Registration Rights Agreement

EXECUTION COPY -------------- REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), datedas of July 13, 2006, by and among G-III Apparel Group, Ltd., a Delawarecorporation, with headquarters located at 512 Seventh Avenue, New York, New York10018 (the " COMPANY "), and the undersigned purchasers (each, a "BUYER", andcollectively, the "BUYERS"). WHEREAS A. In connection with (i) the Securities Purchase Agreement,dated as of July 13, 2006, by and among the Company and the Buyers (the"SECURITIES PURCHASE AGREEMENT") and (ii) the Securities Purchase Agreement,dated as of July 13, 2006, by and among Aron Goldfarb and the Buyers (the"SELLING STOCKHOLDER PURCHASE AGREEMENT"), the Company has agreed, upon theterms and subject to the conditions set forth in the Securities PurchaseAgreement, to issue and sell to each Buyer (i) shares (the "COMMON SHARES") ofthe Company's common stock, par value $0.01 per share (the "COMMON STOCK") and(ii) certain Warrants (such Warrants, as the same may be amended, modified orsupplemented from time to time in accordance with the terms thereof, the"WARRANTS") to purchase additional shares of Common Stock (as exercisedcollectively, the "WARRANT SHARES") in accordance with the terms of the Warrantsand Aron Goldfarb has agreed, upon the terms and subject to the conditions setforth in the Selling Stockholder Purchase Agreement, to issue and sell to eachBuyer Common Shares. B. In accordance with the terms of the Securities PurchaseAgreement and the Selling Stockholder Purchase Agreement, the Company has agreedto provide certain registration rights under the Securities Act of 1933, asamended, and the rules and regulations thereunder, or any similar successorstatute (collectively, the "SECURITIES ACT"), and applicable state securitieslaws. NOW, THEREFORE, in consideration of the premises and themutual covenants contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Company and eachof the Buyers hereby agree as follows: 1. Definitions. Capitalized terms used herein and nototherwise defined herein shall have the respective meanings set forth in theSecurities Purchase Agreement. As used in this Agreement, the following termsshall have the following meanings: a. "BUSINESS DAY" means any day other than Saturday,Sunday or any other day on which commercial banks in The City of New York areauthorized or required by law to remain closed. b. "CLOSING DATE" shall have the meaning set forth in theSecurities Purchase Agreement. c. "EFFECTIVE DATE" means the date that the RegistrationStatement is first declared effective by the SEC. d. "EFFECTIVENESS DEADLINE" means the date which is (i)in the event that the Registration Statement is not subject to review by theSEC, 90 calendar days after the Closing Date or (ii) in the event that theRegistration Statement is subject to review by the SEC, 120 calendar days afterthe Closing Date. e. "FILING DEADLINE" means 30 calendar days after theClosing Date. f. "INVESTOR" means a Buyer, any transferee or assigneethereof to whom a Buyer assigns its rights under this Agreement and who agreesto become bound by the provisions of this Agreement in accordance with Section 9and any transferee or assignee thereof to whom a transferee or assignee assignsits rights under this Agreement and who agrees to become bound by the provisionsof this Agreement in accordance with Section 9. g. "PERSON" means an individual, a limited liabilitycompany, a partnership, a joint venture, a corporation, a trust, anunincorporated organization and a government or any department or agencythereof. h. "REGISTER," "REGISTERED," and "REGISTRATION" refer toa registration effected by preparing and filing one or more RegistrationStatements (as defined below) in compliance with the Securities Act and pursuantto Rule 415, and the declaration or ordering of effectiveness of suchRegistration Statement(s) by the SEC. i. "REGISTRABLE SECURITIES" means (i) the Common Shares,(ii) the Warrant Shares issued or issuable upon exercise of the Warrants and(iii) any shares of capital stock of the Company issued or issuable with respectto the Common Shares, the Warrant Shares or the Warrants without regard to anylimitations on exercise of the Warrants as a result of any stock split, stockdividend, recapitalization, exchange or similar event or otherwise; provided,that any Registrable Securities that have been sold pursuant to a RegistrationStatement or Rule 144 promulgated under the Securities Act or that are eligiblefor resale under Rule 144(k) shall no longer be Registrable Securities. Forpurposes of clarification only, the shares of Common Stock being sold by AronGoldfarb to the Buyers pursuant to the terms of the Selling Stockholder PurchaseAgreement shall be included in the definition of Registrable Securities. j. "REGISTRATION STATEMENT" means a registrationstatement or registration statements of the Company filed under the SecuritiesAct covering the Registrable Securities. k. "REQUIRED HOLDERS" means the holders of at least amajority of the Registrable Securities. l. "RULE 415" means Rule 415 under the Securities Act orany successor rule providing for offering securities on a continuous or delayedbasis. m. "SEC" means the United States Securities and ExchangeCommission. Capitalized terms used herein and not otherwise definedherein shall have the respective meanings set forth in the Securities PurchaseAgreement. 2. Registration. a. Mandatory Registration. The Company shall prepare,and, as soon as practicable but in no event later than the Filing Deadline, filewith the SEC a Registration Statement on Form S-3 covering the resale of all ofthe Registrable Securities. In the event that Form S-3 is unavailable for such aregistration, the Company shall file a Registration Statement on Form S-1,subject to the -2- provisions of Section 2(d). The Registration Statement shall contain (except ifotherwise directed by the Required Holders) the "Selling Stockholders" and "Planof Distribution" sections attached hereto as Exhibit B. The Company shall useits reasonable best efforts to have the Registration Statement declaredeffective by the SEC as soon as practicable, but in no event later than theEffectiveness Deadline. By 9:30 a.m. on the Business Day following the EffectiveDate, the Company shall file with the SEC in accordance with Rule 424 under theSecurities Act the final prospectus to be used in connection with sales pursuantto such Registration Statement. b. Allocation of Registrable Securities. The initialnumber of Registrable Securities included in any Registration Statement and eachincrease in the number of Registrable Securities included therein shall beallocated pro rata among the Investors based on the number of RegistrableSecurities held by each Investor at the time of the Registration Statementcovering such initial number of Registrable Securities or increase thereof isdeclared effective by the SEC. In the event that an Investor sells or otherwisetransfers any of such Investor's Registrable Securities, each transferee shallbe allocated a pro rata portion of the then remaining number of RegistrableSecurities included in such Registration Statement for such transferor. Anyshares of Common Stock included in the Registration Statement and which remainallocated to any Person which ceases to hold any Registrable Securities coveredby such Registration Statement shall be allocated to the remaining Investors,pro rata based on the number of Registrable Securities then held by suchInvestors which are covered by such Registration Statement In no event shall theCompany include any securities other than (i) Registrable Securities and (ii)such number of shares of Common Stock as may be requested pursuant to theexercise of existing piggyback registration rights disclosed in the schedules tothe Securities Purchase Agreement, in any Registration Statement without theprior written consent of the Required Holders. c. Legal Counsel. Subject to Section 5 hereof, theRequired Holders shall have the right to select one legal counsel to review andoversee any registration pursuant to this Section 2 ("LEGAL COUNSEL"), whichshall be Lowenstein Sandler PC or such other counsel as thereafter designated bythe Required Holders. The Company and Legal Counsel shall reasonably cooperatewith each other in performing the Company's obligations under this Agreement. d. Ineligibility for Form S-3. In the event that Form S-3is not available for the registration of the resale of Registrable Securitieshereunder, the Company shall (i) register the resale of the RegistrableSecurities on another appropriate form reasonably acceptable to the RequiredHolders and (ii) undertake to register the Registrable Securities on Form S-3 assoon as such form is available, provided that the Company shall maintain theeffectiveness of the Registration Statement then in effect until such time as aRegistration Statement on Form S-3 covering the Registrable Securities has beendeclared effective by the SEC. e. Sufficient Number of Shares Registered. In the eventthe number of shares available under a Registration Statement filed pursuant toSection 2(a) is insufficient to cover all of the Registrable Securities requiredto be covered by such Registration Statement or an Investor's allocated portionof the Registrable Securities pursuant to Section 2(b), the Company shall amendthe applicable Registration Statement, or file a new Registration Statement (onthe short form available therefor, if applicable), or both, so as to cover atleast 125% of the number of such Registrable Securities as of the trading dayimmediately preceding the date of the filing of such amendment or newRegistration Statement, in each case, as soon as practicable, but in any eventnot later than fifteen (15) days after the Company becomes aware of thenecessity therefor. The Company shall use its reasonable best efforts to causesuch amendment and/or new Registration Statement to become effective as soon aspracticable following the filing thereof. For purposes of the foregoingprovision, the number of shares available under a Registration Statement shallbe deemed "insufficient to cover all of the Registrable Securities" if at anytime the number of shares of Common Stock available for resale under suchRegistration Statement -3- is less than the number of Registrable Securities. The calculation set forth inthe foregoing sentence shall be made without regard to any limitations on theexercise of the Warrants and such calculation shall assume that the Warrants arethen exercisable into shares of Common Stock. f. Effect of Failure to File and Obtain and MaintainEffectiveness of Registration Statement. Subject to Section 4, if (i) aRegistration Statement covering all of the Registrable Securities required to becovered thereby and required to be filed by the Company pursuant to thisAgreement is (A) not filed with the SEC on or before the respective FilingDeadline (a "FILING FAILURE") or (B) not declared effective by the SEC on orbefore the respective Effectiveness Deadline (an "EFFECTIVENESS FAILURE") or(ii) on any day after the Effective Date sales of all of the RegistrableSecurities required to be included on such Registration Statement cannot be made(other than during an Allowable Grace Period (as defined in Section 3(r))pursuant to such Registration Statement or otherwise (including, withoutlimitation, because of a failure to keep such Registration Statement effective,to disclose such information as is necessary for sales to be made pursuant tosuch Registration Statement, to register a sufficient number of shares of CommonStock or to maintain the listing of the Common Stock) (a "MAINTENANCE FAILURE")then, as partial relief for the damages to any holder by reason of any suchdelay in or reduction of its ability to sell the underlying shares of CommonStock (which remedy shall not be exclusive of any other remedies available atlaw or in equity), the Company shall pay to each holder of RegistrableSecurities relating to such Registration Statement an amount in cash equal toone and one half percent (1.5%) of the aggregate Purchase Price (as such term isdefined in the Securities Purchase Agreement) of such Investor's Common Sharesrelating to the Registrable Securities included in such Registration Statementon each of the following dates: (i) the initial day of a Filing Failure and onevery thirtieth day (pro rated for periods totaling less than thirty days) aftera Filing Failure until such Filing Failure is cured; (ii) the initial day of anEffectiveness Failure and on every thirtieth day (pro rated for periods totalingless than thirty days) after an Effectiveness Failure until such EffectivenessFailure is cured; and (iii) the initial day of a Maintenance Failure and onevery thirtieth day (pro rated for periods totaling less than thirty days) aftera Maintenance Failure until such Maintenance Failure is cured. The payments towhich a holder shall be entitled pursuant to this Section 2(f) are referred toherein as "REGISTRATION DELAY PAYMENTS." Registration Delay Payments shall bepaid on the day of the Filing Failure, Effectiveness Failure and the initial dayof a Maintenance Failure, as applicable, and thereafter on the earlier of (I)every thirtieth day after the event or failure giving rise to the RegistrationDelay Payments has occurred and (II) the third Business Day after the event orfailure giving rise to the Registration Delay Payments is cured. In the eventthe Company fails to make Registration Delay Payments in a timely manner, suchRegistration Delay Payments shall bear interest at the rate of one and one halfpercent (1.5%) per month (prorated for partial months) until paid in full.Notwithstanding anything herein to the contrary, (i) no Registration DelayPayments shall be due and payable with respect to the Warrants or the WarrantShares, (ii) the Registration Delay Payments payable to any Investor in anythirty (30) day period shall not exceed one and one half percent (1.5%) of theaggregate Purchase Price of such Investor's Common Shares, and (iii) in no eventshall the Registration Delay Payments exceed ten percent (10%) of the aggregatePurchase Price of such Investor's Common Shares. 3. Related Obligations. At such time as the Company isobligated to file a Registration Statement with the SEC pursuant to Section2(a), 2(d) or 2(e), the Company will use its reasonable best efforts to effectthe registration of the Registrable Securities in accordance with the intendedmethod of disposition thereof and, pursuant thereto, the Company shall have thefollowing obligations: a. The Company shall promptly prepare and file with theSEC a Registration Statement with respect to the Registrable Securities and useits reasonable best efforts to cause such Registration Statement relating to theRegistrable Securities to become effective as soon as practicable after suchfiling (but in no event later than the Effectiveness Deadline). The Companyshall -4- keep each Registration Statement effective pursuant to Rule 415 at all timesuntil the earlier of (i) the date as of which the Investors may sell all of theRegistrable Securities covered by such Registration Statement withoutrestriction pursuant to Rule 144(k) (or any successor thereto) promulgated underthe Securities Act or (ii) the date on which the Investors shall have sold allof the Registrable Securities covered by such Registration Statement (the"REGISTRATION PERIOD"). The Company shall ensure that each RegistrationStatement (including any amendments or supplements thereto and prospectusescontained therein) shall not contain any untrue statement of a material fact oromit to state a material fact required to be stated therein, or necessary tomake the statements therein (in the case of prospectuses, in the light of thecircumstances in which they were made) not misleading. The term "best efforts"shall mean, among other things, that the Company shall submit to the SEC, withintwo (2) Business Days after the later of the date that (i) the Company learnsthat no review of a particular Registration Statement will be made by the staffof the SEC or that the staff has no further comments on a particularRegistration Statement, as the case may be, and (ii) the approval of LegalCounsel pursuant to Section 3(c) (which approval is immediately sought), arequest for acceleration of effectiveness of such Registration Statement to atime and date not later than 48 hours after the submission of such request. b. The Company shall prepare and file with the SEC suchamendments (including post-effective amendments) and supplements to aRegistration Statement and the prospectus used in connection with suchRegistration Statement, which prospectus is to be filed pursuant to Rule 424promulgated under the Securities Act, as may be necessary to keep suchRegistration Statement effective at all times during the Registration Period,and, during such period, comply with the provisions of the Securities Act withrespect to the disposition of all Registrable Securities of the Company coveredby such Registration Statement until such time as all of such RegistrableSecurities shall have been disposed of in accordance with the intended methodsof disposition by the seller or sellers thereof as set forth in suchRegistration Statement. In the case of amendments and supplements to aRegistration Statement which are required to be filed pursuant to this Agreement(including pursuant to this Section 3(b)) by reason of the Company filing areport on Form 10-K, Form 10-Q or Form 8-K or any analogous report under theSecurities Exchange Act of 1934, as amended (the "1934 ACT"), the Company shallhave incorporated such report by reference into such Registration Statement, ifapplicable, or shall file such amendments or supplements with the SEC as soon aspracticable but in no event more than two (2) Business Days after the filing ofthe 1934 Act report which created the requirement for the Company to amend orsupplement such Registration Statement. c. The Company shall (A) permit Legal Counsel to reviewand comment upon (i) a Registration Statement at least three (3) Business Daysprior to its filing with the SEC and (ii) all amendments and supplements to allRegistration Statements (except for Annual Reports on Form 10-K, and QuarterlyReports on Form 10-Q and Current Reports on Form 8-K and any similar orsuccessor reports) within a reasonable number of days prior to their filing withthe SEC, and (B) not file any Registration Statement or amendment or supplementthereto in a form to which Legal Counsel reasonably objects. Notwithstanding theforegoing, in no event shall the filing with the SEC of any such RegistrationStatement or amendment or supplement thereto be delayed beyond the date and timeon which it is required by law to be filed. The Company shall not submit arequest for acceleration of the effectiveness of a Registration Statement or anyamendment or supplement thereto without the prior approval of Legal Counsel,which consent shall not be unreasonably withheld or delayed. The Company shallfurnish to Legal Counsel, without charge, (i) copies of any correspondence fromthe SEC or the staff of the SEC to the Company or its representatives relatingto any Registration Statement, (ii) promptly after the same is prepared andfiled with the SEC, one copy of any Registration Statement and any amendment(s)thereto, including financial statements and schedules, all documentsincorporated therein by reference, if requested by an Investor and not otherwiseavailable on the EDGAR system, and all exhibits and (iii) upon the effectivenessof any Registration Statement, ten (10) copies of the prospectus included insuch -5- Registration Statement and all amendments and supplements thereto. The Companyshall reasonably cooperate with Legal Counsel in performing the Company'sobligations pursuant to this Section 3. d. The Company shall furnish to each Investor whoseRegistrable Securities are included in any Registration Statement, withoutcharge, (i) promptly after the same is prepared and filed with the SEC, at leastone copy of such Registration Statement and any amendment(s) thereto, includingfinancial statements and schedules, all documents incorporated therein byreference, if requested by an Investor and not otherwise available on the EDGARsystem, all exhibits and each preliminary prospectus, (ii) upon theeffectiveness of any Registration Statement, ten (10) copies of the prospectusincluded in such Registration Statement and all amendments and supplementsthereto (or such other number of copies as such Investor may reasonably request)and (iii) such other documents, including copies of any preliminary or finalprospectus, as such Investor may reasonably request from time to time in orderto facilitate the disposition of the Registrable Securities owned by suchInvestor. e. The Company shall use its reasonable best efforts to(i) register and qualify, unless an exemption from registration andqualification applies, the resale by Investors of the Registrable Securitiescovered by a Registration Statement under such other securities or "blue sky"laws of all applicable jurisdictions in the United States, (ii) prepare and filein those jurisdictions, such amendments (including post-effective amendments)and supplements to such registrations and qualifications as may be necessary tomaintain the effectiveness thereof during the Registration Period, (iii) takesuch other actions as may be necessary to maintain such registrations andqualifications in effect at all times during the Registration Period, and (iv)take all other actions reasonably necessary or advisable to qualify theRegistrable Securities for sale in such jurisdictions; provided, however, thatthe Company shall not be required in connection therewith or as a conditionthereto to (x) qualify to do business in any jurisdiction where it would nototherwise be required to qualify but for this Section 3(e), (y) subject itselfto general taxation in any such jurisdiction, or (z) file a general consent toservice of process in any such jurisdiction. The Company shall promptly notifyLegal Counsel and each Investor who holds Registrable Securities of the receiptby the Company of any notification with respect to the suspension of theregistration or qualification of any of the Registrable Securities for saleunder the securities or "blue sky" laws of any jurisdiction in the United Statesor its receipt of notice of the initiation or threatening of any proceeding forsuch purpose. f. The Company shall notify Legal Counsel and eachInvestor in writing of the happening of any event, as promptly as practicableafter becoming aware of such event, as a result of which the prospectus includedin a Registration Statement, as then in effect, includes an untrue statement ofa material fact or omits to state a material fact required to be stated thereinor necessary to make the statements therein, in the light of the circumstancesunder which they were made, not misleading (provided that in no event shall suchnotice contain any material, nonpublic information), and, subject to Section3(r), promptly prepare a supplement or amendment to such Registration Statementto correct such untrue statement or omission, and deliver ten (10) copies ofsuch supplement or amendment to Legal Counsel and each Investor (or such othernumber of copies as Legal Counsel or such Investor may reasonably request). TheCompany shall also promptly notify Legal Counsel and each Investor in writing(i) when a prospectus or any prospectus supplement or post-effective amendmenthas been filed, and when a Registration Statement or any post-effectiveamendment has become effective (notification of such effectiveness shall bedelivered to Legal Counsel and each Investor by facsimile or e-mail on the sameday of such effectiveness and by overnight mail), (ii) of any request by the SECfor amendments or supplements to a Registration Statement or related prospectusor related information, and (iii) of the Company's reasonable determination thata post-effective amendment to a Registration Statement would be appropriate. -6- g. The Company shall use its reasonable best efforts toprevent the issuance of any stop order or other suspension of effectiveness of aRegistration Statement, or the suspension of the qualification of any of theRegistrable Securities for sale in any jurisdiction and, if such an order orsuspension is issued, to obtain the withdrawal of such order or suspension atthe earliest possible moment and to notify Legal Counsel and each Investor whoholds Registrable Securities being sold of the issuance of such order and theresolution thereof or its receipt of notice of the initiation or threat of anyproceeding for such purpose. h. If any Investor may be required under applicablesecurities law to be described in the Registration Statement as an underwriter,the Company shall make available for inspection by (i) any Investor, (ii) LegalCounsel and (iii) one firm of accountants or other agents retained by theInvestors (collectively, the "INSPECTORS"), all pertinent financial and otherrecords, and pertinent corporate documents and properties of the Company(collectively, the "RECORDS"), as shall be reasonably deemed necessary by eachInspector, and cause the Company's officers, directors and employees to supplyall information which any Inspector may reasonably request; provided, however,that each Inspector shall agree in writing to hold in strict confidence andshall not make any disclosure (except to an Investor) or use of any Record orother information which the Company determines in good faith to be confidential,and of which determination the Inspectors are so notified, unless (a) thedisclosure of such Records is necessary to avoid or correct a misstatement oromission in any Registration Statement or is otherwise required under theSecurities Act, (b) the release of such Records is ordered pursuant to a final,non-appealable subpoena or order from a court or government body of competentjurisdiction, or (c) the information in such Records has been made generallyavailable to the public other than by disclosure in violation of this or anyother agreement of which the Inspector has knowledge. Each Investor agrees thatit shall, upon learning that disclosure of such Records is sought in or by acourt or governmental body of competent jurisdiction or through other means,give prompt notice to the Company and allow the Company, at its expense, toundertake appropriate action to prevent disclosure of, or to obtain a protectiveorder for, the Records deemed confidential. Nothing herein (or in any otherconfidentiality agreement between the Company and any Investor) shall be deemedto limit the Investors' ability to sell Registrable Securities in a manner whichis otherwise consistent with applicable laws and regulations. i. The Company shall hold in confidence and not make anydisclosure of information concerning an Investor provided to the Company unless(i) disclosure of such information is necessary to comply with federal or statesecurities laws or the applicable trading market, (ii) the disclosure of suchinformation is necessary to avoid or correct a misstatement or omission in anyRegistration Statement, (iii) the release of such information is orderedpursuant to a subpoena or other final, non-appealable order from a court orgovernmental body of competent jurisdiction, or (iv) such information has beenmade generally available to the public other than by disclosure in violation ofthis Agreement or any other agreement. The Company agrees that it shall, uponlearning that disclosure of such information concerning an Investor is sought inor by a court or governmental body of competent jurisdiction or through othermeans, give prompt written notice to such Investor and allow such Investor, atthe Investor's expense, to undertake appropriate action to prevent disclosureof, or to obtain a protective order for, such information. j. The Company shall use its reasonable best effortseither to (i) cause all of the Registrable Securities covered by a RegistrationStatement to be listed on each securities exchange on which securities of thesame class or series issued by the Company are then listed, if any, if thelisting of such Registrable Securities is then permitted under the rules of suchexchange or (ii) secure designation and quotation of all the RegistrableSecurities covered by a Registration Statement on The Nasdaq Global Market or(iii) if, despite the Company's reasonable best efforts, the Company isunsuccessful in satisfying the preceding clauses (i) and (ii), to secure theinclusion for quotation of all of the Registrable Securities on the AmericanStock Exchange for such Registrable Se ...