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(BANK OF AMERICA LOGO)
as of June 19, 2005
Movado Group, Inc.
650 From Road,
Paramus, NJ 07652
Dear Sir or Madam:
We are pleased to advise you that Bank of
America, 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
reasonable request from time to time,
and (d) the Company shall have maintained
and be maintaining a satisfactory
relationship with the Bank.
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.
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Maximum Amount of Loans and Letters of
Credit: The aggregate amount of Loans and
Letters of Credit at any time outstanding
shall not exceed $12,000,000 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, 2006. All Loans will be
payable on June 16, 2006. 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:
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.
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- 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 20, 2004, as
amended.
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
19, 2005. 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,
Successor by merger to Fleet National Bank
By: /s/ Rich
Williams
-------------------------------------
Name: Rich
Williams
Title: Credit Products Officer
ACCEPTED AND AGREED
ON JUNE 19, 2005
MOVADO GROUP, INC.
By:/s/ Frank V. Kimick
Name: Frank V. Kimick
Title: VP & Treasurer
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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).
MOVADO RETAIL GROUP, INC.,
a New Jersey Corporation
By: /s/
Frank V. Kimick
Name: Frank V. Kimick
Title: VP & Treasurer
MOVADO LLC,
a Delaware Limited Liability Company
By: /s/ Timothy F. Michno
Name: Timothy F. Michno
Title: Secretary & General Counsel
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BANK OF AMERICA,
SUCCESSOR BY MERGER TO
FLEET NATIONAL BANK
AMENDED AND RESTATED
PROMISSORY NOTE
$12,000,000.00
As of June 19, 2005
No later
than June 16, 2006 (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,
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
TWELVE MILLION and 00/100 ($12,000,000.00)
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"). 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 and 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,
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(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 no later
than the Maturity Date, and (ii) with
respect to Prime Loans, a rate equal to 4%
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 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:
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(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 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 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
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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,
