Document:

Naked Brand Group Inc. Exhibit10.1 - Filed by newsfilecorp.com

SUBSCRIBER:
_____________________________________________

 

NAKED BRAND GROUP, INC. 

SUBSCRIPTION AGREEMENT 

PLACEMENT AGENT 

NOBLE FINANCIAL CAPITAL MARKETS 

NAKED BRAND GROUP, INC. 

SUBSCRIPTION AGREEMENT 

     This Subscription Agreement (the
“Subscription Agreement”) is entered into by and between Naked Brand
Group, Inc., a Nevada Corporation (the “Company” or “Naked”), and
the Subscriber(s) whose name appears on the signature page to this Subscription
Agreement (the “Subscriber” and, together with other subscribers to the
Offering (as hereinafter defined), “Investors”). 

     This Subscription Agreement is
executed and delivered in connection with the offering (the “Offering”)
of up to 240 units (each, a “Unit”), at a subscription price of $25,000
per Unit, for gross Offering proceeds of up to $6,000,000. Each Unit shall
consist of (i) a convertible senior secured debenture in the principal amount of
$25,000 (the “Convertible Debenture”), and (b) a five-year warrant (the
“Warrant”) to purchase 166,667 shares of common stock (each, a
“Share”) of the Company, par value $0.001 per share, which Warrant
entitles the holder thereof to acquire an additional Share (the “Warrant
Shares”) at an exercise price of $0.15 per Warrant Share, subject to
adjustment. The Convertible Debentures, shares of common stock issuable upon
conversion of the Convertible Debentures (the “Debenture Shares”), the
Warrants and the Warrant Shares are collectively referred to as the
“Securities.” 

     The Units are being offered to
prospective Investors by the Company through Noble Financial Capital Markets
(the “Placement Agent” or “Noble”) as exclusive Placement Agent
for the Offering and by such other FINRA member selling agents as shall be
engaged by Noble. The terms of the Offering and the Securities are more fully
described in the Confidential Private Placement Memorandum dated May 2, 2014
(the “Memorandum”). The Company is offering the Units for sale on the
terms described in the Memorandum on a “best efforts all or none basis” for the
first 160 Units (the “Minimum Amount”) and a “best efforts” basis for the
remaining 80 Units (the “Maximum Amount”) (plus an over-allotment option
of 80 Units if the Maximum Amount is completed by the termination date) until
all of the Units are sold or the Offering is withdrawn or terminated, whichever
occurs first.

     All subscription proceeds,
including the purchase price for the Units being tendered by Subscriber
contemporaneous herewith, will be held in escrow by U.S. Bank, National
Association (the “Escrow Agent”) pursuant to an escrow agreement (the
“Escrow Agreement”) among the Company, the Placement Agent and the Escrow
Agent; and will be disbursed from escrow at one or more closings to be held from
time to time at the direction of the Company and the Placement Agent provided
that no Closing will occur until at least such time as the Escrow Agent has
gross proceeds of at least the Minimum Amount (including the face amount of
Bridge Notes issued by the Company being converted into the Offering). The
Escrow Agent has been appointed for administrative convenience in connection
with the remittance and delivery of subscription proceeds and related
documentation. Investors will not be a party to the Escrow Agreement and the
consent of Investors will not be required prior to disbursement of subscription
proceeds from escrow. 

     This Subscription Agreement, the
Qualified Investor Questionnaire (the “Questionnaire”) the form of the
Warrant, the form of Security Agreement (the “Security Agreement”) and
the form of Registration Rights Agreement (the “Registration Rights
Agreement”) are exhibits to the Memorandum and are collectively referred to
as the “Transaction Documents”). 

	A. 	
      General.

     1.      Subscriber
hereby subscribes for and agrees to purchase from the Company, and the Company
agrees to sell to Subscriber, the number of Units set forth on the signature
page hereof. 

     2.      Subscriber
herewith tenders to the Company the entire amount of the purchase price for
Units subscribed for by check made payable to the order of “U.S. Bank, National
Association, Escrow Agent for Naked Brand Group, Inc.,” or Subscriber has paid
the entire amount of the purchase price by wire transfer of immediately
available funds in accordance with wire transfer instructions furnished
below: 

U.S. Bank National Association 
ABA# 091000022BNF: U.S. Bank
Trust- TFMA/C: 180121167365 
ATTN: TFM- Daryl Hosch 
Ref: 209028000- Naked
Brand Group 

Page 2 

NAKED BRAND GROUP, INC. 

     3.      Subscriber
herewith delivers to the Company a completed and signed Subscription Agreement
(including a counterpart signature page to the Registration Rights Agreement and
Security Agreement) and a completed and signed Questionnaire for the purchase of
the Units. 

     The purchase price for the Units
submitted to the Escrow Agent will be held for the Subscriber’s benefit.
Subscriber will not become a holder of Convertible Debentures and Warrants until
such time as Subscriber’s subscription is accepted by the Company and a Closing
of the purchase and sale of the Units being subscribed for by Subscriber takes
place. Until such time as Subscribers subscription is accepted or rejected, as
the case may be, this subscription shall be irrevocable, except as provided
below and Subscriber will not have access to his, her or its subscription
funds.

	B. 	
      Securities offered have not been registered under the
      Securities Act of 1933, as amended

     Subscriber acknowledges that (i)
the Securities have not been registered under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the
“Securities Act”), or the securities laws of any state; (ii) absent
registration, any resale or other transfer of any of the Securities must be made
in compliance with the Securities Act; (iii) the Securities are being offered
for sale in reliance upon exemptions from registration contained in the
Securities Act and applicable state securities laws; and (iv) the Company’s
reliance upon such exemption is based in part upon Subscriber’s representations,
warranties and agreements contained in this Subscription Agreement and in the
Questionnaire that Subscriber is delivering to the Company. 

	C. 	
      Security

     In accordance with the terms and
the conditions of the Security Agreement, the Company agrees to secure repayment
of the loan amount under the Convertible Debentures, all accrued and unpaid
interest thereon and all other payments due thereunder, as well as all of the
Company’s obligations thereunder by creating a Security Agreement for the
benefit of all Investors. From time to time, Investor may demand, and the
Company shall execute, such additional documents as may be reasonably necessary
to maintain the security. 

	D. 	
      Representations, Warranties, Acknowledgements and
      Agreements

     1.      In
order to induce the Company to accept this Subscription Agreement, Subscriber
represents and warrants to, and acknowledges and covenants with, the Company as
follows: 

          a.      Subscriber
understands that (i) this Subscription Agreement may be accepted or rejected in
whole or in part by the Company in its sole and absolute discretion, and (ii)
this Subscription Agreement shall survive Subscriber’s death, disability or
insolvency, except that Subscriber shall have no obligation in the event that
this Subscription Agreement is rejected by the Company. In the event that the
Company does not accept Subscriber’s subscription, or if the Offering is
terminated for any reason, Subscriber’s subscription payment (or portion
thereof, as the case may be) will be returned to Subscriber without interest
thereon or deduction therefrom. 

          b.      Subscriber
has carefully read the Memorandum and the exhibits thereto, including various
filings by the Company with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, attached as exhibits to the
Memorandum (the “SEC Documents,” and together with the Memorandum and the
Transaction Documents, collectively, the “Offering Materials”).
Subscriber has been advised to discuss with his, her, or its counsel the
representations, warranties and agreements which Subscriber is making by signing
this Subscription Agreement, the applicable limitations upon Subscriber’s resale
of the Securities, and the investment, tax and legal consequences of this
Subscription Agreement. No oral or written representations have been made and no
oral or written information has been furnished to the Subscriber or Subscriber’s
advisor(s) in connection herewith that were in any way inconsistent with the
information set forth in the Offering Materials and Subscriber disclaims
reliance on any statements made or information provided by the Company, the
Placement Agent or any of their respective employees, counsel or agents or any
other person or entity in the course of Subscriber’s consideration of an
investment in the Units other than those set forth in the Offering Materials.

Page 3 

NAKED BRAND GROUP, INC. 

          c.      Subscriber
understands that no federal or state agency has made any finding or
determination regarding the fairness of the Offering, or any recommendation or
endorsement of the Securities, the terms of this Offering or the adequacy of the
Offering Materials. 

          d.      Subscriber
is purchasing the Units for Subscriber’s own account, with the intention of
holding the Units for investment purposes, with no present intention of dividing
or allowing others to participate in this investment or of reselling or
otherwise participating, directly or indirectly, in a distribution of the
Securities; and Subscriber agrees not to make any sale, transfer or other
disposition of any of the Securities without registration under the Securities
Act and applicable state and provincial securities laws unless counsel
acceptable to the Company is of the opinion that such registration is not
required. Subscriber is not acquiring the Securities, or any interest therein,
on behalf of another person and Subscriber, if an entity, was not formed for the
purpose of purchasing the Units. 

          e.     
Subscriber’s overall commitment to investments which are not readily marketable
is not disproportionate to Subscriber’s net worth, and Subscriber’s investment
in the Units will not cause such overall commitment to become excessive. 

          f.      Subscriber,
if an individual, has adequate means of providing for his or her current needs
and personal and family contingencies and has no need for liquidity in his or
her investment in the Units. 

          g.      Subscriber
is an “accredited investor” as that term is defined in Rule 501(a) under
Regulation D promulgated by the SEC under the Securities Act. In addition,
Subscriber is an “accredited investor” as defined by National Instrument 45-106
– Prospectus and Registration Exemptions adopted by the Canadian
Securities Administrators. Subscriber is financially able to bear the economic
risk of this investment, including the ability to hold the Securities for an
indefinite period and can afford to sustain a complete loss of this investment.

          h.      The
address shown on the signature page to this Subscription Agreement is
Subscriber’s principal residence if he or she is an individual, or its principal
business address if a corporation or other entity. 

     
     i.      Subscriber,
together with any offeree representatives of Subscriber (as identified in the
Questionnaire) has such knowledge and experience in financial business matters
as to be capable of evaluating the merits and risks of an investment in the
Securities. Subscriber acknowledges that the Offering Materials may not contain
all information that is necessary to make an investment decision with respect to
the Company and the Units and that Subscriber must rely on his, her or its own
examination of the Company and the terms and conditions of the Offering prior to
making any investment decision with respect to the Units. 

   
       j.      Subscriber
has been given the opportunity to ask questions of and receive answers from the
Company and its executive officers concerning the business and operations of the
Company and the terms, provisions, and conditions of the Offering and to obtain
any such additional publicly available information that Subscriber deems
necessary or advisable to verify the accuracy of the information contained in
the Offering Materials, or such other information as Subscriber desired in order
to evaluate an investment in the Company; and Subscriber availed himself,
herself or itself of such opportunity to the extent considered appropriate in
order to evaluate the merits and risks of the proposed investment.

          k.     
Subscriber has made an independent evaluation of the merits of the investment
and acknowledges the highly speculative nature of an investment in the Units
including, without limitation, the information under “Risk Factors” in the
Memorandum. 

     
     l.      The
information provided by Subscriber in the Questionnaire is true, complete and
accurate and Subscriber has duly executed and delivered such Questionnaire and
any applicable exhibits thereto.

Page 4 

NAKED BRAND GROUP, INC. 

          m.      Subscriber
has taken no action that would give rise to any claim by any person for
brokerage commissions, finders’ fees or the like relating to this Subscription
Agreement or the transactions contemplated hereby (other than commissions to be
paid by the Company to the Placement Agent or as otherwise described in the
Offering Materials). 

          n.      Subscriber
understands that the Securities will bear a legend substantially similar to the
legend set forth immediately below until (i) such Securities shall have been
registered under the Securities Act and effectively disposed of in accordance
with a registration statement, or (ii) in the opinion of counsel reasonably
satisfactory to the Company such securities may be sold without registration
under the Securities Act: 

	“These securities have not been registered under the
      Securities Act of 1933, as amended (the “Securities Act”), or the “blue
        sky” or securities laws of any state and may not be offered, sold, pledged,
          hypothecated, assigned or transferred except (i) pursuant to a
            registration statement under the Securities Act which has become effective and
              is current with respect to these securities, or (ii) pursuant to a
                specific exemption from registration under the Securities Act but only upon a
                  holder thereof first having obtained the written opinion of counsel
                    reasonably satisfactory to the Company, that the proposed disposition is
                      consistent with all applicable provisions of the Securities Act as well as
      any applicable “blue sky” or similar securities laws.”    

If the Subscriber is resident in Canada, the Securities will
bear the additional legend set forth immediately below: 

	“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.”    

          o.      Subscriber,
if an individual, is at least 21 years of age. 

          p.      If
at any time prior to issuance of the Securities to Subscriber, any
representation or warranty of Subscriber shall no longer be true, complete and
accurate, Subscriber promptly shall give written notice thereof to the Company
providing full details. 

          q.      The
Subscriber represents that the amounts invested by it in the Company in the
Offering were not and are not directly or indirectly derived from activities
that contravene federal, state or international laws and regulations, including
anti-money laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign countries,
territories, entities and individuals. The lists of OFAC prohibited countries,
territories, persons and entities can be found on the OFAC website at
<http://www.treas.gov/ofac>. In addition, the programs administered by
OFAC (the “OFAC Programs”) prohibit dealing with individuals or entities
in certain countries regardless of whether such individuals or entities appear
on the OFAC lists.

          r.      Notwithstanding
the place where this Subscription Agreement may be executed by any of the
parties hereto, all of the terms, provisions, and conditions hereof shall be
construed in accordance with and governed by the laws of the State of New York,
without giving effect to its conflict of laws principles. Any dispute arising
out of or in connection with the interpretation or enforcement of this
Subscription Agreement, the other Offering Materials or Subscriber’s purchase of
the Units, shall be exclusively adjudicated before a federal or state court
located in New York, New York and the parties hereto exclusively submit to the
exclusive jurisdiction and venue of the federal and state courts in New York,
New York with respect to any action or legal proceeding commenced by any party,
and irrevocably waive any objection they now or hereafter may have respecting
the venue of any action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum and Subscriber consents to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
below or such other address as Subscriber shall furnish in writing to the
Company. 

Page 5 

NAKED BRAND GROUP, INC. 

          s.      Subscriber
hereby irrevocably waives trial by jury in any action or proceeding involving,
directly or indirectly, any matter (whether sounding in tort, contract, fraud or
otherwise) in any way arising out of or in connection with the interpretation or
enforcement of this Subscription Agreement, the other Offering Materials or
Subscriber’s purchase of the Units. 

          t.      Subscriber
acknowledges that he, she or it understands the meaning and legal consequences
of the representations, warranties and acknowledgments contained in this
Subscription Agreement and in the Questionnaire, and hereby agrees to indemnify
and hold harmless the Company, and each of its stockholders, officers,
directors, affiliates, controlling persons, agents and representatives, from and
against any and all loss, damage, expense, claim, action, suit or proceeding
(including the reasonable fees and expenses of legal counsel) as incurred
arising out of or in any manner whatsoever connected with (i) a breach of any
representation or warranty of Subscriber contained in this Subscription
Agreement or in the Questionnaire (ii) any sale or distribution by Subscriber in
violation of the Securities Act or any applicable state and foreign securities
laws or (iii) any untrue statement of a material fact made by Subscriber and
contained herein or in the Questionnaire, or omission to state herein or in the
Questionnaire, a material fact necessary in order to make the statements
contained herein or in the Questionnaire, in light of the circumstances under
which they were made, not misleading. Subscriber acknowledges that such damage
could be substantial since (a) the Securities are being offered without
registration under the Securities Act in reliance upon the exemption pursuant to
Section 4(a)(2) and/or Regulation D of the Securities Act for transactions by an
issuer not involving a public offering and, in various states, pursuant to
exemptions from registration, (b) the availability of such exemptions is, in
part, dependent upon the truthfulness and accuracy of the representations made
by Subscriber herein and in its Questionnaire, and (c) the Company will rely on
such representations in accepting Subscriber’s Subscription Agreement. 

          u.      Subscriber
is not subscribing for the Units as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, any
seminar or meeting, or any solicitation of a subscription by a person not
previously known to Subscriber in connection with investments in securities
generally. 

          v.      Subscriber
is not affiliated directly or indirectly with a member broker-dealer firm of the
Financial Industry Regulatory Authority (“FINRA”) as an employee,
officer, director, partner or shareholder or as a relative or member of the same
household of an employee, director, partner or shareholder of a FINRA member
broker-dealer firm, except as otherwise described on a separate sheet of paper
submitted by Subscriber to the Company along with and as part of this completed
Subscription Agreement. 

          w.      Subscriber
represents that he, she or it has full power and authority (corporate, statutory
or otherwise) to execute and deliver this Subscription Agreement, the other
Transaction Documents and to purchase the Units. The execution, delivery and
performance of this Subscription Agreement and the other Transaction Documents
will not: (i) violate, conflict with or result in a default under any provision
of the Certificate or By-Laws (or analogous organizational documents), if any,
of Subscriber; or (ii) violate or result in a violation of, or constitute a
default (whether after the giving of notice, lapse of time or both) under, any
provision of any law, regulation or rule, or any order of, or any restriction
imposed by any court or other governmental agency applicable to Subscriber. This
Subscription Agreement and other Transaction Documents constitute the legal,
valid and binding obligation of Subscriber, enforceable against Subscriber in
accordance with their respective terms except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally and subject to general principles
of equity (regardless of whether such enforcement is considered in a proceeding
at law or at equity). 

     
     x.      Subscriber
acknowledges and agrees that any subsequent trade in any of the Securities in or
from any province or territory of Canada will be a distribution subject to the
prospectus requirements of applicable provincial securities laws unless certain
conditions are met, which conditions include, among others, a requirement that
any certificate representing the any of the Securities (or ownership statement
issued under a direct registration system or other book entry system) bear the
restrictive legend specified in Multilateral Instrument 51-105 or National
Instrument 45-102, as applicable (the “51-105 Legend”). As Subscriber is
not a resident of Canada, Subscriber undertakes not to trade or resell any of
the Securities in or from Canada unless the trade or resale is made in
accordance with Multilateral Instrument 51-105 or National Instrument 45-102, as
applicable, and Subscriber understands and agrees that the Company and others
will rely upon the truth and accuracy of these representations and warranties
made in this Agreement and agrees that if such representations and warranties
are no longer accurate or have been breached, Subscriber shall immediately
notify the Company. By executing and delivering this Agreement and as a
consequence of the representations and warranties made by Subscriber in this
Agreement, Subscriber directs the Company not to include the 51-105 Legend on
any certificates representing any of the Securities to be issued to Subscriber
and, as a consequence, Subscriber will not be able to rely on the resale
provisions of MI 51-105 or National Instrument 45-102, and any subsequent trade
in any of the Securities in or from any jurisdiction of Canada will be a
distribution subject to the prospectus requirements of applicable Canadian
securities laws. If Subscriber wishes to trade or resell any of the Securities
in or from any jurisdiction of Canada, Subscriber agrees and undertakes to
return, prior to any such trade or resale, any certificate representing any of
the Securities to the Company’s transfer agent to have the 51-105 Legend
imprinted on such certificate or to instruct the Company’s transfer agent to
include the 51-105 Legend on any ownership statement issued under a direct
registration system or other book entry system. 

Page 6 

NAKED BRAND GROUP, INC. 

     2.      In
order to induce Subscriber to execute and deliver this Subscription Agreement,
the Company represents and warrants to, and covenants with, Subscriber as
follows: 

          a.      Subsidiaries.
The Company’s Subsidiaries as of the date hereof are set forth in the SEC
Documents. The Company owns, directly or indirectly, 100% of each Subsidiary and
such ownership interest is, other than set out in the Security Agreement, free
and clear of any liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued, fully paid and non-assessable and
free of preemptive and similar rights to purchase securities. Neither the
Company nor the Subsidiaries are subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any Subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any Subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
Subsidiary. 

          b.      Organization
and Qualification. Each of the Company and each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and has the requisite power
and authority to own and use its properties and assets and to carry on its
business as currently conducted and contemplated to be conducted. Each of the
Company and each Subsidiary is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to result
in a material adverse effect on the business, condition (financial or
otherwise), operations, prospects or property of the Company or a Subsidiary,
taken as a whole (“Material Adverse Effect”), and no proceeding has been
initiated in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.

          c.      Authorization;
Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the board of directors or the Company’s stockholders
in connection therewith, other than in connection with the Required Approvals
(as defined herein). Each Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except: (i) as may be limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. 

          d.      No
  Conflicts. The execution, delivery and performance by the Company of the
  Transaction Documents, the issuance and sale of the Securities and the
  consummation by it of the transactions contemplated hereby and thereby to which
  it is a party do not and will not: (i) conflict with or violate any provision of
  the Company’s or any Subsidiary’s certificate or articles of incorporation,
  bylaws or other organizational or charter documents, (ii) conflict with, or
  constitute a default (or an event that with notice or lapse of time or both
  would become a default) under, result in the creation of any lien upon any of
  the properties or assets of the Company or any Subsidiary, or give to others any
  rights of termination, amendment, acceleration or cancellation (with or without
  notice, lapse of time or both) of, any agreement, credit facility, debt or other
  instrument (evidencing a Company or Subsidiary debt or otherwise) or other
  understanding to which the Company or the Subsidiary is a party or by which any
  property or asset of the Company or the Subsidiary is bound or affected, or
  (iii) subject to the Required Approvals (as defined below), conflict with or
  result in a violation of any law, rule, regulation, order, judgment, injunction,
  decree or other restriction of any court or governmental authority to which the
  Company or a Subsidiary is subject (including federal and state securities laws
  and regulations), or by which any property or asset of the Company or a
  Subsidiary is bound or affected; except in the case of each of clauses (ii) and
  (iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect. 

Page 7 

NAKED BRAND GROUP, INC. 

          e.      Filings,
Consents and Approvals. Neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than the filing of a Current Report on Form 8-K and a Form D with the
Securities and Exchange Commission (the “Commission”) and such filings as
are required to be made under applicable state and foreign securities laws (the
“Required Approvals”). 

          f.      Issuance
of the Securities. Each of the Convertible Debenture and the Warrant are
duly authorized and, when issued and paid for in accordance with the terms of
the applicable Transaction Documents, will be duly and validly issued, fully
paid and non-assessable, and free and clear of all liens other than restrictions
on transfer provided for in the Transaction Documents. The Debenture Shares,
upon the conversion of the Convertible Debenture, subject to stockholder
approval of an increase in the Company’s authorized capitalization, to the
extent necessary, duly authorized and, when issued and paid for in accordance
with the terms of the applicable Transaction Documents, will be duly and validly
issued, fully paid and non-assessable, and free and clear of all liens other
than restrictions provided for in the Transaction Documents. The Warrant Shares
issuable upon exercise of the Warrant, subject to stockholder approval of an
increase in the Company’s authorized capitalization, to the extent necessary,
have been duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and non-assessable, free and clear of all liens other than restrictions on
transfer provided for in the Transaction Documents. Subject to stockholder
approval of an increase in the Company’s authorized capitalization, to the
extent necessary, the Company has reserved from its duly authorized capital
stock, such number of securities for issuance upon conversion or exercise of the
Note and Warrant, as applicable. 

          g.      Capitalization;
Additional Issuances. All of the issued and outstanding securities of the
Company as of the date hereof are as set forth in the SEC Documents. Except as
set forth in the SEC Documents, as of the date hereof, there are no outstanding
agreements or preemptive or similar rights affecting the issuance of the
Convertible Debentures and no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, the Convertible
Debentures. The exercise price of any of the Company’s outstanding warrants and
options are set forth in the SEC Documents. 

          h.      Litigation.
Except as set forth in Schedule 2(h) , there are no actions or proceedings
pending or, to the knowledge of the Company, threatened by or against Company or
any of its Subsidiaries involving more than, individually or in the aggregate,
Fifty Thousand Dollars ($50,000). There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the UCC Pledge or the
issuance of the Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.

Page 8 

NAKED BRAND GROUP, INC. 

          i.      Regulatory
Permits. Each of the Company and each Subsidiary possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as currently conducted or as contemplated to be conducted, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit. 

          j.      SEC
Reports; Financial Statements. The Company has filed all reports required to
be filed by it under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the twelve months preceding the date
hereof (the foregoing materials being collectively referenced to as the “SEC
Reports”) on a timely basis or has timely filed a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with the rules and regulations of the Commission with respect thereto
as in effect at the time of filing. Such financial statements have been prepared
in accordance with U.S. GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by U.S. GAAP, and fairly
present in all material respects the financial position of the Company as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. 

          k.      Private
Placement. Assuming the accuracy of the Investors’ representations and
warranties set forth herein, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company to the
Investors as contemplated hereby. 

          l.      No
General Solicitation. Neither the Company nor any person acting on behalf of
the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to Investors. 

         m.      Acknowledgment
Regarding the Investors’ Purchase of Securities. The Company acknowledges
and agrees that each Investor is acting solely in the capacity of an arm’s
length Investor with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Investor is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Investor or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to such Investor’s
purchase of the Securities. The Company further represents to each Investor that
the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives. 

          n.      Compliance.
Neither the Company nor any Subsidiary: (i) is in violation of any order of any
court, arbitrator or governmental body or (ii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in each case as could not have or reasonably be expected to
result in a Material Adverse Effect. 

          o.      Title
to Assets. The Company and each Subsidiary have good and marketable title in
all personal property owned by them that is material to the business of the
Company and each Subsidiary, in each case, free and clear of all liens, except
for liens previously granted by the Company, and listed on Schedule 2(o), liens
that do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and each Subsidiary and liens for the payment of federal, state, foreign
or other taxes, the payment of which is neither delinquent nor subject to
penalties (“Permitted Liens”). Any real property and facilities held under lease
by the Company and each Subsidiary are held by them under valid, subsisting and
enforceable leases with which the Company and each Subsidiary are in
compliance.

Page 9 

NAKED BRAND GROUP, INC. 

          p.      Intellectual
Property. The Company and each Subsidiary exclusively own all right, title
and interest in, or possesses adequate and enforceable rights to use, all
patents, patent applications, trademarks, trade names, service marks, internet
domain names, together with the goodwill associated therewith, copyrights,
rights, licenses, franchises, trade secrets, confidential information,
processes, formulations, software and source and object codes (collectively, the
“Intangibles”) necessary for the conduct of their businesses. To the best
of the knowledge of the Company and the Subsidiary, neither the Company nor any
Subsidiary has infringed upon the rights of others with respect to the
Intangibles and neither the Company nor any Subsidiary have received notice that
they have or may have infringed or are infringing upon the rights of others with
respect to the Intangibles, or any notice of conflict with the asserted rights
of others with respect to the Intangibles that could, individually or in the
aggregate, or could reasonably be expected to have, have a Material Adverse
Effect. “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect. 

          q.      Insurance.
The Company and each Subsidiary is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which
the Company and each Subsidiary are engaged. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. 

          r.      Transactions
With Affiliates and Employees. Except as may be described in the SEC
Documents, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company, is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $10,000, other than for: (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred in the ordinary course of business on behalf of the Company and (iii)
other employee benefits, including stock option agreements, under any stock
option plan of the Company. 

          s.      Certain
Fees. Other than the cash placement fee and warrants issuable to Noble and
certain selected dealers in connection with the Offering, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person with respect to the transactions contemplated by
the Transaction Documents. Investor shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other persons for
fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents. 

          t.      Investment
Company. The Company is not, and is not an affiliate of, and immediately
after receipt of payment for the Securities, will not be or be an affiliate of,
an “investment company” within the meaning of the Investment Company Act of
1940, as amended. 

          u.      Tax
Returns. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary have filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary. 

          v.      Foreign
Corrupt Practices. None of the Company, any Subsidiary or, to the knowledge
of the Company, any agent or other person acting on behalf of the Company or any
Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law
or (iv) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended. 

Page 10 

NAKED BRAND GROUP, INC. 

          w.      No
Disagreements with Accountants or Lawyers. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company which could affect the Company’s ability to perform any
of its obligations under any of the Transaction Documents. 

          x.      Indebtedness.
Except as disclosed in schedule 2(x), neither the Company nor any Subsidiary is
in default with respect to, or liable under (x) any liabilities for borrowed
money or amounts owed in excess of $100,000 (other than trade accounts payable
incurred in the ordinary course of business), or (y) any guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto). 

          y.      Internal
Controls. Except as disclosed in the SEC Documents, the Company is in
compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently
applicable to the Company. The Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in the
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including the Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of the
end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the Company's
internal controls (as such term is defined in Item 308 of Regulation S-K) or, to
the Company's knowledge, in other factors that could significantly affect the
Company's internal controls. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
U.S. GAAP and the applicable requirements of the Exchange Act. 

          z.      OFAC.
None of the Company, any Subsidiary or, to the knowledge of the Company, any
director, officer, agent, employee or Affiliate of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will
not, directly or indirectly, use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other person, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by OFAC. 

          aa.      Full
Disclosure. All of the disclosure furnished by or on behalf of the Company
to the Investors regarding the Company, its business and the transactions
contemplated hereby is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. 

	E. 	
      Registration Rights

     Naked has agreed that, within
sixty (60) days following the final Closing of the Offering, it will file a
registration statement under the Securities Act to register the resale of the
Debenture Shares and Warrant Shares issued in the Offering, thereafter, it shall
use its reasonable commercial efforts to cause the registration statement to be
declared effective by the SEC within one hundred and fifty (150) days of the
date of such final Closing. Execution by the Subscriber of the Registration
Rights Agreement Counterpart Signature Page included as part of this
Subscription.

Page 11 

NAKED BRAND GROUP, INC. 

Agreement shall constitute execution of the Registration Rights
Agreement, the form of which is attached as Exhibit E to the Memorandum.

	F. 	
      Appointment of Collateral Agent; Indemnification of
      Collateral Agent.

          a.      Appointment
of Collateral Agent. Each Investor hereby appoints, authorizes and empowers
CSD Holdings, LLC (the “Collateral Agent”) to act as the collateral agent
and as representative, attorney-in-fact and agent, with full power of
substitution, to act in the name, place and stead of each of Investor, to take
all actions necessary or appropriate in its judgment for the accomplishment of
the terms of any of the Transaction Documents, and to act on behalf of each
Investor and to do or refrain from doing all such further acts and things, to
make all decisions and determinations, and to execute, deliver and receive all
such documents, as it shall deem necessary or appropriate in conjunction with
any of the transactions contemplated by the Transaction Documents. This
appointment may be terminated, and such termination shall be effective, upon the
earlier of the Collateral Agent’s resignation as collateral agent and the
written consent of the holders of a majority-in-interest of the Convertible
Debentures. 

          b.      Limitation
of Liability; Indemnification. In addition to any and all protections and
rights that may be granted hereunder to the Collateral Agent as collateral
agent, to the maximum extent permissible by law, the Collateral Agent will incur
no liability with respect to any action or inaction taken or failed to be taken
in connection with its services as the collateral agent, except its own willful
misconduct or gross negligence. In all questions arising under any of the
Transaction Documents, the Collateral Agent may rely on the advice of counsel of
its choosing, and the Collateral Agent will not be liable to any party to any of
the Transaction Documents or any other person or party for anything done,
omitted or suffered in good faith by it in its capacity as the collateral agent
based on such advice. Each of the Investors (a) agrees, jointly and severally,
to indemnify, defend and save harmless the Collateral Agent from and against any
and all loss, liability or expense (including the reasonable fees and expenses
of outside counsel and experts and their staffs and all expense of document
location, duplication and shipment) arising out of or in connection with the
Collateral Agent’s execution and performance of its duties as collateral agent
under any of the Transaction Documents (a “Collateral Agent Expense”),
except to the extent that such Collateral Agent Expense is finally adjudicated
to have been primarily caused by the gross negligence or willful misconduct of
the Collateral Agent, in its capacity as collateral agent, and (b) acknowledges
and agrees that the foregoing indemnities shall survive the Collateral Agent’s
resignation as the collateral agent or the termination of any of the Transaction
Documents. In no event shall the Collateral Agent, in its capacity as the
collateral agent, be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Collateral Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action. 

          c.      Related
Party. Each Investor acknowledges and agrees that (i) the Collateral Agents
and its present or former members, employees, officers, managers,
representatives and affiliates and the immediate family members of any of the
foregoing persons are or may become in the future a party to or a beneficiary of
a contract with the Company or have or may have in the future an interest in any
property used or held for use by the Company or take actions that may conflict
with the interest of the Investors (the “Affiliate Activities”), (ii) the
Collateral Agent is not under any duty to disclose to any of the Investors or
use on behalf of any of the Investors any information whatsoever about or
derived from the Affiliate Activities or to account for any revenue or profits
obtained in connection with the Affiliate Activities as a result of acting as an
agent (or in any other capacity) hereunder and under any of the transaction
agreements related to the Offering, and (iii) the Collateral Agent is not
required to restrict any of its activities as a result of acting as an agent (or
in any other capacity) hereunder and under any of the transaction agreements
related to the Offering and that it may undertake any activities without further
consultation with or notification to any of the Investors.

	G. 	
      Notice Provisions

     Any and all notices, demands or
requests required or permitted to be given under this Subscription Agreement
shall be given in writing and sent, by certified U.S. mail, return receipt
requested, by facsimile electronic mail, by hand, or by overnight courier,
addressed to the parties hereto at their addresses set forth above or such other
addresses as they may from time-to-time designate by written notice, given in
accordance with the terms of this Section G, together with copies thereof
as follows: 

Page 12 

NAKED BRAND GROUP, INC. 

     If to the Company: 

          Naked
Brand Group
Inc. 
          #2
34346 Manufacturers
Way 
          Abbotsford,
BC Canada V2S
7M1 
          Telephone:
604-855-4767 
          Email:
________________
          Attention:
President 

     In the case of Subscriber, to the
address of Subscriber on the signature page to this Agreement. 

     Notice given as provided in this
Section shall be deemed effective: (i) on the business day hand delivered (or,
if it is not a business day, then the next succeeding business day thereafter),
(ii) on the first business day following the sending thereof by overnight
courier, and (iii) on the seventh calendar day (or, if it is not a business day,
then the next succeeding business day thereafter) after the depositing thereof
into the exclusive custody of the U.S. Postal Service. As used herein, the term
business day (other than Saturday or Sunday) shall mean any day when commercial
banks are open in the State of New York. 

	H. 	
      Miscellaneous.

     1.      This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns.

     2.      This
Subscription Agreement supersedes all prior arrangements or understandings with
respect thereto, whether oral or written. The terms and conditions of this
Subscription Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors, heirs and assigns. 

     3.      The
Offering Materials constitute the entire agreement between the Subscriber and
the Company with respect to the subject matter hereof and supersede all prior
oral or written agreements and understandings, if any, relating to the subject
matter hereof. The terms and provisions of this Subscription Agreement may be
waived, or consent for the departure therefrom granted, only by a written
document executed by the party to be bound thereby.

     4.      No
term or provision contained herein may be modified, amended or waived except by
written agreement or consent signed by the party or parties to be bound thereby.
A waiver by either party of a breach of any provision of this Subscription
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party. 

     5.      Subscriber
acknowledges that the subscription made hereby is not binding upon the Company
until the Company accepts it. The Company has the right to accept or reject this
subscription in whole or in part in its sole and absolute discretion. If this
subscription is rejected in whole, the Company shall return the purchase price
to Subscriber, without interest or deduction, and the Company and Subscriber
shall have no further obligation to each other by reason of this Subscription
Agreement or the subscription made hereby. 

     6.      The
representations, warranties and covenants of the Company and the Subscriber made
in this Subscription Agreement shall survive the Closing and the execution and
delivery hereof and delivery of the Securities. 

     7.      Each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Subscription Agreement, the other Transaction Documents and
the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated. 

Page 13 

NAKED BRAND GROUP, INC. 

OFFERING INFORMATION, LEGENDS, AND NOTICES 

     THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
(THE “SEC”), OR ANY STATE REGULATORY AUTHORITY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

     IT IS INTENDED THAT THE
SECURITIES OFFERED HEREBY WILL BE OFFERED TO ACCREDITED INVESTORS, AS DEFINED IN
RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”).

     THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND ARE BEING OFFERED PURSUANT
TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS FOR NONPUBLIC OFFERINGS. SUCH EXEMPTIONS LIMIT
THE NUMBER AND TYPES OF INVESTORS TO WHICH THE OFFERING WILL BE MADE AND
RESTRICT SUBSEQUENT TRANSFERS OF THE SECURITIES SUCH SECURITIES MAY ONLY BE
RESOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IF, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. 

     THE SECURITIES OFFERED HEREBY
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN A LOSS OF THEIR
ENTIRE INVESTMENT. INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY ARE
FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS OFFERING. 

     THE OFFEREE, BY ACCEPTING
DELIVERY OF THE OFFERING MATERIALS, AGREES TO RETURN THE OFFERING MATERIALS AND
ALL ACCOMPANYING OR RELATED DOCUMENTS TO THE COMPANY UPON REQUEST IF THE OFFEREE
DOES NOT AGREE TO PURCHASE ANY OF THE SECURITIES OFFERED HEREBY. 

     ANY OFFERING MATERIALS SUBMITTED
IN CONNECTION WITH THE PRIVATE PLACEMENT OF THE SECURITIES DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED. ANY REPRODUCTION OR DISTRIBUTION OF ANY OFFERING
MATERIALS IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF THEIR CONTENTS,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, IS PROHIBITED. ANY PERSON
ACTING CONTRARY TO THE FOREGOING RESTRICTIONS MAY PLACE HIM/HERSELF AND THE
COMPANY IN VIOLATION OF FEDERAL OR STATE SECURITIES LAWS. 

NASAA UNIFORM LEGEND 

     IN MAKING AN INVESTMENT DECISION
INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. 

Page 14 

NAKED BRAND GROUP, INC. 

FOR RESIDENTS OF FLORIDA 

     PURSUANT TO THE FLORIDA
SECURITIES ACT, WHERE SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, ANY
SALE MADE SHALL BE VOIDABLE BY SUCH FLORIDA INVESTOR EITHER WITHIN THREE DAYS
AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH INVESTOR TO THE ISSUER,
AN AGENT OF THE ISSUER, OR AN ESCROW AGENT, OR WITHIN THREE DAYS AFTER THE
AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER
OCCURS LATER. 

Page 15 

NAKED BRAND GROUP, INC. 

SIGNATURE PAGE FOR: 

INDIVIDUAL INVESTOR 

IN WITNESS WHEREOF, this Subscription Agreement has been
executed by Subscriber and by the Company on the respective dates set forth
below. 

	Signature 	Signature (If Purchased Jointly) 
	 	 
	_____________________________________________	_____________________________________________
	 	 
	Print Name ____________________________________	Print Name
    ____________________________________
	 	 
	Date: ________________________________________	Date:
    _________________________________________
	 	 
	Social Security # ________________________________	Social Security #
      _________________________________
	 	 
	Residential Address _____________________________	Residential Address
      ______________________________
	 	 
	_____________________________________________	______________________________________________ 
	  	  
	Telephone # ___________________________________	Telephone #
    ____________________________________
	 	 
	Fax # _________________________________________	Fax #
    __________________________________________
	 	 
	Email: ________________________________________	Email:
    _________________________________________
	 	 
	EXACT
      Name in which Securities are to be issued: 
	 
	 
	Number of Units:
      _______________________________________________________________	  
	 	 
	Purchase Price: $
      ___________________________________________________	  

	Form of Joint Ownership (if applicable): 	[ ] Tenants-in-Common 	[ ] Joint Tenants with Right of 
	Survivorship 
	 
	[
      ]                  
      Others:
      __________________________________________________________________________________________________________________________

Page 16 

NAKED BRAND GROUP, INC. 

SIGNATURE PAGE FOR: 

PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY OR TRUST

     IN WITNESS WHEREOF, this
Subscription Agreement has been executed by Subscriber and by the Company on the
respective dates set forth below. 

Name of Partnership, Corporation, and Limited Liability Company
or Trust
_____________________________________________________________

	By: ________________________________________	Federal Tax ID Number
      ______________________________
	 	 
	Name: ______________________________________	State of Organization
      ________________________________
	 	 
	Title: _______________________________________	  
	 	 
	Date: _______________________________________	  
	 	 
	Principal Business Address:
      ___________________________________________________________________________________________________________
	 
	Attn: _______________________________________	  
	 	 
	Telephone: __________________________________	  
	 	 
	Fax: ________________________________________	  
	 	 
	Email: _______________________________________	  
	 	 
	EXACT Name in which Securities are to be issued: 

	 
	 
	Number of Units:
________________________________________	  
	 	 
	Purchase Price: $ _________________________________	  

Page 17 

NAKED BRAND GROUP, INC. 

SIGNATURE PAGE FOR: 

SUBSCRIPTION AGREEMENT ACCEPTANCE 

NAKED BRAND GROUP, INC., a Nevada corporation 

 

	By: 	 	 
	 	 	 
	Printed Name: 	 	 
	 	 	 
	Title: 	 	 
	 	 	 
	Dated: 	 	 

SUBSCRIPTION AGREEMENT NO:
_____________________________

SUBSCRIBER:
____________________________________________

NUMBER OF UNITS:
_____________________________________

PURCHASE PRICE: $
___________________________________

Page 18 

NAKED BRAND GROUP, INC. 

COUNTERPART SIGNATURE PAGE FOR: 

REGISTRATION
RIGHTS AGREEMENT 

     IN WITNESS WHEREOF, this
Registration Rights Agreement has been executed by Subscriber and by the Company
on the respective dates set forth below. 

	Subscriber Signature(s): 	 	Print Names of Subscriber(s): 
	 	 	 
	 	 	 

Dated __________________________________, 2014 
Names must
conform to signature page of the Subscription Agreement. 

THE COMPANY: 

NAKED BRAND GROUP, INC.

	By: 	  
	         Name: 	  
	         Title: 	  
	  	  
	Dated: _______________, 2014 	

Page 19 

NAKED BRAND GROUP, INC. 

COUNTERPART SIGNATURE PAGE FOR: 

SECURITY
AGREEMENT 

     IN WITNESS WHEREOF, this Security
Agreement has been executed by Subscriber and by the Company on the respective
dates set forth below. 

	Subscriber Signature(s): 	 	Print Names of Subscriber(s): 
	 	 	 
	 	 	 

Dated __________________________________, 2014 
Names must
conform to signature page of the Subscription Agreement. 

THE COMPANY: 

NAKED BRAND GROUP, INC.

	By: 	  
	         Name:
    	  
	         Title:
	  
	  	  
	Dated: _______________, 2014 	

Page 20Naked Brand Group Inc. Exhibit10.2 - Filed by newsfilecorp.com

FORM OF SERIES A SENIOR SECURED CONVERTIBLE DEBENTURE

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE
COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS
CONVERTIBLE DEBENTURE SHOULD CAREFULLY REVIEW THE TERMS OF THIS CONVERTIBLE
DEBENTURE, INCLUDING SECTIONS 3(c)(iii) AND 14(a) HEREOF. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS CONVERTIBLE DEBENTURE AND, ACCORDINGLY, THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS CONVERTIBLE DEBENTURE.

♦[If resident in Canada, the following legend is applicable:
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.] 

NAKED BRAND GROUP, INC. 

6% SENIOR SECURED CONVERTIBLE DEBENTURE 

	Issuance Date: _____________, 2014 	Original Principal Amount: U.S. $[♦]
  

     FOR VALUE RECEIVED, Naked
Brand Group, Inc., a Nevada corporation (the "Company" or
“Maker”), hereby promises to pay to the order of ___________ or its
registered assigns ("Holder") the amount set out above as the Original
Principal Amount (as reduced pursuant to the terms hereof pursuant to
redemption, conversion or otherwise, the "Principal") when due, whether
upon the Maturity Date (as defined below), acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest
("Interest") on any outstanding Principal at the applicable Interest Rate
(as defined below) from the date set out above as the Issuance Date (the
"Issuance Date") until the same becomes due and payable, whether upon the
Maturity Date, or acceleration, conversion, redemption or otherwise (in each
case in accordance with the terms hereof). This 6% Senior Secured Convertible
Debenture (including any 6% Senior Secured Convertible Debenture issued in
exchange, transfer or replacement hereof, this ("Convertible Debenture")
is one of an issue of 6% Senior Secured Convertible Debentures issued pursuant
to the Subscription Agreement (as defined below) on the Initial Closing Date (as
defined below) (collectively, the "Other Convertible Debentures") and
such other 6% Senior Secured Convertible Debentures, if any, that have been
issued pursuant to the Subscription Agreement on one or more Additional Closing
Dates that is not the Issuance Date (collectively, the "Additional
Convertible Debenture"), and together with the Other Convertible Debentures,
the ("Convertible Debenture"). Certain capitalized terms used
herein are defined in Section 20. 

1 

     1.      PAYMENTS
OF PRINCIPAL. On ______________, 2017 (the “Maturity Date”), the
Company shall pay to the Holder an amount in cash representing all the
outstanding Principal, accrued and unpaid Interest and accrued and unpaid late
charges on such Principal and Interest. The Company may not prepay any portion
of the Convertible Debenture.

     2.      INTEREST;
INTEREST RATE. 

          (a)      Interest
on this Convertible Debenture shall commence accruing on the Issuance Date and
shall be computed on the basis of a 360-day year and twelve 30-day months, on
any outstanding Principal at the Interest Rate payable semi-annually beginning
from the first such semi-annually date after the Issuance Date, on each
conversion date (as to that principal amount then being converted) and on the
Maturity Date (each, an "Interest Date"). Interest shall be payable on
each Interest Date, to the Holder on the applicable Interest Date, in shares of
Common Stock ("Interest Shares") so long as there has been no Equity
Conditions Failure; provided however, that the Company may, at its option
following written notice to the Holder, pay Interest on any Interest Date in
cash ("Cash Interest") or in a combination of Cash Interest and Interest
Shares. The Company shall deliver a written notice (each, an "Interest
Election Notice") to each holder of the Convertible Debentures on or prior
to the Interest Notice Due Date (the date such notice is delivered to all of the
holder, the "Interest Notice Date") which notice (i) either (A) confirms
that Interest to be paid on such Interest Date shall be paid entirely in
Interest Shares or (B) elects to pay Interest as Cash Interest or a combination
of Cash Interest and Interest Shares and specifies the amount of Interest that
shall be paid as Cash Interest and the amount of Interest, if any, that shall be
paid in Interest Shares and (ii) if the Company is paying all or any portion of
Interest in Interest Shares, certifies that there has been no Equity Conditions
Failure. If an Equity Conditions Failure has occurred as of the Interest Notice
Date, then unless the Company has elected to pay such Interest as Cash Interest,
the Interest Election Notice shall indicate that unless the Holder waives the
Equity Conditions Failure, the Interest shall be paid as Cash Interest.
Notwithstanding anything herein to the contrary, if no Equity Conditions Failure
has occurred as of the Interest Notice Date but an Equity Conditions Failure
occurs at any time prior to the Interest Date, (A) the Company shall provide the
Holder a subsequent notice to that effect and (B) unless the Holder waives the
Equity Conditions Failure, the Interest shall be paid as Cash Interest. Interest
to be paid on an Interest Date in Interest Shares shall be paid in a number of
fully paid and non-assessable shares (rounded to the nearest whole share in
accordance herewith) of Common Stock equal to the quotient of (1) the amount of
Interest payable on such Interest Date less any related Cash Interest paid on
such Interest Date and (2) the Conversion Price in effect on the applicable
Interest Date. 

          (b)      Intentionally
Left Blank

          2

          (c)      Prior
to the payment of Interest on an Interest Date, Interest on this Convertible
Debenture shall accrue at the Interest Rate and be payable by way of inclusion
of the Interest in the Conversion Amount on each Conversion Date in accordance
herewith. From and after the occurrence and during the continuance of any Event
of Default, the Interest Rate shall automatically be increased to fifteen
percent (15.0%) . In the event that such Event of Default is subsequently cured,
the adjustment referred to in the preceding sentence shall cease to be effective
as of the calendar day immediately following the date of such cure; provided
that the Interest as calculated and unpaid at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default through and
including the date of such cure of such Event of Default. The Company shall pay
any and all stamp, issuance and similar taxes that may be payable with respect
to the issuance and delivery of Interest Shares. 

     3.      CONVERSION
OF CONVERTIBLE DEBENTURE. This Convertible Debenture shall be convertible
into validly issued, fully paid and non-assessable shares of Common Stock, on
the terms and conditions set forth in this Section 3. 

          (a)      Conversion
Right. Subject to the provisions of this Section 3, at any time the Holder
shall be entitled to convert a minimum of twenty-five percent (25%) of the
Original Principal Amount of this Convertible Debenture plus any accrued or
unpaid Interest and unpaid late charges (or such amount as is then outstanding)
into validly issued, fully paid and non-assessable shares of Common Stock in
accordance with this Section 3, at the Conversion Rate. Notwithstanding the
foregoing, the immediately preceding sentence shall not be applicable to a
Holder who purchased $250,000 or more aggregate principal amount of Convertible
Debentures. The Company shall not issue any fraction of a share of Common Stock
upon any conversion. If the issuance would result in the issuance of a fraction
of a share of Common Stock, the Company shall round such fraction of a share of
Common Stock up to the nearest whole share. The Company shall pay any and all
stamp, issuance and similar taxes that may be payable with respect to the
issuance and delivery of Common Stock upon conversion of any Conversion Amount.

          (b)      Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x)
such Conversion Amount by (y) the Conversion Price (the "Conversion
Rate"). For the purposes of this Convertible Debenture, the following terms
shall have the following meanings: 

     (i)      "Conversion
Amount" means the portion of the Principal to be converted, redeemed or
otherwise with respect to which this determination is being made, plus all
accrued and unpaid Interest with respect to such portion of the Principal and
accrued and unpaid late charges with respect to such portion of such Principal
and such Interest; and. 

     (ii)      "Conversion
Price" means, as of any Conversion Date or other date of determination (x)
$0.075 per share (subject to adjustment as provided herein). For the avoidance
of doubt, the Conversion Price shallbe appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or similar
transaction during the applicable calculation period. 

3 

(c) Mechanics of Conversion.

     (i)      Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on
any date (each, a "Conversion Date"), the Holder shall deliver, pursuant
to Section 20, for receipt on or prior to 5:30 p.m., New York time, on such
date, a copy of an executed notice of conversion in the form attached hereto as
Exhibit I (the "Conversion Notice") to the Company and/or such
other person as the Company may from time to time direct. To effect conversions
hereunder, the Holder shall not be required to physically surrender this
Convertible Debenture to the Company unless the entire principal amount of this
Debenture, plus all accrued and unpaid interest thereon, has been so converted.
Conversion hereunder shall have the effect of lowering the outstanding principal
amount of this Convertible Debenture in an amount equal to the applicable
conversion. No later than three (3) Business Days after each conversion date
(the “Share Delivery Date”), Company shall cause to be delivered, to the Holder
a certificate or certificates representing the Conversion Shares representing a
number of Conversion Shares being acquired upon a conversion pursuant to the
Conversion Notice. On or after the six month anniversary of the original issue
date, if the Company is participant in the Deposit or Withdrawal at Custodian
system (DWAC) of the Depository Trust Company, the Company shall deliver any
certificate or certificates required to be delivered by the Company under this
Section 3(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions. 

     (ii)      Intentionally
Left Blank 

     (iii)     Registration;
Book-Entry. The Company shall maintain a register (the "Register")
for the recordation of the names and addresses of the holders of the Convertible
Debentures and the principal amount of the Convertible Debentures held by such
holders (the "Registered Convertible Debentures"). The entries in the
Register shall be conclusive and binding for all purposes absent manifest error.
The Company and the holders of the Convertible Debentures shall treat each
Person whose name is recorded in the Register as the owner of a Convertible
Debenture for all purposes (including, without limitation, the right to receive
payments of Principal and Interest thereunder) notwithstanding notice to the
contrary. Subject to compliance with applicable securities laws, a Registered
Convertible Debenture may be assigned, transferred or sold in whole or in part
only by registration of such assignment or sale on the Register. Upon its
receipt of a written request to assign, transfer or sell all or part of any
Registered Convertible Debenture by the holder thereof, the Company shall record
the information contained therein in the Register and issue one or more new
Registered Convertible Debenture in the same aggregate principal amount as the
principal amount of the surrendered Registered Convertible Debenture to the
designated assignee or transferee pursuant herewith, provided that if the
Company does not so record an assignment, transfer or sale (as the case may be)
of all or part of any Registered Convertible Debenture within two (2) Business
Days of its receipt of such a request, then the Register shall be automatically
updated to reflect such assignment, transfer or sale (as the case may be).
Notwithstanding anything to the contrary set forth in this Section 3, following
conversion of any portion of this Convertible Debenture in accordance with the
terms hereof, the Holder shall not be required to physically surrender this
Convertible Debenture to the Company unless (A) the full Conversion Amount
represented by this Convertible Debenture is being converted (in which event
this Convertible Debenture shall be delivered to the Company following
conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has
provided the Company with prior written notice (which notice may be included in
a Conversion Notice) requesting reissuance of this Convertible Debenture upon
physical surrender of this Convertible Debenture. The Holder and the Company
shall maintain records showing the Principal, Interest and late charges
converted and/or paid (as the case may be) and the dates of such conversions
and/or payments (as the case may be) or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Convertible Debenture upon conversion. 

4 

     (iv)      Pro
Rata Conversion; Disputes. In the event that the Company receives a
Conversion Notice from more than one holder of the Convertible Debentures for
the same Conversion Date and the Company can convert some, but not all, of such
portions of the Convertible Debentures submitted for conversion, the Company,
subject to Section 3(d), shall convert from each holder of the Convertible
Debentures electing to convert on such date, a pro rata amount of such holder's
portion of the Convertible Debentures submitted for conversion based on the
principal amount of the Convertible Debentures submitted for conversion on such
date by such holder relative to the aggregate principal amount of all of the
Convertible Debentures submitted for conversion on such date. In the event of a
dispute as to the number of shares of Common Stock issuable to the Holder in
connection with a conversion of this Convertible Debenture, the Company shall
issue to the Holder the number of shares of Common Stock not in dispute and
resolve such dispute in accordance herewith. 

          (d)      Limitations
on Conversions. Notwithstanding anything to the contrary contained in this
Convertible Debenture, this Convertible Debenture shall not be convertible by
the Holder hereof, and the Company shall not affect any conversion of this
Convertible Debenture or otherwise issue any shares of Common Stock pursuant
hereto, to the extent (but only to the extent) that after giving effect to such
conversion or other share issuance hereunder the Holder or any of its affiliates
would beneficially own in excess of 9.99% (the "Maximum Percentage") of
the Common Stock. To the extent the above limitation applies, the determination
of whether this Convertible Debenture shall be convertible (vis-à-vis other
convertible, exercisable or exchangeable securities owned by the Holder or any
of its Affiliates) and of which such securities shall be convertible,
exercisable or exchangeable (as among all such securities owned by the Holder
and its Affiliates) shall, subject to the Maximum Percentage limitation, be
determined on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to convert this
Convertible Debenture, or to issue shares of Common Stock, pursuant to this
paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of convertibility. For
purposes of this paragraph, beneficial ownership and all determinations and
calculations (including, without limitation, with respect to calculations of
percentage ownership) shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended (the ”1934 Act”) and the rules
and regulations promulgated thereunder. The provisions of this paragraph shall
be implemented in a manner otherwise than in strict conformity with the terms of
this paragraph to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Maximum Percentage limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to the Maximum Percentage limitation. The limitations contained in
this paragraph shall apply to a successor Holder of this Convertible Debenture.
The holders of Common Stock shall be third party beneficiaries of this paragraph
and the Company may not waive this paragraph without the consent of holders of a
majority of its Common Stock. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within one (1) Business Day
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding, including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including, without
limitation, pursuant to this Convertible Debenture or securities issued pursuant
to the Subscription Agreement. By written notice to the Company, any Holder may
increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any such increase
will not be effective until the 61st day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to the Holder
sending such notice and not to any other holder of the Convertible Debentures.

5 

          (e)      Automatic
Conversions. Notwithstanding anything herein to the contrary the unconverted
principal amount of Convertible Debentures, any outstanding accrued and unpaid
interest and any unpaid late charges shall automatically convert into Conversion
Shares if the Automatic Conversion Conditions have been satisfied. For the
purposes of this paragraph, the Automatic Conversion Conditions are: (X) (i) the
closing of any underwritten public offering with aggregate proceeds to the
Company of at least $10,000,000 provided that valuation of the Company shall be
at least $50,000,000; or (ii) the VWAP of the Company’s common stock exceeds
$0.375 (subject to adjustment) per share for more than twenty (20) consecutive
Trading Days following the Initial Closing Date. 

          (f)      Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion.
In addition to any other rights available to the Holder, if after actual
receipt of an effective Conversion Notice the Company fails for any reason to
deliver to the Holder such certificate or certificates by the Share Delivery
Date pursuant to Section 3(c), and if after such Share Delivery Date the Holder
is required by its brokerage firm to purchase (in an open market transaction or
otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Conversion
Shares which the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to
the Holder (in addition to any other remedies available to or elected by the
Holder) the amount, if any, by which (x) the Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common Stock that the
Holder was entitled to receive from the conversion at issue multiplied by (2)
the actual sale price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Debenture in a
principal amount equal to the principal amount of the attempted conversion (in
which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company
had timely complied with its delivery requirements under Section 3(c). For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of this
Debenture with respect to which the actual sale price of the Conversion Shares
(including any brokerage commissions) giving rise to such purchase obligation
was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Debenture as required pursuant to
the terms hereof 

6 

     4.      EVENT
OF DEFAULT. 

          (a)      “Event
of Default”, wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body): 

               (i)      any
default in the payment of the Principal, or the Interest, as and when the same
shall become due and payable, for which there will be no cure period; 

               (ii)      Maker
shall fail to observe or perform any obligation or shall breach any term or
provision of this Convertible Debenture (other than Section 3(c)(ii))and such
failure or breach shall not have been remedied within ten (10) business days
after the date on which notice of such failure or breach shall have been
delivered (other than those occurrences described in other provisions of this
Section 4 for which a different grace or cure period is specified, or for which
no cure period is specified and which constitute immediate Events of Default);

               (iii)      Maker
shall fail to observe or perform any of its material obligations owed to the
Holder or any other material covenant, agreement, representation or warranty
contained in, or otherwise commit any material breach hereunder or in any other
transaction document executed in connection herewith, including the Subscription
Agreement, and such failure or breach shall not have been remedied within ten
(10) business days after the date on which notice of such failure or breach
shall have been delivered (other than those occurrences described in other
provisions of this Section 4 for which a different grace or cure period is
specified, or for which no cure period is specified and which constitute
immediate Events of Default); 

7 

               (iv)      Maker
shall commence, or there shall be commenced against the Maker a case under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Maker commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Maker, or there is commenced against the
Maker any such bankruptcy, insolvency or other proceeding which remains
undismissed for a period of thirty (30) days; or the Maker is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Maker suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of thirty (30) days; or the
Maker makes a general assignment for the benefit of creditors; or the Maker
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Maker shall call a
meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Maker shall by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Maker for the
purpose of effecting any of the foregoing; 

               (v)      Maker
shall default in any of its respective obligations under any of the Convertible
Debentures or any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of the Maker, whether such indebtedness now exists or shall hereafter be created
and such default shall result in indebtedness aggregating more than $200,000
becoming or being declared due and payable prior to the date on which it would
otherwise become due and payable; or

               (vi)      except
in connection with the transactions effected in connection with the Subscription
Agreement, the Maker shall (a) be a party to any Change of Control Transaction
(as defined below), (b) agree to sell or dispose all or in excess of 50% of its
assets in one or more transactions (whether or not such sale would constitute a
Change of Control Transaction), (c) redeem or repurchase more than a de minimis
number of shares of Common Stock or other equity securities of the Maker, or (d)
make any distribution or declare or pay any dividends (in cash or other
property, other than common stock) on, or purchase, acquire, redeem, or retire
any of the Maker’s capital stock, of any class, whether now or hereafter
outstanding. For the purposes of this paragraph “Change of Control
Transaction” means the occurrence of any of: (i) an acquisition after
the date hereof by an individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the 1934 Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Maker, by contract
or otherwise) of in excess of 51% of the voting securities of the Maker, (ii) a
replacement at one time or over time of more than one-half of the members of the
Maker’s board of directors which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a majority of
the members of the board of directors who are members on the date hereof), (iii)
the merger of the Maker with or into another entity that is not wholly owned by
the Maker, consolidation or sale of 33% or more of the assets of the Maker in
one or a series of related transactions, or (iv) the execution by the Maker of
an agreement to which the Maker is a party or by which it is bound, providing
for any of the events set forth above in (i), (ii) or (iii). 

8 

          (b)      If
any Event of Default occurs and shall be continuing, the full Principal amount
of this Convertible Debenture together with all of the Convertible Debentures,
together with all accrued interest thereon, shall become, at the election of the
Required Holders immediately due and payable in cash.

          (c)      The
Holder need not provide and the Maker hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by the Holder at any time prior to
payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon. 

     5.      NEGATIVE
COVENANTS. So long as any portion of the Principal of the Convertible
Debentures, any accrued or unpaid Interest or late charges remains outstanding,
the Maker will not, directly or indirectly, without the consent of the Required
Holders: 

          (a)      other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
suffer to exist any indebtedness for borrowed money of any kind debt incurred by
the Company in the ordinary course of business, not to exceed the higher of (i)
$250,000 in the aggregate, or (ii) 5% of the principal balance of the
Convertible Debentures; 

          (b)      other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any
liens of any kind, on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits
therefrom; 

          (c)      amend
its articles of incorporation, bylaws or other charter documents so as to
adversely affect any rights of the Holder, unless the sole and exclusive purpose
of such amendment of the Maker’s articles of incorporation, bylaws or other
charter documents is to increase the authorized capitalization of the Maker;

     6.      POSITIVE
COVENANTS. So long as any portion of the Principal of the Convertible
Debentures, any accrued or unpaid Interest or late charges remains outstanding,
the Maker will not directly or indirectly, without the consent of the Required
Holders: 

          (a)      enter
into any transaction, including, without limitation, the purchase, sale, or
exchange of property or the rendering of any service, with any Affiliate, except
in the ordinary course of and pursuant to the reasonable requirements of the
Maker’s business and upon fair and reasonable terms no less favorable to the
Maker than it would obtain in a comparable arm’s-length transaction with a
person not an Affiliate; 

          (b)      repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de
minimis number of securities other than the Convertible Debentures subject to
the prepayment provisions herein or as set forth on Schedule I hereto; 

          (c)      pay
cash dividends or distributions on any equity securities of the Maker; 

9 

          (d)      timely
pay and discharge all of its material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings; 

          (e)      continue
to engage in business of the same general type as now conducted by it and to
preserve, renew and keep in full force and effect, its corporate existence and
its assets, rights, privileges and franchises to the extent necessary or
desirable in the normal conduct of business; 

          (f)      comply
in all material respects with all applicable laws, ordinances, rules,
regulations, decisions, orders and requirements of governmental authorities;

          (g)      use
of the proceeds from the sale of the Convertible Debentures solely for the
purposes set forth in the Private Placement Memorandum issued in connection with
the sale of the Convertible Debentures and for no other purposes; 

          (h)      notify
Holder(s) promptly after the Maker shall obtain knowledge of any written notice
of any legal or arbitral proceedings, and of all proceedings by or before any
governmental authority, and each material development in respect of such legal
or other proceeding affecting the Maker, except proceedings which, if adversely
determined, would not reasonably be likely to have a material adverse effect on
the business or prospects of the Company; 

          (i)      keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities; 

          (j)      permit
any representatives designated by Holder, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its business, assets, affairs, finances, prospects, and
condition with its officers and independent accountants, all at such reasonable
times during normal business hours and as often as reasonably requested;

          (k)      promptly
upon Holder’s written request therefor, deliver to Holder such documents and
other evidence of the existence, good standing, foreign qualification and
financial condition of the Maker as Purchaser shall request from time to
time;

          (l)      effect
or enter into an agreement to effect any issuance by the Company of Common Stock
or Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. “Variable Rate Transaction” means a
transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price that is based
upon, and/or varies with, the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt or
equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock, or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue securities at a
future determined price. Notwithstanding the foregoing Section 6(k) shall not
apply in respect of an Exempt Issuance except that no Variable Rate Transaction
shall be an Exempt Issuance;

10 

          (m)      sell
or grant any option to purchase or sell or grant any right to replace or
otherwise dispose of or issue (or announces any sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock equivalent
entitling any Person to acquire shares of Company Common Stock at an effective
price per share that is lower than the then Conversion Price (if the Holder of
Common Stock or Common Stock equivalent so issued shall at any time whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise due to warrants, options or rights per
share which are issued in connection with such issuance, entitled to receive
shares of Common Stock at an effective price per share that is lower than the
Conversion Price, such issuance shall deem to have occurred for less than the
Conversion Price on such date of issuance). Notwithstanding the foregoing
Section 6(k) shall not apply in respect of any Exempt Issuance; and 

          (n)      enter
into any agreement with respect to any of the foregoing. 

     For the purposes of this Section
6, the following terms shall have the following meanings: 

               (i)      “Permitted
Indebtedness” shall mean either (a) the indebtedness of the Maker
existing on the date of issuance of this Convertible Debenture and set forth on
Schedule II hereto; , (b) any indebtedness the proceeds of which are used to
repay the Convertible Debentures in full, (c) indebtedness incurred in
connection with discounted bills of exchange or the discounting or factoring of
receivables for credit in each case incurred in the ordinary course of business
consistent with past practice and (d) any indebtedness incurred in the ordinary
course of business consistent with past practice or consented to by the Required
Holders, which consent shall be binding upon the Holder. 

               (ii)      “Permitted
Lien” shall mean the individual and collective reference to the
following: (a) liens for taxes, assessments and other governmental charges or
levies not yet due or liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Maker) have been established in accordance with generally accepted accounting
procedures, (b) liens imposed by law which were incurred in the ordinary course
of business, such as carriers’, warehousemen’s and mechanics’ liens, statutory
landlords’ liens, and other similar liens arising in the ordinary course of
business, and (x) which do not individually or in the aggregate materially
detract from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Maker or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or asset subject to
such lien, (c) purchase money security interests, and (d) liens previously
granted by the Maker prior to the date hereof. 

11 

     7.      ADJUSTMENTS.

          (a)      Adjustment
of Fixed Conversion Price upon Subdivision or Combination of Common
Stock. Without limiting any provision herewith, if the Company at any time
on or after the Issuance Date subdivides (by any stock split, stock dividend,
stock combination, recapitalization or other similar transaction) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Fixed Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any provision
herewith, if the Company at any time on or after the Issuance Date combines (by
any stock split, stock dividend, stock combination, recapitalization or other
similar transaction) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Fixed Conversion Price in effect
immediately prior to such combination will be proportionately increased. Any
adjustment pursuant to this Section 7(a) shall become effective immediately
after the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 7(a) occurs during the period that a
Fixed Conversion Price is calculated hereunder, then the calculation of such
Fixed Conversion Price shall be adjusted appropriately to reflect such event.

          (b)      Failure
to Increase Authorized Shares Reduction in Conversion Price. If the
Company’s authorized shares of Common Stock are not increased to 450,000,000
shares by August 31, 2014 (the “Share Authorization Date”), then the Conversion
Price shall be reduced by $0.005 (subject to a floor of $0.055) for each thirty
(30) days or part thereof that such shareholder approval is not obtained. 

          (c)      Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest
cent or the nearest 1/100th of a share, as applicable. The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock. 

     8.      NO
WAIVER OF THE HOLDER’S RIGHTS. All payments of Principal and Interest shall
be made without setoff, deduction or counterclaim. No delay or failure on the
part of the Holder in exercising any of its options, powers or rights, nor any
partial or single exercise of its options, powers or rights shall constitute a
waiver thereof or of any other option, power or right, and no waiver on the part
of the Holder of any of its options, powers or rights shall constitute a waiver
of any other option, power or right. Maker hereby waives presentment of payment,
protest, and all notices or demands in connection with the delivery, acceptance,
performance, default or endorsement of this Note. Acceptance by the Holder of
less than the full amount due and payable hereunder shall in no way limit the
right of the Holder to require full payment of all sums due and payable
hereunder in accordance with the terms hereof. 

     9.      RESERVATION
OF AUTHORIZED SHARES. 

          (a)      Reservation.
Subject to the Company’s authorized share capital, the Company shall reserve out
of its authorized and unissued Common Stock such number of shares of Common
Stock as may be issued for all of the Convertible Debentures equal to [ ]% of
the Conversion Rate of all of the Convertible Debentures as of the most recent
Closing Date. After the earlier of the Authorized Share Increase Date and for so
long as any of the Convertible Debentures are outstanding, the Company shall
take all action necessary to reserve and keep available out of its authorized
and unissued Common Stock, solely for the purpose of effecting the conversion of
the Convertible Debentures, [ ]% of the number of shares of Common Stock as
shall from time to time be necessary to effect the conversion of all of the
Convertible Debentures then outstanding, provided that at no time shall the
number of shares of Common Stock so reserved be less than the number of shares
required to be reserved by the previous sentence (without regard to any
limitations on conversions) (the "Required Reserve Amount"). The initial
number of shares of Common Stock reserved for conversions of the Convertible
Debentures and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Convertible Debentures based on the
original principal amount of the Convertible Debenture held by each holder on
the most recent Closing Date as of the applicable date of determination or
increase in the number of reserved shares (as the case may be) (the
"Authorized Share Allocation"). In the event that a holder shall sell or
otherwise transfer any of such holder's Convertible Debenture, each transferee
shall be allocated a pro rata portion of such holder's Authorized Share
Allocation. Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Convertible Debentures shall be allocated to the
remaining holders of Convertible Debenture, pro rata based on the principal
amount of the Convertible Debentures then held by such holders. 

12 

     10.      VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this
Convertible Debenture, except as required by law (including, without limitation,
Title 7 of the Nevada Revised Statutes) and as expressly provided in this
Convertible Debenture. 

     11.      SECURITY.
The obligation of the Company under this Convertible Debenture are secured by
certain assets of the Maker pursuant to the certain Security Agreement, dated as
of the date hereof, by and among the Company and the secured party secondary
thereto. The Convertible Debentures shall be senior to all indebtedness of the
Company except for that certain indebtedness administered by Kalamalka Partners,
Ltd., as agent for certain lenders, as to which it shall rank pari passu. 

     12.      AMENDING
THE TERMS OF THIS CONVERTIBLE DEBENTURE. The prior written consent of the
Required Holders shall be required for any change or amendment to this
Convertible Debenture. No consideration shall be offered or paid to the Holder
to amend or consent to a waiver or modification of any provision of this
Convertible Debenture unless the same consideration is also offered to all of
the holders of the Convertible Debentures. The Holder shall be entitled, at its
option, to the benefit of any amendment to any of the Convertible Debentures.

     13.      TRANSFER.
Subject to compliance with applicable securities laws, this Convertible
Debenture and any shares of Common Stock issued upon conversion of this
Convertible Debenture may be offered, sold, assigned or transferred by the
Holder without the consent of the Company. 

13 

     14.      REISSUANCE
OF THIS CONVERTIBLE DEBENTURE. 

          (a)      Transfer.
If this Convertible Debenture is to be transferred, the Holder shall surrender
this Convertible Debenture to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Convertible Debenture (in
accordance herewith), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less than the
entire outstanding Principal is being transferred, a new Convertible Debenture
(in accordance herewith) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this
Convertible Debenture, acknowledge and agree that, by reason of the provisions
herewith following conversion or redemption of any portion of this Convertible
Debenture, the outstanding Principal represented by this Convertible Debenture
may be less than the Principal stated on the face of this Convertible Debenture.

          (b)      Lost,
Stolen or Mutilated Convertible Debenture. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Convertible Debenture (as to which a written certification
and the indemnification contemplated below shall suffice as such evidence), and,
in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Convertible Debenture, the
Company shall execute and deliver to the Holder a new Convertible Debenture (in
accordance with Section 14(c)) representing the outstanding Principal. 

          (c)      Issuance
of New Convertible Debenture. Whenever the Company is required to issue a
new Convertible Debenture pursuant to the terms of this Convertible Debenture,
such new Convertible Debenture (i) shall be of like tenor with this Convertible
Debenture, (ii) shall represent, as indicated on the face of such new
Convertible Debenture, the Principal remaining outstanding (or in the case of a
new Convertible Debenture being issued pursuant to Section 14(a), the Principal
designated by the Holder which, when added to the principal represented by the
other new Convertible Debenture issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Convertible Debenture
immediately prior to such issuance of new Convertible Debenture), (iii) shall
have an issuance date, as indicated on the face of such new Convertible
Debenture, which is the same as the Issuance Date of this Convertible Debenture,
(iv) shall have the same rights and conditions as this Convertible Debenture,
and (v) shall represent accrued and unpaid Interest and late charges on the
Principal and Interest of this Convertible Debenture, from the Issuance Date.

     15.      CUMULATIVE
RIGHTS AND REMEDIES; USURY. The rights and remedies of the Holder expressed
herein are cumulative and not exclusive of any rights and remedies otherwise
available under this Convertible Debenture, or applicable law (including at
equity). The election of the Holder to avail itself of any one or more remedies
shall not be a bar to any other available remedies, which the Maker agrees the
Holder may take from time to time. If it shall be found that any Interest due
hereunder shall violate applicable laws governing usury, the applicable Interest
Rate due hereunder shall be reduced to the maximum permitted rate of interest
under such law 

14 

     16.      GOVERNING
LAW. All questions concerning the construction, validity, enforcement and
interpretation of this Convertible Debenture shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each of the Maker
and the Holder agree that all legal proceedings concerning the interpretations,
enforcement and defense of this Convertible Debenture shall be commenced in the
state and federal courts sitting in The City of New York, County of New York
(the “New York Courts”). Each of the Maker and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder (including with respect to the enforcement
of this Convertible Debenture), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each of the Maker and the Holder hereby irrevocably
waive personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to the other at
the address in effect for notices to it under this Convertible Debenture and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each of the Maker and
the Holder hereby irrevocably waive, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Convertible Debenture or the transactions
contemplated hereby. 

     17.      REQUIRED
NOTICE TO THE HOLDER. The Holder is to be notified by the Maker, within
three (3) business days, in accordance with the notice provisions in the
Subscription Agreement, of the existence or occurrence, of any Event of Default.

     18.      PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Convertible
Debenture is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Convertible Debenture or to
enforce the provisions of this Convertible Debenture or (b) there occurs any
bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors' rights and involving a claim under this Convertible
Debenture, then the Company shall pay the costs incurred by the Holder for such
collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation,
attorneys' fees and disbursements. The Company expressly acknowledges and agrees
that no amounts due under this Convertible Debenture shall be affected, or
limited, by the fact that the purchase price paid for this Convertible Debenture
was less than the original Principal amount hereof. 

     19.      CONSTRUCTION;
HEADINGS. This Convertible Debenture shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Convertible Debenture are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Convertible Debenture. Terms used in this Convertible
Debenture but defined in the other Transaction Documents shall have the meanings
ascribed to such terms on the Subscription Date in such other Transaction
Documents unless otherwise consented to in writing by the Holder. 

15 

     20.      NOTICES.
Any and all notices or other communications or deliveries to be provided by the
Holder hereunder, including, without limitation, any Notice of Conversion, shall
be in writing and delivered, by electronic mail, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other address as the Company may specify for such
purposes by notice to the Holder delivered in accordance with this Section 20.
Any and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered, by email, or sent by a
nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of the Holder appearing on the books of the Company,
or if no such facsimile number or address appears on the books of the Company,
at the principal place of business of such Holder, as set forth in the
Subscription Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via email at the
address set forth on the signature pages attached hereto prior to 5:30 p.m. (New
York City time) on any date, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via email at the
address set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (iv) upon actual receipt by
the party to whom such notice is required to be given. 

     21.      CERTAIN
DEFINITIONS. For purposes of this Convertible Debenture, the following terms
shall have the following meanings: 

          (a)      “Affiliate”
means, as applied to any person, (a) any other person directly or indirectly
controlling, controlled by or under common control with, that person, (b) any
other person that owns or controls 10% or more of any class of equity securities
(including any equity securities issuable upon the exercise of any option or
convertible security) of that person or any of its Affiliates, or (c) any
director, partner, officer, manager, agent, employee or relative of such person.
For the purposes of this definition, “control” (including with correlative
meanings, the terms “controlling,” “controlled by,” and “under common control
with”), as applied to any person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that person, whether through ownership of voting securities or by contract or
otherwise 

          (b)      "Authorized
Share Increase Date" means the date the Company increased the number of
authorized shares of Common Stock to [450,000,000] shares of Common Stock (as
adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the Subscription Date). 

          (c)      "Bloomberg"
means Bloomberg, L.P. 

          (d)      "Business
Day" means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed. 

          (e)      "Closing
Date" means, collectively, the Initial Closing Date and all Additional
Closing Dates, if any. 

16 

          (f)      "Common
Stock" means (i) the Company's shares of common stock, $0.001 par value per
share, and (ii) any capital stock into which such common stock shall have been
changed or any share capital resulting from a reclassification of such common
stock. 

          (g)      “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock. 

          (h)      “Equity
Conditions” means during the period in question, (i) the Company shall duly
honor all conversions scheduled to occur or occurring, (ii) the Company has an
effective registration statement pursuant to which the Holders are permitted to
utilize the prospectus thereunder to resell all the Conversion Shares issuable
upon Conversion of the Convertible Debentures (and the Company believes in good
faith, that such effectiveness shall continue uninterrupted for the foreseeable
future), (iii) there is a sufficient number of authorized, but unissued or
otherwise unreserved shares of common stock for the issuance of all the
Conversion Shares, and (iv) there is no existing Event of Default or no Event of
Default which, with the passage of time or with the giving of notice, would
constitute an Event of Default.

          (i)      "Equity
Conditions Failure" means that on any day during the period commencing ten
(10) Trading Days prior to the applicable date of determination through the
applicable date of determination, the Equity Conditions have not been satisfied
(or waived in writing by the Requisite Holders). 

          (j)      “Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officer or directors of the Company pursuant to any stock or option
plan duly adopted by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided any such issuance shall only be
to a Person which is, itself or through its subsidiaries, an operating company
in a business synergistic with the business of the Company and in which the
Company receives benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities. 

          (k)      "Initial
Closing Date" shall have the meaning set forth in the Subscription
Agreement. 

17 

          (l)      "Interest
Notice Due Date" means the second (2nd) Trading Day immediately prior to
the applicable Interest Date. 

          (m)      "Interest
Rate" means six percent (6.00%) per annum, as may be adjusted from time to
time in accordance with Section 2. 

          (n)      "Person"
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency thereof. 

          (o)      Intentionally
Left Blank.

          (p)      "Principal
Market" means the OTCQB Market. 

          (q)      "Required
Holders" means, at any given time, the holders of a majority of the
aggregate principal amount of the Convertible Debentures, outstanding as of such
time (excluding any Convertible Debenture held by the Company or any of its
subsidiaries). 

          (r)      "SEC"
means the United States Securities and Exchange Commission or the successor
thereto. 

          (s)      "Subscription
Agreement" means that certain subscription agreement, dated as of the
Subscription Date, by and among the Company and the initial holders of the
Convertible Debentures pursuant to which the Company issued the Convertible
Debentures and certain share purchase warrants, as may be amended from time to
time. 

          (t)      "Trading
Day" means any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or securities market on
which the Common Stock is then traded, provided that "Trading Day" shall
not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at
4:00:00 p.m., New York time) unless such day is otherwise designated as a
Trading Day in writing by the Holder. 

          (u)      "VWAP"
means, for any security as of any date, the dollar volume-weighted average price
for such security on the Principal Market during the period beginning at 9:30:01
a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing
does not apply, the dollar volume-weighted average price of such security in the
over-the-counter market for such security during the period beginning at 9:30:01
a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the "pink sheets" by OTC Markets Group Inc. If the VWAP
cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

18 

     22.      DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the
terms of this Convertible Debenture, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
non-public information relating to the Company or any of its Subsidiaries, the
Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on
Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do
not constitute material, non-public information relating to the Company or its
Subsidiaries.

[signature page follows] 

19 

     IN WITNESS WHEREOF, the
Company has caused this Convertible Debenture to be duly executed as of the
Issuance Date set out above. 

	NAKED BRAND GROUP, INC. 
	  	 
	  	 
	By: 	 
	             	Joel Primus, Chief Executive
      Officer 

20 

EXHIBIT I 

NAKED BRAND GROUP, INC. 
CONVERSION NOTICE 

     Reference is made to the 6%
Senior Secured Convertible Debenture (the "Convertible Debenture") issued
to the undersigned by Naked Brand Group, Inc., a Nevada corporation (the
"Company"). In accordance with and pursuant to the Convertible Debenture, the
undersigned hereby elects to convert the Conversion Amount (as defined in the
Convertible Debenture) of the Convertible Debenture indicated below into shares
of Common Stock, $0.001 par value per share (the "Common Stock"), of the
Company, as of the date specified below. Capitalized terms not defined herein
shall have the meaning as set forth in the Convertible Debenture. 

	Date of Conversion: 	 
	 	 
	Aggregate Principal to be converted:	 
	 	 
	Aggregate accrued and unpaid
      Interest and accrued 
and unpaid late fees with respect to such portion
      of 
the aggregate Principal and such aggregate Interest 
to be
      converted: 	 
	 	 
	AGGREGATE CONVERSION AMOUNT TO BE
      
CONVERTED: 	 
	 	 
	Please confirm the following information: 	 
	 	 
	Conversion Price: 	 
	 	 
	Number of shares of Common Stock to be
      issued: 	 
	 	 
	Please issue the Common Stock into
      which the 
Convertible Debenture is being converted in the
      
following name and to the following address: 	 
	 	 
	Issue to: 	 
	 	 
	Facsimile Number: 	 

21 

	 	 
	Holder: 	 
	 	 
	By: 	 
	 	 
	Title: 	 
	 	 
	Dated: 	 
	 	 
	Account Number: 	 
	 	 
	(if electronic book entry transfer) 	 
	 	 
	Transaction Code Number: 	 
	 	 
	(if electronic book entry transfer) 	 
	 	 
	Address: 
(if delivery of
      share certificates)	 
	 	 
	 	 

22

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