UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2016
Naked Brand Group Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 001-37662 | 99-0369814 | ||
| (State or other | (Commission | (IRS Employer | ||
|
jurisdiction
of incorporation) |
File Number) | Identification No.) |
10 th Floor – 95 Madison Avenue, New York, NY 10016
(Address of principal executive offices) (Zip Code)
212.851.8050
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01 | Entry into a Material Definitive Agreement. |
On November 3, 2016, Naked Brand Group Inc. (the “Company”) entered into a subscription agreement (the “Subscription Agreement”) with David Hochman and Andrew Kaplan, members of the Company’s board of directors, pursuant to which Messrs. Hochman and Kaplan each purchased and the Company issued a convertible promissory note (each, a “Note” and together, the “Notes”) in the initial principal amount of $12,000 and $100,000, respectively. Each Note was issued and sold for cash at a purchase price equal to 100% of its principal amount in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated thereunder. As previously disclosed, the Company previously issued a Note on October 21, 2016 in the amount of $112,000, and the Company may, from time to time, sell additional Notes in the same series.
The Notes will bear interest at a rate of 9% per annum payable upon the earliest to occur of (i) the liquidation and dissolution of the Company pursuant to a plan of complete liquidation or (ii) December 31, 2017, unless earlier converted, redeemed or repurchased. The Notes constitute a general unsubordinated obligation of the Company and are guaranteed by the Company.
In the event the Company consummates an equity financing resulting in gross proceeds to the Company of at least $1,000,000, excluding the proceeds to the Company from the purchase of the Notes (a “Qualified Financing”), the entire unpaid principal amount of the Notes and all accrued unpaid interest thereon (the “Outstanding Balance”) will automatically convert, at the initial closing of such financing, into equity securities issued at the price per security (the “Conversion Price”) issued in such Qualified Financing (the “Qualified Financing Securities”) and on the same terms and conditions that apply to the Qualified Financing Securities. In the event the Company consummates an equity financing that is not a Qualified Financing (a “Subsequent Financing”), then the holder of the Notes may, in its sole discretion, convert the Outstanding Balance at the initial closing of such Subsequent Financing into the equity securities issued at the Conversion Price and on the same terms and conditions that apply to the securities issued in such Subsequent Financing..
In the event of a “Sale Transaction” (as defined in the Notes), the Outstanding Balance will automatically convert, with no further action by the holder of the Notes, into shares of the Company’s common stock at a conversion price that is equal to the enterprise value of the Company, as established by the consideration payable in the Sale Transaction, so as to permit the holder to receive the cash, securities or other property to which the holder would be entitled in the Sale Transaction on account of the holder’s ownership of the shares of common stock.
The Notes are subject to customary events of default, upon the occurrence of which all payments on the Notes may become immediately due.
As a condition to the issuance of any shares of common stock or other securities of the Company upon conversion of the Notes, the holders must become a party to such other agreements and instruments, as reasonably requested by the Company.
The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the Notes, which is incorporated by reference herein to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 27, 2016.
| Item 2.03 | Creation of a Direct Financial Obligation or an Off-Balance Sheet Arrangement. |
The information provided above under Item 1.01 is incorporated by reference under this Item 2.03.
In addition, on November 7, 2016, the Company issued a promissory note to an accredited investor in exchange for $100,000 in cash. The promissory note accrues interest at the rate of ten percent per annum and matures on the earlier to occur of (i) May 7, 2017 or (ii) the date of the closing date of an Equity Financing (as defined in the promissory note). In the event the Company fails to pay the principal amount plus accrued but unpaid interest on the maturity date and does not cure such failure to pay within ten business days, then the interest rate shall automatically increase to 13%.
| 2 |
The foregoing description is only a summary and is qualified in its entirety by reference to the Notes, a copy of which is attached as Exhibit 4.2 to this Current Report on Form 8-K.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information provided above under Item 1.01 is incorporated by reference under this Item 3.02.
The securities were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as permitted by Rule 135c under the Securities Act.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 4.1 | Form of 9% Convertible Promissory Note (incorporated by reference to Exhibit 4.1 attached to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2016). |
| 4.2* | Form of 10% Promissory Note. |
| 10.1 | Form of Subscription Agreement for 9% Convertible Promissory Note (incorporated by reference to Exhibit 10.1 attached to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2016). |
| * | Filed herewith. |
| 3 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NAKED BRAND GROUP INC. | |||
| By: /s/ Kai-Hsiang Lin | |||
| Kai-Hsiang Lin | |||
| Vice President of Finance | |||
| Date: November 9, 2016 |
| 4 |
EXHIBIT INDEX
| 4.1 | Form of 9% Convertible Promissory Note (incorporated by reference to Exhibit 4.1 attached to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2016). |
| 4.2* | Form of 10% Promissory Note. |
| 10.1 | Form of Subscription Agreement for 9% Convertible Promissory Note (incorporated by reference to Exhibit 10.1 attached to the Company’s Current Report on Form 8-K filed with the USEC on October 27, 2016). |
| * | Filed herewith. |
| 5 |
Exhibit 4.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
UNSECURED PROMISSORY NOTE
| $100,000 | November 7, 2016 |
FOR VALUE RECEIVED, NAKED BRAND GROUP INC., a Nevada corporation (the “ Company ”), hereby promises to pay to the order of STANLEY GREEN, an individual with a mailing address at * (the “ Holder ”; and this Note herein referred to as the “ Note ”), in the manner hereinafter provided, the principal amount equal to ONE HUNDRED THOUSAND DOLLARS ($100,000), in immediately available funds and in lawful money of the United States of America, in accordance with the provisions hereinafter specified.
1. Accrual of Interest . Interest shall accrue on the outstanding principal amount hereof, whether before or after any judgment hereon, at the rate of ten percent (10%) per annum commencing on the date of issuance of this Note. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.
2. Payment of Interest . All interest accrued on the outstanding principal amount of this Note from time to time shall be payable, in cash, whether before or after any judgment hereon, upon payment of the outstanding principal amount hereunder, whether on or after the Maturity Date, or upon the occurrence of an Event of Default, or on any earlier date upon which this Note is prepaid in its entirety; provided that upon any partial prepayment of the outstanding principal amount under this Note, the interest accrued but unpaid hereunder on the amount of such prepayment, shall be paid on the date of such prepayment.
3. Principal Payment . The Company shall pay all the outstanding principal hereunder, if not sooner paid, on the earlier to occur of (a) May 7, 2017 or (b) the date of the closing date of an Equity Financing (as defined below) (each, such date, the “ Maturity Date ”). If the Maturity Date is not a Business Day, payment shall be made on the next succeeding Business Day.
(i) The term “ Equity Financing ” means any subsequent sales by the Company of its Equity Securities following the date of issuance of this Note , in one or more offerings relying on Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), or Regulation D thereunder for exemption from the registration requirements of Section 5 of the Securities Act, or pursuant to a registration statement on Form S-1 or Form S-3, which has been declared effective by the U.S. Securities and Exchange Commission, from which the Company receives gross cash proceeds of not less than US$2,000,000.00 (excluding, for the avoidance of doubt, the aggregate principal amount of this Note).
(ii) The term “ Equity Securities ” means (a) common stock of the Company, (b) any securities conferring the right to purchase common stock of the Company, or (c) any securities directly or indirectly convertible into, or exchangeable for (with or without additional consideration) common stock of the Company. Notwithstanding the foregoing, any security granted, issued or sold by the Company to any director, officer, employee, consultant or adviser of the Company for the primary purpose of soliciting or retaining their services will not be considered “Equity Securities”.
(iii) The term “ Business Day ” means any day other than a Saturday, a Sunday, or any other day which in New York is a legal holiday or a day on which banking institutions are authorized or required by law or government action to close.
4. Prepayment . This Note may be prepaid in whole or in part at any time without premium or penalty.
5. Manner and Application of Payments . All amounts payable in cash hereunder shall be payable to Holder by wire transfer of immediately available funds and shall be applied, first, to interest due hereunder and then to outstanding principal.
6. No Security . This Note is an unsecured obligation of the Company and no collateral is delivered or otherwise made available by the Company or any other person for the obligations hereunder.
7. Event of Default . It shall be an “ Event of Default ” hereunder if the Company shall default in the payment when due of any principal or interest hereunder and such default is not cured within ten (10) Business Days following the due date. If an Event of Default occurs, the Holder by written notice to the Company may declare the principal and all interest on this Note to be immediately due and payable. Upon a declaration of acceleration, such principal and interest will become immediately due and payable. While an Event of Default continues to exist under this Note that is not cured within the applicable cure period, interest shall accrue at a default interest rate of 13% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
8. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by facsimile or e-mail (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. The addresses for such communications shall be:
| - 2 - |
If to the Company:
Naked Brand Group Inc.
95 Madison Avenue, 10
th
Floor
New York, NY 10016
Attention: Kai-Hsiang (“Ken”) Lin, Vice President of Finance
Telephone: 212-851-8050
Facsimile: 917-725-8509
Email: ken.lin@thenakedshop.com
If to Holder:
Stanley Green
*
Telephone: *
Facsimile: N/A
Email: *
Each party shall provide notice to the other party of any change in address.
9. Costs and Expenses . To the fullest extent allowed by applicable law, the Company must pay all expenses and costs, including reasonable attorneys’ fees incurred by the Holder as a result of any Event of Default under this Note or in connection with efforts to collect any amount due under this Note, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.
10. Amendment . The provisions of this Note may be amended only by a written instrument signed by the Company and Holder.
11. Enforceability . The Note is a valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
12. Governing Law . THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS TO BE WHOLLY PERFORMED WITHIN SAID STATE. IF ANY ACTION IS BROUGHT TO ENFORCE OR INTERPRET THIS NOTE, EXCLUSIVE VENUE FOR SUCH ACTION SHALL BE IN NEW YORK, NEW YORK. THE COMPANY AND THE HOLDER EACH, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES, AND OTHERWISE AGREES NOT TO REQUEST, A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION, PROCEEDING OR COUNTERCLAIM OF ANY TYPE IN WHICH THE COMPANY OR ANY OF ITS SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS NOTE.
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13. Waivers . All parties now or hereafter liable with respect to this Note, whether the Company, any guarantor, endorser or any other person, hereby waive presentment for payment, demand, notice of non-payment or dishonor, protest, notice of protest and notice of any other kind whatsoever.
14. Severability . If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Note so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company intending to be legally bound hereby, has duly executed this Note under seal the day and year first above written.
| NAKED BRAND GROUP INC. | |||
| By: | /s/ Kai-Hsiang Lin | ||
| Name: Kai-Hsiang (“Ken”) Lin | |||
| Title: Vice President of Finance | |||
AGREED AND ACKNOWLEDGED:
| By: | /s/ Stanley Green |
Name: Stanley Green
[Signature page to Promissory Note by Naked Brand Group Inc. to Stanley Green]