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Item 1.01
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Entry into a Material Definitive Agreement.
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On November 3, 2016, Naked Brand Group Inc. (the “Company”)
entered into a subscription agreement (the “Subscription Agreement”) with David Hochman and Andrew Kaplan, members
of the Company’s board of directors, pursuant to which Messrs. Hochman and Kaplan each purchased and the Company issued a
convertible promissory note (each, a “Note” and together, the “Notes”) in the initial principal amount
of $12,000 and $100,000, respectively. Each Note was issued and sold for cash at a purchase price equal to 100% of its principal
amount in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and/or Rule 506 of Regulation D promulgated thereunder. As previously disclosed, the Company previously
issued a Note on October 21, 2016 in the amount of $112,000, and the Company may, from time to time, sell additional Notes in the
same series.
The Notes will bear interest at a rate of 9% per annum payable
upon the earliest to occur of (i) the liquidation and dissolution of the Company pursuant to a plan of complete liquidation or
(ii) December 31, 2017, unless earlier converted, redeemed or repurchased. The Notes constitute a general unsubordinated obligation
of the Company and are guaranteed by the Company.
In the event the Company consummates an equity financing resulting
in gross proceeds to the Company of at least $1,000,000, excluding the proceeds to the Company from the purchase of the Notes (a
“Qualified Financing”), the entire unpaid principal amount of the Notes and all accrued unpaid interest thereon (the
“Outstanding Balance”) will automatically convert, at the initial closing of such financing, into equity securities
issued at the price per security (the “Conversion Price”) issued in such Qualified Financing (the “Qualified
Financing Securities”) and on the same terms and conditions that apply to the Qualified Financing Securities. In the event
the Company consummates an equity financing that is not a Qualified Financing (a “Subsequent Financing”), then the
holder of the Notes may, in its sole discretion, convert the Outstanding Balance at the initial closing of such Subsequent Financing
into the equity securities issued at the Conversion Price and on the same terms and conditions that apply to the securities issued
in such Subsequent Financing..
In the event of a “Sale Transaction” (as defined
in the Notes), the Outstanding Balance will automatically convert, with no further action by the holder of the Notes, into shares
of the Company’s common stock at a conversion price that is equal to the enterprise value of the Company, as established
by the consideration payable in the Sale Transaction, so as to permit the holder to receive the cash, securities or other property
to which the holder would be entitled in the Sale Transaction on account of the holder’s ownership of the shares of common
stock.
The Notes are subject to customary events of default, upon the
occurrence of which all payments on the Notes may become immediately due.
As a condition to the issuance of any shares of common
stock or other securities of the Company upon conversion of the Notes, the holders must become a party to such other
agreements and instruments, as reasonably requested by the Company.
The foregoing description is only a summary and
is qualified in its entirety by reference to the full text of the Notes, which is incorporated by reference herein to Exhibit
4.1 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission
(the “SEC”) on October 27, 2016.