Form of Warrant

FORM OF WARRANT]NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATENOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATESECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERREDOR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FORTHE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINIONOF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION ISNOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAIDACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTIONWITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECUREDBY THE SECURITIES. G-III APPAREL GROUP, LTD. WARRANT TO PURCHASE COMMON STOCKWarrant No.: --------------Number of Shares of Common Stock: -------------Date of Issuance: July 13, 2006 ("ISSUANCE DATE") G-III Apparel Group, Ltd., a Delaware corporation (the "COMPANY"),hereby certifies that, for good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, [NAME OF BUYER], the registeredholder hereof or its permitted assigns, is entitled, subject to the terms setforth below, to purchase from the Company, at the Exercise Price (as definedbelow) then in effect, at any time or times on or after January 13, 2007, butnot after 11:59 p.m., New York Time, on the Expiration Date (as defined below),______________ (_____________)(1) fully paid nonassessable shares of CommonStock (as defined below) (the "WARRANT SHARES"). Except as otherwise definedherein, capitalized terms in this Warrant shall have the meanings set forth inSection 16. This Warrant (including all Warrants issued in exchange, transfer orreplacement hereof, the "WARRANTS") is one of the Warrants (the "SPA WARRANTS")issued pursuant to Section 1 of that certain Securities Purchase Agreement,dated as of July 13, 2006 (the "SUBSCRIPTION DATE"), by and among the Companyand the investors (the "BUYERS") referred to therein (the "SECURITIES PURCHASEAGREEMENT"). 1. EXERCISE OF WARRANT. (a) Mechanics of Exercise. Subject to the terms andconditions hereof (including, without limitation, the limitations set forth inSection 1(f)), this Warrant may be exercised by the holder of this Warrant onany day on or after January 13, 2007, in whole or in part, by (i) delivery of awritten notice, in the form attached hereto as Exhibit A (the "EXERCISENOTICE"), of the holder of this Warrant's election to exercise this Warrant and(ii) (A) payment to the Company of an amount equal to the applicable ExercisePrice multiplied by the number of Warrant Shares as to which this Warrant isbeing exercised (the "AGGREGATE EXERCISE PRICE") in cash or wire transfer ofimmediately available funds or (B) by notifying the Company that this Warrant isbeing exercised pursuant to a Cashless Exercise (as- ----------------(1) A number of shares of Common Stock equal to 25% of the number of shares of Common Stock issuable to the holder of this Warrant at the Closing. defined in Section 1(d)). The holder of this Warrant shall not be required todeliver the original Warrant in order to effect an exercise hereunder. Executionand delivery of the Exercise Notice with respect to less than all of the WarrantShares shall have the same effect as cancellation of the original Warrant andissuance of a new Warrant evidencing the right to purchase the remaining numberof Warrant Shares. On or before the first Business Day following the date onwhich the Company has received each of the Exercise Notice and the AggregateExercise Price (or notice of a Cashless Exercise) (the "EXERCISE DELIVERYDOCUMENTS"), the Company shall transmit by facsimile an acknowledgment ofconfirmation of receipt of the Exercise Delivery Documents to the holder of thisWarrant and the Company's transfer agent (the "TRANSFER AGENT"). On or beforethe third Business Day following the date on which the Company has received allof the Exercise Delivery Documents (the "SHARE DELIVERY DATE"), the Companyshall (X) provided that the Transfer Agent is participating in The DepositoryTrust Company ("DTC") Fast Automated Securities Transfer Program, upon therequest of the holder of this Warrant, credit such aggregate number of shares ofCommon Stock to which the holder of this Warrant is entitled pursuant to suchexercise to the holder of this Warrant's or its designee's balance account withDTC through its Deposit Withdrawal Agent Commission system, or (Y) if theTransfer Agent is not participating in the DTC Fast Automated SecuritiesTransfer Program, issue and dispatch by overnight courier to the address asspecified in the Exercise Notice (so that the certificate is received by theholder of this Warrant on or before such third Business Day), a certificate,registered in the Company's share register in the name of the holder of thisWarrant or its designee, for the number of shares of Common Stock to which theholder of this Warrant is entitled pursuant to such exercise. Upon delivery ofthe Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A)above or notification to the Company of a Cashless Exercise referred to inSection 1(d), the holder of this Warrant shall be deemed for all corporatepurposes to have become the holder of record of the Warrant Shares with respectto which this Warrant has been exercised, irrespective of the date of deliveryof the certificates evidencing such Warrant Shares. If this Warrant is submittedin connection with any exercise pursuant to this Section 1(a) and the number ofWarrant Shares represented by this Warrant submitted for exercise is greaterthan the number of Warrant Shares being acquired upon an exercise, then theCompany shall as soon as practicable and in no event later than three BusinessDays after any exercise and at its own expense, issue a new Warrant (inaccordance with Section 7(d)) representing the right to purchase the number ofWarrant Shares purchasable immediately prior to such exercise under thisWarrant, less the number of Warrant Shares with respect to which this Warrant isexercised. No fractional shares of Common Stock are to be issued upon theexercise of this Warrant, but rather the number of shares of Common Stock to beissued shall be rounded up to the nearest whole number. The Company shall payany and all taxes which may be payable with respect to the issuance and deliveryof Warrant Shares upon exercise of this Warrant. (b) Exercise Price. For purposes of this Warrant, "EXERCISE PRICE"means $11.00, subject to adjustment as provided herein. (c) Company's Failure to Timely Deliver Securities. If the Companyshall fail for any reason or for no reason to issue to the holder of thisWarrant within three (3) Business Days of receipt of the Exercise DeliveryDocuments, a certificate for the number of shares of Common Stock to which theholder of this Warrant is entitled and register such shares of Common Stock onthe Company's share register or to credit the holder of this Warrant's balanceaccount with DTC for such number of shares of Common Stock to which the holderof this Warrant is entitled upon the holder of this Warrant's exercise of thisWarrant, then, in addition to all other remedies available to the holder of thisWarrant, the Company shall pay in cash to the holder of this Warrant on each dayafter such third Business Day that the issuance of such shares of Common Stockis not timely effected an amount equal to 1.5% of the product of (A) the sum ofthe number of shares of Common Stock not issued to the holder of this Warrant ona timely basis and to which the holder of this Warrant is entitled and (B) theClosing Sale Price of the shares of Common Stock on the trading day immediatelypreceding the last possible date which the -2- Company could have issued such shares of Common Stock to the holder of thisWarrant without violating Section 1(a). In addition to the foregoing, if withinthree (3) trading days after the Company's receipt of the facsimile copy of anExercise Notice (the "DEADLINE DATE") the Company shall fail to issue anddeliver a certificate to the holder of this Warrant and register such shares ofCommon Stock on the Company's share register or credit the holder of thisWarrant's balance account with DTC for the number of shares of Common Stock towhich the holder of this Warrant is entitled upon such holder's exercisehereunder, and if on or after such trading day the holder of this Warrantpurchases (in an open market transaction or otherwise) shares of Common Stock todeliver in satisfaction of a sale by the holder of this Warrant of shares ofCommon Stock issuable upon such exercise that the holder of this Warrantanticipated receiving from the Company (a "BUY-IN"), then the Company shall,within five (5) Business Days after such Buyer's request, promptly honor itsobligation to deliver to such Buyer a certificate or certificates representingsuch shares of Common Stock and pay cash to such Buyer in an amount equal to theexcess (if any) of such Buyer's total purchase price (including brokeragecommissions, if any) for the shares of Common Stock purchased in such Buy-Inover the product of (A) such number of shares of Common Stock, times (B) theClosing Bid Price on the Deadline Date. In addition, if within three BusinessDays of delivery of such certificate or certificates to such Buyer, Buyer shallsell shares of Common Stock represented by such certificate or certificates at aprice per share less than the Closing Bid Price on the Deadline Date, theCompany shall pay cash to such Buyer in an amount equal to the excess of suchClosing Bid Price times the number of shares so sold over such Buyer's totalproceeds (less brokerage commissions, if any) from the sale of such shares.Notwithstanding the foregoing, in the event the Company fails to honor itsobligation to deliver such Buyer a certificate or certificates representing suchshares of Common Stock within such five (5) Business Day period, the Companyshall pay cash to such Buyer in an amount equal to (i) such Buyer's totalpurchase price (including brokerage commissions, if any) for the shares ofCommon Stock so purchased in such Buy-In less (ii) any payments previously madeby the Company to the Buyer pursuant to the second sentence of this Section1(c), at which point the Company's obligation to deliver such certificate (andto issue such shares of Common Stock) shall terminate. (d) Cashless Exercise. Notwithstanding anything contained hereinto the contrary, if the Warrant is exercisable and a Registration Statement (asdefined in the Registration Rights Agreement) covering the Warrant Shares thatare the subject of the Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is notavailable for the resale of such Unavailable Warrant Shares after theEffectiveness Deadline (as defined in the Registration Rights Agreement), theholder of this Warrant may, in its sole discretion, exercise this Warrant inwhole or in part and, in lieu of making the cash payment otherwise contemplatedto be made to the Company upon such exercise in payment of the AggregateExercise Price, elect instead to receive upon such exercise the "Net Number" ofshares of Common Stock determined according to the following formula (a"CASHLESS EXERCISE"): -3- Net Number = (A x B) - (A x C) ----------------- B For purposes of the foregoing formula: A= the total number of shares with respect to which this Warrant is then being exercised. B= the average of the Closing Sale Prices of the shares of Common Stock (as reported by Bloomberg) on the five trading days immediately preceding the date of the Exercise Notice. C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. (e) Disputes. In the case of a dispute as to the determination ofthe Exercise Price or the arithmetic calculation of the Warrant Shares, theCompany shall promptly issue to the holder of this Warrant the number of WarrantShares that are not disputed and resolve such dispute in accordance with Section12. (f) Limitations on Exercises; Beneficial Ownership. (i) TheCompany shall not effect the exercise of this Warrant, and the holder of thisWarrant shall not have the right to exercise this Warrant, to the extent thatafter giving effect to such exercise, such Person (together with such Person'saffiliates) would beneficially own in excess of 4.99% (the "MAXIMUM PERCENTAGE")of the shares of Common Stock outstanding immediately after giving effect tosuch exercise. For purposes of the foregoing sentence, the aggregate number ofshares of Common Stock beneficially owned by such Person and its affiliatesshall include the number of shares of Common Stock issuable upon exercise ofthis Warrant with respect to which the determination of such sentence is beingmade, but shall exclude shares of Common Stock which would be issuable upon (i)exercise of the remaining, unexercised portion of this Warrant beneficiallyowned by such Person and its affiliates and (ii) exercise or conversion of theunexercised or unconverted portion of any other securities of the Companybeneficially owned by such Person and its affiliates (including, withoutlimitation, any convertible notes or convertible preferred stock or warrants)subject to a limitation on conversion or exercise analogous to the limitationcontained herein. Except as set forth in the preceding sentence, for purposes ofthis paragraph, beneficial ownership shall be calculated in accordance withSection 13(d) of the Securities Exchange Act of 1934, as amended. For purposesof this Warrant, in determining the number of outstanding shares of CommonStock, the holder of this Warrant may rely on the number of outstanding sharesof Common Stock as reflected in (1) the Company's most recent Form 10-K, Form10-Q, Current Report on Form 8-K or other public filing with the Securities andExchange Commission, as the case may be, (2) a more recent public announcementby the Company or (3) any other notice by the Company or the Transfer Agentsetting forth the number of shares of Common Stock outstanding. For any reasonat any time, upon the written or oral request of the holder of this Warrant, theCompany shall within one Business Day confirm orally and in writing to theholder of this Warrant the number of shares of Common Stock then outstanding. Inany case, the number of outstanding shares of Common Stock shall be determinedafter giving effect to the conversion or exercise of securities of the Company,including the SPA Warrants, by the holder of this Warrant and its affiliatessince the date as of which such number of outstanding shares of Common Stock wasreported. By written notice to the Company, the holder of this Warrant mayincrease or decrease the Maximum Percentage to any other percentage not inexcess of 9.99% specified in such notice; provided that (i) any such increasewill not be effective until the sixty-first (61st) day after such notice isdelivered to the Company, and (ii) any such increase or decrease will apply onlyto the holder of this Warrant and not to any other holder of SPA Warrants. -4- 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. TheExercise Price and the number of Warrant Shares shall be adjusted from time totime as follows: (a) Adjustment upon Issuance of Shares of Common Stock. If andwhenever on or after the Subscription Date the Company issues or sells, or inaccordance with this Section 2 is deemed to have issued or sold, any shares ofCommon Stock (including the issuance or sale of shares of Common Stock owned orheld by or for the account of the Company, but excluding shares of Common Stockdeemed to have been issued by the Company in connection with any ExcludedSecurities), for a consideration per share (the "NEW ISSUANCE PRICE") less thana price (the "APPLICABLE PRICE") equal to the Exercise Price in effectimmediately prior to such issue or sale or deemed issuance or sale (theforegoing a "DILUTIVE ISSUANCE"), then immediately after such Dilutive Issuance,the Exercise Price then in effect shall be reduced to an amount equal to theproduct of (A) the Exercise Price in effect immediately prior to such DilutiveIssuance and (B) the quotient determined by dividing (1) the sum of (I) theproduct derived by multiplying the Exercise Price in effect immediately prior tosuch Dilutive Issuance and the Common Stock Deemed Outstanding immediately priorto such Dilutive Issuance plus (II) the consideration, if any, received by theCompany upon such Dilutive Issuance, by (2) the product derived by multiplying(I) the Exercise Price in effect immediately prior to such Dilutive Issuance by(II) the number of Common Stock Deemed Outstanding immediately after suchDilutive Issuance. Upon each such adjustment of the Exercise Price hereunder,the number of Warrant Shares shall be adjusted to the number of shares of CommonStock determined by multiplying the Exercise Price in effect immediately priorto such adjustment by the number of Warrant Shares acquirable upon exercise ofthis Warrant immediately prior to such adjustment and dividing the productthereof by the Exercise Price resulting from such adjustment. For purposes ofdetermining the adjusted Exercise Price under this Section 2(a), the followingshall be applicable: (i) Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then all such shares of Common Stock underlying such Options shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i), the "lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion, exercise or exchange of such Convertible Securities" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities. In the event that any such Option or Convertible Security expires or becomes unconvertible, unexercisable or unexchangeable, the Exercise Price shall be further adjusted so as to undo any adjustment made with respect to such Option or Convertible Security made pursuant to the first two sentences of this Section 2(a)(i). (ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one -5- share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then each share of Common Stock issuable upon conversion of the Convert ...