EXHIBIT 10.1
as of June 16, 2008
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.
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:
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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.
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- Notices
of defaults under any credit facilities or financial obligations of
Borrower in excess of $5,000,000.
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Such other
statements and reports as shall be reasonably requested by the
Bank.
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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.
successor by merger to Fleet
National Bank
Title: Credit Products Officer
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.
,
By: /s/ Timothy
F. Michno
a Delaware Limited Liability Company
By: /s/ Timothy
F. Michno
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 r
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