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Endorsement Agreement

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Date:
2003
Size:
18K
ID:
#424622

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MOVADO GROUP, INC. ENDORSEMENT AGREEMENT WHEREAS, Movado Group, Inc. (the "Company") and the Trustees of the Grinberg Family Trust (the "Trust") entered into a Policy Collateral Assignment And Split Dollar Agreement, dated as of December 5, 1995 (the "Split Dollar Agreement"); and WHEREAS, pursuant to the Split Dollar Agreement, life insurance protection is provided to the beneficiaries of the Trust, upon the of the death of the survivor of Gedalio Grinberg ("Executive") and Sonia Grinberg (Executive and Sonia Grinberg are collectively referred to as the "Insureds") under a life insurance policy issued to the Trust by the New York Life Insurance Company, Policy No. 45660373 (hereinafter referred to as the "Policy"); and WHEREAS, pursuant to the Split Dollar Agreement, the Policy is owned by the Trust and collaterally assigned by it to the Company in order to secure the repayment of the amounts due to the Company in respect of the Company's loans to the Trust which have been used by the Trust to pay the premiums on the Policy (such loans totaling $5,186,860 on the date hereof and being represented by a Demand Note, dated December 5, 1995, between the Company and the Trust (the "Demand Note")); and WHEREAS, Section XIII of the Split Dollar Agreement provides that it may be amended at any time and from time to time by a written instrument by the parties thereto; and WHEREAS, Section 402 of the Sarbanes-Oxley Act of the 2002 (the "Act") prohibits certain public companies (including the Company) from directly or indirectly making or arranging for an extension of credit in the form of a personal loan to its executive officers on or after July 30, 2002; and WHEREAS, Executive and a Trustee and a beneficiary of the Trust are executive officers of the Company; and WHEREAS, counsel to the Company has advised the Company that the collateral assignment split-dollar life insurance arrangement reflected in the Split Dollar Agreement may violate the aforementioned prohibition on personal loans to executive officers set forth in Section 402 of the Act, in respect of loans made to the Trust on or after July 30, 2002, although there exists no authority on point and reasonable arguments may be made to the contrary; and WHEREAS, in order to best ensure that the Company does not violate the aforementioned prohibition on personal loans to executive officers set forth in Section 402 of the Act, the parties hereto wish to (i) amend and restate the Split Dollar Agreement, (ii) rename the amended and restated Split Dollar Agreement the "Movado Group, Inc. Endorsement Agreement" (hereinafter referred to as the "Endorsement Agreement" or the "Agreement"), and (iii) transfer the Policy to the Company in partial repayment of the outstanding $5,186,860 principal balance of the Demand Note, with such repayment being in an amount equal to the cash 2 surrender value of the Policy on the date hereof ($4,595,591), and with the remaining principal balance of the Demand Note ($591,269) continuing to be subject to the terms and conditions of the Demand Note. NOW, THEREFORE, in consideration for the mutual promises contained herein, the parties hereto agree to amend and restate the Split Dollar Agreement in its entirety as follows: 1. Transfer of Policy; Partial Repayment of Demand Note. The Trustees of the Trust hereby agree to promptly execute any and all documents required by the New York Life Insurance Company (the "Insurer") and the Company to transfer ownership of the Policy from the Trust to the Company in exchange for the Company's agreement to promptly execute any and all documents required to reflect the partial repayment of the outstanding principal balance of the Demand Note, as described in the recitals above. 2. Ownership of Policy. Except as otherwise provided in this Agreement, the Company shall be the sole and exclusive owner of the Policy. 3. Surrender, Withdrawals, Loans; Etc. Other than as specifically allowed herein, the Company shall not borrow from, hypothecate, withdraw cash value from, surrender in whole or in part, cancel, or in any other manner encumber the Policy without the prior written consent of the Trustees of the Trust. Unless the Company and the Trustees of the Trust otherwise agree, in the event there is a complete or partial surrender or cancellation of the Policy, the proceeds payable as a result of the surrender, cancellation, withdrawal or loan shall be paid to the Company in an amount equal to the aggregate premiums paid under the Policy since inception, and any remaining proceeds shall be payable to the Trust. 4. Investment of Cash Values. If the Policy provides the policy owner with a choice of investment funds for the Policy cash values, the Company shall select the funds in which to invest such cash values. 5. Payment of Premiums. Subject to the terms of this Agreement, the Company agrees to pay premiums on the Policy as provided under the Policy. In the event this Agreement is terminated in accordance with terms of Section 11, the Company shall not be liable for any premiums owed on the Policy after the date of termination. 6. Payment of Death Benefits. Upon the death of the survivor of the Insureds, the death benefit under the Policy (including any interest payable under the Policy in respect of such death benefit for the period from the date of death of such survivor until the payment of the death benefit) shall be divided as follows: (a) The Company shall be entitled to receive an amount equal to the aggregate premiums paid under the Policy since inception less the amount of the then outstanding principal balance of the Demand Note (the "Company Death Benefit"). (If the Policy provides for a death benefit equal to the sum of the face amount of the Policy and any cash account or accumulation value, the
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