMENTS (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR
(ii) ANY DOCUMENT RELATED TO THE NOTE (“COLLECTIVELY A "CLAIM").  FOR THE
PURPOSES OF THIS ARBITRATION PROVISION ONLY, THE TERM “PARTIES” SHALL INCLUDE
ANY PARENT CORPORATION, SUBSIDIARY OR AFFILIATE OF THE BANK INVOLVED IN THE
SERVICING, MANAGEMENT OR ADMINISTRATION OF ANY OBLIGATION DESCRIBED OR EVIDENCED
BY THE LOAN DOCUMENTS.
 

(ii)
AT THE REQUEST OF ANY PARTY TO THE LOAN DOCUMENTS, ANY CLAIM SHALL BE RESOLVED
BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9,
U.S. CODE) (THE "ACT").  THE ACT WILL APPLY EVEN THOUGH THE LOAN DOCUMENTS
PROVIDE THAT THEY ARE GOVERNED BY THE LAW OF A SPECIFIED STATE.  THE ARBITRATION
WILL TAKE PLACE ON AN INDIVIDUAL BASIS WITHOUT RESORT TO ANY FORM OF CLASS
ACTION.

(iii)           ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH
THE ACT, THE THEN-CURRENT RULES AND PROCEDURES FOR THE ARBITRATION OF FINANCIAL
SERVICES DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR
THEREOF ("AAA"), AND THE TERMS OF THIS PARAGRAPH.  IN THE EVENT OF ANY
INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL.  IF AAA IS UNWILLING
OR UNABLE TO (i) SERVE AS THE PROVIDER OF ARBITRATION OR (ii) ENFORCE ANY
PROVISION OF THIS ARBITRATION CLAUSE, ANY PARTY TO THE LOAN DOCUMENTS MAY
SUBSTITUTE ANOTHER ARBITRATION ORGANIZATION WITH SIMILAR PROCEDURES TO SERVE AS
THE PROVIDER OF ARBITRATION.

(iv)           THE ARBITRATION SHALL BE ADMINISTERED BY AAA AND CONDUCTED,
UNLESS OTHERWISE REQUIRED BY LAW, IN THE STATE SPECIFIED IN THE GOVERNING LAW
SECTION OF THE LOAN DOCUMENTS.  ALL CLAIMS SHALL BE DETERMINED BY ONE
ARBITRATOR; HOWEVER, IF CLAIMS EXCEED FIVE MILLION DOLLARS ($5,000,000), UPON
THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE
ARBITRATORS.  All ARBITRATION HEARINGS SHALL COMMENCE WITHIN NINETY (90) DAYS OF
THE DEMAND FOR ARBITRATION AND CLOSE WITHIN NINETY (90) DAYS OF COMMENCEMENT AND
THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN THIRTY (30) DAYS OF THE
CLOSE OF THE HEARING.  HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE,
MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL SIXTY (60)
DAYS.  THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS
FOR THE AWARD.  THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING
JURISDICTION TO BE CONFIRMED, JUDGMENT ENTERED AND ENFORCED.

(v)           THE ARBITRATOR(S) WILL GIVE EFFECT TO STATUTES OF LIMITATION IN
DETERMINING ANY CLAIM AND MAY DISMISS THE ARBITRATION ON THE BASIS THAT THE
CLAIM IS BARRED. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS,
THE SERVICE ON AAA UNDER APPLICABLE AAA RULES OF A NOTICE OF CLAIM IS THE
EQUIVALENT OF THE FILING OF A LAWSUIT.  ANY DISPUTE CONCERNING THIS ARBITRATION
PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE
ARBITRATOR(S).  THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES
PURSUANT TO THE TERMS OF THE LOAN DOCUMENTS.

(vi)           THIS PARAGRAPH DOES NOT LIMIT THE RIGHT OF ANY PARTY TO: (I)
EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE
JUDICIAL OR NON-JUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN
A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO,
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR
ADDITIONAL OR SUPPLEMENTARY REMEDIES.

(vii)           THE FILING OF A COURT ACTION IS NOT INTENDED TO CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE SUING PARTY, THEREAFTER TO
REQUIRE SUBMITTAL OF THE CLAIM TO ARBITRATION.

(viii)                      BY AGREEING TO BINDING ARBITRATION, THE PARTIES
IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM.  FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THE
LOAN DOCUMENTS TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE
PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF SUCH CLAIM.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES ENTERING INTO THE LOAN DOCUMENTS.

(ix)           EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.  THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS NOTE AND MAKE THE
LOANS.

(h)           Upon receipt of an affidavit of an officer of the Bank as to the
loss, theft, destruction or mutilation of this Note or any other Loan Document
which is not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon surrender and cancellation of such Note or other
security document, the Borrower will issue, in lieu thereof, a replacement Note
or other security document in the same principal amount thereof and otherwise of
like tenor.

(i)           The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the Borrower or any other
party obligated on this Note, to grant to one or more banks or other financial
institutions (each, a “Participant”) participating interests in any obligation
of the Bank to extend credit to the Borrower and/or any or all of the
Liabilities held by the Bank.  In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower, the Bank shall remain responsible for the performance of its
obligations hereunder and the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank’s rights and obligations
hereunder.  The Bank may furnish any information concerning the Borrower in its
possession from time to time to prospective assignees and Participants, provided
that the Bank shall require any such prospective assignee or Participant to
agree in writing to maintain the confidentiality of such information.

(j)           This Note shall be binding upon and inure to the benefit of the
Borrower, the Bank, all future holders of this Note and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under this Note without the prior written consent of the
Bank.  The term “Bank” as used herein shall be deemed to include the Bank and
its successors, endorsees and assigns.  The Bank shall have the unrestricted
right at any time or from time to time, and without the Borrower’s consent, to
assign all or any portion of its rights and obligations hereunder and/or under
any of the other Loan Documents to one or more Banks (each, an “Assignee”), and
the Borrower agrees that it shall execute, or cause to be executed, such
documents, including without limitation, amendments to this Note and to any
other documents, instruments and agreements executed in connection herewith as
the Bank shall deem necessary to effect the foregoing.  In addition, at the
request of the Bank and any such Assignee, the Borrower shall issue one or more
new promissory notes, as applicable, to any such Assignee and, if the Bank has
retained any of its rights and obligations hereunder following such assignment,
to the Bank, which new promissory notes shall be issued in replacement of, but
not in discharge of, the liability evidenced by the promissory note held by the
Bank prior to such assignment and shall reflect the amount of Loans held by such
Assignee and the Bank after giving effect to such assignment.  Upon the
execution and delivery of appropriate assignment documentation, amendments and
any other documentation required by the Bank in connection with such assignment,
and the payment by Assignee of the purchase price agreed to by the Bank, and
such Assignee, such Assignee shall be a party to this Agreement and shall have
all of the rights and obligations of the Bank hereunder and under each other
assigned Loan Document (and under any and all other guaranties, documents,
instruments and agreements executed in connection herewith) to the extent that
such rights and obligations have been assigned by the Bank pursuant to the
assignment documentation between the Bank and such Assignee, and the Bank shall
be released from its obligations hereunder and thereunder to a corresponding
extent.

(k)           This Note and the other Loan Documents are intended by the parties
as the final, complete and exclusive statement of the transactions evidenced
thereby.  All prior or contemporaneous promises, agreements and understandings,
whether oral or written, are deemed to be superceded by this Note and such other
Loan Documents, and no party is relying on any promise, agreement or
understanding not set forth in this Note or such other Loan Documents.  Neither
this Note nor any of such other Loan Documents may be amended or modified except
by a written instrument describing such amendment or modification executed by
the Borrower and the Bank.

(l)           This Note shall replace and supersede the Amended and Restated
Promissory Note made by the Borrower to the order of the Bank dated as of June
15, 2006 (the “Prior Note”); provided, however, that the execution and delivery
of this Note shall not in any circumstance be deemed to have terminated,
extinguished or discharged the Borrower’s indebtedness under such Prior Note,
all of which indebtedness shall continue under and be governed by this Note and
the documents, instruments and agreements executed pursuant hereto or in
connection herewith.  This Note is a replacement, consolidation, amendment and
restatement of the Prior Note and IS NOT A NOVATION. The Borrower shall also pay
and this Note shall also evidence any and all unpaid interest on all Loans made
by the Bank to the Borrower pursuant to Prior Note, and at the interest rate
specified therein, for which this Note has been issued as replacement therefor.

MOVADO GROUP, INC.

By: /s/ John C. Burns                                                      
Name:  John C. Burns
Title:  VP, Treasurer

 
 

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