Document:

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                                                                    Exhibit 10.4

[Fleet Logo]
       Commercial Banking

June 20, 2002

Movado Group, Inc.
650 From Road
Paramus, New Jersey 07652

Dear Sir or Madam:

We are pleased to advise you that Fleet National Bank, (the "Bank") hereby
agrees to consider requests from Movado Group, Inc. (the "Company") for
short-term loans ("Loans") from time to time. Please be advised that any
extension of credit will be available at the sole discretion of the Bank
subject to the following terms and conditions:

Loan Requests: Each request for a loan 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. As you know, however, the Bank shall be under no
obligation whatsoever to make any loan or otherwise extend credit to the
Company. The Bank may respond to any request for a loan for a stated amount
with a loan for a different amount, date or maturity, or may decline to respond
entirely.

Maximum Amount of Loans: In no event shall the Company have more than
$10,000,000 of Loans outstanding at any one time.

Expiration and Maturity Date: Borrowing requests must be made on or before June
19, 2003. All Loans will be payable on the earlier of demand by the Bank (which
shall be in the sole and absolute discretion of the Bank) and June 19, 2003.

                                      -1-

A FleetBoston Financial Company
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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 attached promissory note (the "Note"),
which Note shall evidence all Loans. 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.

Additional provisions applicable to the Line

The Company shall not grant a security interest in, pledge, assign or otherwise
encumber any of its accounts receivable.

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.

-    Accounts receivable aging reports and such additional information relating
     thereto as is currently reported.

-    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 prior letter agreement from the Bank to the Company.

                                      -2-
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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 30, 2002. 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,

                                             FLEET NATIONAL BANK

                                             By: /s/ John C. Auth
                                                --------------------------
                                             Name: John C. Auth
                                             Title: Vice President

ACCEPTED AND AGREED
ON JUNE 20, 2002

MOVADO GROUP, INC.

By: /s/ Frank V. Kimick
   --------------------------
Name: Frank V. Kimick
Title: VP & Treasurer

                                     - 3 -
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Each of the guarantors indicated below hereby consents to this letter
agreement and reaffirms its continuing liability under its respective
guarantees 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).

                                   SWISSAM INC.,
                                   a New Jersey Corporation

                                   By: /s/ David R. Phalen
                                       -------------------------------
                                   Name:   David R. Phalen
                                   Title:

                                   MOVADO LLC
                                   a Delaware Limited Liability Company

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

                                      -4-

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                              FLEET NATIONAL BANK

                                PROMISSORY NOTE

$10,000,000.00                                              June 20, 2002

     ON DEMAND, but no later than June 19, 2003 (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
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 Ten Million and 00/100 ($10,000,000.00) Dollars of 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 schedule attached to and made a part of this Note. 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 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 the following 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
4% per annum in excess of the rate then applicable to Agreed Rate Loans and 4%
per annum in excess of the rate then applicable to Prime Loans, payable on
demand, and (ii) with respect to Prime
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Loans, a rate equal to 4% per annum in excess of the rate then applicable to
Prime Loans, payable on demand. 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 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 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

                                      -2-

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     Rate Loan on the date for payment specified in Borrower's written notice.
Without limiting the foregoing, Borrower shall pay 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 be conclusive if made reasonably and in
good faith.

     4.  INCREASED COSTS. If the Bank 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 on demand such additional amounts as the
Bank may 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,

                                      -3-
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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 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 recent 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 or (iii) under any other document, instrument and/or agreement with
or in favor of the Bank; 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;
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

                                     - 4 -
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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 g) mortgage or pledge of, creation of a security
interest in, any assets of the Borrower, other than security interests in favor
of the Bank; or h) the incurrence by the Borrower of any indebtedness for
borrowed money, other than obligations owing to the Bank; i) the Bank shall have
determined, in its sole 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 sole 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, demand, 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
FleetBoston Financial 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 all other
indebtedness and obligations and liabilities of any kind of the Borrower to the
Bank, 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.

                                     - 5 -

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         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 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, together with each other document, instrument or
agreement made with or in favor of the Bank.

                  (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 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 or the allocated costs of in-house
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

                                     - 6 -

<PAGE>
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) The Borrower hereby waives presentment, demand for payment, 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

                                      -7-
<PAGE>
the payment of interest. This provision shall control every other provision of
all agreements between the Borrower, each Guarantor, each other party obligated
on this Note and the Bank.

     (g)  THE BORROWER AND THE BANK (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY, AND
THE BORROWER WAIVES THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM, IN EACH
CASE IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE AND/OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THE LOAN DOCUMENTS AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. 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

                                      -8-
<PAGE>
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 or other financial institutions (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 Promissory Note made by
the Borrower to the order of the Bank dated as of June 21, 2001 (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

                                     - 9 -

<PAGE>
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/ Frank V. Kimick
                                           ------------------------------------
                                           Name: Frank V. Kimick
                                           Title: VP and Treasurer
                                                                        6/20/02

                                      -10-
<PAGE>
                          LOAN AND REPAYMENT SCHEDULE
                   PROMISSORY NOTE DATED AS OF JUNE 20, 2002
                               MOVADO GROUP, INC.
                             to FLEET NATIONAL BANK

<Table>
                                               Last Day
                                               of             Amount of      Unpaid
                Amount          Rate of        Interest       Principal      Principal      Notation
Date            of Loan         Interest       Period         Repayment      Balance        Made By
<S>            <C>              <C>           <C>            <C>            <C>            <C>
-----------------------------------------------------------------------------------------------------

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</Table><PAGE>
                                                                     EXHIBIT 4.1

                               THIRD AMENDMENT TO
                     REVOLVING CREDIT AND GUARANTY AGREEMENT

         THIRD AMENDMENT, dated as of August 23, 2002 (the "Amendment"), to the
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of January 22, 2002, among
KMART CORPORATION, a Michigan corporation (the "Borrower"), a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code, the Guarantors
named therein (the "Guarantors"), JPMORGAN CHASE BANK, a New York banking
corporation ("JPMorgan Chase"), each of the other financial institutions party
thereto (together with JPMorgan Chase, the "Banks") and JPMORGAN CHASE BANK, as
Agent for the Banks (in such capacity, the "Agent"):

                              W I T N E S S E T H:

         WHEREAS, the Borrower, the Guarantors, the Banks and the Agent are
parties to that certain Revolving Credit and Guaranty Agreement, dated as of
January 22, 2002, as amended by that certain First Amendment to Revolving Credit
and Guaranty Agreement dated as of February 15, 2002 and as further amended by
that certain Second Amendment to Revolving Credit and Guaranty Agreement dated
as of March 7, 2002 (as the same may be further amended, modified or
supplemented from time to time, the "Credit Agreement");

         WHEREAS, the Borrower and the Guarantors have requested that certain
provisions of the Credit Agreement be amended subject to and upon the terms and
conditions set forth herein so as to, among other things, modify the negative
covenant with respect to minimum EBITDA appearing in the Credit Agreement;

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         1. As used herein, all terms that are defined in the Credit Agreement
shall have the same meanings herein.

         2. Section 6.05 of the Credit Agreement is hereby amended in its
entirety to read as follows:

         SECTION 6.05 EBITDA.

                  (a) Permit cumulative EBITDA for the Borrower and the
         Guarantors for each fiscal period beginning on February 1, 2002 and
         ending on or about each of the dates listed below to be less than the
         amount specified opposite such date:

<PAGE>

<TABLE>
<CAPTION>
                   Period Ending                          EBITDA
                   -------------                          ------
<S>                                                       <C>
                   August 31, 2002                        ($400,000,000)

                   September 30, 2002                     ($400,000,000)

                   October 31, 2002                       ($300,000,000)

                   November 30, 2002                      ($300,000,000)

                   December 31, 2002                      $100,000,000

                   January 31, 2003                       $100,000,000
</TABLE>

         (b) Permit cumulative EBITDA for the Borrower and the Guarantors for
         each rolling twelve (12) fiscal month period ending on or about each of
         the dates listed below to be less than the amount specified opposite
         such date:

<TABLE>
<CAPTION>
                   February 28, 2003                      $100,000,000
                   -----------------                      ------------
<S>                                                       <C>
                   March 31, 2003                         $100,000,000

                   April 30, 2003                         $100,000,000

                   May 31, 2003                           $100,000,000

                   June 30, 2003                          $100,000,000

                   July 31, 2003                          $100,000,000

                   August 31, 2003                        $100,000,000

                   September 30, 2003                     $100,000,000

                   October 31, 2003                       $100,000,000

                   November 30, 2003                      $100,000,000

                   December 31, 2003                      $100,000,000

                   January 31, 2004                       $350,000,000

                   February 29, 2004                      $350,000,000

                   March 31, 2004                         $350,000,000
</TABLE>

                                       2
<PAGE>

         3. Section 2.19 of the Credit Agreement is hereby amended by: (i)
deleting the word "and" in the last line thereof and inserting a comma in its
place; and (ii) inserting the following at the end thereof: "and that certain
Third Amendment Fee Letter dated August 23, 2002.".

         4. Item 6 of Schedule 6.11 to the Credit Agreement is hereby amended in
its entirety to read as follows:

                  6. Any sale or disposition of all or any of the interests of
         the Borrower or any of its Subsidiaries in, or all or any of the assets
         of, Bluelight.com LLC or any present or future e-commerce joint
         venture.

         5. The amendments set forth in this Amendment shall not become
effective (the "Third Amendment Effective Date") until the date on which this
Amendment shall have been executed by the Borrower, the Guarantors, the Required
Banks and the Agent, and the Agent shall have received evidence satisfactory to
it of such execution, provided that notwithstanding the occurrence of the Third
Amendment Effective Date, the effect of this Amendment shall terminate and be of
no further force or effect if (x) on or before September 16, 2002, the
Bankruptcy Court shall not have entered an order substantially in the form of
Exhibit A hereto authorizing the terms of this Amendment and the payment no
later than September 16, 2002 by the Borrower to the Agent for its own account
of an arrangement fee in the amount heretofore agreed upon by the Borrower and
the Agent and the payment no later than September 16, 2002 by the Borrower to
the Agent, for the respective account of each Bank that has executed and
delivered to the Agent a counterpart of this Amendment by not later than 5:00
p.m. (New York City time) on August 28, 2002, an amendment fee in an amount
equal to 1/4 of 1% of such Bank's Tranche A Commitment and/or Tranche B
Credit-Linked Deposit on August 28, 2002, and (y) such arrangement fee and
amendment fee shall not have been paid in cash to the Agent for its own account
and the accounts of the Banks referred to above, respectively, within one
Business Day after entry of the order referred to above (except as may otherwise
be agreed by the Agent in the case of the timing and amount of such arrangement
fee).

         6. Except to the extent hereby amended, the Credit Agreement and each
of the Loan Documents remain in full force and effect and are hereby ratified
and affirmed.

         7. The Borrower agrees that its obligations set forth in Section 10.05
of the Credit Agreement shall extend to the preparation, execution and delivery
of this Amendment, including the reasonable fees and disbursements of special
counsel to the Agent.

         8. This Amendment shall be limited precisely as written and shall not
be deemed (a) to be a consent granted pursuant to, or a waiver or modification
of, any other

                                       3
<PAGE>

term or condition of the Credit Agreement or any of the instruments or
agreements referred to therein or (b) to prejudice any right or rights which the
Agent or the Banks may now have or have in the future under or in connection
with the Credit Agreement or any of the instruments or agreements referred to
therein. Whenever the Credit Agreement is referred to in the Credit Agreement or
any of the instruments, agreements or other documents or papers executed or
delivered in connection therewith, such reference shall be deemed to mean the
Credit Agreement as modified by this Amendment.

         9. This Amendment may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.

         10. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       4
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Revolving Credit and Guaranty Agreement to be duly executed as of the day and
the year first written.

                                    BORROWER:

                                    KMART CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    GUARANTORS:

                                    BIG BEAVER DEVELOPMENT CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BIG BEAVER OF CAGUAS
                                    DEVELOPMENT CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BIG BEAVER OF FLORIDA DEVELOPMENT, LLC

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BIG BEAVER OF GUAYNABO
                                    DEVELOPMENT CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BLUELIGHT.COM LLC

                                    By:
                                        ----------------------------------------
                                        Title:

                                       5
<PAGE>

                                    KMART HOLDINGS, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART MICHIGAN PROPERTY SERVICES, L.L.C.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART OF AMSTERDAM, NY DISTRIBUTION
                                    CENTER, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART OF MICHIGAN, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART OF NORTH CAROLINA LLC

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KLC, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART CORPORATION OF ILLINOIS, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                       6
<PAGE>

                                    BLUELIGHT.COM, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART STORES OF INDIANA, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART STORES OF TNCP, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    THE COOLIDGE GROUP LLC

                                    By:
                                        ----------------------------------------
                                        Title:

                                    TROY CMBS PROPERTY, L.L.C.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART OVERSEAS CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    JAF, INC.

                                    By:
                                        ----------------------------------------
                                         Title:

                                       7
<PAGE>

                                    VTA, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BIG BEAVER OF CAGUAS DEVELOPMENT
                                    CORPORATION II

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BIG BEAVER OF CAROLINA DEVELOPMENT
                                    CORPORATION

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART PHARMACIES, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART PHARMACIES OF MINNESOTA, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    BUILDERS SQUARE, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                       8
<PAGE>

                                    KMART CMBS FINANCING, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART INTERNATIONAL SERVICES, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    PMB, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    SOURCING & TECHNICAL SERVICES, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    ILJ, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    STI MERCHANDISING, INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KBL HOLDING INC.

                                    By:
                                        ----------------------------------------
                                        Title:

                                       9
<PAGE>

                                    KMART OF INDIANA

                                    By:
                                        ----------------------------------------
                                        Title:

                                    KMART OF PENNSYLVANIA LP

                                    By:
                                        ----------------------------------------

                                    KMART OF TEXAS L.P.

                                    By:
                                        ----------------------------------------
                                        Title:

                                       10
<PAGE>

                                    JPMORGAN CHASE BANK,
                                      INDIVIDUALLY AND AS AGENT

                                    By:
                                        ----------------------------------------
                                        Title:

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

                                    By:
                                        ----------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

                                       11
<PAGE>

                                    EXHIBIT A

                                 [FORM OF ORDER]

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