Document:

mpr20070731ex10af.htm

    
      	
               

            	
              Exhibit
                (10) (af)

            

    

    

    
      	
               

            	
              Description
                of Met-Pro Corporation FYE 2008 Management Incentive
                Plan

            

    

    

    
      	
              
                Background

              

            	
               

            

    

    

    
      	
              A
                number of years ago, Met-Pro Corporation (the “Company”) established a
                compensation plan (the “Management Incentive Plan” or the “Plan”) which is
                presently applicable to the Chief Executive Officer, the Chief Financial
                Officer, the Company’s two Executive Vice Presidents, the Assistant to the
                President and the various individuals who function as General Managers
                of
                the Company’s business units (herein collectively “business units”). In
                the fiscal year ended January 31, 2007, a total of eleven employees
                participated in the plan and a total of $233,938 was awarded under
                the
                plan.

            

    

    

    Description
      of the Plan

    

    The
      Management Incentive Plan provides participating individuals with the
      opportunity to earn annual incentive awards payable in cash (“awards”) based
      upon the performance of the operating segment or business unit managed by an
      individual Executive Vice President or General Manager, and for the achievement
      of measures relating to the individual’s own performance. In the case of the
      Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) and the
      Assistant to the President, awards are based upon the performance of the overall
      Company, as well as the achievement of measures relating to that individual’s
      own performance. The types of measures and relative weight of those measures
      used in determining annual incentive awards are tailored to the position and
      organizational responsibility.

    

    The
      amount of the award is based on a percentage of annual base salary. This
      percentage reflects the executive’s respective organizational level, position
      and responsibility for achievement of the Company’s strategic goals. In the
      fiscal year ending January 31, 2008, these percentages are as follows: for
      the
      CEO, 50% of base salary; for the CFO, 40% of base salary; for Executive Vice
      Presidents, 35% of base salary; for the Assistant to the President, 25% of
      base
      salary; and for General Managers, 25% of base salary.

    

    Under
      the terms of the Management
      Incentive Plan, in order to be eligible for an award, certain objective
      threshold results must be met. The fiscal year 2008 Management Incentive Plan
      requirements are as follows: for the CEO, the CFO and the Assistant to the
      President, the achievement of a predetermined threshold profit before tax
      (“PBT”) for the Company as a whole; and for Executive Vice Presidents and
      General Managers, the achievement of a PBT by the individual’s respective
      operating segments or business unit.

    

    The
      Company’s Compensation and Stock
      Option Committee (“Committee”) together with the Company’s other non-management
      Directors administers the Plan with respect to the CEO and acts in an advisory
      capacity to the Board with respect to the other participants in the Plan. The
      Committee retains the discretion, for purposes of determining an officer’s
      eligibility for a bonus under the Management Incentive Plan, to make adjustments
      to take into account extraordinary or unusual items outside of normal
      operations, such as capital asset sales or unusual expenses.

    

    The
      CEO, together with the CFO, works
      with the participants in the Management Incentive Plan to establish thresholds
      and goals under the Management Incentive Plan, presents these thresholds and
      goals to the Committee (typically in February of each year) as part of the
      Company’s annual budgeting process, monitors and reports to the Board and the
      Committee on a periodic basis throughout the year as to performance relative
      to
      these thresholds and goals, and presents to the Committee an
      assessment  after the end of the fiscal year as to the extent to which
      the thresholds and goals were met by each of the participants in the Management
      Incentive Plan (other than himself).

    

    A
      “threshold financial multiplier” is used as a computational factor in
      determining the actual award amount, the value of which varies depending on
      the
      relative achievement of the threshold financial target.  The specific
      threshold financial multiplier assigned, based upon the PBT achieved, is shown
      in the

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

      table
        below. If the threshold financial target actually achieved at year-end is
        less
        than a certain percentage of the targeted goal (80% for the CEO, CFO and
        Assistant to the President; 85% for Executive Vice Presidents; and 90% for
        General Managers), no award will be paid, except to the extent of a defined
        bonus pool under the Plan from which the Chief Executive Officer has certain
        discretionary authority to grant awards.

    

    

    
      	 	
              Attainment
                of Threshold Financial Target

            	
              Threshold
                Financial Multiplier—CEO, CFO,  Assistant to
                President

            	
              Threshold
                Financial Multiplier— Executive Vice Presidents

            	
              Threshold
                Financial Multiplier—General Managers

            
	 	
              Less
                than 80%

            	
              0.00%

            	
              0.00%

            	
              0.00%

            
	 	
              80%

            	
              50.00%

            	
              0.00%

            	
              0.00%

            
	 	
              85%

            	
              62.50%

            	
              50.00%

            	
              0.00%

            
	 	
              90%

            	
              75.00%

            	
              66.67%

            	
              50.00%

            
	 	
              95%

            	
              87.50%

            	
              83.34%

            	
              75.00%

            
	 	
              100%

            	
              100.00%

            	
              100.00%

            	
              100.00%

            
	 	
              105%

            	
              110.00%

            	
              110.00%

            	
              110.00%

            
	 	
              110%

            	
              120.00%

            	
              120.00%

            	
              120.00%

            
	 	
              115%

            	
              130.00%

            	
              130.00%

            	
              130.00%

            
	 	
              120%

            	
              140.00%

            	
              140.00%

            	
              140.00%

            
	 	
              125%

            	
              150.00%

            	
              150.00%

            	
              150.00%

            
	 	
              greater
                than 125%

            	
              150.00%

            	
              150.00%

            	
              150.00%

            

    

    

    After
      achieving the gating percentage of the threshold financial target (80%, 85%,
      or
      90%, as the case may be), the award calculation requires the participant to
      meet
      certain financial and performance goals.  For the CEO, the CFO and the
      Assistant to the President, the financial and performance goals consist of
      PBT
      and predetermined personal performance goals.  The weight assigned
      to PBT and personal performance goals are 65% and 35%,
      respectively.  The financial and performance goals for the Executive
      Vice President of the Fluid Handling Technologies segment consist of PBT, net
      sales, inventory turnover, accounts receivable days outstanding and
      predetermined personal performance goals.  The weight assigned to
      profit before tax, net sales, inventory turnover, accounts receivable days
      outstanding and personal performance goals are 35%, 30%, 10%, 10% and 15%,
      respectively.  The financial and performance goals for the Executive
      Vice President of the Product Recovery/Pollution Control Technologies segment
      consisted of PBT, net sales, accounts receivable days outstanding (which vary
      with respect to particular business units), inventory turnover percentages
      for
      certain of the business units), and predetermined personal performance
      goals.  The weight assigned to profit before tax, net sales, accounts
      receivable days outstanding, inventory turnover and personal performance goals
      are 35%, 30%, 10%, 10% and 15%, respectively.  For the General
      Managers, the financial and performance goals consist of a number of possible
      performance measurements such as, PBT, net sales, accounts receivable days
      outstanding, inventory turns and predetermined personal performance
      goals.  The weight assigned to these goals range from 10% to 40% and
      varies with the individual.  Based
      upon relative performance, the weight of each goal would be multiplied by a
      corresponding percentage within the range of 0% to 125%.  If less than
      a particular percentage of a particular goal is achieved (80%, 85%, or 90%,
      as
      the case may be), the multiplier would be 0%, between the gating percentage
      and
      100% the multiplier would be between 50% and 100%, between 100% and 125% the
      multiplier would be between 100% and 150%, and greater than 125% the multiplier
      would remain at 150%.

    

    Additionally,
      for participants other than the CEO, the CFO and the Assistant to the President,
      the Management Incentive Plan provides that the financial and personal
      performance goals will be multiplied by a corporate goal percentage, which
      is
      based on the PBT achieved by the Company during its fiscal year.  If
      less than a particular percentage of the corporate goal is achieved (80% for
      Executive Vice Presidents

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

      and
        General Managers), the multiplier would be 50% and 90%; between the gating
        percentage and 100% the multiplier would be between 50% and 100% for Executive
        Vice Presidents and between 90% and 100% for General Managers; and greater
        than
        100% the multiplier would remain at 100%.

    

    

    The
      total actual award amount cannot exceed 150% of the eligible incentive level
      (that is, as previously discussed, for fiscal year 2008, 50% for the CEO; 40%
      for the CFO; 35% for Executive Vice Presidents; 25% for the Assistant to the
      President; and 25% for the General Managers), meaning that the participant’s
      award amount will not be greater than 1.5 times the incentive level times the
      base salary.

    

    The
      award amounts in formulaic terms can be expressed as:

    

    For
      the CEO, the CFO and the Assistant to the President:

     

     
Award
      amount = (Eligibility
      and Incentive Level) x (Base Salary) x (Threshold Financial Multiplier)
      x

           (Financial
      and
      Performance Goals: PBT % + Personal Performance Goals %)

    

    
      	
            	
              For
                Executive Vice Presidents:

            

    

     

      Award
      amount =
      (Eligibility and Incentive Level) x (Base Salary) x (Threshold Financial
      Multiplier) x

         (Financial
      and Performance Goals: PBT % + Net Sales % + Inventory Turnover % +

            
      A/R Days Outstanding % + Personal Performance Goals %) x

                    (Corporate
      Goal %)

    

    For
      General
      Managers:

         
      Award amount = (Eligibility and Incentive Level) x (Base Salary) x (Threshold
      Financial Multiplier) x

             
      (Financial and Performance Goals: PBT % + Net Sales % +        

            A/R
      Days Outstanding
      % + Inventory Turns %+ Personal Performance Goals %) x

                     (Corporate
      Goal %)

    

    

    

    

    
      
        
        

      

      
        3boalineofcreditandnote.htm

    EXHIBIT
      10.1

     

     

     

     

     

     

     

     

     

    as
      of June 15, 2007

     

     

     

    Movado
      Group, Inc.

    650 From Road,

    Paramus, NJ07652

     

     

     

    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, 2008.  All Loans will be payable in full on June
      16, 2008.  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 16, 2006
      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 15, 2007.  This letter shall be unenforceable
      against the Bank unless so signed and returned on or before such date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 15, 2007

     

    MOVADO
      GROUP, INC.

     

    By:      
      /s/ Eugene Karpovich

     

               
      Name:   Eugene Karpovich      

               
Title:      SVP,
      CFO                 

     

     

     

    Guarantor
      signatures on next page

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    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                                  

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    BANK
      OF AMERICA, N.A.

     

    AMENDED
      AND RESTATED

     

    PROMISSORY
      NOTE

     

     

     

     

    $20,000,000.00                                                                                                             As
      of June 15,
      2007

     

     

               
      No later than June 16, 2008 (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 Yorkfrom 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.  Allarbitration 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/ Eugene
      Karpovich                     

                                                                 
   Name:
 Eugene
      Karpovich

                                                                  
Title: 
SVP,
      CFO

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