--------------------------------------------------------------------------------

THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THIS
“SUBSCRIPTION AGREEMENT”) RELATES HAVE BEEN ISSUED IN AN OFFSHORE TRANSACTION TO
PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN
REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

THE HOLDER OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES MUST
NOT TRADE THE SECURITIES IN OR FROM A JURISDICTION OF CANADA UNLESS THE
CONDITIONS IN SECTION 13 OF MULTILATERAL INSTRUMENT 51-105 ISSUERS QUOTED IN THE
U.S. OVER THE COUNTER MARKETS ARE MET.

CONFIDENTIAL
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

TO:

NAKED BRAND GROUP INC. (formerly Search By Headlines.com Corp.), having an
address at 2 – 34346 Manufacturers Way, Abbotsford, BC V2S 7M1

 

 

 

(“NBGI”)

 

 

AND:

NAKED INC. (.formerly Naked Boxer Brief Clothing Inc.), having an address at 2 –
34346 Manufacturers Way, Abbotsford, BC V2S 7M1

 

 

 

(“Naked” and, together with NBGI, the “Issuers”)

PURCHASE OF CONVERTIBLE NOTES

1.                     Subscription

1.1                    On the basis of the representations and warranties and
subject to the terms and conditions set forth in this subscription agreement
(this “Agreement”), the undersigned (the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase a convertible note from NBGI and a note
from Naked, in the form attached hereto as Exhibit “B” (the “Note”), in the
aggregate principal amount of USD$__________ (such subscription and agreement to
purchase being the “Subscription”), for the aggregate purchase price of
USD$______ (the “Subscription Amount”), which is tendered herewith. The
principal and interest of the Note are convertible into common shares (the
“Conversion Shares”) of NBGI (as set out in the Note). In connection with the
issuance of the Note, NBGI will issue to the Subscriber share purchase warrants
(the “Warrants”) entitling the Subscriber to purchase common shares of NBGI (as
set out in the Warrants). The Note, the Conversion Shares, the Warrants, and the
Warrant Shares are collectively referred to herein as the “Securities”.

1.2                    The Issuers hereby agree to sell the Securities to the
Subscriber on the basis of the representations and warranties and subject to the
terms and conditions set forth in this Agreement. Subject to the terms of this
Agreement, the Agreement will be effective upon its acceptance by the Issuers.

--------------------------------------------------------------------------------

- 2 -

1.3                    The Subscriber acknowledges that the Securities have been
offered as part of an offer by the Issuers of other Securities in an amount as
may be determined by the board of directors of the Issuers in their sole
discretion (the “Offering”).

1.4                    The Subscriber acknowledges that a finder’s fee or a
broker’s commission may be paid by the Issuers in connection with this
Subscription.

1.5                    Unless otherwise provided, all dollar amounts referred to
in this Agreement are in lawful money of the United States.

2.                      Payment

2.1                    The Subscription Amount must accompany this Subscription
and shall be paid in accordance with the Note as instructed by the Agent (as
such term is defined in the Note).

3.                       Documents Required from Subscriber

3.1                     The Subscriber must complete, sign and return to the
Issuers the following documents:

  (a)

an executed copy of this Agreement;

        (b)

a Canadian Investor Questionnaire (the “Questionnaire”) attached as Exhibit “A”
that starts on page 12; and

        (c)

such other supporting documentation that the Issuers or their legal counsel may
request to establish the Subscriber’s qualification as a qualified investor.

3.2                     The Subscriber shall complete, sign and return to the
Issuers as soon as possible, on request by the Issuers, any additional
documents, questionnaires, notices and undertakings as may be required by any
regulatory authorities and applicable law.

3.3                     Both parties to this Agreement acknowledge and agree
that Clark Wilson LLP has acted as counsel only to the Issuers and is not
protecting the rights and interests of the Subscriber. The Subscriber
acknowledges and agrees that the Issuers and Clark Wilson LLP have given the
Subscriber the opportunity to seek, and are hereby recommending that the
Subscriber obtain, independent legal advice with respect to the subject matter
of this Agreement and, further, the Subscriber hereby represents and warrants to
the Issuers and Clark Wilson LLP that the Subscriber has sought independent
legal advice or waives such advice.

4.                       Conditions and Closing

4.1                     The closing of the sale of the Securities to the
Subscriber (the “Closing”) shall occur on or before November 14, 2013, or on
such other date as may be determined by the Issuers in their sole discretion
(the “Closing Date”).

4.2                     The Closing is conditional upon and subject to:

  (a)

the Issuers having obtained all necessary approvals and consents, including
regulatory approvals for the Offering; and

        (b)

the issue and sale of the Securities being exempt from the requirement to file a
prospectus and the requirement to deliver an offering memorandum under
applicable securities legislation relating to the sale of the Securities, or the
Issuers having received such orders, consents or approvals as may be required to
permit such sale without the requirement to file a prospectus or deliver an
offering memorandum.

--------------------------------------------------------------------------------

- 3 -

4.3                     On the Closing Date, the Subscriber acknowledges that
the certificates representing the Securities will be available for delivery,
provided that the Subscriber has satisfied the requirements of Section 3 hereof
and the Issuers have accepted this Agreement.

5.                       Acknowledgements and Agreements of Subscriber

5.1                     The Subscriber acknowledges and agrees that:

  (a)

none of the Securities have been or will be registered under the United States
Securities Act of 1933, as amended, (the “1933 Act”), or under any securities or
“blue sky” laws of any state of the United States, and, unless so registered,
may not be offered or sold in the United States or, directly or indirectly, to
U.S. Persons, as that term is defined in Regulation S under the 1933 Act
(“Regulation S”), except in accordance with the provisions of Regulation S,
pursuant to an effective registration statement under the 1933 Act, or pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act and in each case only in accordance with applicable
state, provincial and foreign securities laws;

        (b)

the Issuers have not undertaken, and will have no obligation, to register any of
the Securities under the 1933 Act or any other securities legislation;

        (c)

the decision to execute this Agreement and acquire the Securities agreed to be
purchased hereunder has not been based upon any oral or written representation
as to fact or otherwise made by or on behalf of the Issuers and such decision is
based entirely upon a review of any public information which has been filed by
NBGI with the United States Securities and Exchange Commission (the “SEC”) and
any Canadian provincial securities commissions (collectively, the “Public
Record”);

        (d)

the Subscriber understands and agrees that the Issuers and others will rely upon
the truth and accuracy of the acknowledgements, representations, warranties,
covenants and agreements contained in this Agreement and the Questionnaire, and
agrees that if any of such acknowledgements, representations and agreements are
no longer accurate or have been breached, the Subscriber shall promptly notify
the Issuers;

        (e)

there are risks associated with the purchase of the Securities, as more fully
described in NBGI’s periodic disclosure forming part of the Public Record;

        (f)

the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from the Issuers in connection with the
distribution of the Securities hereunder, and to obtain additional information,
to the extent possessed or obtainable without unreasonable effort or expense,
necessary to verify the accuracy of the information about the Issuers;

        (g)

finder’s fees or broker’s commissions may be payable by the Issuers to finders
who introduce subscribers to the Issuers;

        (h)

the books and records of the Issuers were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the Subscriber
during reasonable business hours at its principal place of business, and all
documents, records and books in connection with the distribution of the
Securities hereunder have been made available for inspection by the Subscriber,
the Subscriber’s lawyer and/or advisor(s);

        (i)

all of the information which the Subscriber has provided to the Issuers is
correct and complete as of the date this Agreement is signed, and if there
should be any change in such information prior to the Closing, the Subscriber
will immediately provide the Issuers with such information;

--------------------------------------------------------------------------------

- 4 -

  (j)

the Issuers are entitled to rely on the representations and warranties of the
Subscriber contained in this Agreement and the Questionnaire, and the Subscriber
will hold harmless the Issuers from any loss or damage it or they may suffer as
a result of the Subscriber’s failure to correctly complete this Agreement or the
Questionnaire;

          (k)

the Subscriber has been advised to consult the Subscriber’s own legal, tax and
other advisors with respect to the merits and risks of an investment in the
Securities and with respect to applicable resale restrictions, and it is solely
responsible (and the Issuers are not in any way responsible) for compliance
with:

          (i)

any applicable laws of the jurisdiction in which the Subscriber is resident in
connection with the distribution of the Securities hereunder, and

          (ii)

applicable resale restrictions;

          (l)

the Subscriber understands and agrees that there may be material tax
consequences to the Subscriber of an acquisition or disposition of the
Securities. The Issuers give no opinion and make no representation with respect
to the tax consequences to the Subscriber under federal, state, provincial,
local or foreign tax law of the Subscriber’s acquisition or disposition of the
Securities;

          (m)

in addition to resale restrictions imposed under U.S. securities laws, there are
additional restrictions on the Subscriber’s ability to resell any of the
Securities in Canada under applicable provincial securities laws and
Multilateral Instrument 51-105 – Issuers Quoted in the U.S. Over- the-Counter
Markets (“MI 51-105”) of the Canadian Securities Administrators;

          (n)

the Issuers have advised the Subscriber that the Issuers are relying on an
exemption from the requirements to provide the Subscriber with a prospectus and
to sell the Securities through a person registered to sell securities under
provincial securities legislation and other applicable securities laws, as a
consequence of acquiring the Securities pursuant to such exemption, certain
protections, rights and remedies provided by the applicable securities
legislation including the various provincial securities acts, including
statutory rights of rescission or damages, will not be available to the
Subscriber;

          (o)

neither the SEC nor any securities commission or similar regulatory authority
has reviewed or passed on the merits of any of the Securities;

          (p)

there is no government or other insurance covering any of the Securities; and

          (q)

the Issuers will refuse to register the transfer of any of the Securities to a
U.S. Person not made pursuant to an effective registration statement under the
1933 Act or pursuant to an available exemption from the registration
requirements of the 1933 Act and in each case in accordance with applicable
laws.

6.                       Representations, Warranties and Covenants of the
Subscriber

6.1                     The Subscriber hereby represents and warrants to and
covenants with the Issuers (which representations, warranties and covenants
shall survive the Closing) that:

  (a)

the Subscriber is not a U.S. Person and is executing this Agreement outside of
the U.S.;

        (b)

the Subscriber has the legal capacity and competence to enter into and execute
this Agreement and to take all actions required pursuant hereto and, if the
Subscriber is a corporate entity, it is duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation and all necessary approvals
by its directors, shareholders and others have been obtained to authorize
execution and performance of this Agreement on behalf of the Subscriber;

--------------------------------------------------------------------------------

- 5 -

  (c)

the entering into of this Agreement and the transactions contemplated hereby do
not result in the violation of any of the terms and provisions of any law
applicable to, or, if applicable, the constating documents of, the Subscriber or
of any agreement, written or oral, to which the Subscriber may be a party or by
which the Subscriber is or may be bound;

          (d)

the Subscriber has duly executed and delivered this Agreement and it constitutes
a valid and binding agreement of the Subscriber enforceable against the
Subscriber in accordance with its terms;

          (e)

the Subscriber has received and carefully read this Agreement;

          (f)

the Subscriber is aware that an investment in the Issuers is speculative and
involves certain risks (including those risks disclosed in the Public Record),
including the possible loss of the entire investment;

          (g)

the Subscriber has made an independent examination and investigation of an
investment in the Securities and the Issuers and agrees that the Issuers will
not be responsible in any way whatsoever for the Subscriber’s decision to invest
in the Securities and the Issuers;

          (h)

all information contained in the Questionnaire is complete and accurate and may
be relied upon by the Issuers, and the Subscriber will notify the Issuers
immediately of any material change in any such information occurring prior to
the closing of the purchase of the Securities;

          (i)

the Subscriber is purchasing the Securities for its own account for investment
purposes only and not for the account of any other person and not for
distribution, assignment or resale to others, and no other person has a direct
or indirect beneficial interest is such Securities, and the Subscriber has not
subdivided his interest in the Securities with any other person;

          (j)

the Subscriber (i) is able to fend for itself in the Subscription; (ii) has such
knowledge and experience in business matters as to be capable of evaluating the
merits and risks of its prospective investment in the Securities; and (iii) has
the ability to bear the economic risks of its prospective investment and can
afford the complete loss of such investment;

          (k)

the Subscriber is not an underwriter of, or dealer in, any of the Securities,
nor is the Subscriber participating, pursuant to a contractual agreement or
otherwise, in the distribution of the Securities or any of them;

          (l)

the Subscriber is not aware of any advertisement of any of the Securities and is
not acquiring the Securities as a result of any form of general solicitation or
general advertising, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media, or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising;

          (m)

no person has made to the Subscriber any written or oral representations:

          (i)

that any person will resell or repurchase any of the Securities,

          (ii)

that any person will refund the purchase price of any of the Securities, or

          (iii)

as to the future price or value of any of the Securities;

          (n)

the Subscriber understands and agrees that none of the Securities have been
registered under the 1933 Act, or under any state securities or “blue sky” laws
of any state of the United States, and, unless so registered, may not be offered
or sold in the United States or, directly or indirectly, to U.S. Persons except
in accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act, or pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the 1933 Act
and in each case only in accordance with applicable state, provincial and
foreign securities laws;

--------------------------------------------------------------------------------

- 6 -

  (o)

the Subscriber understands and agrees that offers and sales of any of the
Securities prior to the expiration of the period specified in Regulation S (such
period hereinafter referred to as the “Distribution Compliance Period”) shall
only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions of the 1933 Act or an exemption therefrom and in each case only in
accordance with applicable state and provincial securities laws;

          (p)

the Subscriber acknowledges that it has not acquired the Securities as a result
of, and will not itself engage in, any “directed selling efforts” (as defined in
Regulation S under the 1933 Act) in the United States in respect of any of the
Securities which would include any activities undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning the market
in the United States for the resale of any of the Securities; provided, however,
that the Subscriber may sell or otherwise dispose of any of the Securities
pursuant to registration of any of the Securities pursuant to the 1933 Act and
any applicable securities laws or under an exemption from such registration
requirements and as otherwise provided herein;

          (q)

hedging transactions involving the Securities may not be conducted unless such
transactions are in compliance with the provisions of the 1933 Act and in each
case only in accordance with applicable securities laws;

          (r)

the Subscriber acknowledges and agrees that the Issuers shall not consider the
Subscriber’s Subscription for acceptance unless the undersigned provides to the
Issuers, along with an executed copy of this Agreement:

          (i)

a fully completed and executed Questionnaire in the form attached hereto as
Exhibit “A”, and

          (ii)

such other supporting documentation that the Issuers or their legal counsel may
request to establish the Subscriber’s qualification as a qualified investor; and

          (s)

by completing the Questionnaire, the Subscriber is representing and warranting
that the Subscriber satisfies one of the categories of registration and
prospectus exemptions provided in National Instrument 45-106 – Prospectus and
Registration Exemptions (“NI 45-106”) adopted by the Canadian Securities
Administrators.

6.2                     In this Agreement, the term “U.S. Person” shall have the
meaning ascribed thereto in Regulation S promulgated under the 1933 Act and for
the purpose of the Agreement includes any person in the United States.

7.                       Representations and Warranties will be Relied Upon by
the Issuers

7.1                     The Subscriber acknowledges that the representations and
warranties contained herein are made by it with the intention that such
representations and warranties may be relied upon by the Issuers and their legal
counsel in determining the Subscriber’s eligibility to purchase the Securities
under applicable legislation, or (if applicable) the eligibility of others on
whose behalf it is contracting hereunder to purchase the Securities under
applicable legislation. The Subscriber further agrees that by accepting delivery
of the certificates representing the Securities on the Closing Date, it will be
representing and warranting that the representations and warranties contained
herein are true and correct as at the Closing Date with the same force and
effect as if they had been made by the Subscriber on the Closing Date and that
they will survive the purchase by the Subscriber of the Securities and will
continue in full force and effect notwithstanding any subsequent disposition by
the Subscriber of such Securities.

--------------------------------------------------------------------------------

- 7 -

8.                       Legending and Registration of Securities

8.1                     If the Subscriber is a resident of Canada, the
Subscriber hereby acknowledges that upon the issuance thereof, and until such
time as the same is no longer required under the applicable securities laws and
regulations, the certificates or other document representing any of the
Securities will bear a legend in substantially the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS
(AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT, OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE SECURITIES LAWS.

THE HOLDER OF THE SECURITIES REPRESENTED HEREBY MUST NOT TRADE THE SECURITIES IN
OR FROM A JURISDICTION OF CANADA UNLESS THE CONDITIONS IN SECTION 13 OF
MULTILATERAL INSTRUMENT 51-105 ISSUERS QUOTED IN THE U.S. OVER THE COUNTER
MARKETS ARE MET.”

8.2                     The Subscriber hereby acknowledges and agrees to the
Issuers making a notation on their records or giving instructions to their
registrar and transfer agent in order to implement the restrictions on transfer
set forth and described in this Agreement.

9.                       Resale Restrictions

9.1                     The Subscriber acknowledges that the Securities are
subject to resale restrictions in Canada and the United States and may not be
traded in Canada or the United States except as permitted by the applicable
federal, state and provincial securities laws and the rules made thereunder.

10.                     Collection of Personal Information

10.1                    The Subscriber acknowledges and consents to the fact
that the Issuers are collecting the Subscriber’s personal information for the
purpose of fulfilling this Agreement and completing the Offering. The
Subscriber's personal information (and, if applicable, the personal information
of those on whose behalf the Subscriber is contracting hereunder) may be
disclosed by the Issuers to (a) stock exchanges or securities regulatory
authorities, (b) the Issuers’ registrar and transfer agent, (c) Canadian tax
authorities, (d) authorities pursuant to the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) and (e) any of the other
parties involved in the Offering, including legal counsel, and may be included
in record books in connection with the Offering. By executing this Agreement,
the Subscriber is deemed to be consenting to the foregoing collection, use and
disclosure of the Subscriber's personal information (and, if applicable, the
personal information of those on whose behalf the Subscriber is contracting
hereunder) for the foregoing purposes and to the retention of such personal
information for as long as permitted or required by law or business practice.
Notwithstanding that the Subscriber may be purchasing Securities as agent on
behalf of an undisclosed principal, the Subscriber agrees to provide, on
request, particulars as to the nature and identity of such undisclosed
principal, and any interest that such undisclosed principal has in the Issuers,
all as may be required by the Issuers in order to comply with the foregoing.

--------------------------------------------------------------------------------

- 8 -

Furthermore, the Subscriber is hereby notified that:

  (a)

the Issuers may deliver to any securities commission having jurisdiction over
the Issuers, the Subscriber or this subscription, including any Canadian
provincial securities commissions and/or the SEC (collectively, the
“Commissions”) certain personal information pertaining to the Subscriber,
including such Subscriber’s full name, residential address and telephone number,
the number of shares or other securities of the Issuers owned by the Subscriber,
the number of Securities purchased by the Subscriber and the total purchase
price paid for such Securities, the prospectus exemption relied on by the
Issuers and the date of distribution of the Securities,

        (b)

such information is being collected indirectly by the Commissions under the
authority granted to them in securities legislation,

        (c)

such information is being collected for the purposes of the administration and
enforcement of the securities laws, and

        (d)

the Subscriber may contact the following public official in Ontario with respect
to questions about the Ontario Securities Commission’s indirect collection of
such information at the following address and telephone number:

Administrative Assistant to the Director of Corporate Finance
Ontario Securities Commission
Suite 1903, Box 55
20 Queen Street West
Toronto, ON M5H 3S8
Telephone: (416) 593-8086

11.                      Costs

11.1                    The Subscriber acknowledges and agrees that all costs
and expenses incurred by the Subscriber (including any fees and disbursements of
any special counsel retained by the Subscriber) relating to the purchase of the
Securities shall be borne by the Subscriber.

12.                      Governing Law

12.1                    This Agreement is governed by the laws of the Province
of British Columbia and the federal laws of Canada applicable therein. The
Subscriber, in its personal or corporate capacity and, if applicable, on behalf
of each beneficial purchaser for whom it is acting, irrevocably attorns to the
exclusive jurisdiction of the courts of the Province of British Columbia.

13.                      Currency

13.1                    Any reference to currency in this Agreement is to the
currency of the United States unless otherwise indicated.

--------------------------------------------------------------------------------

- 9 -

14.                      Survival

14.1                    This Agreement, including, without limitation, the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties hereto
notwithstanding the completion of the purchase of the Securities by the
Subscriber pursuant hereto.

15.                      Assignment

15.1                    This Agreement is not transferable or assignable.

16.                      Severability

16.1                    The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.

17.                      Entire Agreement

17.1                    Except as expressly provided in this Agreement and in
the exhibits, agreements, instruments and other documents attached hereto or
contemplated or provided for herein, this Agreement contains the entire
agreement between the parties with respect to the sale of the Securities and
there are no other terms, conditions, representations or warranties, whether
expressed, implied, oral or written, by statute or common law, by the Issuers or
by anyone else.

18.                      Notices

18.1                    All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication, including facsimile, electronic mail
or other means of electronic communication capable of producing a printed copy.
Notices to the Subscriber shall be directed to the address of the Subscriber set
forth on page 10 of this Agreement and notices to the Issuers shall be directed
to it at the address of the Issuers set forth on page 1 of this Agreement.

19.                      Counterparts and Electronic Means

19.1                    This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall constitute an
original and all of which together shall constitute one instrument. Delivery of
an executed copy of this Agreement by electronic facsimile transmission or other
means of electronic communication capable of producing a printed copy will be
deemed to be execution and delivery of this Agreement as of the date hereinafter
set forth.

20.                      Exhibits

20.1                    The exhibits attached hereto form part of this
Agreement.

21.                      Indemnity

21.1                    The Subscriber will indemnify and hold harmless the
Issuers and, where applicable, their directors, officers, employees, agents,
advisors and shareholders, from and against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all fees,
costs and expenses whatsoever reasonably incurred in investigating, preparing or
defending against any claim, lawsuit, administrative proceeding or investigation
whether commenced or threatened) arising out of or based upon any representation
or warranty of the Subscriber contained in this Agreement, the Questionnaire, or
in any document furnished by the Subscriber to the Issuers in connection
herewith being untrue in any material respect or any breach or failure by the
Subscriber to comply with any covenant or agreement made by the Subscriber to
the Issuers in connection therewith.

--------------------------------------------------------------------------------

- 10 -

IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement
as of the date of acceptance by the Issuers.

Subscriber Information   Register the Securities as set forth below:            
  (Name to Appear on Certificate) (Name of Subscriber)               (Account
Reference, if applicable Account Reference (if applicable):
___________________________               (Address, including Postal Code)      
      X     (Signature of Subscriber – if the Subscriber is an Individual)      
          X     (Signature of Authorized Signatory – if the Subscriber is not an
Individual)   Deliver the Securities as set forth below:                
(Attention - Name) (Name and Title of Authorized Signatory – if the Subscriber
is not an Individual)             (Account Reference, if applicable)       (SIN,
SSN, or other Tax Identification Number of the Subscriber)         (Street
Address, including Postal Code) (No PO Box)       (Subscriber’s Address,
including city and Postal Code)         (Telephone Number)                  
(Telephone Number)    

--------------------------------------------------------------------------------

- 11 -

ACCEPTANCE

The Issuers hereby accept the subscription as set forth above on the terms and
conditions contained in this Private Placement Subscription Agreement as of the
______ day of November, 2013.

NAKED BRAND GROUP INC.

 

Per:            __________________________________________________              
     Authorized Signatory

 

NAKED INC.

 

Per:            __________________________________________________              
     Authorized Signatory

--------------------------------------------------------------------------------

EXHIBIT “A”

CANADIAN INVESTOR QUESTIONNAIRE

TO: NAKED BRAND GROUP INC. and   NAKED INC.   (collectively, the “Issuers”)    
RE: Purchase of Convertible Notes (the “Securities”)    

Capitalized terms used in this Questionnaire and not specifically defined have
the meaning ascribed to them in the Private Placement Subscription Agreement
between the Subscriber and the Issuers to which this Exhibit A is attached.

In connection with the purchase by the Subscriber (being the undersigned, or if
the undersigned is purchasing the Securities as agent on behalf of a disclosed
beneficial Subscriber, such beneficial Subscriber, shall be referred herein as
the “Subscriber”) of the Securities, the Subscriber hereby represents, warrants
and certifies to the Issuers that the Subscriber:

  (i)

is purchasing the Securities as principal (or deemed principal under the terms
of National Instrument 45-106 - Prospectus and Registration Exemptions adopted
by the Canadian Securities Administrators (“NI 45-106”));

  (ii) (A) is resident in or is subject to the laws of one of the following
(check one):

  [   ] Alberta [   ] New Brunswick [   ] Prince Edward Island           [   ]
British Columbia [   ] Nova Scotia [   ] Quebec           [   ] Manitoba [   ]
Ontario [   ] Saskatchewan           [   ] Newfoundland and Labrador            
  [   ] United States:  _______________________ (List State of Residence)

    or         (B) [   ] is resident in a country other than Canada or the
United States; and

  (iii)

has not been provided with any offering memorandum in connection with the
purchase of the Securities.

In connection with the purchase of the Securities of the Issuers, the Subscriber
hereby represents, warrants, covenants and certifies that:

(a)

the Subscriber is not a trust company or trust company registered under the laws
of Prince Edward Island that is not registered or authorized under the Trust and
Loan Companies Act (Canada) or under comparable legislation in another
jurisdiction of Canada; and

    (b)

____ the Subscriber is an “accredited investor” within the meaning of NI 45-106,
by virtue of satisfying one of the following criteria (YOU MUST ALSO INITIAL OR
PLACE A CHECK- MARK ON THE APPROPRIATE LINE BELOW).

[   ] (a)
a person registered under the securities legislation of a jurisdiction of Canada
as an adviser or dealer, other than a person registered solely as a limited
market dealer under one or both of the Securities Act (Ontario) or the
Securities Act (Newfoundland and Labrador),

--------------------------------------------------------------------------------

- 13 -

[   ] (b)

an individual registered or formerly registered under the securities legislation
of a jurisdiction of Canada as a representative of a person referred to in
paragraph (a),

      [   ] (c)

an individual who, either alone or with a spouse, beneficially owns financial
assets having an aggregate realizable value that before taxes, but net of any
related liabilities, exceeds $1,000,000,

      [   ] (d)

an individual whose net income before taxes exceeded $200,000 in each of the 2
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded $300,000 in each of the 2 most recent calendar years and
who, in either case, reasonably expects to exceed that net income level in the
current calendar year,

      [   ] (e)

an individual who, either alone or with a spouse, has net assets of at least
$5,000,000,

      [   ] (f)

a person, other than an individual or investment fund, that has net assets of at
least $5,000,000 as shown on its most recently prepared financial statements and
that has not been created or used solely to purchase or hold securities as an
accredited investor as defined in this paragraph (f),

      [   ] (g)

an investment fund that distributes or has distributed its securities only to

  (i)

a person that is or was an accredited investor at the time of the distribution,

   

 

  (ii)

a person that acquires or acquired securities in the circumstances referred to
in sections 2.10 [Minimum amount investment] of NI 45-106, or 2.19 [Additional
investment in investment funds] of NI 45-106, or

   

 

  (iii)

a person described in paragraph (i) or (ii) that acquires or acquired securities
under section 2.18 [Investment fund reinvestment] of NI 45-106,

[   ] (h)

an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt,

      [   ] (i)

a trust company or trust company registered or authorized to carry on business
under the Trust and Loan Companies Act (Canada) or under comparable legislation
in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
fully managed account managed by the trust company or trust company, as the case
may be,

      [   ] (j)

a person acting on behalf of a fully managed account managed by that person, if
that person

  (i)

is registered or authorized to carry on business as an adviser or the equivalent
under the securities legislation of a jurisdiction of Canada or a foreign
jurisdiction, and

        (ii)

in Ontario, is purchasing a security that is not a security of an investment
fund,

[   ] (k)

a registered charity under the Income Tax Act (Canada) that, in regard to the
trade, has obtained advice from an eligibility adviser or an adviser registered
under the securities legislation of the jurisdiction of the registered charity
to give advice on the securities being traded,

      [   ] (l)

an entity organized in a foreign jurisdiction that is analogous to the entity
referred to in paragraph (a) in form and function,

      [   ] (m)

a person in respect of which all of the owners of interests, direct, indirect or
beneficial, except the voting securities required by law to be owned by
directors, are persons that are accredited investors,

--------------------------------------------------------------------------------

- 14 -

[   ] (n)

an investment fund that is advised by a person registered as an adviser or a
person that is exempt from registration as an adviser, or

      [   ] (o)

a person that is recognized or designated by the securities regulatory authority
or, except in Ontario and Québec, the regulator as an accredited investor.

The above representations and warranties will be true and correct both as of the
execution of this certificate and as of the closing time of the purchase and
sale of the Securities and acknowledges that they will survive the completion of
the issue of the Securities.

The Subscriber acknowledges that the foregoing representations and warranties
are made by the undersigned with the intent that they be relied upon in
determining the suitability of the Subscriber as a Subscriber of the Securities
and that this certificate is incorporated into and forms part of the Agreement
and the undersigned undertakes to immediately notify the Issuers of any change
in any statement or other information relating to the Subscriber set forth
herein which takes place prior to the closing time of the purchase and sale of
the Securities.

By completing this certificate, the Subscriber authorizes the indirect
collection of this information by each applicable regulatory authority or
regulator and acknowledges that such information is made available to the public
under applicable legislation.

DATED as of ________day of November, 2013.

      Print Name of Subscriber (or person signing as agent)

By: __________________________________________________
      Signature

       __________________________________________________
       Title

--------------------------------------------------------------------------------

EXHIBIT “B”

FORM OF PROMISSORY NOTE

PROMISSORY NOTE

THIS PROMISSORY NOTE is dated November 14, 2013

BETWEEN:

> > > > NAKED BRAND GROUP INC., formerly Search By Headlines.com Corp. (“NBGI”),
> > > > a Nevada corporation, and NAKED INC., formerly Naked Boxer Brief
> > > > Clothing Inc. (“Naked”), a Nevada corporation, both having an office for
> > > > notice at 2-34346 Manufacturers Way, Abbotsford, BC V2S 7M1
> > > > 
> > > > (together, the “Borrowers”)

AND:

> > > > ___________________, of _____________________________
> > > > 
> > > > (the “Lender”)

BACKGROUND:

A.          Naked is a wholly-owned subsidiary of NBGI operating a product
manufacturing and distribution business for men’s clothing products;

B.          Naked requires funds to expand its inventory and sales operations,
and, in order to raise funds for that purpose, (i) Naked and NBGI have
determined to issue joint and several convertible term promissory notes (the
“Kalamalka Loans”) to a group of accredited investors, as defined in applicable
securities legislation (the “Kalamalka Group”) in connection with an agency and
interlender agreement dated as of the date hereof (the “Agency Agreement”); and
(ii) NBGI has determined to issue certain warrants to purchase common shares in
its capital (each, a “Warrant”) to Kalamalka Partners Ltd. (the “Agent”) and to
each member of the Kalamalka Group; and

C.          The Lender is a member of the Kalamalka Group, is an accredited
investor, has entered into the Agency Agreement with the other members of the
Kalamalka Group, NBGI, Naked, and the Agent pursuant to which the Agent will
manage the obligations evidenced by this Note and the Security (as hereinafter
defined) for those obligations provided for in this Note on the Lender’s behalf
(as amended, supplemented and replaced from time to time) and has agreed to loan
funds to the Borrowers as provided for in this Note (the “Loan”).

NOW THEREFORE THE PARTIES HERETO AGREE as follows:

1.          For value received the Borrowers hereby jointly and severally
promise to pay to the Lender the sum of USD$________________ (the “Principal”)
on January 31, 2014 (the “Due Date”). This Note will bear interest (the
“Interest”) on the Principal outstanding, from time to time, both before and
after maturity, default and judgment, commencing the date of advance of the
Principal to the Borrowers until repaid to the Lender at the rate of twelve
percent (12%) per annum, calculated daily and payable on the Due Date.

--------------------------------------------------------------------------------

- 16 -

2.          On the Due Date, the Borrowers shall wire to a bank account
maintained by the Agent (the “Agent’s Account”) an amount equal to the Principal
and Interest, plus any other amounts owing under the Loan. The Borrower must
designate such payment to the Agent’s Account by notice in writing to the Agent
as “a payment with respect to the November 2013 Kalamalka Loan”. Such payment
shall be deemed to be a payment made rateably to each member of the Kalamalka
Group that is a Lender. For greater certainty, the Borrowers may not prepay all
or any portion of the Principal or any Interest without the prior written
consent of the Agent.

3.          At the Lender’s option, but subject to the provisions of the Agency
Agreement, the outstanding Principal and all accrued but unpaid Interest
represented by this Note will become immediately due and payable upon written
notice of acceleration given by the Agent to the Borrowers following the
occurrence of any of the following events (each an “Event of Default”):

(a)

if the Borrowers shall fail to pay any portion of the Principal, any Interest on
this Note or any other sum due hereunder, on the date on which such amount shall
become due and payable, whether at the stated Due Date or at any accelerated
date of maturity or at any other date fixed for payment;

    (b)

if the Borrowers shall fail to perform in any material respect any of the other
covenants and agreements set forth herein or in any security granted by either
of them in connection with their obligations under this Note and under any Note
issued to a Lender in connection with the Agency Agreement (collectively the
“Security”), and not cure such failure within ten (10) days after notice
thereof;

    (c)

if the Borrowers shall fail to pay any portion of any principal, interest or any
other sum due, or fail to perform in any material respect any of the other
covenants or agreements set forth in any loan documents or security granted by
either of them in connection with any other loans facilitated by the Agent and
not cure such failure within any curative period granted by the Agent or the
lenders with respect to such loans;

    (d)

if any material representation or warranty of the Borrowers in this Note, the
officer’s certificate of NBGI or the officer’s certificate of Naked provided in
connection herewith shall prove to have been false in any material respect upon
the date when made or deemed to have been made or repeated;

    (e)

if a Borrower shall fail to pay at maturity, or within any applicable period of
grace, any obligation for borrowed money or credit received or in respect of any
capitalized lease, in each case for which such Borrower’s obligations exceed
CAD$50,000, or fail to observe or perform any material term, covenant or
agreement contained in any material agreement by which it is bound and
evidencing or securing borrowed money or credit received or in respect of any
such capitalized lease for such period of time or otherwise as would permit
(assuming the giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the maturity
thereof, or any such holder or holders to rescind or to have a right to rescind
the purchase of any such obligations;

    (f)

if a Borrower shall make an assignment for the benefit of creditors, or admit in
writing its inability to pay or generally fail to pay its debts as they mature
or become due, or petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of a Borrower or of any substantial part of
its respective assets or shall commence any case or other proceeding relating to
a Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall authorize any of the
foregoing, or if any such petition or application shall be filed or any such
case or other proceeding shall be commenced against a Borrower or a Borrower
shall indicate its approval thereof, consent thereto or acquiescence therein or
such involuntary petition or application shall not have been dismissed within
sixty (60) days following the filing thereof;

--------------------------------------------------------------------------------

- 17 -

(g)

if a decree or order shall be entered appointing any trustee, custodian,
liquidator or receiver of a Borrower or of any substantial part of its assets,
or adjudicating a Borrower bankrupt or insolvent, or approving a petition in any
such case or other proceeding;

    (h)

if there shall remain in force, undischarged, unsatisfied, unvacated, unbonded
or unstayed, for more than sixty (60) days, any final judgment against a
Borrower that, with other such outstanding final judgments against a Borrower or
any subsidiary of a Borrower that are undischarged, unsatisfied, unvacated,
unbonded or unstayed, exceeds in the aggregate CAD$25,000 in excess of insurance
coverage which an insurer has acknowledged and confirmed it would provide with
respect to such judgment;

    (i)

if this Note or any Security shall be cancelled, terminated, revoked or
rescinded, or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind this Note or any Security shall be commenced by or on
behalf of a Borrower or its shareholders, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more provisions of this Note or any Security is illegal,
invalid or unenforceable in accordance with the terms thereof;

    (j)

if there shall occur (i) a sale or disposition of all or substantially all of
the assets of a Borrower, or (ii) any transfer of beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the United States Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of all or any portion of the outstanding shares of a
Borrower, in a single transaction or a series of related transactions except, in
the case of a transfer of beneficial ownership of common shares in the capital
of a Borrower where the shareholders of that Borrower immediately prior to such
transaction or series of related transactions retain directly or indirectly at
least fifty percent (50%) of the voting power in that Borrower or the successor
or acquiring entity (as applicable); and

    (k)

if (a) there occurs a Material Adverse Effect as defined in subsection (i) of
the definition thereof or that otherwise is not curable, or (b) there occurs any
other Material Adverse Effect that continues in existence uncured for five
business days. “Material Adverse Effect” means any event or series of events
that, individually or in the aggregate, results in (i) a material adverse change
in, or a material adverse effect upon, the operations, business, properties, or
condition (financial or otherwise) of a Borrower (including without limitation
the withdrawal by applicable authorities of a business license of a Borrower
which business license would be necessary to conduct its business as currently
conducted or as contemplated to be conducted), (ii) a material impairment of the
ability of a Borrower to perform under this Note, the Security to which it is a
party or any other note or agreement to which a Borrower is a party, or (iii) a
material adverse effect upon the legality, validity, binding effect or
enforceability against a Borrower of this Note, any Security to which it is a
party or any other note or agreement to which a Borrower is a party. For greater
certainty, a Material Adverse Effect shall include a material adverse change in
the business plans of the Borrowers as represented to the Agent.

4.          Upon the occurrence of an Event of Default and at any time
thereafter, provided the Event of Default has not been waived by the Agent or
the Borrowers have not theretofore remedied all outstanding Events of Default
within the prescribed time period, the Agent may at its option, but in
accordance with the provisions of the Agency Agreement, by notice to the
Borrowers:

(a)

declare the Principal, Interest and all other amounts owing under this Note to
be immediately due and payable; and

    (b)

enforce all rights and remedies granted under the Security.

--------------------------------------------------------------------------------

- 18 -

5.

Each of the Borrowers represents and warrants to the Lender that:

(a)

it is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or continuation, and is qualified
and licensed to do business in any jurisdiction in which the conduct of its
business or its ownership of property requires that it be so qualified, except
those jurisdictions where failure to be so qualified would not be reasonably
likely to have a Material Adverse Effect;

    (b)

it has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted and to enter into and carry out the transactions contemplated by this
Note and the Security;

    (c)

the execution, delivery and performance of this Note are within its powers, have
been duly authorized, are not or will not be in conflict with or constitute a
breach of any provision contained in its enabling documents, and do not or will
not contravene, conflict with or result in a violation or breach of, or result
in a default under, any provision of any material agreement to which it is a
party or by which it is bound, or give any person the right to (i) declare a
default or exercise any remedy under any such material agreement, (ii)
accelerate the maturity or performance of any such material agreement, or (iii)
cancel, terminate or modify any such material agreement;

    (d)

it has obtained or made all orders, consents, approvals, licenses,
authorizations or validations of, or filings, recordings or registrations with,
or exemptions by, any governmental or public body or authority, or any
subdivision thereof, required to authorize, or required in connection with, (i)
the execution, delivery and performance of this Note and the Security to which
it is a party, or (ii) the legality, validity, binding effect or enforceability
of this Note and the Security to which it is a party;

    (e)

it has not granted or agreed to grant any protective provisions, liquidation
preferences, redemption rights or other investor protection rights to any person
or entity;

    (f)

the audited financial statements of Naked for the fiscal year ended January 31,
2013, the unaudited financial statements of Naked for the period ending July 31,
2013, the audited financial statements of NBGI, presented on a consolidated
basis, for the fiscal year ended January 31, 2013, and unaudited financial
statements of NBGI for the period ending July 31, 2013 (collectively the
“Financial Statements”) and the related statements of income, cash flows and
shareholder’s equity of NBGI and its subsidiaries, on a consolidated basis, for
the fiscal years or periods ended on such dates, true and correct copies of
which have been furnished to the Agent and the Lenders prior to the date hereof,
present fairly in all material respects the consolidated financial position of
NBGI and its subsidiaries at the dates of such balance sheets and the results of
the operations of NBGI and its subsidiaries for the periods covered thereby and
the Financial Statements have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other, except that the unaudited financial
statements may not contain all footnotes required by generally accepted
accounting principles and may be subject to year-end audit adjustments;

    (g)

except as fully disclosed in the Financial Statements or otherwise disclosed to
the Agent there are no liabilities or obligations with respect to it of any
nature whatsoever (whether absolute, accrued, contingent or otherwise, and
whether or not due) which, either individually or in aggregate, would be
reasonably likely to be material to it;

    (h)

except as previously disclosed to the Agent or disclosed in the Financial
Statements, since July 31, 2013 there has been no change in its business,
operations, property, assets, liabilities or condition (financial or otherwise)
which change would be reasonably likely to have a Material Adverse Effect;

--------------------------------------------------------------------------------

- 19 -

(i)

upon any issuance of shares pursuant to the due exercise of the Warrants, such
shares will be duly authorized, validly issued, fully paid and non-assessable,
and free of any liens or encumbrances, except for restrictions on transfer under
applicable securities laws;

    (j)

this Note and the Security to which it is a party have been duly executed and
delivered by it and are legally valid and binding obligation of it, enforceable
against it in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability;

    (k)

except as previously disclosed to the Agent, there are no pending or, to either
Borrower’s knowledge, threatened actions or proceedings to which a Borrower is
party before any court or regulatory or administrative agency, whether Canadian
or foreign, in which a decision adverse to a Borrower would be reasonably likely
to have a Material Adverse Effect;

    (l)

it has filed or caused to be filed all tax returns required to be filed, and has
paid, or has made adequate provision for the payment of, all material taxes
reflected therein or otherwise owed;

    (m)

it does not own any real property and it has good and marketable title to all of
its material properties and material assets, including all material property
reflected in the most recent balance sheets included in the Financial Statements
free and clear of all Liens (as hereinafter defined) except Permitted Liens (as
hereinafter defined);

    (n)

to the best of its knowledge, it is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except where the failure to be so in compliance would not be
reasonably likely to have a Material Adverse Effect; and

    (o)

it is not in material default in or material breach of the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its material contracts, no condition exists that, with the
giving of notice or the lapse of time or both, would constitute such a material
default, and, to its knowledge, no counterparty to any such material contract is
in material default in or material breach of any such material contract.

6.          Except for Section 6(b) which is a covenant of NBGI only, each of
the Borrowers covenants and agrees that, so long as any of their obligations
under this Note remain outstanding, they shall do all of the following:

(a)

duly and punctually pay or cause to be paid the Principal and Interest and all
other amounts provided for in this Note and in the Security in accordance with
the terms hereof;

    (b)

reserve out of the authorized and unissued capital of NBGI an adequate number of
common shares such that, upon any exercise of the Warrants, such shares shall be
immediately issuable;

    (c)

preserve and maintain in full force and effect its legal existence and good
standing in its respective jurisdiction of organization and maintain
qualification in each jurisdiction in which qualification is required under
applicable law, except where the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect;

    (d)

notify the Agent in writing promptly upon becoming aware of any event or change
that has caused, or evidences, an Event of Default or a Material Adverse Effect,
together with a reasonably detailed description thereof and the actions it
proposes to take with respect thereto;

--------------------------------------------------------------------------------

- 20 -

(e)

notify the Agent in writing promptly upon entering into any discussions,
negotiations, agreements, understandings or arrangements relating to any
financing or acquisition proposal, whether completed or proposed, from the date
hereof to and including the earlier of the conversion or payment of all sums due
hereunder;

    (f)

notify the Agent in writing promptly upon obtaining knowledge of the institution
or threat of any action or proceeding against or affecting it or any of its
property, and any material development in any such action or proceeding, that:
(i) if adversely determined, has a reasonable possibility of giving rise to a
Material Adverse Effect, or (ii) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
transactions contemplated by this Note. It shall provide the Agent with
additional information regarding any such action or proceeding as may be
reasonably requested by the Agent to evaluate such action or proceeding,
including copies of any filings;

    (g)

keep all property necessary to its business in reasonably good working order and
condition, ordinary wear and tear excepted;

    (h)

make due and timely payment or deposit of all material federal, state,
provincial, local and other Canadian, US and foreign taxes, assessments or
contributions required by law;

    (i)

comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to intellectual property and environmental standards and controls),
except where the failure to so comply would not be reasonably likely to have a
Material Adverse Effect;

    (j)

take all actions and execute all writings or documents, including the
preparation, delivery and prosecution of authorization requests and filings with
governmental authorities, as may reasonably be requested by the Agent in
connection with the current or future exercise of a Warrant or other rights of
the Lender under this Note;

    (k)

keep adequately insured by financially sound and reputable insurers all assets
and property of a character customarily insured by persons engaged in similar
businesses similarly situated, including inventory, against loss or damage of
the kinds customarily insured against by such persons, in such amounts as are
customarily insured for by such persons, and, in the case of inventory, maintain
at minimum insurance equivalent to the value of the total indebtedness owed to
the Kalamalka Group; that it will forthwith notify the Agent of any significant
loss; that it will duly and punctually pay all premiums and other sums of money
for maintaining such insurance; and that it will name the Agent as an additional
loss payee on all insurance policies;

    (l)

deliver to the Agent:

  (i)

within 90 days of the fiscal year end, audited consolidated financial statements
of NBGI and any of its subsidiaries;

        (ii)

within 45 days of the end of a month, unaudited consolidated profit and loss
statement and balance sheet for the month;

        (iii)

within 45 days of the end of the first three (3) fiscal quarters and within 90
days of the end of the fourth fiscal quarter, a management report on the
quarter’s results and operations;

        (iv)

within 90 days of the fiscal year end, unaudited non-consolidated financial
statements of the Borrowers and any of their subsidiaries;

        (v)

at least 30 days before the commencement of each fiscal year, a business plan
for the next fiscal year, together with the operating, capital expenditure and
research and development budgets, approved by the Board;

--------------------------------------------------------------------------------

- 21 -

  (vi)

within three (3) business days after its receipt by either of the Borrowers, a
copy of any notice to such Borrower of any alleged material breach of contract
or obligation, together with management’s proposed manner of response to such
alleged breach;

        (vii)

within three (3) business days after any actual, apparent, or suspected loss of
any material amount of inventory or receivables, notice to the Agent of all
information concerning such loss or potential loss, together with management’s
proposed manner of response;

        (viii)

within three (3) business days after any change, extension, or other amendment
to one or more of the Borrowers’ loan facilities, notice to the Agent of all
information concerning such amendments and the reasons for same;

        (ix)

weekly updates with respect to the Borrowers’ current equity capital and debt
raising efforts;

        (x)

bi-weekly margin reports with respect to Naked within three (3) business days of
the end of each bi-weekly period including, without limitation, information
relating to detailed inventory and receivables listings; and

        (xi)

any such other information, accounts, data and projections reasonably required
by the Lender; and

(m)

in the case of Naked, maintain a borrowing base equivalent to a discount factor
of 0.90 multiplied by the value of the sum of the value of Naked’s inventory
plus the value of its accounts receivable and, in the case of NBGI, ensure that
Naked maintains such borrowing base. For greater certainty, except as otherwise
agreed between the parties, inventories will be calculated at the lower of cost
or market value and include adjustments for estimated obsolete or excess
inventory determined by future estimated sales in relation to older or out of
season product. Cost is based on actual cost on a weighted average basis. The
costs of finished goods inventories include raw materials and direct labour.
Inventory shall include raw material in transit in the possession of the
Borrower, materials in the course of production, work in progress, and unsold
finished goods. The calculation of accounts receivable for margining purposes
shall include only those accounts current as of sixty (60) days that are
expected to be collectable, except that up to $10,000 of receivables may be
included in the borrowing base for the purpose of calculating margin if such
receivables are more than sixty (60) days old but less than ninety (90) days
old. Naked and NBGI, within fifteen (15) days of either party being made aware
that Naked does not meet its borrowing base requirement, shall repay to the
Agent on behalf of the Kalamalka Group any amounts required to maintain Naked’s
borrowing base with the Lender.

7.          Each of the Borrowers covenants and agrees that, so long as any of
its obligations under this Note remain outstanding, it shall not do any of the
following without the Agent’s written consent:

(a)

use the funds advanced under the Loan for any purpose other than the financing
of inventory and receivables;

    (b)

incur any indebtedness or guarantee any indebtedness or issue or sell any debt
securities or guarantee any debt securities of others that rank or could rank in
priority to, or pari passu with, the Kalamalka Loans, other than (i) the
indebtedness evidenced by this Note; (ii) as disclosed in the Financial
Statements; and (iii) with respect to the Permitted Liens;

    (c)

create, incur, assume or suffer to exist any lien or encumbrance upon or with
respect to any of its property or assets (real or personal, tangible or
intangible) (“Liens”), whether now owned or hereafter acquired, or sell any such
property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable with recourse to it), or assign any right to receive income or permit
the filing of any security interest under the British Columbia Personal Property
Security Act or any other similar notice of lien or encumbrance under any
similar recording or notice statute, provided that the provisions of this
Subsection 7(c) shall not prevent the creation, incurrence, assumption or
existence of the following (collectively, the “Permitted Liens”):

--------------------------------------------------------------------------------

- 22 -

  (i)

financing statement registered in the British Columbia Personal Property
Registry on August 9, 2012 under Base Registration 893601G in favour of
Kalamalka Partners Ltd. with respect to NBGI;

        (ii)

UCC-1 Financing Statement registered in the State of Nevada on August 13, 2012
under Document Number 2012011822-4 in favour of Kalamalka Partners Ltd. with
respect to NBGI;

        (iii)

UCC-1 Financing Statement registered in the State of California on August 13,
2012 under Document Number 12-7324895970 in favour of Kalamalka Partners Ltd.
with respect to NBGI;

        (iv)

financing statement registered in the British Columbia Personal Property
Registry on August 9, 2012 under Base Registration 893591G in favour of
Kalamalka Partners Ltd. with respect to Naked;

        (v)

UCC-1 Financing Statement registered in the State of Nevada on August 13, 2012
under Document Number 20120021823-6 in favour of Kalamalka Partners Ltd. with
respect to Naked;

        (vi)

UCC-1 Financing Statement registered in the State of California on August 13,
2012 under Document Number 12-7324896123 in favour of Kalamalka Partners Ltd.
with respect to Naked;

        (vii)

inchoate Liens for taxes, assessments or governmental charges or levies not yet
due or Liens for taxes, assessments or governmental charges or levies being
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles;

        (viii)

Liens in respect of its property or assets imposed by law, which were incurred
in the ordinary course of business and do not secure indebtedness for borrowed
money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and
other similar Liens arising in the ordinary course of business, and which do not
in the aggregate materially detract from the value of its property or assets or
impair the use thereof in the operation of its assets subject thereto;

        (ix)

Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business consistent with past practices;

        (x)

the Liens created by the Security;

        (xi)

Liens that are subordinate to the Security; or

        (xii)

any Liens consented to in writing by the Agent from time to time, such consent
not to unreasonably withheld;

(d)

wind up, liquidate or dissolve its affairs, or convey, sell, lease or otherwise
dispose of all or any part of its property or assets (in one or a series of
related transactions), or enter into any sale- leaseback transactions for any
part of its property or assets involving any person other than Lender (or agree
to do any of the foregoing at any future time), except in each case for sales of
inventory, materials and equipment in the ordinary course of business consistent
with past practice; or

--------------------------------------------------------------------------------

- 23 -

(e)

make any distribution to any or all of its shareholders, or redeem or acquire
any or all of such shareholders’ shares or options in NBGI (other than issuances
of options or repurchases of options or equity securities at cost pursuant to
any equity plan adopted by NBGI for the benefit of employees or consultants of
NBGI); or create or suffer to exist any encumbrance or restriction on the
ability of Naked to (i) pay dividends or make other distributions to NBGI, (ii)
repay or prepay any indebtedness owed by Naked to NBGI.

8.          The Lender shall not be obligated to advance the Loan unless all
representations and warranties of the Borrowers contained in this Note and the
Security are true and correct, no Event of Default has occurred and is
continuing and the Agent has received on behalf of the Lender the following:

(a)

duly executed originals of this Note, the Security and all other documents which
the Borrowers have covenanted to deliver or cause to be delivered under this
Note or the Security;

    (b)

certificates of status or good standing for each of the Borrowers issued by the
relevant authority in its jurisdiction of incorporation and all jurisdictions
where it is required to be registered by virtue of conducting business in such
jurisdiction;

    (c)

a certified copy of resolutions of the directors of each of the Borrowers
authorizing the execution, delivery and performance of this Note, the Security
and the instruments, agreements, certificates and other documents contemplated
in this Note and the Security;

    (d)

a certificate of a responsible officer of each of the Borrowers, certifying
certain matters as to each of the Borrowers;

    (e)

in connection with the first issuance of notes to members of the Kalamalka Group
who are Lenders, a favourable opinion from counsel for each of the Borrowers (in
form and content satisfactory to counsel for the Agent) as to the status, power
and capacity of each Borrower, the due authorization, execution and delivery of
this Note and the Security, the enforceability of this Note, and, in the case of
NBGI, the validity of the Warrants; and

    (f)

evidence satisfactory to the Agent of the perfection of the Security in British
Columbia, Nevada, California, and any other jurisdiction where the Borrowers’
inventory or material assets are located.

9.          Concurrently with the execution of this Note, NBGI shall issue to
the Lender Warrant for the purchase of 75,000 Common shares of NBGI at an
exercise price of USD$0.10 per share on or before 4:00PM on November 13, 2016.
While this Note is outstanding the Lender shall be permitted to apply any or all
of the outstanding Principal and Interest to payment of the exercise price of
the respective Warrants.

10.        At the option of the Lender, at maturity or at any time prior to
maturity, the Lender may convert the balance outstanding under the Loan,
including Principal and Interest from time to time, in whole or in part into
Common shares of NBGI. The conversion rate will be one (1) common share of NBGI
for each twenty-five cents (USD$0.25) of the Loan so converted (the “Conversion
Price”). If, at any time while any portion of the Loan is outstanding, NBGI
subdivides, consolidates, or pays a stock dividend on the Common shares, the
Conversion Price will be simultaneously adjusted upon the happening of each such
event and the Conversion Price shall be calculated by multiplying the Conversion
Price in effect immediately prior to such event by the following fraction:

  (a)

the numerator of which is the number of common shares issued and outstanding
immediately prior to the event; and

--------------------------------------------------------------------------------

- 24 -

  (b)

the denominator of which is the number of common shares issued and outstanding
immediately after the completion of the event.

If, at any time while any portion of the Loan is outstanding, the common shares
are changed into a different class or classes of shares, whether by
reclassification, recapitalization, reorganization, arrangement, amalgamation or
merger, the Lender shall have the right to convert all or any portion of the
Loan outstanding into the kind and amount of shares and other securities and
property receivable upon such change by holders of that number of shares then to
which the Loan could have been converted immediately prior to such change.
Adjustments made under this Section shall be successive and each resulting new
Conversion Price shall continue in effect until the next adjustment (if any)
made hereunder.

11.        The Borrowers and the Lender acknowledge and agree that the rights
and obligation under this Note and the Security are subject to the provisions of
the Agency Agreement and that this Note ranks, in all respects, pari passu with
Notes issued to other members of the Kalamalka Group who are also parties to the
Agency Agreement. The Borrowers and the Lender further acknowledge and agree
that the rights and obligations under this Note, the Security, and the Agency
Agreement are separate and distinct from those rights and obligations contained
in the agency and interlender agreement among the Borrowers, the Agent, and
certain lenders dated August 10, 2012, as amended from time to time, (the “First
Loan Agency Agreement”) and the promissory notes and security agreements issued
in connection with and governed by the First Loan Agency Agreement.

12.        The Borrowers hereby waive presentment or demand for payment and
waive and forego any claim or right of set-off, contribution, or any other
defense or diminishment or set off of the amount herein evidenced and secured.
The Borrowers further waive all defenses or pleadings or cross-claims as answer
or to resist demand or repayment and acknowledge and acquiesce to the filing of
process by Lender and the taking of judgment and the execution of such process
and waives all defenses or counterpleading thereto excepting only prior payment
or the non-advance of the Principal of the Loan.

13.        SECURITIES DECLARATION AND ENFORCEABILITY

> NONE OF THE SECURITIES TO WHICH THIS NOTE RELATES HAVE BEEN REGISTERED UNDER
> THE UNITED STATES SECURITES ACT OF 1933 (THE “1933 ACT”), OR ANY U.S. STATE
> SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD,
> DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED
> HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE
> 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
> OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
> TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
> ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
> TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
> COMPLIANCE WITH THE 1933 ACT.

14.        This Note will be binding on and enure to the benefit of the Lender,
its successors and permitted assigns and the Borrowers and their respective
permitted successors and assigns.

15.        If any part or provision of this Note is invalid or unenforceable it
will at the election of the Lender be severed from this Note and the remainder
of this Note will be construed as if such invalid or unenforceable part or
provision had been deleted from this Note.

16.        This Note and all matters arising hereunder will be governed by the
laws of British Columbia.

--------------------------------------------------------------------------------

- 25 -

IN WITNESS WHEREOF the Borrowers have executed this Note effective as the date
first above written.

NAKED BRAND GROUP INC.
by its authorized signatory

 

__________________________
Name:
Title:

NAKED INC.
by its authorized signatory

 

__________________________
Name:
Title:

--------------------------------------------------------------------------------