Memorandum of Understanding dated October 1, 2012 with Shark Investments, LLC

(a)  

"Exercise Payment" means the amount of money equal to the Exercise Price multiplied by the number of Optioned Shares specified in the Notice of Exercise;

(b)  

"Exercise Price" means US$0.25;

(c)  

"Expiry Date" means October 9, 2017;

(d)  

“Fair Market Value” means the average of the closing or last reported sale prices of the Shares on the OTCQB (or such other exchange or quotation system on which the Shares are primarily quoted or traded at such time) over the 30 day period immediately prior to the date of the delivery of a Notice of Exercise to the Company by the Optionee, or, if closing prices are not then routinely reported, the average of the last bid and asked prices of the Shares over the 30 day period ending five business days prior to such date; provided that, if there is no public market for the Shares, then the Fair Market Value shall be determined in good faith by the Company’s board of directors;

(e)  

"Notice of Exercise" means a notice in writing addressed to the Company at its address first recited (or such other address of the Company as may from time to time be notified to the Optionee in writing), substantially in the form attached as Exhibit A hereto, which notice shall specify therein the number of Optioned Shares in respect of which the Options are being exercised;

(f)  

"Options" means the irrevocable right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Company pursuant to Section 1.3 of this Agreement;

(g)  

"Optioned Shares" means the shares of common stock of the Company, subject to the Option;

(h)  

"Securities" means, collectively, the Options and the Optioned Shares;

(i)  

"Shareholders" means holders of record of the Shares;

(j)  

"Shares" means the common shares in the capital stock of the Company; and

(k)  

"U.S. Person" shall have the meaning ascribed thereto in Regulation S under the 1933 Act, and for the purpose of the Agreement includes any person in the United States.

(a)  

five (5) years from the Date of Grant; or

(b)  

the expiration of thirty (30) days from the date of the termination of the Consulting Agreement (or any definitive agreement which supersedes and replaces the Consulting Agreement).

(a)  

providing the Company with a completed and executed Notice of Exercise, in the form attached as Exhibit A hereto, for the number of Optioned Shares which the Optionee wishes to purchase, in the manner therein indicated; and

(b)  

in accordance with the Optionee’s instructions in the Notice of Exercise, either:

(i)  

paying the Exercise Payment, in United States funds, either by bank draft, certified cheque or money order, payable to the Company in Abbotsford, British Columbia at the address set forth on page 1 of this Agreement, or wiring the Exercise Payment to the Company or its lawyers pursuant to wiring instructions that will be provided to the Optionee upon request; or

(ii)  

electing to receive, without the payment by the Optionee of any additional consideration, such number of Shares as is computed using the following formula:

 

where:

X =

the number of Shares to be issued to the Holder;

 

Y =

the number of Optioned Shares covered by the Notice of Exercise;

 

A =

the Fair Market Value of one Share; and

 

B =

the Exercise Price.

(a)  

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

(b)  

the Company has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

(c)  

the Optionee has received and carefully read this Agreement and the public information which has been filed with the Securities and Exchange Commission (the "SEC") in compliance or intended compliance with applicable securities legislation (collectively, the "Company Information");

(d)  

the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of the Company Information (the receipt of which is hereby acknowledged);

(e)  

no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

(f)  

there is no government or other insurance covering the Securities;

(g)  

there are risks associated with an investment in the Securities;

(h)  

the Company has advised the Optionee that the Company is relying on an exemption from the requirements to provide the Optionee with a prospectus under the Securities Act (British Columbia) (the "B.C. Act") and, as a consequence of acquiring the Securities pursuant to this exemption, certain protections, rights and remedies provided by the B.C. Act, including statutory rights of rescission or damages, will not be available to the Optionee;

(i)  

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

(j)  

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

(k)  

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

(l)  

no representation has been made to the Optionee that any of the Securities will be listed on any stock exchange or automated dealer quotation system at the time that Optionee chooses to exercise their Options;

(m)  

in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Optionee's ability to resell the Securities under the B.C. Act and the rules, regulations and instruments thereunder, including Multilateral Instrument 51-105;

(n)  

the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in accordance with applicable state and provincial securities laws; and

(o)  

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

(i)  

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

(ii)  

applicable resale restrictions.

(a)  

the Optionee is resident in the United States;

(b)  

the Optionee has received and carefully read this Agreement and the Questionnaire;

(c)  

the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto;

(d)  

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

(e)  

the Optionee is aware that an investment in the Company is speculative and involves certain risks, including the possible loss of the investment, and the Optionee has carefully read and considered the matters set forth under the caption "Risk Factors" appearing in the Company's various disclosure documents, filed with the SEC;

(f)  

the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Company;

(g)  

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

(h)  

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

(i)  

the Optionee acknowledges and agrees that the Options are not being offered as part of a public offering and that the Optionee has had access to information about the Company equal to the information that would have been contained in a registration statement filed by the Company and the Optionee has received and reviewed copies of all of the Company’s filings with the SEC;

(j)  

the Optionee has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in anyway whatsoever for the Optionee's decision to invest in the Securities and the Company;

(k)  

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

(l)  

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

(i)  

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

(ii)  

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

(iii)  

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

(a)  

pursuant to Multilateral Instrument 51-105 (“MI 51-105”), a subsequent trade in the Optioned Shares in or from Canada will be a distribution subject to the prospectus and registration requirements of applicable Canadian securities legislation (including the B.C. Act) unless certain conditions are met, which conditions include, among others, a requirement that any certificate representing the Optioned Shares (or ownership statement issued under a direct registration system or other book entry system) bear the restrictive legend (the “51-105 Legend”) specified in MI 51-105;

(b)  

the Optionee is not a resident of Canada and undertakes not to trade or resell any of the Optioned Shares in or from Canada unless the trade or resale is made in accordance with MI 51-105.  The Optionee understands and agrees that the Company and others will rely upon the truth and accuracy of these representations and warranties made in this Section 6.3 and agrees that if such representations and warranties are no longer accurate or have been breached, the Optionee shall immediately notify the Company;

(c)  

by executing and delivering this Agreement and as a consequence of the representations and warranties made by the Optionee in this Section 6.3, the Optionee will have directed the Company not to include the 51-105 Legend on any certificates representing the Optioned Shares to be issued to the Optionee.  As a consequence, the Optionee will not be able to rely on the resale provisions of MI 51-105, and any subsequent trade in any of the Optioned Shares in or from Canada will be a distribution subject to the prospectus and registration requirements of applicable Canadian securities legislation; and

(d)  

if the Optionee wishes to trade or resell any of the Optioned Shares in or from Canada, the Optionee agrees and undertakes to return, prior to any such trade or resale, any certificate representing the Optioned Shares to the Company’s transfer agent to have the 51-105 Legend imprinted on such certificate or to instruct the Company’s transfer agent to include the 51-105 Legend on any ownership statement issued under a direct registration system or other book entry system.

TO:

Naked Brand Group Inc.

 

2 - 34346 Manufacturers Way

 

Abbotsford, BC

 

Canada  V2S 7M1

 

has included a certified cheque or bank draft payable to or to the order of the Company for the whole amount of the Exercise Payment; or

 

elects to receive such number of Shares as is computed using the following formula:

 

where:

X =

the number of Shares to be issued to the undersigned;

 

Y =

the number of Optioned Shares covered by this Notice of Exercise;

 

A =

the Fair Market Value of one Share; and

 

B =

the Exercise Price per Share.

Registration Information:

Delivery Instructions:

Name to appear on certificates

Name

Address

Address

Telephone Number

 

Category 1

An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of US $5,000,000;

 

Category 2

A natural person whose individual net worth, or joint net worth with that person’s spouse, on the date of purchase exceeds US $1,000,000;

 

Category 3

A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

 

Category 4

A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;

 

Category 5

A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);

 

Category 6

A director or executive officer of the Company;

 

Category 7

A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act;

 

Category 8

An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

the Subscriber is an “accredited investor” within the meaning of NI 45-106, by virtue of satisfying the indicated criterion as set out in Appendix “A” to this certificate (YOU MUST ALSO INITIAL OR PLACE A CHECK-MARK ON THE APPROPRIATE LINE BELOW).

o

 

(a) 

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

o

 

(b) 

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

o

 

(c) 

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

o

 

(d) 

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

o

 

(e) 

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

X

Authorized signatory

Name of Optionee (please print)

Name of authorized signatory (please print)

Tax I.D. No.

Appointment of Advisor.  The Company hereby agrees to appoint the Advisor as a member of the Company’s Advisory Board (the “Advisory Board”) and the Advisor hereby agrees to be a member of the Advisory Board as of the Effective Date.

Role of the Advisor.  The Advisor will advise the Company from time to time on issues as requested by the Company, including (a) providing strategic advice on the direction and strategy of the Company, (b) advising and assisting with business development by and for the Company, (c) facilitating introductions between the Company and third parties who may be in a position to assist in furthering the goals of the Company, and (d) providing the advice more particularly set out in Schedule A.  The Advisor will make himself reasonably available to attend meetings or for conversations to discuss the business of the Company at the Company’s request.  The Advisor will not be a director, officer or employee of the Company.

Expenses.  The Company will reimburse the Advisor for pre-approved expenses necessarily incurred by the Advisor in carrying out his duties, upon the provision of invoices/receipts.

Confidential Information.  The Advisor acknowledges that in the course of the appointment hereunder the Advisor may have access to confidential information.  “Confidential Information” includes all non-public information, data and intellectual property (whether oral, in writing or in electronic form) relating to the business of the Company or this Agreement.  The Advisor acknowledges that the Confidential Information constitutes a proprietary right, which the Company is entitled to protect.  Accordingly, the Advisor covenants and agrees that during the term of this Agreement and thereafter until such time as all the Confidential Information becomes publicly known and made generally available through no action or inaction of the Advisor, the Advisor will keep in strict confidence the Confidential Information, and will take all necessary actions to ensure that the Confidential Information remains confidential and will not, without prior written consent of the Company, use, disclose or otherwise disseminate the Confidential Information, directly or indirectly, to any third party except as expressly permitted by this Agreement or as required by law.

Non-Solicitation of Clients or Customers.  During the term of this Agreement, and for a period of  12 months immediately following the termination of this Agreement, the Advisor covenants and agrees that he or it will not,  directly or indirectly, on his or its own behalf or on behalf of a third party, contact, solicit or endeavour to entice away any person or entity who (i) during the term of this Agreement is a client or customer of the Company about whom the Advisor became aware in connection with providing the Services or with whom the Advisor had contact in connection with the provision of Services, or (ii) after termination of this Agreement, was a client or customer of the Company during the six (6) months immediately preceding the termination of this Agreement, about whom the Advisor became aware in connection with providing the Services or with whom the Advisor had contact in connection with the provision of Services, for the purpose of supplying or selling to such clients or customers, any services or products that are, in the opinion of the Company, competitive with the services or products provided, developed, marketed, sold or licensed by the Company.

Non-Solicitation of Employees/Advisors.  During the term of this Agreement and for a period of 12 months immediately following the termination of this Agreement, the Advisor covenants and agrees that he will not, directly or indirectly, on his own behalf or on behalf of a third party:

(a)  

hire or retain any employee or independent contractor of the Company about whom the Advisor became aware in connection with providing the Services or with whom the Advisor had contact in connection with the provision of Services; or

(b)  

contact, solicit or endeavour to entice away

(i)  

any employee or independent contractor of the Company about whom the Advisor became aware in connection with providing the Services or with whom the Advisor had contact in connection with the provision of Services, or

(ii)  

any person who was an employee or independent contractor of the Company on the termination date of this Agreement or during the period of 6 months immediately preceding termination about whom the Advisor became aware in connection with providing the Services or with whom the Advisor had contact in connection with the provision of Services,

Information Provided.  The Advisor represents and warrants with respect to any information in any form which the Advisor may provide to the Company that (a) the Advisor has the lawful right to provide such information to the Company without breach of any law, regulation, contract obligation or duty of employment, and (b) the Company may receive and use such information without incurring any liability or obligation to any other person or entity.  The Advisor will indemnify, defend and hold harmless the Company (including its employees, officers and directors) from any damages and claims arising out of or relating to any breach by the Advisor of such representations and warranties.

Disclosure.  The Advisor will (a) disclose to the Company all of the Advisor’s interests in any transaction or agreement contemplated by the Company or any matter which may influence the Advisor’s objectivity in performing his role under this Agreement, and (b) inform the Company of any business opportunities made available to the Advisor as a result of the Advisor’s involvement with the Company.  The Advisor will account to the Company for any profits made by the Advisor, directly or indirectly, and fully compensate the Company for any loss of opportunity to the Company arising out of or relating to any breach by the Advisor of the obligations set out in this Section.

Remedies.  The parties to this Agreement recognize that any violation or threatened violation by the Advisor of any of the provisions contained in Sections 4, 5, 6 or 7 will result in immediate and irreparable damage to the Company and that the Company could not adequately be compensated for such damage by monetary award alone.  Accordingly, the Advisor agrees that in the event of any such violation or threatened violation, the Company will, in addition to any other remedies available to the Company at law or in equity, be entitled to the enforcement of this Agreement by injunction, specific performance or other equitable relief without proof of actual damages, and the Advisor hereby consents to the issuance of such order or relief.

Reasonable Restrictions.  The Advisor agrees that all of the restrictions, obligations and remedies set out in Sections 4, 5, 6, 7, 8, 9 and 10, are important to the continuing growth of the Company and as such are necessary, reasonable and valid.

Term and Renewal.  This Agreement commences as of the Effective Date and will continue in force and effect for an initial period of two (2) years from the Effective Date, subject to renewal or earlier termination in accordance with this Agreement.

Termination.  Either party may terminate this Agreement for convenience by providing no less than 10 days’ written notice to the other party.  The Company may terminate this Agreement immediately upon notice to the Advisor if the Advisor breaches any of the provisions contained in Sections 4, 5, 6, 7 or 8.  Upon any termination or expiry of this Agreement, the Advisor will promptly return to the Company all Confidential Information in the Advisor’s possession or control or, at the direction of the Company, destroy such Confidential Information and certify its destruction to the Company.

Survival.  Any termination or expiry of this Agreement will not relieve the parties of obligations that by their nature survive such termination including, without limitation, warranties, remedies, indemnities and obligations of non-competition, non-solicitation and confidentiality.

Independent Contractor.  The Advisor will serve as an independent contractor to and not as an agent, director, officer or employee of the Company and will have no authority to bind or commit the Company in any way.

Indemnity.  The Advisor agrees to indemnify, defend and hold harmless the Company, from and against any and all losses, claims, actions, damages, costs and expenses, charges, taxes, penalties, assessments or demands (including reasonable legal fees and expenses): (a) that result from negligent acts or omissions of the Advisor in providing services pursuant to this Agreement; or (b) which result from a breach of any provision of this Agreement by the Advisor, including without limitation, from a breach of any of the provisions in Sections 4, 5, 6, 7 or 8 of this Agreement.

Further Assurances.  Each party hereto will promptly and duly execute and deliver to the other party such further documents and assurances and take such further action as such other party may from time to time reasonably request in order to more effectively carry out the intent and purpose of this Agreement and to establish and protect the rights and remedies created or intended to be created hereby.

Notices.  All notices required or allowed to be given under this Agreement to a party will be made by first class mail delivery, courier delivery or facsimile transmission to the address for such party set forth above or to such other address as may be designated from time to time by such party in writing.

Governing Law.  This Agreement will be governed by and interpreted and construed in accordance with the laws of the Province of British Columbia and the Federal laws of Canada applicable therein and each party submits to the jurisdiction of courts of competent jurisdiction in the Province of British Columbia.

Severability.  In the event that any provision of this Agreement is not enforceable, such provision will be severed from this Agreement, and the remainder of this Agreement will remain in full force and effect.

Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement between the parties with respect to the subject matter of this Agreement and supersedes all previous communications, representations and agreements, whether oral or written, between the parties with respect to the subject matter hereof.  No amendments to the terms of this Agreement will be effective unless in writing and signed by both parties.

Assignment.  This Agreement is not assignable by the Advisor without the prior written consent of the Company.  This Agreement will enure to the benefit of and be binding on the parties and their heirs, executors, successors and permitted assigns.

Independent Legal Advice.  The Advisor acknowledges and agrees that the Company has given him the opportunity to seek, and has recommended that the Advisor obtain, independent legal advice with respect to the subject matter of the Agreement and, further, the Advisor hereby represents and warrants to the Company that he has sought independent legal advice or waives such advice.

Schedules.  The Schedules attached hereto are hereby incorporated into this Agreement and form a part hereof.  All terms defined in the body of this Agreement will have the same meaning in the Schedules attached hereto.

Enurement.  This Agreement will be to the benefit of and be binding on, as applicable, the respective heirs, executors, administrators, successors and permitted assigns of each of the parties.

Counterparts.  This Agreement may be executed in counterpart and such counterparts together shall constitute a single instrument.  Delivery of an executed counterpart of this Agreement by electronic means, including by facsimile transmission or by electronic delivery in portable document format (“.pdf”), shall be equally effective as delivery of a manually executed counterpart hereof.  The Parties acknowledge and agree that in any legal proceedings between them respecting or in any way relating to this Agreement, each waives the right to raise any defense based on the execution hereof in counterparts or the delivery of such executed counterparts by electronic means.

SIGNED by JARED NIXON in the presence of:

Signature of Witness

Print Name of Witness

Address of Witness

Occupation of Witness

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assisting in fundraising;

assisting in recruiting efforts where possible;

being available for and participating in meetings by telephone or in person for one hour to review progress;

assisting in board management, celebrity alignment, strategic retail placement, manufacturing strategy, strategic and creative development of current, future and licensed products;

reviewing business planning materials;

assessing execution of business plan against business goals of the Company; and

anything incidental to the foregoing to facilitate the performance of the Advisor’s obligations hereunder.