Document:

Naked Brands Group Inc.: Exhibit 10.2 - Filed by newsfilecorp.com

FORM OF PROMISSORY NOTE 

PROMISSORY NOTE 

THIS PROMISSORY NOTE is dated November 14, 2013

BETWEEN: 

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

        (together, the “Borrowers”) 

      

    

  

AND: 

  
    
      
        ___________________, of
          _____________________________

        (the “Lender”) 

      

    

  

BACKGROUND: 

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

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

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

NOW THEREFORE THE PARTIES HERETO AGREE as follows: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 	 
	(b) 	
      enforce all rights and remedies granted under the
      Security.

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

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

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

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

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

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

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

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

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

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

	

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 	 	 
	(l) 	
      deliver to the Agent:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 	 	 
	 	(x) 	
      the Liens created by the Security;

	 	 	 
	 	(xi) 	
      Liens that are subordinate to the Security; or

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

13.      
SECURITIES DECLARATION AND ENFORCEABILITY 

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

      

    

  

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

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

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

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

NAKED BRAND GROUP INC. 
by its authorized signatory

 

__________________________ 
Name: 
Title: 

NAKED INC. 
by its authorized signatory 

 

__________________________ 
Name: 
Title:Naked Brands Group Inc.: Exhibit 10.3 - Filed by newsfilecorp.com

AGENCY AND INTERLENDER AGREEMENT 

This AGENCY AND INTERLENDER AGREEMENT (as amended,
restated or otherwise modified from time to time, this “Agreement”) dated
for reference November 14, 2013 

AMONG: 

  
    
      
        KALAMALKA PARTNERS LTD., a British Columbia corporation
          with an office at 101 – 2903 35th Avenue, Vernon, B.C. V1T 2S7 

        (the “Agent”) 

      

    

  

AND: 

  
    
      
        GREGORY DARROCH, businessperson of 576 Middleton Way,
          Coldstream, B.C. V1B 3W8 

        (“Darroch”) 

      

    

  

AND: 

  
    
      
        JOHN NELSON, businessperson of 968 Ryder Drive, Kelowna,
          B.C. V1Y 7T5 

        (“Nelson”, and together with Darroch, the “First
          Lenders”) 

      

    

  

AND: 

Those additional investors who become parties to this Agreement
(the “Additional Lenders” and collectively with Darroch and Nelson, the
“Lenders”) by executing the endorsement attached hereto as Schedule “A”
(the “Endorsement”) 

WHEREAS: 

	A. 	
      Pursuant to certain promissory notes and subject to the
      terms and conditions thereof, the Lenders have agreed to make certain
      loans to Naked Inc. (“Naked”), a corporation domesticated under the
      laws of the State of Nevada, and Naked Brand Group Inc. (“NBGI”), a
      corporation incorporated under the laws of the State of Nevada (Naked and
      NBGI together, the “Borrowers”), on a joint and several basis in an
      aggregate amount up to USD$300,000 (the “Credit
  Facility”).

	 	 
	B. 	
      The Lenders wish to appoint the Agent to act on their
      behalf as to certain matters, and wish to set out their rights and
      obligations with respect to one another, each as provided for in this
      Agreement.

	 	 
	C. 	
      The Borrowers wish to acknowledge, consent to, and agree
      to the Agent’s appointment and certain other matters relating to the
      Credit Facility pursuant to the terms of this
Agreement.

2 

NOW, THEREFORE, in consideration of the premises set out herein
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as follows: 

1.         DEFINED
TERMS. 

All capitalized terms used in this Agreement, unless the
context requires a different meaning, have the respective meanings indicated
below: 

	 	(a) 	
      “Applicable Law” means all laws, rules and
      regulations applicable to the Borrowers, any property, conduct,
      transaction, covenant or Loan Document in question, including all
      applicable common law and equitable principles; all provisions of all
      applicable provincial, federal and foreign constitutions, statutes, rules,
      regulations, treaties and orders of governmental bodies; and all orders,
      judgments and decrees of all courts and arbitrators;

	 	 	 	 
	 	(b) 	
      “Bankruptcy Code” means (a) the Bankruptcy Code of
      the United States, 11 U.S.C. Section 101 et seq., and/or (b) any of
      the Companies’ Creditors Arrangement Act (Canada), the
      Bankruptcy and Insolvency Act (Canada) and the Winding-Up and
      Restructuring Act (Canada) or any similar statute, in each case as
      amended from time to time;

	 	 	 	 
	 	(c) 	
      “Bankruptcy Event” means, with respect to a
      Borrower, the occurrence of any one or more of the following
  events:

	 	 	 	 
	 		(1) 	
      it passes a resolution, institutes proceedings (whether
      formal or informal), or consents to the filing of a petition for its
      winding-up, liquidation or dissolution or files or consents to the filing
      of a notice of intention to make a proposal, petition, answer or consent
      seeking reorganization, readjustment or arrangement in connection with any
      insolvency proceeding, composition or similar relief under any Applicable
      Law or a receiver, receiver-manager, manager, custodian, liquidator or
      trustee or similar officer or official of itself or any part of its
      property is appointed, or it makes an assignment for the benefit of
      Lenders or is unable, or admits its inability in writing, to pay its debts
      as they become due or otherwise acknowledges its insolvency or voluntarily
      suspends transaction of its usual business, or any action is taken by such
      Borrower in furtherance of any of the aforesaid purposes or if such
      Borrower commits any other act of bankruptcy under, or makes any
      application or filing pursuant to, the Bankruptcy Code; or

	 	 	 	 
	 		(2) 	
      any application, petition or proposal is made or filed
      with respect to it under the Bankruptcy Code or any other legislation
      seeking reorganization, readjustment or arrangement in connection with any
      insolvency proceeding, composition or similar relief under any other
      Applicable Law, or a proceeding (whether formal or informal) is
      instituted, filed or initiated for its winding up, liquidation or
      dissolution or seeking an order adjudging it insolvent or the appointment
      of any receiver, receiver-manager, manager, custodian, liquidator or
      trustee or similar officer or official of it or over all or any part of
      its property or a petition in bankruptcy is instigated by a Borrower other
      than it, and such application, proceeding or petition is not dismissed, stayed or
withdrawn within 60 days after it has notice or knowledge of the institution
thereof provided that a Bankruptcy Event shall have occurred immediately (i)
upon the appointment of a receiver, receiver-manager, trustee, custodian,
liquidator or similar officer or official of a Borrower, or (ii) if it is
determined by the Majority Lenders, acting in their sole discretion, that the
Borrower against whom such application, petition or proceeding is brought is not
contesting such application, proceeding or petition in good faith, in all cases
whether or not such application, proceeding or petition is dismissed, stayed or
withdrawn within 60 days after the Borrower against whom such application,
petition or proceeding is brought has notice or knowledge of the institution
thereof; 

3 

	 	(d) 	
      “Business Day” means any day that is not a
      Saturday, a Sunday, or a day on which commercial banks in Vancouver,
      British Columbia are required or authorized to be closed;

	 	 	
       

	 	(e) 	
      “Collateral” means all property of the Borrowers
      in which a Lien has been granted either to the Agent, for the benefit of
      the Lenders, or pursuant to the Notes;

	 	 	
       

	 	(f) 	
      “Enforcement Notice” means written notice given by
      the Majority Lenders to the Agent (i) stating that a Trigger Event has
      occurred and further stating whether the Trigger Event constituted an
      Event of Default in respect of a scheduled payment, and the nature and
      date thereof, specifying in reasonable detail the circumstances of such
      satisfaction and (ii) setting forth instructions to the Agent to exercise
      all or any such rights, powers and remedies as are available under the
      Loan Documents;

	 	 	
       

	 	(g) 	
      “Event of Default” has the meaning ascribed to it
      in the Notes;

	 	 	
       

	 	(h) 	
      “Insolvency Proceeding” means any event, action,
      case, or proceeding commenced by or against a Borrower, or any agreement
      by such Borrower, for (i) the entry of an order for relief under any
      chapter or provision of the Bankruptcy Code or any other insolvency,
      arrangement, dissolution, liquidation or similar debt adjustment law
      (whether provincial, federal, or foreign); (ii) the appointment of a
      receiver, receiver-manager, trustee, liquidator, monitor, or other
      custodian for such Person or any part of its properties; (iii) an
      assignment for the benefit of Lenders of such Borrower; (iv) the
      liquidation, dissolution, or winding up of the affairs of such Borrower
      solely in the context of a financially distressed situation and not in the
      ordinary course of business in lieu of merger activity otherwise permitted
      by the Notes; or (v) without limiting the generality of any of the
      foregoing, the occurrence of a Bankruptcy Event with respect to such
      Borrower;

	 	 	
       

	 	(i) 	
      “Joinder Agreement” means an agreement in form and
      substance satisfactory to the Agent, acting reasonably, pursuant to which
      the assignee or transferee of a Lender or the assignee of the Agent
      becomes a party to this Agreement;

	 	 	
       

	 	(j) 	
      “Lender Warrants” means warrants entitling the
      holders thereof to purchase one (1) Common share with a par value of
      $0.001 in the capital of NBGI at a price of ten cents (USD$0.10) per share
      until the earlier of 4:00 p.m. Pacific time on November 13,
  2016 and the occurrence of certain events set out in the form
      of certificate for the Warrants mutually agreed to by the Agent and NBGI
      to be issued to each Lender concurrently with or in connection with the
  issuance of the Note;

4 

	 	(k) 	
      “Lien” means, with respect to any Borrower or
      Collateral, any interest in any real, personal or other property which
      secures payment or performance of, or which is created as a result of a
      non-payment of, any obligation and shall include any mortgage, lien,
      encumbrance, charge, hypothecation or other security interest of any kind,
      whether arising by contract, as a matter of law, by judicial process or
      otherwise;

	 	 	 
	 	(l) 	
      “Loan Documents" means, collectively, the Notes,
      the Naked Security Agreement, the NBGI Security Agreement and all of such
      other security and agreements to be entered into, or granted under,
      pursuant to the Notes, whether executed prior to, contemporaneously with
      or subsequent to the Notes, as each of the Loan Documents may be amended,
      extended, renewed, replaced, restated and in effect from time to
    time;

	 	 	 
	 	(m) 	
      “Loan Management Warrants” means warrants
      entitling the holders thereof to purchase one (1) Common share with a par
      value of $0.001 in the capital of NBGI at a price of ten cents (USD$0.10)
      per share until the earlier of 4:00 p.m. Pacific time on November 13, 2016
      and the occurrence of certain events set out in the form of certificate
      for the Warrants mutually agreed to by the Agent and NBGI, to be issued to
      the Agent or at its direction in consideration of the Agent agreeing to
      manage funds advanced under the Credit Facility to the Borrowers by the
      Lenders;

	 	 	 
	 	(n) 	
      “Majority Lenders” means, at any time, the Lenders
      holding a majority of the Obligations, or, if there are no amounts
      outstanding in respect of the Obligations, then the Lenders whose
      aggregate commitments in respect of the Obligations constitute not less
      than 66-2/3% thereof;

	 	 	 
	 	(o) 	
      “Naked Security Agreement” means the security
      agreement dated November 14, 2013 granted by Naked in favour of the Agent
      for the rateable benefit of the Lenders providing for the grant of a
      security interest by Naked in all of the Collateral;

	 	 	 
	 	(p) 	
      “NBGI Security Agreement” means the security
      agreement dated November 14, 2013 granted by NBGI in favour of the Agent
      for the rateable benefit of the Lenders providing for the pledge,
      hypothecation and grant of a security interest by NBGI in all of the
      Collateral;

	 	 	 
	 	(q) 	
      “Notes” means collectively the convertible
      promissory notes (as those notes may be amended, extended, renewed,
      replaced, restated and in effect from time to time) made jointly and
      severally by the Borrowers in favour of each of the Lenders under or in
      connection with the Credit Facility from time to time;

	 	 	 
	 	(r) 	
      "Obligations" means, all present and future debts,
      liabilities, obligations, covenants and duties of the Borrowers (including
      interest thereon) in each case whether primary, secondary, direct or
      indirect, secured or unsecured, fixed, absolute or contingent, joint,
      several or independent, due or to become due, liquidated or unliquidated,
      and whether created directly or acquired by assignment or otherwise,
      including, without limitation, those arising under or in connection
with:

5 

	 	(1) 	
      the Borrowers’ obligations under the Notes and any of the
      other Loan Documents to which they are a party, including, without
      limitation the unpaid principal amount of, and accrued interest on, the
      Notes, including, without limitation, any interest which accrues (at the
      rate provided in the applicable Loan Documents) after the commencement of
      any bankruptcy or insolvency proceeding with respect to a Borrower or any
      other Person, whether or not allowed or allowable principal, interest
      thereon, charges and other costs and expenses as therein set
  forth;

	 	 	 
	 	(2) 	
      all of the obligations with respect to payment of any
      costs and expenses incurred or advances made by the Agent and the Lenders,
      or any of them, pursuant to all or any of the Loan Documents to protect
      the Collateral (as defined in the NBGI Security Agreement and the Naked
      Security Agreement) and to fulfill the obligations of the Borrowers or any
      other Person party to all or any of the Loan Documents, together with
      interest thereon from the time such costs and expenses are incurred or
      advances made, at the rate or rates from time to time provided for in the
      Notes but in any case not in excess of the maximum rate permitted by
      applicable law; and

	 	 	 
	 	(3) 	
      performance by the Borrowers or any other Person which is
      a party to all or any of the Loan Documents to which each is a party and
      the agreements, terms and conditions as set forth or incorporated therein
      and all amendments, modifications, renewals, restatements, replacements
      and/or extensions of any of the Loan Documents, in effect from time to
      time, including, but not limited to, amendments, modifications,
      extensions, renewals, restatements, replacements and/or extensions which
      are evidenced by new or additional instruments, documents or agreements or
      which change the rate of interest on any obligation secured
  hereby;

	 	(s) 	
      “Person” means and includes an individual, a
      partnership, a corporation, a joint stock company, a trust, an
      unincorporated association, a joint venture or other entity or a
      governmental body or any agency or political subdivision thereof;
    and

	 	 	 	 
	 	(t) 	
      “Trigger Event” means:

	 	 	 	 
	 		(1) 	
      the occurrence of an Event of Default which is
      continuing;

	 	 	 	 
	 		(2) 	
      the declaration by any Lender that the Obligations due to
      such Lender are or have become due and payable before the stated maturity
      or before the regularly scheduled dates of payment of such
    Obligations;

	 	 	 	 
	 		(3) 	
      the commencement of any enforcement action by the Agent
      or any Lender as a result of an Enforcement Notice;

	 	 	 	 
	 		(4) 	
      any action by any Lender to exercise its right of set-off
      of amounts held by such Lender with respect to the Obligations to it;
      or

6 

	 	(5) 	
      the commencement of an Insolvency Proceeding by or
      against a Borrower.

The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement and section
references are to this Agreement unless otherwise specified. The meanings given
to terms defined herein shall be equally applicable to both the singular and
plural forms of such terms. 

2.         APPOINTMENT.

2.1      Appointment and Acceptance
of Appointment

The Lenders hereby appoint and designate the Agent as agent
hereunder and under the Loan Documents to hold the Loan Documents as agent for
the rateable benefit of the Lenders and to carry out the responsibilities and
exercise the powers and rights set out in this Agreement and the powers and
rights related to enforcement of the Loan Documents that would otherwise be
carried out and exercised separately by the Lenders. The Agent hereby accepts
such appointment on the terms and conditions set forth herein.

2.2      Authorizations

The Lenders hereby authorize the Agent: 

	 	(a) 	
      to carry out the responsibilities and exercise the powers
      and rights vested in the Agent in this Agreement, the Notes and the other
      Loan Documents;

	 	 	 
	 	(b) 	
      to exercise all of their respective rights and remedies
      under the Loan Documents to the exclusion of the Lenders at any time when
      an Enforcement Notice shall be in effect (subject to a withdrawal of such
      authorization upon written notice to the Agent executed by the Majority
      Lenders); and

	 	 	 
	 	(c) 	
      to exercise such other rights and powers as are
      reasonably incidental to the foregoing rights and powers, or as are
      customarily and typically exercised by agents performing duties similar to
      the duties of the Agent hereunder and under the Loan
  Documents.

The duties of the Agent shall be deemed administrative in
nature, and the Agent shall not have, by reason of this Agreement, or any of the
Loan Documents, a fiduciary relationship with any Lender. The Agent shall
exercise that degree of care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.

2.3      Agent’s Fee 

For so long as there remains any balance outstanding under a
Note, the Lender of such Note agrees to pay to the Agent a management fee
equivalent to 1% per annum, calculated daily and payable on the Due Date (as
defined in the Note) on all principal outstanding under the Note (the
“Agent’s Fee”). The Agent shall be entitled to withhold or otherwise
retain an amount equal to the Agent’s Fee from any payments made by the
Borrowers with respect to the Credit Facility. 

3.         LIMITATIONS
ON DUTIES AND ACTIONS OF AGENT. 

7 

The Agent shall have full authority to act on behalf of the
Lenders in all matters set out in Section 2, but shall not have any duties or
responsibilities except those expressly set forth in this Agreement, the Notes
and the other Loan Documents except that the Agent shall not be bound by any
duties or responsibilities set forth in any Loan Document entered into after the
date hereof that are more burdensome to the Agent than those set forth herein or
in the Loan Documents as in effect on the date hereof. The Agent shall not be
liable for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, excepting only its own gross negligence or wilful misconduct.

4.         AGENT’S
USE OF PROFESSIONALS. 

The Agent may employ one or more professionals to advise or
assist it from time to time. The Agent shall be entitled to rely on the advice
and statements of professionals so selected. The Agent may pay reasonable
remuneration for all services performed for it in the discharge of its duties
hereof without taxation for costs or fees of any counsel, solicitor or attorney.

5.        
INSTRUCTIONS FROM LENDERS; PERMITTED INACTION. 

Unless otherwise excused as provided herein the Agent shall act
on all written instructions received from the Majority Lenders with respect to
any action to be taken or not to be taken in connection with this Agreement or
any of the Loan Documents including, without limitation, actions to be taken in
connection with an Insolvency Proceeding in respect of a Borrower. If the Agent
shall request instructions from the Majority Lenders with respect to taking any
particular action in connection with this Agreement or any of the Loan
Documents, the Agent shall be entitled to refrain from taking such particular
action unless and until it shall have received written instructions from the
Majority Lenders (in which event it shall be required to act in accordance with
such written instructions unless otherwise excused as provided herein); and the
Agent shall not incur any liability to any Person for so refraining. Without
limiting the foregoing, the Lenders shall not have any right of action
whatsoever against the Agent as a result of the Agent taking or not taking any
action hereunder or any of the Loan Documents pursuant to or in accordance with
the written instructions of the Majority Lenders, except for the Agent’s own
gross negligence or wilful misconduct in connection with any action taken or not
taken by it. In addition, without limiting the generality of the above
provisions of this Section 5, the Agent shall not be required to act on any
instructions purportedly given by the Majority Lenders to instruct the Agent if
it has any reason to question whether the Majority Lenders have given such
instructions, or if it believes that there is any question of interpretation as
to the meaning of such instructions, until such time as it is satisfied that the
Majority Lenders have given such instructions or such question of interpretation
has been resolved to its satisfaction. Notwithstanding anything to the contrary
contained in this Agreement or any of the Loan Documents, the Agent shall not be
required to take any action that is, in its opinion (which may be, but is not
required to be, based on the advice of legal counsel), contrary to Applicable
Law or the terms of any of the Loan Documents or that would, in its reasonable
opinion, subject it or any of its officers, employees, representatives, or
directors to personal liability or that would require it to expend or risk its
own funds. 

6.         INSTRUCTIONS
BY LENDERS. 

An approval, instruction or other expression of the Majority
Lenders may be obtained by instrument in writing without any meeting of the
Lenders. An approval, instruction or other expression by the Majority Lenders
shall be binding upon all Lenders as against the Agent, and the Agent shall be
bound to give effect thereto accordingly (unless explicitly excused pursuant
to the provisions hereof). Nothing in this Section 6 shall require any meeting
of the Lenders to be held for any purpose, nor shall any Lender be required to
attend any such meeting. The Lenders have appointed the Agent to act on their
behalf in accordance with this Agreement and the Loan Documents and the Lenders
agree that if the Borrowers receive oral or written instructions from any Lender
(including the Majority Lenders) with respect to taking any particular action in
connection with this Agreement or any of the Loan Documents, the Borrowers shall
be entitled to refrain from taking such particular action unless and until they
have received written instructions from the Agent (in which case they shall be
required to act in accordance with such written instructions unless otherwise
excused as provided herein) and the Borrowers shall not incur any liability to
any Person for so refraining. 

8 

7.         SPECIFIC
POWER AND DUTIES OF THE AGENT. 

Without restricting its other powers set out in this Agreement,
the Agent shall: 

	 	(a) 	
      collect from the Lenders the advances made by them under
      the Notes;

	 	 	 
	 	(b) 	
      maintain a bank account (the “Agent’s Account”)
      into which it will deposit the proceeds of each Note when received from
      the Lenders unless the Agent and a Lender otherwise agree to have the
      proceeds deposited to the Agent’s solicitor’s trust account or to one of
      the Borrower’s bank accounts directly;

	 	 	 
	 	(c) 	
      deposit into the Agent’s Account, Agent’s solicitor’s
      trust account or one of the Borrower’s bank accounts when received the
      advances by the Lenders under the Notes; and

	 	 	 
	 	(d) 	
      to deposit in the Agent’s account all payments of
      interest and all repayments of principal under the Notes and to pay those
      amounts on a rateable basis to the Lenders within five business days of
      those amounts being credited to the Agent’s
Account.

8.         NO
RESPONSIBILITY OF AGENT FOR CERTAIN MATTERS. 

The Agent: 

	 	(a) 	
      shall not be responsible in any manner whatsoever for the
      correctness of any recitals, statements, representations, or warranties
      contained herein or in any of the other Loan Documents except for those
      expressly made by the Agent herein;

	 	 	 	 
	 	(b) 	
      makes no representation or warranty as to and is not
      responsible in any way for:

	 	 	 	 
	 		(1) 	
      the value, location, existence, or condition of any
      Collateral;

	 	 	 	 
	 		(2) 	
      the financial condition of the Borrowers or the title of
      any of the Borrowers to any of the Collateral;

	 	 	 	 
	 		(3) 	
      the sufficiency of the security afforded by this
      Agreement or the Loan Documents or whether registration in respect thereof
      has been properly effected or maintained;

	 	 	 	 
	 		(4) 	
      the validity, genuineness, correctness, perfection, or
  priority of any Lien with respect to the Collateral,

9 

	 	(5) 	
      other than in respect of itself subject to the Agent’s
      representations herein, the validity, proper execution, enforceability,
      legality, or sufficiency of this Agreement or any Loan Document;
  or

	 	 	 
	 	(6) 	
      the identity, authority or right of any Lender or
      Borrower executing any document;

and the Agent shall have no liability or responsibility in
respect of any such matters, or for the filing or renewal of any registration of
any Loan Document. The Agent shall not be required to ascertain or inquire as to
the performance by a Borrower of any of its covenants or obligations hereunder
or under any of the other Loan Documents. 

9.         LIMITED
DUTIES OF AGENT REGARDING COLLATERAL. 

The Agent shall not be responsible for insuring any of the
Collateral, for the payment of taxes, charges, fines, levies, assessments, or
Liens upon any of the Collateral and shall be indemnified therefor as provided
in Section 14 hereof. Furthermore, the Agent shall not be responsible for the
maintenance or safeguarding of any Collateral, except as provided in the
immediately following sentence when the Agent has possession of any Collateral.
The Agent shall not have any duty to any of the Borrowers or the Lenders with
respect to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Agent selected by it with reasonable care
or any income therefrom or for the preservation of rights against prior parties
or any other rights pertaining thereto, except the duty to accord the Collateral
in its actual possession substantially the same degree of care as the Agent
accords its own assets and the duty to account for monies received by it. 

10.      RELIANCE ON EXPERTS AND
WRITINGS. 

The Agent shall be entitled and fully authorized to rely and
act, and shall be fully protected in relying and acting, upon any writing,
instruction, resolution, notice, consent, certificate, affidavit, letter,
facsimile or e-mail or other document believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of professionals (including, without limitation,
counsel to the Lenders), independent accountants and other experts selected by
the Agent, the Borrowers or the Lenders. The Agent shall not have any duty to
verify or confirm the content of any writing, instruction, resolution, notice,
consent, certificate, affidavit, letter, facsimile, e-mail or other document as
provided in this section. 

11.      ADDITION OF LENDERS

The Agent shall have no obligation to arrange for additional
lenders to advance monies or otherwise extend credit to the Borrowers under the
Credit Facility. Notwithstanding the foregoing, prior to November 30, 2013 the
Agent shall have the option to arrange for the Lenders or other lenders to
advance monies or otherwise extend credit to the Borrowers on the same terms as
the other Notes under the Credit Facility. Each of the Lenders acknowledges,
consents to and agrees that the Agent will be authorized to add additional
lenders to this Agreement provided that upon each such addition the aggregate
principal amount of the Notes issued in connection with the Credit Facility and
governed hereunder does not exceed USD$300,000. Any additional lenders must
execute the form of endorsement attached hereto as Schedule A and agree to
become a party to this Agreement. 

10 

12.      WARRANTS 

Each of the Lenders acknowledges that in connection with the
issuance of the Notes, for each $1.00 of Notes subscribed for by a Lender, such
Lender is entitled to receive from NBGI one (1) Lender Warrant. Each of the
Lenders acknowledges, consents to and agrees that the Agent shall be entitled to
receive from NBGI any Loan Management Warrants as agreed between the Agent and
the Borrowers. Each Lender confirms that such Lender has no interest in or claim
to any such Loan Management Warrants. 

13.      RESIGNATION AND REMOVAL OF
AGENT. 

13.1    Resignation or Removal. 

The Agent may resign on 90 days’ prior written notice (or such
shorter period as may be agreed to by the Majority Lenders and the Agent) to the
Lenders and may be removed for or without cause at any time by the Majority
Lenders. In the event of any resignation or removal, the Majority Lenders shall
have the right to appoint a successor Agent, but, if the Majority Lenders have
not appointed a successor Agent within 60 days after the retiring Agent’s giving
of notice of resignation or its removal, the retiring Agent shall, at the
expense of the Lenders, on behalf of the Lenders either appoint a successor
Agent or apply to the appropriate court to make such appointment. Upon the
acceptance of any appointment as a Agent hereunder by a successor, to be
evidenced by the successor Agent’s execution and delivery to the other parties
hereto of a counterpart of this Agreement and a Joinder Agreement, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties and obligations of the retiring Agent, and
the retiring Agent shall be discharged from any further duties and obligations
as Agent, as appropriate, under this Agreement and the Loan Documents. The
payment and indemnity obligations of the Borrowers and the Lenders provided for
in Section 14 hereof shall survive any such removal or resignation in favour of
the retiring Agent in respect of any matter arising during its tenure as Agent.

13.2    Vesting. 

Upon the request of any successor Agent, at the expense of the
Borrowers, the Lenders, the Borrowers and the predecessor Agent shall promptly
execute and deliver such instruments, conveyances, and assurances reflecting
terms consistent with the terms hereof and the Loan Documents then in effect for
the purpose of more fully and certainly vesting and confirming in such successor
Agent all rights, powers, duties, and obligations of the predecessor Agent
hereunder and under the Loan Documents, and the predecessor Agent shall also
promptly assign and deliver to the successor Agent any Collateral subject to the
Lien of the Loan Documents that may then be in its possession. 

13.3    Successors. 

Any entity into which a Agent may be amalgamated, merged or
with which it may be consolidated, or any entity resulting from any
amalgamation, merger or consolidation to which a Agent shall be a party, or any
state, provincial or national bank or trust company in any manner succeeding to
the corporate trust business of a Agent, as a whole or substantially as a whole,
shall be the successor of such Agent hereunder if legally bound hereby as such
successor, without the necessity for execution or filing of any paper or any
further act on the part of any of the parties hereto, anything to the contrary
contained herein notwithstanding. 

11 

14.      INDEMNITY. 

14.1    Indemnity by Borrowers. 

Without limiting any other protection of the Agent hereunder or
otherwise by law, the Borrowers shall, jointly and severally, indemnify the
Agent for any and all liabilities, obligations, losses, damages, penalties,
actions, claims, demands, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever (other than the Agent’s normal fees for its
services hereunder) that may be suffered by, imposed on, incurred by or asserted
against the Agent whether groundless or otherwise, howsoever arising from or out
of any act, omission or error of the Agent in any way relating to or arising out
of this Agreement or any Loan Document or any of the Collateral or the
enforcement of any of the terms of any thereof, including fees and expenses of
special counsel; provided that neither Borrower shall be liable for any such
payment to the Agent to the extent the obligation to make such payment arises
solely from such the Agent’s negligence or wilful misconduct. All statements
from the Agent or any other Person for obligations owing by the Borrowers
pursuant to the preceding sentence shall be sent to Lenders in the first
instance but may thereafter be sent to the Borrowers if timely payment is not
made. Any amount due under this Section 14.1 and unpaid 30 days after request
for such payment will bear interest from the expiration of such 30 days at a
rate per annum equal to the then current rate charged by the Agent from time to
time, payable on demand. All amounts so payable and the interest thereon will be
payable out of any assets in the possession of the Agent in priority to amounts
owing to any and all other parties. 

14.2    Indemnity by Lenders. 

The Lenders agree that they indemnify the Agent (to the extent
not paid or reimbursed by the Borrowers pursuant to the preceding Section 14.1
and without limiting the obligation of the Borrowers to do so), rateably in
accordance with the respective principal amounts of Obligations held by the
Lenders at the time such claim arises; provided that no Lender shall be liable
to the Agent for all or any portion of such claims resulting from the Agent’s
gross negligence or wilful misconduct. The indemnity obligations of the Lenders
under this Section 14.2 are subject to the right of any Lender not to be or
become subject to such indemnity obligations in respect of any Enforcement
Action. 

14.3    Survival. 

The obligations of the Borrowers and the Lenders under this
Section 14 shall survive the payment in full of all the other Obligations, the
resignation or removal of the Agent and the termination of this Agreement. 

15.      AGENT’S FUNDS NOT AT RISK.

For purposes of clarity, no provision of this Agreement or the
Loan Documents and no request of any Lender or other Person shall require the
Agent to expend or risk any of its own funds, or to take any legal or other
action under this Agreement or the Loan Documents which might in its reasonable
judgment involve any expense or any financial or other liability unless the
Agent shall be furnished with indemnification acceptable to it, acting
reasonably, including the advance of funds sufficient in the judgment of the
Agent to satisfy such liability, costs and expenses. 

16.      INDEPENDENT CREDIT
DECISIONS. 

Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based upon such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and the Loan Documents. Each Lender also acknowledges that it will,
independently and without reliance upon either the Agent or any other Lender and
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
hereunder or under the Loan Documents. 

12 

17.      DETERMINATION OF LENDERS;
SUBSEQUENT LENDERS BOUND. 

The Agent may deem and treat the payee of any promissory note
or other evidence of indebtedness or obligation relating to any Obligation as
the owner thereof for all purposes hereof unless and until: 

	 	(a) 	
      a written notice of the assignment or transfer thereof
      signed by such payee; and

	 	 	 
	 	(b) 	
      a written acknowledgement agreeing to be bound by the
      terms hereof signed by the assignee or transferee, each in form reasonably
      satisfactory to the Agent, shall have been filed with the Agent. Any
      request, authority or consent of any Person who at the time of making such
      request or giving such authority or consent is the holder of any such note
      or other evidence of indebtedness or obligation shall be conclusive and
      binding on any subsequent holder, transferee or assignee of such note or
      other evidence of indebtedness or obligation and of any note or notes or
      other evidences of indebtedness or obligation issued in exchange
      therefor.

18.      INTERLENDER PROVISIONS

18.1    Enforcement Action 

No Lender may initiate any Insolvency Proceeding with respect
to any of the Collateral, except to the extent such Lender is acting or
qualifies as the “Majority Lenders” and is instructing the Agent. No Lender may
seek, and each Lender hereby waives, any right to require any of the Collateral
to be partitioned. 

This Agreement shall not be deemed to restrict or prohibit any
Lender from participating in any Insolvency Proceeding against a Borrower.

18.2    Remedies 

The Lenders hereby irrevocably agree that the Agent shall be
authorized, upon receipt by it of an Enforcement Notice and until such time as
the Trigger Event described therein is cured or waived, and at the direction of
the Majority Lenders or incidental to any such direction, for the purpose of
carrying out the terms of this Agreement and any of the Loan Documents, to take
any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes hereof
and thereof, including, without limiting the generality of the foregoing, to the
extent permitted by applicable law, to do the following: 

	 	(a) 	
      to ask for, demand, sue for, collect, receive, or give
      acquittance for any and all monies due or to become due with respect to
      the Collateral (except that, without the consent of all Lenders, the Agent
      shall not accept any Obligations in whole or partial consideration from
      the disposition of any Collateral);

13 

	 	(b) 	
      to receive, take, endorse, assign and deliver any and all
      cheques, notes, drafts, acceptances, documents and other negotiable and
      non-negotiable instruments, documents and chattel paper taken or received
      by the Agent in connection with this Agreement or any of the Loan
      Documents;

	 	 	 
	 	(c) 	
      to commence, file, prosecute, defend, settle, compromise
      or adjust any claim, suit, action or proceeding with respect to the
      Collateral;

	 	 	 
	 	(d) 	
      to sell, transfer, assign or otherwise deal in or with
      the Collateral or any part thereof pursuant to the terms and conditions of
      this Agreement and the Loan Documents; and

	 	 	 
	 	(e) 	
      to do, at its option and at the expense and for the
      account of the Lenders (to the extent the Agent shall not be reimbursed by
      the Borrowers) at any time or from time to time, all acts and things which
      the Agent deems reasonably necessary to protect or preserve the Collateral
      and to realize upon the Collateral.

18.3    Application of Proceeds 

The Lenders and the Borrowers agree that if a Lender (a
“Receiving Party”) receives a payment (such payment, a “Shared
Payment”) following the receipt of an Enforcement Notice regarding the
occurrence of a Trigger Event, such Shared Payment shall be paid over to the
Agent to be distributed as provided below. It is understood that such
Enforcement Notice may be given at any time after the occurrence of a Trigger
Event and that there is no obligation to give such notice immediately upon the
occurrence of a Trigger Event. Such obligation to pay over the Shared Payment
shall apply regardless of whether the Shared Payment is paid directly by a
Borrower as a payment in respect of any of the Obligations, obtained by means of
a set-off, received as insurance or expropriation proceeds pursuant to any of
the Loan Documents, or otherwise realized as a result of enforcement action
taken with respect to the Collateral or any other collateral securing any of the
Obligations, or paid as a distribution in any Insolvency Proceeding, but shall
not apply to amounts received by operation of clauses First through Fifth of
this Section 16.3 set out below. Shared Payments shall be applied as
follows: 

	 	First: 	
      to the payment of (i) all costs and expenses (including
      legal or other professional fees, currency conversion expenses and tax
      liabilities) incurred by the Agent in connection with the execution of its
      duties hereunder, including all such costs and expenses incurred in
      connection with the sale, collection or other realization in respect of
      the Collateral or any Enforcement action taken in respect of any Loan
      Document or in repayment of all monies borrowed by the Agent to pay such
      costs and expenses; 

	 	  	     
	 	Second: 	
      to the Lenders pro rata in proportion to the respective
      amounts of the Obligations constituting accrued and unpaid expenses owed
      to the Lenders under the Loan Documents; 

	 	  	     
	 	Third: 	
      to the Lenders pro rata in proportion to the respective
      amounts of the Obligations (other than the Obligations described in clause
      “Second”) owed to the Lenders under the Loan Documents; 

	 	  	     
	 	Fourth: 	
      to the payment of other obligations of any of the
      Borrowers to any of the Lenders which are not paid in accordance with the preceding
      subparagraphs, rateably in accordance with the respective amounts of such
  other obligations; and 

14 

	 	Fifth: 	
      after indefeasible payment in full of all Obligations, to
      the Borrowers or upon the order of the Borrowers, or to whomsoever may be
      lawfully entitled to receive the same or as a court of competent
      jurisdiction may direct, of any surplus then remaining from such amounts.      

For any distribution of monies pursuant to this Section 18.3
made to a Lender and denominated in a currency other than the currency in which
such distribution is denominated, the Agent shall exchange the relevant portion
of such distribution into the equivalent amount of the applicable currency based
on exchange rates on the date of distribution. 

18.4    Insurance and Expropriation
Proceeds

If, at any time after an Event of Default has occurred and is
continuing, the Agent receives or, at the time such Event of Default occurs, the
Agent is otherwise holding any insurance or expropriation proceeds pursuant to
any of the Loan Documents, the Agent shall hold all such amounts and distribute
the same in accordance with Section 18.3 hereof.

18.5    Rights Distinct from First Loan
Agency Agreement

Each of the parties hereto acknowledges and agrees that the
rights and obligations contained in this Agreement are separate and distinct
from those rights and obligations contained in the agency and interlender
agreement among the Borrowers, the Agent, and certain lenders dated August 10,
2012, as amended from time to time (the “First Loan Agency
Agreement”). Notwithstanding the foregoing, each of the Lenders
acknowledges and agrees that the Agent’s Account may be used to receive payments
from the Borrowers in connection with the First Loan Agency Agreement and the
Agent shall be entitled to make payments of interest or repayments of principal
to the lenders under the First Loan Agency Agreement provided that such payments
are not designated by the Borrowers as payments in connection with this Credit
Facility.

19      MISCELLANEOUS. 

19.1    Notices. 

All notices and other communications provided for herein shall
be in writing and given as follows: 

Each notice to a party must be given in
writing. A notice may be given by delivery to an individual or by facsimile and
will be validly given if delivered on a Business Day to an individual at the
following address, or, if transmitted on a Business Day by fax addressed to the
following party:

If to the Agent: 

	 	Name: 	Kalamalka Partners Ltd. 
	 	Attention: 	David Willis 
	 	Address: 	101 – 2903 35th Avenue
    
	 	  	Vernon, B.C., V1T 2S7 
	 	Fax No.: 	(250) 542-8300

15 

If to the Lenders:

As set out opposite or beneath each
Lender’s name on the execution pages of this Agreement. 

If to a Borrower: 

	 	Name: 	Naked Brand Group Inc. 
	 	Attention: 	Joel Primus 
	 	Address: 	2-34346 Manufacturers Way,
      Abbotsford BC V2S 7M1 
	 	Fax No.: 	1-877-366-4767 
	 	  	  
	 	Name: 	Naked Inc. 
	 	Attention: 	Joel Primus 
	 	Address: 	2-34346 Manufacturers Way,
      Abbotsford BC V2S 7M1 
	 	Fax No.: 	1-877-366-4767

with a copy to: 

	 	Name: 	Clark Wilson LLP 
	 	Attention: 	Virgil Hlus 
	 	Address: 	800-900 West Georgia Street,
      Vancouver BC V6C 3H1 
	 	Fax No.: 	604-687-6314 

or to any other address, fax number or
individual that the party designates. Any notice:

	 	(a) 	
      if validly delivered, will be deemed to have been given
      when delivered;

	 	 	 
	 	(b) 	
      if validly transmitted by fax before 3:00 p.m. (local
      time at the place of receipt) on a Business Day, will be deemed to have
      been given on that Business Day; and

	 	 	 
	 	(c) 	
      if validly transmitted by fax after 3:00 p.m. (local time
      at the place of receipt) on a Business Day, will be deemed to have been
      given on the Business Day after the date of the
  transmission.

19.2    Amendments. 

Neither this Agreement nor any of the Loan Documents may be
amended or waived except by a writing signed by all of the Lenders, the Agent
and the Borrowers.

19.3    Conflicts with Loan Documents,
Interlender Agreement and other Loan Documents. 

The parties hereto agree that, if any provision of this
Agreement is inconsistent with or contrary to any provisions in any of the Loan
Documents, the provisions of this Agreement shall prevail as among the parties
hereto. 

16 

19.4    Successors and Assigns. 

This Agreement shall be binding upon and inure to the benefit
of the Agent and the Lenders and their respective successors and assigns. If any
Lender shall transfer the Obligations owing to it, it shall promptly so notify
the Agent in writing. No Lender which transfers any Obligations owing to it
shall transfer its benefits under the Loan Documents without obtaining from the
transferee and delivering to the Agent and the Lenders, a Joinder Agreement and
an executed acknowledgement of the transferee agreeing to be bound by the terms
hereof to the same extent as if it had been a Lender on the date hereof. Each
transferee of any Obligations shall take such Obligations subject to the
provisions of this Agreement and to any request made, waiver or consent given or
other action taken or authorized hereunder by each previous holder of such
Obligations prior to the receipt by the Agent of written notice of such
transfer; and, except as expressly otherwise provided in such notice, the Agent
shall be entitled to assume conclusively that the transferee named in such
notice shall thereafter be vested with all rights and powers as a Lender under
this Agreement (and the Agent may conclusively assume that no Obligations have
been subject to any transfer other than transfers of which the Agent has
received such a notice). Upon the written request of any Lender, the Agent will
provide such Lender with copies of any written notices of transfer received
pursuant hereto. 

19.5    Continuing Effectiveness. 

This Agreement shall continue to be effective among the Agent
and the Lenders even though a case or proceeding under any bankruptcy or
insolvency law or any proceeding in the nature of a receivership, whether or not
under any insolvency law, shall be instituted with respect to the Borrowers or
any portion of the property or assets of the Borrowers, and all actions taken by
the Lenders with respect to the Collateral or by the Agent with regard to such
proceeding shall be determined by the Majority Lenders as provided for herein;
provided, however, that nothing herein shall be interpreted to preclude any
Lender from filing a proof of claim with respect to its Obligations or from
casting its vote, or abstaining from voting, for or against confirmation of a
plan of reorganization in a case of bankruptcy, insolvency or similar law in its
sole discretion. 

19.6    Further Assurances. 

Each Borrower agrees to do such further acts and things and to
execute and deliver such additional agreements, powers and instruments as any
Lender or the Agent may reasonably request to carry into effect the terms,
provisions and purposes of this Agreement or to better assure and confirm unto
the Agent or any of the Lenders its respective rights, powers and remedies
hereunder. 

19.7    Counterparts. 

This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. A facsimile of the signature of any party on any counterpart shall
be effective as the signature of the party executing such counterpart for
purposes of effectiveness of this Agreement. 

19.8    Effectiveness. 

This Agreement shall become effective immediately upon
execution hereof by the Agent and the Lenders, and upon execution and delivery by the Borrowers of the Loan
Documents to which each is a party, and shall continue in full force and effect
until the expiration of 90 days following the date on which the Obligations are
paid in full, the Notes have been terminated and cancelled and no other
extensions of credit under the Notes shall be outstanding, notwithstanding that
from time to time prior thereto the Borrower may be free from any Obligations

17 

19.9    Governing Law. 

This Agreement shall be governed by, and interpreted and
enforced in accordance with, the laws in force in the Province of British
Columbia (excluding any conflicts of laws rule or principle which might refer
such construction to the laws of another jurisdiction). Such choice of law
shall, however, be without prejudice to or limitation of any other rights
available to the Agent or any Lender under the laws of any jurisdiction where a
Borrower or its property may be located. 

19.10  Headings. 

Headings of sections of this Agreement have been included
herein for convenience only and should not be considered in interpreting this
Agreement. 

19.11  No Implied Beneficiaries. 

Nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon or give to any Person other than the Lenders
and the Agent any right, remedy or claim under or by reason of this Agreement or
any covenant, condition or stipulation herein contained. 

19.12  Severability. 

If any provision of this Agreement shall be held or deemed to
be, or shall in fact be, inoperative or unenforceable as applied in any
particular case in any jurisdiction, or because it conflicts with any other
provision or provisions hereof or with any constitution or statute or rule of
public policy, or for any other reason, such circumstance shall not have the
effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or rendering any other provision herein
contained invalid, inoperative or unenforceable to any extent whatsoever. Upon
the determination that any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to give effect to their original
intention as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.

19.13  Obligations Several. 

The obligations and representations and warranties of each of
the Lenders and the Agent herein are several. Nothing herein contained shall be
construed as creating among the Lenders a partnership, joint venture or other
joint association. 

19.14  No Obligation to Extend Credit. 

No provision of this Agreement shall be construed as obligating
any Lender to advance any monies or otherwise extend credit to a Borrower at any
time.

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