Document:

lineofcreditletteragreement.htm

    
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.

      

      
        
          
            

             

            

            

          

           

        

        
           

          
            

          

        

        
           

        

      

      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

      

      
        
          
            

             

            

            

          

           

        

        
           

          
            

          

        

        
           

        

      

      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 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,
Treasurerpromissorynote.htm

    

      EXHIBIT
10.2
 

      

       PROMISSORY
NOTE

      

      

      $7,000,000
July 31, 2008

      

       For
value received, the undersigned unconditionally promises to pay to the order of
JPMORGAN CHASE BANK, N.A. (hereinafter the "Bank") at its offices
at  277 Park Avenue, New York , New York 10172-0003, or to such other
address as the Bank may notify the undersigned in writing, the principal sum of
Seven Million Dollars ($7,000,000) (the "Note Amount") or, if less, such unpaid
principal amount of each loan (a "Loan") (as recorded on the grid attached
hereto or on any additional pages thereof) made by the Bank to the undersigned
and outstanding under this note on July 31, 2009 (the "Maturity
Date").

      

       The
undersigned promises to pay interest on the unpaid balance of the principal
amount of each such Loan from and including the date of such Loan to the last
day of the Interest Period thereof at either (i) a floating rate per annum equal
to the Prime Rate (a "Prime Loan"); (ii) a fixed rate per annum equal to the
Adjusted LIBO Rate applicable to such Loan plus 0.625% (a "Eurodollar Loan"); or
(iii) a fixed rate per annum equal to the Money Market Rate applicable to such
Loan (a "Money Market Loan").  Any principal not paid when due shall
bear interest from and including the date due until paid in full at a rate per
annum equal to the Default Rate. Interest shall be payable on the relevant
Interest Payment Date and shall be calculated on the basis of a year of 360 days
for the actual number of days elapsed.  Any extension of time for the
payment of the principal of this note resulting from the due date falling on a
non-Banking Day shall be included in the computation of interest.

      

       Anything
in this note to the contrary notwithstanding, no Loans shall be made hereunder,
no letters of credit shall be issued by the Bank for the account of the
undersigned ("Letters
of Credit") and no drafts shall be drawn by the undersigned and accepted
by the Bank ("Acceptances") if, as
a result thereof, the aggregate unpaid principal balance of all Loans made by
the Bank to the undersigned hereunder plus the aggregate undrawn face amount of
all Letters of Credit, the aggregate unreimbursed amount of all drafts drawn
under Letters of Credit and the aggregate outstanding face amount of Acceptances
would exceed the Note Amount or Reduced Note Amount as applicable for the
relevant period.

      

       The
date, amount, rate of interest and maturity date of each Loan and payment(s) (if
any) of principal, the Loan(s) to which such payment(s) will be applied (which
shall be at the discretion of the Bank) and the outstanding principal balance of
Loans shall be recorded by the Bank on its books and records (which may be
electronic in nature) and at any time and from time to time may be, and shall be
prior to any transfer and delivery of this note, entered by the Bank on the
schedule attached or any continuation of the schedule attached hereto by the
Bank (at the discretion of the Bank, any such entries may aggregate Loans (and
payments thereon) with the same interest rate and tenor and, if made on a given
date, may show only the Loans outstanding on such date).  Any such
entries shall be conclusive in the absence of manifest error.  The
failure by the Bank to make any or all such entries shall not relieve the
undersigned from its obligation to pay any and all amounts due
hereunder.

      

       1.
DEFINITIONS.  The terms listed below shall be defined as
follows:

      

       "Adjusted
LIBO Rate" means the LIBO Rate for such Loan divided by one minus the Reserve
Requirement.

      

       "Banking
Day" means any day on which commercial banks are not authorized or required to
close in New York City and whenever such day relates to a Eurodollar Loan or
notice with respect to any Eurodollar Loan, a day on which dealings in U.S.
dollar deposits are also carried out in the London interbank
market.

      

       "Code"
means the Uniform Commercial Code of the State of New York.

      

       "Default
Rate" means, in respect of any amount not paid when demanded, a rate per annum
during the period commencing on the date of demand until such amount is paid in
full equal to: (a) if a Prime Loan, a floating rate of 2% above the rate of
interest thereon; (b) if a Eurodollar Loan or Money Market Loan, a fixed rate of
2% above the rate of interest in effect thereon at the time of demand until the
last day of the Interest Period thereof and, thereafter, a floating rate of 2%
above the rate of interest for a Prime Loan.

      

       "Event
of Default" means each of the events stated in Section 7.

      

       "Facility
Documents" means this note or any document executed by the undersigned or by any
Third Party granting security or support for this note and all other agreements,
instruments or other documents executed by the undersigned or a Third Party or
otherwise executed in connection with this note, whether by guaranty,
subordination, grant of a security interest or any other credit support, or
which is contained in any certificate, document, opinion, financial or other
statement furnished at the time under or in connection with any Facility
Document.

      

       "Interest
Payment Date" means (a) with respect to any Prime Loan, the last day of each
month, or (b) with respect to any Eurodollar Loan or Money Market Loan, the last
day of the Interest Period applicable to which such Loan is a part and, in the
case of a Eurodollar Loan or a Money Market Loan with an Interest Period of more
than three months' duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months' duration after the first day of
such Interest Period.

      

       "Interest
Period" means (a) with respect to any Eurodollar Loan, the period commencing on
the date of such Loan and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the
undersigned may elect or (b) with respect to any Money Market Loan, the period
commencing on the date of such Loan and ending on the last day of the period for
which such Loan is offered, as recorded by the Bank on the grid hereto; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Loan only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Loan that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period.  For purposes hereof, the date of a
Loan initially shall be the date on which such Loan is made and, in the case of
the continuation of a Loan, thereafter shall be the effective date of the most
recent conversion or continuation of such Loan.

      

       "Liabilities"
means all obligations and liabilities of the undersigned to the Bank or its
affiliates of whatever nature, including payment of this note, whether now
existing or hereafter incurred or acquired, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, primary
or secondary, sole, joint, several or joint and several, secured or
unsecured.

      

       "LIBO
Rate" means, with respect to any Eurodollar Loan for any Interest Period, the
rate quoted by the principal London branch of the Bank at approximately 11:00
a.m. London time two (2) Business Days' prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of
dollar deposits in immediately available funds, for a period and in an amount,
comparable to such Interest Period and the principal amount of such Eurodollar
Loan, as it appears on Page 3756 of the Moneyline Telerate Markets.

      

       "Money
Market Rate" means, if offered, a rate of interest per year as offered by the
Bank from time to time on any single commercial borrowing during the period
offered on such Loan.  The Money Market Rate of interest available for
any subsequent borrowings may differ since Money Market Rates may fluctuate on a
daily basis.

      

       "Prime
Rate" means that floating rate of interest from time to time announced publicly
by the Bank in New York, New York as its prime rate.  The Prime Rate
shall be automatically adjusted on the date of any change thereto.

      

       "Regulation
D" means Regulation D of the Board of Governors of the Federal Reserve
System.

      

       "Regulatory
Change" means any change after the date of this note in United States federal,
state or municipal laws or any foreign laws or regulations (including Regulation
D) or the adoption or making after such date of any interpretations, directives
or requests applying to a class of banks, including the Bank, of or under any
United States federal, state or municipal laws or any foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

      

       "Reserve
Requirement" means, for any Eurodollar Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during the term of such Loan under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion U.S. dollars, or as otherwise established by the Board of
Governors of the Federal Reserve System and any other banking authority to which
the Bank is subject, against "Eurocurrency liabilities" (as such term is used in
Regulation D).  Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks by reason of any Regulatory Change against (x) any category
of liabilities which includes deposits by reference to which the LIBO Rate is to
be determined or (y) any category of extensions of credit or other assets which
include Eurodollar Loans.  The Reserve Requirement shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

      

       "Third
Party" means any third party who supports or is liable with respect to this note
due to the execution of any document granting support or security for this note,
whether by guaranty, subordination, grant of security or any other credit
support.

      

       2.
BORROWINGS AND PREPAYMENTS.  The undersigned shall give the Bank
notice of each borrowing request by 12:00 noon, New York City time three (3)
Banking Days prior to each requested borrowing of a Eurodollar Loan and by 12:00
noon New York City time on the date of each requested borrowing of a Prime Loan
or a Money Market Loan; provided that no Eurodollar Loan shall be in a minimum
amount equal to less than $100,000.  The undersigned shall have the
right to make prepayments of principal at any time or from time to time;
provided that:  (a) the undersigned shall give the Bank irrevocable
notice of each prepayment by 12:00 noon New York City time three (3) Banking
Days prior to prepayment of a Eurodollar Loan, one (1) Banking Day prior to
prepayment of a Money Market Loan and by 12:00 noon New York City time on the
date of prepayment of a Prime Loan; (b) Eurodollar Loans and Money Market Loans
may be prepaid prior to the last day of the Interest Period thereof only if
accompanied by payment of the additional payments calculated in accordance with
paragraph 5 below; and (c) all prepayments shall be
in a minimum amount equal to the lesser of $100,000 or the unpaid
principal amount of this note. If the undersigned fails to notify the Bank, in
accordance with the terms hereof, prior to the maturity date of any Eurodollar
Loan or Money Market Loan to continue such Loan as a Eurodollar Loan or Money
Market Loan, such Loan shall be converted to a Prime Loan on its maturity
date.

      

       3. ADDITIONAL
COSTS.  (a) If as a result of any Regulatory Change which (i) changes
the basis of taxation of any amounts payable to the Bank under this note (other
than taxes imposed on the overall net income of the Bank or the lending office
by the jurisdictions in which the principal office of the Bank or the lending
office are located) or (ii) imposes or modifies any reserve, special deposit,
deposit insurance or assessments, minimum capital, capital ratios or similar
requirements relating to any extension of credit or other assets of, or any
deposits with or other liabilities of the Bank, or (iii) imposes any other
condition affecting this note, the Bank determines (which determination shall be
conclusive absent manifest error) that the cost to it of making or maintaining a
Eurodollar Loan or a Money Market Loan is increased or any amount received or
receivable by the Bank under this note is reduced, then the undersigned will pay
to the Bank on demand an additional amount that the Bank determines will
compensate it for the increased cost or reduction in amount.

      

       (b)
Without limiting the effect of the foregoing provisions of this Section 3 (but
without duplication), the undersigned shall pay to the Bank from time to time on
request such amounts as the Bank may determine to be necessary to compensate the
Bank for any costs which it determines are attributable to the maintenance by it
or any of its affiliates pursuant to any law or regulation of any jurisdiction
or any interpretation, directive or request (whether or not having the force of
law and whether in effect on the date of this note or thereafter) of any court
or governmental or monetary authority of capital in respect of the Loans
hereunder (such compensation to include, without limitation, an amount equal to
any reduction in return on assets or equity of the Bank to a level below that
which it could have achieved but for such law, regulation, interpretation,
directive or request).

      

       4. UNAVAILABILITY,
INADEQUACY OR ILLEGALITY OF LIBO RATE.  Anything herein to the
contrary notwithstanding, if the Bank reasonably determines (which determination
shall be conclusive) that:

      

       (a)
quotations of interest rates for the relevant deposits referred to in the
definition of LIBO Rate are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining the rate of interest for a
Eurodollar Loan; or

      

       (b)
the definition of LIBO Rate does not adequately cover the cost to the Bank of
making or maintaining a Eurodollar Loan; or

      

       (c)
as a result of any Regulatory Change (or any change in the interpretation
thereof) adopted after the date hereof, the principal office of the Bank or the
lending office is subject to any taxes, reserves, limitations, or other charges,
requirements or restrictions on any claims of such office on non-United States
residents (including, without limitation, claims on non-United States offices or
affiliates of the Bank) or in respect of the excess above a specified level of
such claims; or

      

       (d)
it is unlawful for the Bank or the lending office to maintain any Eurodollar
Loan at the LIBO Rate;

      

      THEN, the
Bank shall give the undersigned prompt notice thereof, and so long as such
condition remains in effect, any existing Eurodollar Loan shall bear interest as
a Prime Loan and the Bank shall make no Eurodollar Loans.

      

        5. BREAK FUNDING
PAYMENTS.  In the event of (a) the payment of any principal of any
Eurodollar Loan or Money Market Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan or Money Market Loan other than on the
last day of the Interest Period applicable thereto, or (c) the failure to
borrow, convert, continue on the date specified in any notice delivered pursuant
hereto, then, in any such event, the undersigned shall compensate the Bank for
the loss, cost and expense attributable to such event.  In the case of
a Eurodollar Loan or Money Market Loan, such loss, cost or expense to the Bank
shall be deemed to include an amount determined by the Bank to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal
amount of such Eurodollar Loan or Money Market Loan had such event not occurred,
at the Adjusted LIBO Rate that would have been applicable to such Eurodollar
Loan or the Money Market Rate that would have been applicable to such Money
Market Loan, as the case may be, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Eurodollar Loan or Money Market Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which the Bank would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market.  A certificate of
the Bank setting forth any amount or amounts that the Bank is entitled to
receive pursuant to this Section shall be delivered to the Bank and shall be
conclusive absent manifest error.  The undersigned shall pay the Bank
the amount shown as due on any such certificate within 10 days after receipt
thereof.

      

       6.
BANK’S RIGHT OF SETOFF.  The Bank retains all rights of setoff that it
may have under applicable law or contract, including, without limitation, at its
option, to setoff  balances (general or special, time or demand,
provisional or final) held by it for the account of the undersigned at any of
Bank’s offices, in dollars or in any other currency, against any amount payable
under this Note which is not paid when due (regardless of whether such balances
are then due to the undersigned).

      

       7.
EVENTS OF DEFAULT.  If any of the following events of default shall
occur with respect to any of the undersigned or any Third Party:

      

       (a)
the undersigned shall fail to pay any principal, interest or any other amount
payable under this note, or any other Liability, as and when due and payable;
or

      

       (b)
the undersigned or any Third Party shall fail to perform or observe any covenant
or agreement contained in any Facility Document, and such failure shall continue
for 30 consecutive days; or

      

       (c)
the undersigned or any Third Party shall fail to pay when due any indebtedness
in excess of $5,000,000 or more (including but not limited to indebtedness for
borrowed money) or if any such indebtedness shall become due and payable, or be
capable of being due and payable at the option of the holder thereof, prior to
the scheduled maturity thereof; or

      

       (d)
the undersigned or any Third Party:  (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit of creditors;
(iii) shall commence any proceeding or file a petition seeking relief under any
bankruptcy, insolvency, reorganization, receivership, dissolution, liquidation
or other similar Federal, state or foreign law or seeking the appointment of a
receiver, trustee, custodian, conservator or similar official for all or a
substantial part of its property or (iv) shall have any such proceeding
commenced or petition filed against it and the same shall remain undismissed for
a period of 30 days or shall consent or acquiesce thereto; or

      

       (e)
the undersigned or any Third Party shall merge or consolidate with or into, or
convert into, any other legal entity; or

      

       (f)
any Facility Document shall at any time and for any reason cease to be in full
force and effect or shall be declared null and void, or the undersigned or any
relevant Third Party shall deny or contest any further liability or obligation
thereunder or the validity or enforceability thereof or of any lien or security
interest created thereby; or

      

       (g)
any lien, mortgage, pledge, security interest or other encumbrance of any kind
shall be created or imposed upon any property or asset of the undersigned or any
Third Party without the Bank's written consent thereto, except as permitted
pursuant to Section 8.3 of the Credit Agreement dated as of December 15, 2005
among the undersigned (as Borrower), the Lenders signatory thereto and the Bank
(as Administrative Agent, Swingline Bank and Issuing Agent); or

      

       (h)
any action or proceeding before any court or governmental agency or authority
which involves forfeiture of any property or assets of the undersigned or a
Third Party shall have been commenced or if any such forfeiture or other seizure
or assumption of custody or control over such assets by any court or
governmental agency or authority shall occur; or

      

       (i)
one or more verdicts, judgments, decrees or orders for the payment of money in
excess of $5,000,000 in the aggregate shall be rendered against the undersigned
and shall continue in effect for a period of 60 consecutive days without being
vacated, or stayed pending appeal (or the satisfaction or bonding of any such
verdict, judgment, decree or order shall, in the Bank's reasonable judgment,
constitute a material adverse change), any proceedings to execute any such
verdict, judgment, decree or order shall be commenced, or if any attachment,
distraint, levy or other restraint shall be placed upon any property or assets
of the undersigned or any Third Party;

      

      THEN, in
any such case, the unpaid principal amount of this note, together with accrued
interest and all other Liabilities, shall immediately become due and payable
without any notice or other action by the Bank. The undersigned waive(s)
presentment, notice of dishonor, protest and any other notice or formality with
respect to this note.  All rights and remedies provided in this note
or otherwise available to the Bank shall be cumulative and not exclusive and
each may be exercised by the Bank from time to time and as often as may be
necessary.

      

       8.
ENFORCEMENT.  The Bank may, upon the occurrence and continuation of an
Event of Default, proceed to enforce payment of the same and exercise any of or
all the rights and remedies afforded the Bank by the Code or otherwise possessed
by the Bank.  Any requirement of the Code for reasonable notice to the
undersigned shall be deemed to have been complied with if such notice is mailed,
postage prepaid, to the undersigned and such other persons entitled to notice,
at the addresses shown on the records of the Bank at least four (4) Business
Days prior to the time of sale, disposition or other event requiring notice
under the Code.

      

       9.
TRANSFER.  Upon any transfer of this note, the undersigned hereby
waiving notice of any such transfer, the Bank may deliver the Assets With Bank
or any part thereof to the transferee who shall thereupon become vested with all
the rights herein or under applicable law given to the Bank with respect thereto
and the Bank shall thereafter forever be relieved and fully discharged from any
liability or responsibility in the matter; but the Bank shall retain all rights
hereby given to it with respect to any Liabilities and Assets With Bank not so
transferred.  No modification or waiver of any of the provisions of
this note shall be effective unless in writing, signed by the Bank, and only to
the extent therein set forth; nor shall any such waiver be applicable except in
the specific instance for which given.  This agreement sets forth the
entire understanding of the parties, and the undersigned acknowledges that no
oral or other agreements, conditions, promises, understandings, representations
or warranties exist in regard to the obligations hereunder, except those
specifically set forth herein.

      

       10.
JURISDICTION AND WAIVER.  The undersigned hereby irrevocably consents
to the in
personam jurisdiction of the federal and/or state courts located within
the State of New York over controversies arising from or relating to this note
or the Liabilities and
irrevocably waives trial by jury and the right to interpose any
counterclaim or offset of any nature in any such litigation.  The
undersigned further irrevocably waives presentment, demand, protest, notice of
dishonor and all other notices or demands of any kind in connection with this
note or any Liabilities.

      

       11. MISCELLANEOUS.  Each
reference herein to the Bank shall be deemed to include its successors,
endorsees, and assigns, in whose favor the provisions hereof shall also
inure.  Each reference herein to the undersigned shall be deemed to
include the successors and assigns of the undersigned, all of whom shall be
bound by the provisions hereof.

      

       The
undersigned agrees to pay to the Bank, as soon as incurred, all costs and
reasonable and documented expenses incidental to the care, preservation,
processing, sale or collection of or realization upon any of or all the Assets
With Bank or incurred in connection with the enforcement or collection of this
note, or in any way relating to the rights of the Bank hereunder, including
reasonable outside counsel fees and expenses.  Each and every right
and remedy hereby granted to the Bank or allowed to it by law shall be
cumulative and not exclusive and each may be exercised by the Bank from time to
time and as often as may be necessary.  The undersigned shall have the
sole responsibility for notifying the Bank in writing that the undersigned
wishes to take advantage of any redemption, conversion or other similar right
with respect to any of the Assets With Bank.  The Bank may release any
party (including any partner of any undersigned) without notice to any of the
undersigned, whether as co-makers, endorsers, guarantors, sureties, assigns or
otherwise, without affecting the liability of any of the undersigned hereof or
any partner of any undersigned hereof.

      

       12.
GOVERNING LAW.  This note shall be governed by and construed in
accordance with the laws of the State of New York and, as to interest rates,
applicable Federal law.

      

            MOVADO GROUP,
INC.

      

      

            By:
/s/Sallie A.
DeMarsilis

            Name:  Sallie
A. DeMarsilis

            Title:    Senior
Vice President and Chief Financial Officer

      

         Address
for notices: 650 From Road

         Paramus,
New Jersey 07652-3556

         Attn:  Sallie
A. DeMarsilis

                    Chief
Financial Officer

           

      

      

      GRID

      

        LOANS     PAYMENTS

      

      
        	
                Date

                Made

              	
                Amount

              	
                Rate

              	
                Maturity

                Date

              	 
      	
                Date
      Made

              	
                Principal

              	
                Interest

              	 
      	
                Balance
      Due

                On
      Principal

              	 
      	
                LN
      Clerk

                Initials

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