EX-99.1 2 ex99-1.htm

Exhibit 99.1

Naked Brand Group Limited ACN 619 054 938

NOTICE OF GENERAL MEETING

TIME: | 10:00 am (AEDT)
DATE: | 23 April 2021
VENUE: | BDO Sydney, Level 11, 1 Margaret Street, SYDNEY NSW 2000, Australia

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NOTICE OF GENERAL MEETING

NOTICE is given that the Extraordinary General Meeting of Naked Brand Group Limited (ACN 619 054 938) will be held at BDO Sydney, Level 11, 1 Margaret Street, SYDNEY NSW 2000, Australia on Friday, 23 April 2021 at 10:00 am (Sydney time) (Thursday, 22 April 2021 at 8:00pm (New York time)).

BUSINESS OF THE MEETING

Shareholders are invited to consider the following items of business at the General Meeting.

Resolution 1 |  | Consideration of the Proposed Transaction
Resolution (ordinary) |  | That for the purpose of section 208 of the Corporations Act 2001 (Cth) and for all other purposes, the giving of financial benefits to related parties of the Company in connection with the Proposed Transaction as set out in the Explanatory Memorandum is approved.

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QUESTIONS FROM SHAREHOLDERS

In order to provide an equal opportunity for all shareholders to ask questions of the Board, we ask you to submit in writing any questions to the Company. Please send your questions via email or mail to:

Company Secretary

Naked Brand Group Limited

Unit 7, 35-39 William Street

Double Bay NSW 2028, Australia

agm@nakedbrandgroup.com

Written questions must be received by no later than 10:00am (Sydney time) on Friday, 16 April 2021 (7:00pm (New York time) on Thursday, 15 April 2021). Your questions should relate to matters that are relevant to the business of the Meeting, as outlined in this Notice and Explanatory Memorandum.

In accordance with the Corporations Act and the Company’s policy, a reasonable opportunity will also be provided to shareholders attending the Meeting to ask questions about, or make comments upon, matters in relations to the Company.

During the course of the Meeting, the Chair will seek to address as many shareholder questions as reasonably practicable, and where appropriate, will give a representative of the auditor the opportunity to answer written questions addressed to it. However, there may not be sufficient time to answer all questions at the Meeting. Please note that individual responses may not be sent to shareholders.

VOTING INFORMATION

Entitlement to vote at the General Meeting

You will be entitled to attend and vote at the Extraordinary General Meeting if you are registered as a Shareholder of the Company as at 10:00am (Sydney time) on Wednesday, 21 April 2021 (8:00pm (New York time) on Tuesday, 20 April 2021), the record date, subject to any applicable voting exclusion. This is because, in accordance with the Corporations Regulations 2001 (Cth), the Board has determined that the Shares on issue at that time will be taken, for the purposes of the Meeting, to be held by the persons who held them at that time, which must not be at least 48 hours before the meeting. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Eligible shareholders or their proxies and attorneys wishing to vote in person should attend the Meeting and are asked to arrive at least 30 minutes prior to commencement of the Meeting so that their Shareholding may be checked against the register and their attendance recorded.

If you hold your ordinary shares in street name and you wish to vote in person at the Meeting, please contact your bank, broker or other nominee for the procedures necessary to allow you to do so.

Voting by proxy

(a) | A shareholder entitled to attend and vote at the Meeting may appoint one proxy or, if the shareholder is entitled to cast 2 or more votes at the Meeting, 2 proxies, to attend and vote instead of the shareholder.
(b) | Where 2 proxies are appointed to attend and vote at the Meeting, each proxy may be appointed to represent a specified proportion or number of the shareholder’s voting rights at the Meeting.
(c) | A proxy need not be a shareholder of the Company.
(d) | A proxy may be an individual or a body corporate. If a body corporate is appointed, the proxy form must indicate the full name of the body corporate and the full name or title of the individual representative of the body corporate for the Meeting.
(e) | A proxy form accompanies this notice. A return envelope, which requires no postage if mailed in the United States, is enclosed for your convenience. The proxy form also may be returned by email. For the proxy form to be valid it must be signed, dated and received, together with the power of attorney or other authority (if any) under which the form is signed, or a (notarially) certified copy of that power of attorney, by 10:00am (Sydney time) on Wednesday, 21 April 2021 (8:00pm (New York time) on Tuesday, 20 April 2021):

| Post to: | Continental Stock Transfer & Trust Co., 1 State Street - Floor 30, New York, NY 10275-0741
| Email to: | proxy@continentalstock.com

(f) | A proxy also may be submitted by Internet or by telephone by following the instructions set forth on the proxy form.

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To be valid, a proxy submitted by Internet or by telephone must be submitted by the date and time set forth on the proxy form.

If you hold your ordinary shares in street name and you wish to vote by proxy, please follow the directions provided to you by your bank, broker or other nominee in order to instruct your bank, broker or other nominee how to vote your shares.

WHETHER OR NOT YOU EXPECT TO ATTEND, YOU ARE REQUESTED BY THE BOARD TO PROMPTLY RETURN THE ENCLOSED PROXY FORM, OR TO SUBMIT YOUR PROXY BY INTERNET OR PHONE. SHAREHOLDERS WHO EXECUTE PROXIES RETAIN THE RIGHT TO REVOKE THEM AT ANY TIME PRIOR TO THE VOTING THEREOF.

PLEASE NOTE: IF YOUR SHARES ARE HELD IN STREET NAME, YOUR BROKER, BANK OR OTHER NOMINEE CANNOT VOTE YOUR SHARES ON NON-ROUTINE ITEMS OF BUSINESS, SUCH AS THE ELECTION OF DIRECTORS, UNLESS YOU INSTRUCT YOUR NOMINEE HOW TO VOTE IN ACCORDANCE WITH THE DIRECTIONS YOU RECEIVE FROM YOUR NOMINEE.

Quorum and Voting Rights

Two or more shareholders present at the Meeting and entitled to vote on a resolution at the Meeting shall constitute a quorum. Each share is entitled to one vote upon all items of business to be acted upon at the Meeting.

Required Vote

Approval of an ordinary resolution requires the affirmative vote of a majority of the votes cast.

Any shares that are not voted (whether by abstention, broker non-vote or otherwise) will have no effect on an ordinary resolution or a special resolution. A “broker non-vote” occurs when your ordinary shares are held in street name and the bank, broker or other nominee does not have authority to vote on an item of business on your behalf. This may occur if the item of business is non-routine, and you do not provide voting instructions to your bank, broker or other nominee.

Revoking a Proxy

You may revoke any proxy by notifying the Company in writing by mail at Attention: Directors, Naked Brand Group Limited, c/o Tim Aman, BDO Sydney, Level 11, 1 Margaret Street, SYDNEY NSW 2000, or by email at proxy@continentalstock.com. You also may revoke any proxy by submitting a later-dated proxy or by voting in person at the meeting. Attendance at the Meeting does not alone serve to revoke a proxy. For a written revocation or later-dated proxy to be valid, it must be received by 10:00am (Sydney time) on Wednesday, 21 April 2021 (8:00pm (New York time) on Tuesday, 20 April 2021).

If you hold your shares in street name, please follow the directions provided to you by your bank or broker in order to revoke your voting instructions.

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OTHER INFORMATION

Costs

We will bear the cost of preparing, printing, assembling and mailing these materials, the proxy card, and any other material which may be sent to shareholders in connection with our General Meeting. It is contemplated that brokerage houses will forward these materials and the proxy card to beneficial owners at our request. In addition to the solicitation of proxies by use of the mails, our officers and regular employees may solicit proxies without additional compensation, by telephone or other electronic means. We may reimburse brokers or other persons holding shares in their names or the names of their nominees for the expenses of forwarding soliciting material to their principals and obtaining their proxies.

Important Notice Regarding Availability of Meeting Materials

The Meeting materials, including the notice and explanatory statement, are available at our corporate website, ir.nakedbrands.com. You may also obtain a copy of these materials and the proxy card, free of charge, by contacting us by mail at Attention: Company Secretary, Naked Brand Group Limited, c/o Bendon Limited, 8 Airpark Drive, Airport Oaks, Auckland 2022, New Zealand or by email at proxy@continentalstock.com.

Shareholder Communications with the Board

The Board maintains a process for shareholders to communicate with the Board. Shareholders wishing to communicate with the Board or any individual director must mail a communication addressed to the attention of the Board or the individual director, Attention: Directors, Naked Brand Group Limited, c/o Bendon Limited, 8 Airpark Drive, Airport Oaks, Auckland 2022, New Zealand. Any such communication must state the number of ordinary shares beneficially owned by the shareholder making the communication. All of such communications will be forwarded to the full Board or to any individual director or directors to whom the communication is directed unless the communication is clearly of a marketing nature or is unduly hostile, threatening, illegal, or similarly inappropriate, in which case we have the authority to discard the communication or take appropriate legal action regarding the communication.

Where You Can Find More Information

We file annual and other reports and documents with the SEC under the Securities Exchange Act of 1934, as amended. Our SEC filings made electronically through the SEC’s EDGAR system are available to the public at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549-1004. Please call the SEC at (800) SEC-0330 for further information on the operation of the public reference room.

Proxy voting by the Chair

The Chairman intends to vote all undirected proxies in favour of each Resolution.

Voting by Corporate Representatives

A body corporate may elect to appoint an individual to act as its representative in accordance with section 250D of the Corporations Act, in which case the Company will require a certificate of appointment of the corporate representative executed in accordance with the Corporations Act. The certificate of appointment must be lodged with the Company before the Meeting.

DATED: 30 March 2021

BY ORDER OF THE BOARD OF NAKED BRAND GROUP LIMITED

Kel Fitzalan

Director

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Explanatory Memorandum

This Explanatory Memorandum and all attachments are important documents and should be read carefully. If you have any questions regarding the matters set out in this Explanatory Memorandum or the preceding Notice, please contact the Company or your professional adviser.

This Explanatory Memorandum has been prepared for Shareholders in connection with the General Meeting of the Company to be held on Friday, 23 April 2021 at 10:00am (Sydney time) (Thursday, 22 April 2021 at 8:00pm (New York time)).

The purpose of this Explanatory Memorandum is to provide Shareholders with information that the Board believes to be material to Shareholders in deciding whether or not to approve the resolutions detailed in the Notice.

1. | RESOLUTION 1 – PROPOSED TRANSACTION

1.1. | Proposed Transaction

On 21 January 2021, Naked Brands Group Limited (Naked or the Company) announced its plans to undertake a transformative restructure in which it will dispose of its unprofitable bricks-and-mortar operations in order to focus exclusively on the planned rapid acceleration of its e-commerce business. To that end, the Company signed a non-binding and non-exclusive term sheet (Term Sheet) to divest itself of its New Zealand subsidiary Bendon Limited (NZ Company number 110935) (Bendon), and the entities controlled by Bendon (Bendon Group), to a group composed of existing management of the Company, including Justin Davis-Rice (Mr Davis-Rice), the Chairman of the Company and the CEO of Bendon, Anna Johnson (Ms Johnson).

The Company proposes to sign a conditional share sale agreement (Bendon Share Sale Agreement) for the sale of all of the issued share capital in Bendon to JADR Holdings Pty Limited (ACN 151 656 192) as trustee for the DR Family Trust No 2 (Davis-Rice Buyer) and Matana Intimates Holdings Trustee Limited (NZ Company number 8156011) as trustee for the Matana Intimates Holding Trust (Johnson Buyer) (together, the Buyers), associated with Mr Davis-Rice and Ms Johnson respectively (Proposed Transaction).

a) | Independent Board Committee

Mr Davis-Rice is both the Chairman of the Company and is associated with the Davis-Rice Buyer by virtue of it being a family trust. Ms Johnson is the CEO of Bendon and is associated with the Johnson Buyer by virtue of it being a family trust. On that basis, the Company adopted strict governance and information protocols to ensure independent consideration and assessment of the Buyers’ proposal and the Bendon Share Sale Agreement.

The independent directors of the Company (being Simon Tripp, Andrew Shape and Kelvin Fitzalan) have formed the Independent Board Committee which considered, on behalf of the Company, the Buyers’ proposal.

b) | About Bendon

Bendon is a New Zealand company which is wholly owned by Naked. Bendon along with its wholly owned subsidiaries, operate an intimate, swim+resort and sleep apparel business. Bendon’s brands include Fayreform, Me, by Bendon, Pleasure State, Lovable, Bendon, Hickory and Davenport. It recently consolidated its presence to Australia and New Zealand, through 100+ retail doors, an E-commerce site and 59 company-owned Bendon retail and outlet stores. It employs over 500 staff and is headquartered in Auckland, New Zealand.

Despite investing in a turnaround plan from December 2018, the Bendon Group has incurred NZ$78.9m of net losses before tax over the three-year period ending 31 January 2021. The Independent Board Committee is of the view that the Bendon Group will continue to incur losses through to FY24. These losses will continue to impact the Company’s cash flow and based on management forecasts, will require the deployment of further capital to fund which could otherwise be used to grow the Company’s e-commerce business. Bendon is also affected by the unpredictability of trade due to current and potential trading impacts from COVID-19 related shutdowns given its bricks and mortar focus. Accordingly, the Board expects the Bendon Group business to continue to hamper the Company’s growth and value.

The Directors have therefore been considering the associated risks and benefits involved for Shareholders if the Company retains an interest in the Bendon Group.

The results of these considerations is that the Independent Board Committee have taken the view that it is not in the best interests of Shareholders to continue progressing and funding the Bendon business.

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c) | Alternative Options Considered

The Company considered a range of options in realising value from Bendon. In September 2019 and in mid-2020, Australian bankers Allunga Capital (Allunga) and, subsequently, New Zealand firm Antipodes Private Investment Bank (Antipodes) were engaged for this purpose.

Allunga was mandated to seek offers for Bendon’s brand Fayreform. Allunga received no material offers after extensive work.

Antipodes was mandated to seek offers for the total Bendon Group. Antipodes reported that they found no interest from the market in acquiring the whole of the Bendon Group and further that the Bendon brands had a low stand-alone value.

New Zealand accountants, Bellingham Wallace were also engaged to estimate the costs involved to effect a liquidation of Bendon. Their advice was that the Company would need to contribute a further NZ25.2 million (assuming Bendon’s existing cash position of NZ$16.5 million is maintained) or NZ$41.7 million if Bendon’s cash balance is transferred to the Company.

The Company also considered placing Bendon into voluntary administration. However, the significant costs, lack of control and potential harm to the brand made this option less desirable.

Following this process and the lack of viable alternatives, the Company received an offer from the Buyers, which resulted in the execution of the Term Sheet.

The Independent Board Committee deliberately negotiated for the Term Sheet to be non-exclusive so as to elicit offers from other interested parties following the related announcement to the market. No such offers or approaches were forthcoming.

1.2. | Bendon Share Sale Agreement

The material terms of the Bendon Share Sale Agreement are set out below. The Bendon Share Sale Agreement is otherwise on terms that are customary for a management buy-out agreement of this nature including the provision by the Buyer of ‘reverse warranties’ in favour of the Company.

Amongst other conditions (set out in paragraph (f)) the Bendon Share Sale Agreement is conditional on Shareholders approving Resolution 1 as described in this Notice. If Resolution 1 is not approved the Proposed Transaction will not proceed.

The key terms of the Bendon Share Sale Agreement are as follows:

| a) | (Agreement to buy and sell Bendon) the Company has agreed to sell all of the issued share capital in Bendon together with any accrued rights free from encumbrances for the consideration described in paragraph g) below on the terms and conditions set out in the Bendon Share Sale Agreement. Upon Completion, the Proposed Transaction will have an economic close of 31 January 2021 (Accounts Date) notwithstanding that Completion is due to occur on or before 31 May 2021.
| b) | (FOH Services Agreement) the Company will procure that, FOH Online, its wholly owned subsidiary, enters into a management services agreement with Bendon pursuant to which Bendon will provide the management services summarised further in section 1.4.1 to FOH Online (FOH Services Agreement).
| c) | (Forgiveness of the Intra Group Loans) the Company will procure that the Naked Group forgives all inter-company debt owing by Bendon Group entities to the Naked Group (Intra Group Loans) effective on 30 January 2021 (which is approximately NZ$40.4 million). Whilst contemplated by the Term Sheet, and therefore warranting disclosure as a deal term, the forgiveness of the Intra Group Loans has already occurred as at the date of this notice. See page 69 of Independent Expert Report for more information.
| d) | (Naked Facility) the Company is to provide Bendon with a 5 year loan of NZ$7 million (Naked Facility) at initially an interest rate per annum of 5% and following Bendon obtaining additional external senior debt which the Buyers and Bendon are proposing to raise after Completion, an interest rate of 50 basis points above the rate of this senior debt. The Naked Facility will also be subordinated to this senior debt.
| e) | (Ms Johnson’s employee entitlements) the Company will, to the extent permissible under the relevant rules, pay out or settle in cash, all of Ms Johnson’s: (a) accrued remuneration; and (b) share incentive entitlements, up to the Accounts Date.

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| f) | (Condition Precedent) Completion of the Proposed Transaction is subject to and conditional on:

| a. | the items specified above in paragraphs (b), (d) and (e) being satisfied;
| b. | the Buyers giving notice and receiving a direction order authorising the Proposed Transaction from the Overseas Investment Office (NZ);
| c. | the Bank of New Zealand releasing its security interest over the shares in Bendon;
| d. | the relevant Bendon Group entity receiving any change of control consents that are required to be obtained under the material contracts in respect of the Proposed Transaction;
| e. | the Company receiving the independent expert’s report prepared in accordance with ASIC’s guidelines that determines that the Proposed Transaction is fair and reasonable to the non-associated shareholders. A description of the Independent Expert’s opinion can be found in section 1.6;
| f. | all conflict of interest disclosures in respect of the Proposed Transaction required by applicable law or regulations (including the Nasdaq Listing Rules and in statutory registers) being duly made;
| g. | the Seller’s accountant conducting an independent audit of Bendon’s Inventory and FOH Online’s Inventory, as at 31 January 2021, for the purposes of the inventory adjustment contemplated in paragraph (g)
| h. | no material adverse change occurring in relation to any Bendon Group entity; and
| i. | Mr Davis-Rice (or an entity controlled by Mr Davis-Rice) and Naked entering into a consultant services agreement in relation to Mr Davis-Rice’s role as CEO of the Company (in addition to his ongoing role as chairman of the Company).

A number of these conditions precedent have been satisfied as at the date of this Notice.

| g) | (Consideration) The consideration payable by the Buyers is NZ$1.00 as adjusted based on the target inventory amount of NZ$18.2 million and by a true up adjustment for estimated Net Cash/ (Debt) and Working Capital as at the Accounts Date.
| h) | (Exit event proceeds) If the Buyers or Mr Davis-Rice and Ms Johnson agree to sell the shares in Bendon or its business within three years following Completion, Naked will be entitled to the following percentage of the net proceeds of the sale:

| a. | in the first year following Completion, 75%;
| b. | in the second year following Completion, 50%; and
| c. | in the third year following Completion, 25%.

| i) | (Profit share) The Company is entitled to a tiered percentage of net profits of the Bendon Group for three years commencing on 1 July 2021, being in:

| a. | the first year, 30%;
| b. | the second year, 20%; and
| c. | the third year, 10%.

The net profits are to be calculated on a cumulative basis so that any losses from the first or second year are offset against any profits in a subsequent year.

| j) | (Warranties and indemnities) The Company has agreed to provide warranties relating to title, authority and capacity along with associated indemnities for a breach in favour of the Buyers. Given the nature of the management buyout, the Buyers have agreed to provide market standard ‘reverse warranties’ in favour of the Company arising from their intimate knowledge of the Bendon Group business.
| k) | (Costs) The Company has agreed to pay up to NZ$300,000 of the Buyers’ and Bendon’s costs in relation to the Proposed Transaction (Buyers’ Transaction Costs) which was agreed in restitution for the Buyers’ agreeing for the Term Sheet to be entered into on a non-exclusive basis.
| l) | (Guarantee) Mr Davis-Rice and Ms Johnson guarantee certain obligations under the Bendon Share Sale Agreement with the balance being guaranteed post completion by Bendon.

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1.3. | Effects of Proposed Transaction on the Company

As a result of the Proposed Transaction, the Company will be free to focus its development efforts on the FOH Online business, as well as see strategic acquisitions in the e-commerce space that not only compliment FOH Online, but provide the opportunity to generate cross business operational synergies.

The Company has recently proven to be in a position to access capital through the public markets that the board believes is better deployed in complimentary growth businesses in the high margin e-commerce sector. This could also involve investment in technologies that strengthen the Company’s offering and customer experience, that could include but not be limited to the e-commerce platform, body scanning and artificial intelligence.

As a result of the Proposed Transaction, the Company will be free to invest its capital in developing value rather than funding Bendon losses, or funding expensive capital raises to keep the core Bendon business operating.

Accounting consequences

For the Proposed Transaction, the Company will recognize a corresponding reduction of assets and liabilities relating to the sale upon Completion. Additionally, we anticipate the Company will recognise a loss from the sale of the Bendon Group.

Taxation

The Proposed Transaction should not give rise to any Australian income tax consequences for the Company. The Company will not bring to account any capital loss in respect of the forgiveness of the Intra Group Loans.

The summary in this section is general in nature. In addition, particular taxation implications will depend upon the circumstances of each Shareholder. Accordingly, Shareholders are encouraged to seek and rely only on their own professional advice in relation to their tax position. Neither the Company nor any of its officers, employees or advisers assumes any liability or responsibility for advising shareholders about the tax consequences for them from the Proposed Transaction.

| 1.3.1. | Alternative strategy if MBO Fails

Since Naked listed in 2017, its major asset Bendon has accumulated operating losses of over US$56m. The Independent Board Committee has determined that the best option was to dispose of Bendon. As noted in section 1.1c), an advisor was engaged and offers were sought from the market. This process did not result in any interest from third party buyers.

If the Proposed Transaction is unsuccessful, the Board will remain committed to disposing of the Bendon business to cauterise exposure to future losses. In this scenario, the Company would seek to exit the Bendon business through a liquidation. This is a multifaceted and complex process involving but not limited to settling all liabilities including staff and leases, disposal of inventory and sale of brands among other things.

Naked currently is in a very strong financial position due to capital raised from shareholders in readiness to deploy its new strategy of expanding and developing a world class e-commerce lingerie and intimates retail platform. Accordingly, Naked would be obligated to settle all liabilities at full cost. An analysis of the liquidation option has been undertaken and is more than twice the cost to Naked of the Proposed Transaction, would likely take much longer and would be more risky to deliver as the Naked brand could suffer reputational damage as a result.

1.4. | Ongoing arrangements with Bendon

| 1.4.1. | FOH Services Agreement

In the current structure, Bendon performs certain services in relation to the FOH Online e-commerce business including revenue and financial reporting, product design, inventory management, freight and logistics management, website management, customer service, marketing and IT support (Bendon Services).

As part of the Proposed Transaction, so that Naked can continue to operate FOH Online using the existing ecommerce model, operating and management structure without having to construct a standalone infrastructure, a 5 year management services agreement is to be entered between FOH Online and Bendon. Under this agreement, Bendon is to provide certain management services to FOH Online and FOH Online is to reimburse Bendon for all direct and reasonable costs incurred in the performance of these services as agreed in annual budget as well as a 5% administration fee based on monthly sales. The 5% administration fee is to cover the actual costs of services performed by Bendon personnel.

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The other key terms of the FOH Services Agreement are as follows:

| a) | FOH Online may terminate for convenience by 3 months’ notice;
| b) | Bendon may not terminate for convenience; and
| c) | there are no exclusivity restrictions on either party.

Other than the terms outlined above, the FOH Services Agreement is on terms customary for an agreement of this nature.

The Independent Board Committee’s view is that the terms of the FOH Services Agreement commercially favour the Company. The Independent Board Committee has formed this view given the reasonable fee structure which has been designed so that FOH Online is substantially no less worse off than when the Bendon Services had been provided before Completion and within the Naked corporate group. This coupled with the termination provisions at the Company’s disposal and non-exclusivity arrangements, which allows the Company to pursue third party alternatives for the relevant services should this be more favourable, have resulted in the Independent Board Committee forming the view that the FOH Service Agreement has been concluded on an arm’s length basis. While the FOH Services Agreement is on an arm’s length terms and therefore does not require approval by the shareholders the Independent Board Committee is of the view that it is appropriate for the shareholders to approve the FOH Services Agreement in the context of the broader Proposed Transaction.

| 1.4.2. | Naked Facility

As part of the Proposed Transaction, the Company proposes to enter into the Facility Agreement pursuant to which it will advance to Bendon an amount of up to NZ$7m to Bendon (Naked Facility) which will be guaranteed by the Australian and New Zealand entities in the Bendon Group and secured by all-asset security over their assets, as is market practice.

The Company has agreed that the Naked Facility will be subordinated to an additional loan which Bendon will be seeking from a third party lender, following completion of the Proposed Transaction (Senior Debt). Until such time as the Senior Debt has been obtained, the interest payable on the Naked Facility will be charged at a fixed rate of 5%. Following Bendon obtaining the Senior Debt, the interest rate will change to the rate that is 50 basis points higher than the rate agreed under the Senior Debt.

The loan has a fixed term of 5 years which may be repaid early in accordance with the Facility Agreement but may not be redrawn by Bendon.

Standard default provisions apply under the Facility Agreement if Bendon or its guarantors fails to repay or observe the terms of the Facility Agreement.

In order to facilitate the exit from the Bendon business, the Company believes it is in the best interests of shareholders to provide the Naked facility to support the transition and ongoing operation of the Bendon business flowing from the Proposed Transaction. This will in turn allow Bendon to continue to operate as a going concern and provide the services under the FOH Services Agreement which the Company will require for its ongoing operations. The Independent Board Committee’s view is that the Naked Facility is on arm’s length terms and is particularly favourable to the Company given the interest rate mechanics. Again, whilst shareholder approval is not strictly required, given the nature of the Proposed Transaction shareholder approval will specifically be sought.

1.5. | Advantages and disadvantages

The Independent Board Committee believes that the Proposed Transaction is in the best interests of the Company for the following (non-exhaustive) reasons:

| ● | the Independent Expert has concluded that the Proposed Transaction is fair and reasonable to non-associated Shareholders of the Company;
| ● | the Proposed Transaction will allow the Company to save its cash funds (as it will cease to fund the Bendon business losses) which can be used to focus on the Company’s c.NZ$25m to NZ$30m revenue eCommerce business in FOH Online being efficiently run under a full-service management agreement with Bendon, being the FOH Services Agreement;
| ● | it removes Bendon material contingent liabilities from the Naked Group (such as lease liabilities and employee entitlements which are estimated to be NZ$18.9m and NZ$3.0m respectively);

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| ● | it avoids the need for the deployment of capital by Naked to fund:

| ○ | the ongoing Bendon losses; or
| ○ | the costs of liquidating Bendon,

which is not conducive to shareholder value;

| ● | it represents the only offer received, after extensive attempts to sell the Bendon business and/or Bendon’s brands;
| ● | it is superior to the alternative options available;
| ● | it avoids the need for a liquidation of Bendon and the estimated cost to the Company of circa NZ$23m-26m million to effect that liquidation;
| ● | it provides downside risk protection relating to Bendon for Shareholders;
| ● | it provides Shareholders with a financial upside interest in the possible turnaround of Bendon through the exit event proceeds and profit share arrangements described in further detail in section 1.2;
| ● | the Proposed Transaction will result in the Company no longer being as exposed to COVID-19 related shutdown events due to its new e-commerce focus;
| ● | it will provide the Company with continuity of the expertise of the Bendon management via the FOH Services Agreement, and the flexibility to find alternative service providers at short notice;
| ● | the Company will be positioned to seek material transactions either complimentary to the FOH Online eCommerce business model, or a merger with a material business; and
| ● | the Bendon business may not be consistent with the investment objectives of all Shareholders.

The Independent Board Committee believes that the following non-exhaustive list of disadvantages may be relevant to a Shareholder’s decision on how to vote on the Proposed Transaction:

| ● | the Company would lose any future benefit of an increase in the market value of the Bendon business (other than through the exit event proceeds and profit share arrangements described in further detail in section 1.2);
| ● | for the term of the FOH Services Agreement, the Company would no longer have direct control over the provision of the management services provided by Bendon and their costs;
| ● | the Proposed Transaction involves the Company selling an asset, which may not be consistent with the investment objectives of all Shareholders; and
| ● | non-associated Shareholders may disagree with the recommendations of the Independent Board Committee and opinion of the Independent Expert.

1.6. | Independent Expert Report

For the purpose of assisting shareholders on how to vote on Resolution 1, the Company has commissioned an Independent Expert’s Report by FTI Consulting, an independent global business advisory service provider. The Independent Expert has concluded that the Proposed Transaction is fair and reasonable to shareholders as a whole.

Summary of opinion

In FTI’s opinion the Proposed Transaction is fair and reasonable. The evaluation is summarized below. This is summary of FTI’s opinion, Shareholders should read the Independent Expert Report in its entirety before deciding how to vote.

Fairness assessment

FTI tested whether the Proposed Transaction is fair by assessing whether the value of the consideration is equal to or greater than the value of Bendon and the financial benefits (Financial Benefits) included in the Proposed Transaction.

Set out in the table below is FTI’s estimate of the fair value of Bendon and the financial benefits in comparison to the consideration offered by the Buyer.

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Table 1: Summary of fairness assessment

Fairness assessment |  |  |  |  | Low |  |  | Mid |  |  | High |
Financial Benefit to the Buyer, including: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
A. The value of the equity in Bendon (on a controlling basis) |  |  | NZD 000’s |  |  |  | (67,000 | ) |  |  | (64,200 | ) |  |  | (61,400 | )
B. Additional Financial Benefits |  |  | NZD 000’s |  |  |  | 63,173 |  |  |  | 63,173 |  |  |  | 63,173 |
Total Financial Benefit to the Buyer |  |  | NZD 000’s |  |  |  | (3,827 | ) |  |  | (1,027 | ) |  |  | 1,773 |
versus: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consideration offered by the Buyer |  |  | NZD |  |  |  | 1.0 |  |  |  | 1.0 |  |  |  | 1.0 |

Source: FTI Consulting analysis

The Consideration offered by the Buyer, NZD1.00, is within the range of FTI’s estimates of the fair value of Bendon and the Financial Benefits to the Buyer, of between negative NZD3.8 million and positive NZD1.8 million. Both the low end and the mid-point of this range is less than the Consideration of NZD1.00. Accordingly, FTI’s opinion is that the Proposed Transaction is fair.

Reasonableness assessment

In accordance with ASIC RG 111 the Proposed Transaction is reasonable if it is fair, or if despite not being fair, the overall advantages of the proposal outweigh its disadvantages to Shareholders. FTI has also considered the advantages and disadvantages to Shareholders of the Proposed Transaction.

Advantages

FTI identified the following main advantages to Shareholders if the Proposed Transaction proceeds. The Proposed Transaction:

| ● | removes uncertainty regarding future funding requirements of the continuing losses of the Bendon business;
| ● | represents the only offer received, after extensive attempts to sell the Bendon business and/or the brands, and, given that a better offer was not received since the announcement, it appears unlikely that one will be received in the near term;
| ● | is superior to the alternative options available to the Directors;
| ● | provides downside risk protection for Shareholders;
| ● | provides Shareholders with a financial upside interest in the possible turnaround of Bendon;
| ● | will allow Naked to avoid an expensive liquidation process;
| ● | will allow Naked’s management to focus on its strategic plan to grow the Naked business;
| ● | will provide Naked with continuity of the expertise of Bendon management via the FOH Services Agreement, and the flexibility to find alternative service providers at short notice; and
| ● | will help reduce the risk of breaching NASDAQ share price minimums.

Disadvantages

FTI identified the following main disadvantages to Shareholders if the Proposed Transaction proceeds:

| ● | shareholders will not have the opportunity to participate in the potential upside from Bendon, over and above the upside provided in the transaction terms (profit share clause and profit share on exit clause);
| ● | the Proposed Transaction constitutes a disposal of the main undertaking of the Company, which while the Proposed Transaction is a disposal is of a loss-making business, there is a risk that Naked will not successfully execute its strategic plan to rebuild the business through acquisitions of more attractive online retail businesses;
| ● | an ongoing potential conflict of interest is created by the Proposed Transaction where the CEO of Naked, Justin Davis-Rice, will also have an economic interest in Bendon;
| ● | management of FOH Online will no longer be employed by Naked which could have short term negative implications on Naked’s remaining business; and
| ● | the ongoing Naked business, at least temporarily, will enjoy a smaller “footprint” in the form of its FOH Online business, which, from a revenue perspective, is smaller than Bendon.

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1.7. | Chapter 2E of the Corporations Act

In accordance with section 208 of the Corporations Act, for a public company to give a financial benefit to a related party of the public company, the public company must:

| a) | obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and

| b) | give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

The Proposed Transaction involves the granting of various financial benefits to related parties. Accordingly, the Company seeks Shareholder approval for the purposes of section 208 of the Corporations Act. The various related party components of the Proposed Transaction are described in further detail below.

| 1.7.1. | Sale of Bendon to Buyers

The sale of Bendon to the Davis-Rice Buyer and the Johnson Buyer constitutes giving a financial benefit to a related party.

Pursuant to and in accordance with the requirements of section 219 of the Corporations Act and ASIC Regulatory Guide 76, the following information is provided in relation to this component of the Proposed Transaction:

Who is the related party? |  | The related parties are the Davis-Rice Buyer and the Johnson Buyer. The Davis-Rice Buyer is a related party by virtue of it being associated with Mr Davis-Rice, a director of the Company. The Johnson Buyer may also be considered a related party on the basis it is acting in concert with the Davis-Rice Buyer and is receiving financial benefits in conjunction with the Davis-Rice Buyer.
What is the nature of the financial benefit? |  | The nature of the financial benefit proposed to be given to the related party is the transfer of all rights, title and interests to the entire issued share capital in Bendon and consequently, the Bendon Group’s business and any associated benefit or profits arising from that interest.
What is the maximum value of the financial benefit? |  | The fair value ascribed to 100% of the issued share capital of Bendon is between NZ$61.4 million and NZ$67.0 million by the Independent Expert. This valuation has been conducted before considering the other financial benefits offered under the Proposed Transaction. This valuation is set out in further detail in section 9 of the Independent Expert Report.
When will the financial benefit be granted? |  | The financial benefits will be granted on the passing of Resolution 1 and Completion of the Proposed Transaction.
Directors’ recommendations |  | The Independent Board Committee which comprises all of the Directors other than Mr Davis-Rice (who declines to give recommendations in respect of Resolution 1 due to his material personal interests in Resolution 1) have no personal interest in the outcome of Resolution 1 and unanimously recommend that Shareholders vote IN FAVOUR of Resolution 1 subject to the Independent Expert continuing to conclude the Proposed Transaction is fair and reasonable to the non-associated Shareholders. In consideration of the findings of the Independent Expert’s Report, each member of the Independent Board Committee is of the opinion that Resolution 1 is reasonable and appropriate having regard to the circumstances of the Company, and therefore in the best interests of the Company and Shareholders for the reasons outlined in this Explanatory Memorandum. The Shareholders associated with Mr Davis-Rice will not be voting on Resolution 1. Otherwise, each Director intends to vote all of their (or their associates) shares in the Company in favour of Resolution 1 in which they (or their associate) are entitled to vote.
Further information |  | For the avoidance of doubt, following Completion of the Bendon Share Sale Agreement, Mr Davis Rice will remain as Chairman and CEO of the Company and continue as a director of Bendon. Other than as set out in this Explanatory Memorandum, The Independent Board Committee are not aware of any other information that would be reasonably required by shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

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| 1.7.2. | FOH Services Agreement

The entering into of the FOH Services Agreement constitutes the provision of financial benefits by the Company’s subsidiary, FOH Online to Bendon, a related party of the Company by virtue of section 228(6) of the Corporations Act.

The FOH Services Agreement, which is summarised in section 1.4.1, has been robustly negotiated on arm’s length terms and accordingly the Independent Board Committee’s view is that it satisfies the arm’s length exception in section 210 of the Corporations Act. However, in the context of the broader Proposed Transaction, the Independent Board Committee considers that it is appropriate that Shareholders approve the FOH Services Agreement for the purposes of Chapter 2E of the Corporations Act.

The following information is provided in relation to this component of the Proposed Transaction for the purposes of section 219 of the Corporations Act and ASIC Regulatory Guide 76.

Who is the related party? |  | The related party is Bendon by virtue of there being reasonable grounds to believe it will become a related party of the Company if Resolution 1 is approved and the Proposed Transaction occurs due to the Buyers, being related parties of the Company, obtaining control of Bendon.
What is the nature of the financial benefit? |  | The payment of a service fee by FOH Online, an entity controlled by the Company, to Bendon for all direct and reasonable costs incurred in the performance of these services as agreed in annual budget as well as a 5% administration fee based on monthly sales.
What is the maximum value of the financial benefit? |  | Refer to section 10.2(b) of the Independent Expert Report.
When will the financial benefit be granted? |  | The financial benefits will be granted on the passing of Resolution 1 and Completion of the Proposed Transaction.
Directors’ recommendations |  | The Independent Board Committee which comprises all of the Directors other than Mr Davis-Rice (who declines to give recommendations in respect of Resolution 1 due to his material personal interests in Resolution 1) have no personal interest in the outcome of Resolution 1 and unanimously recommend that Shareholders vote IN FAVOUR of Resolution 1 subject to the Independent Expert continuing to conclude the Proposed Transaction is fair and reasonable to the non-associated Shareholders. In consideration of the findings of the Independent Expert’s Report, each member of the Independent Board Committee is of the opinion that Resolution 1 is reasonable and appropriate having regard to the circumstances of the Company, and therefore in the best interests of the Company and Shareholders for the reasons outlined in this Explanatory Memorandum and in particular the reasons set out as outlined in section 1.4.1. The Shareholders associated with Mr Davis-Rice will not be voting on Resolution 1. Otherwise, each Director intends to vote all of their (or their associates) shares in the Company in favour of Resolution 1 in which they (or their associate) are entitled to vote.
Further information |  | Other than as set out in this Explanatory Memorandum, The Independent Board Committee are not aware of any other information that would be reasonably required by shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

| 1.7.3. | Forgiveness of Intra Group Loans

As part of the Proposed Transaction, the Company has forgiven Bendon’s Intra Group Loans, which is a condition of the Buyers’ offer. These loans were historically incurred for the purposes of funding Bendon losses and were forgiven so as to facilitate the completion of the Proposed Transaction. The forgiveness of the Intra Group Loans constitutes the granting of a financial benefit to a related party. The following information is provided in relation to this component of the Proposed Transaction for the purposes of section 219 of the Corporations Act and ASIC Regulatory Guide 76.

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Who is the related party? |  | The related party is Bendon by virtue of there being reasonable grounds to believe it will become a related party of the Company if Resolution 1 is approved and the Proposed Transaction occurs due to the Buyers, being related parties of the Company, obtaining control of Bendon.
What is the nature of the financial benefit? |  | The forgiveness of loans owing by Bendon to the Naked Group which would otherwise be due and payable by Bendon.
What is the maximum value of the financial benefit? |  | The maximum value of the financial benefit is the total value of the Intra Group Loans owing by Bendon to the Naked Group being NZ$40.4 million.
When will the financial benefit be granted? |  | The financial benefits will be granted on the passing of Resolution 1 and Completion of the Proposed Transaction.
Directors’ recommendations |  | The Independent Board Committee which comprises all of the Directors other than Mr Davis-Rice (who declines to give recommendations in respect of Resolution 1 due to his material personal interests in Resolution 1) have no personal interest in the outcome of Resolution 1 and unanimously recommend that Shareholders vote IN FAVOUR of Resolution 1 subject to the Independent Expert continuing to conclude the Proposed Transaction is fair and reasonable to the non-associated Shareholders. In consideration of the findings of the Independent Expert’s Report, each member of the Independent Board Committee is of the opinion that Resolution 1 is reasonable and appropriate having regard to the circumstances of the Company, and therefore in the best interests of the Company and Shareholders given the for the reasons outlined in this Explanatory Memorandum including those outlined above. The Shareholders associated with Mr Davis-Rice will not be voting on Resolution 1. Otherwise, each Director intends to vote all of their (or their associates) shares in the Company in favour of Resolution 1 in which they (or their associate) are entitled to vote.
Further information |  | Other than as set out in this Explanatory Memorandum, the Independent Board Committee are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

| 1.7.4. | Naked Facility

The key terms of the Naked Facility are summarised in section 1.4.2.

The purposes of the Naked Facility is to provide transitional support to the Buyers to ensure the Bendon business can continue to operate as a going concern which is mutually beneficial for Naked and Bendon. This in turn will allow Bendon to continue to provide the relevant services to Naked for the term of the FOH Online Services Agreement which are necessary for Naked’s own continued operations at least in the transitional period.

The granting of the Naked Facility constitutes the giving of financial benefits to a related party. As alluded to in 1.4.2, the Independent Board Committee considers the Naked Facility to be on arm’s length terms and therefore falls within the exception in section 210 of the Corporations Act to obtain shareholder approval. However, given its context in the broader Proposed Transaction the Company is seeking shareholder approval. The following information is provided in relation to this component of the Proposed Transaction for the purposes of section 219 of the Corporations Act and ASIC Regulatory Guide 76.

Who is the related party? |  | The related party is Bendon by virtue of there being reasonable grounds to believe it will become a related party of the Company if Resolution 1 is approved and the Proposed Transaction occurs due to the Buyers, being related parties of the Company, obtaining control of Bendon.
What is the nature of the financial benefit? |  | The nature of the financial benefit proposed to be given to Bendon is the availability of funds advanced under the Naked Facility.
What is the maximum value of the financial benefit? |  | Pursuant to the Facility Agreement, the maximum amount of NZ$7 million can be advanced by Naked to Bendon.
When will the financial benefit be granted? |  | The financial benefits will be granted on the passing of Resolution 1 and Completion of the Proposed Transaction.
Directors’ recommendations |  | The Independent Board Committee which comprises all of the Directors other than Mr Davis-Rice (who declines to give recommendations in respect of Resolution 1 due to his material personal interests in Resolution 1) have no personal interest in the outcome of Resolution 1 and unanimously recommend that Shareholders vote IN FAVOUR of Resolution 1 subject to the Independent Expert continuing to conclude the Proposed Transaction is fair and reasonable to the non-associated Shareholders. In consideration of the findings of the Independent Expert’s Report, each Independent Board Committee is of the opinion that Resolution 1 is reasonable and appropriate having regard to the circumstances of the Company, and therefore in the best interests of the Company and Shareholders for the reasons outlined in this Explanatory Memorandum and in particular section 1.4.2. The Shareholders associated with Mr Davis-Rice will not be voting on Resolution 1. Otherwise, each Director intends to vote all of their (or their associates) shares in the Company in favour of Resolution 1 in which they (or their associate) are entitled to vote.
Further information |  | Other than as set out in this Explanatory Memorandum, the Independent Board Committee are not aware of any other information that would be reasonably required by shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

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| 1.7.5. | Buyers’ Transaction Costs

As part of the Proposed Transaction, the Company has agreed to pay up to NZ$300,000 for the Buyers’ and Bendon’s Transaction Costs. This was commercially agreed in exchange for the Buyers agreeing for the Term Sheet to be entered into on a non-exclusive basis to allow the Company to elicit other offers from interested parties as detailed in section 1.1c).

If the Proposed Transaction does not proceed due to the acts or omissions of the Buyers, the Buyers must refund any such costs paid by the Company.

As this payment is a related party financial benefit, the following information is provided in relation to this component of the Proposed Transaction for the purposes of section 219 of the Corporations Act and ASIC Regulatory Guide 76.

Who is the related party? |  | The related parties are the Davis-Rice Buyer and the Johnson Buyer. The Davis-Rice Buyer is a related party by virtue of it being associated with Mr Davis-Rice, a director of the Company. The Johnson Buyer may also be considered a related party on the basis it is acting in concert with the Davis-Rice Buyer and is receiving financial benefits in conjunction with the Davis-Rice Buyer.
What is the nature of the financial benefit? |  | A cash payment of up to NZ$300,000 for the Buyers’ Transactions Costs.
What is the maximum value of the financial benefit? |  | The maximum value of the financial benefit is NZ$300,000.
When will the financial benefit be granted? |  | The financial benefits will be granted on the passing of Resolution 1 and Completion of the Proposed Transaction.
Directors’ recommendations |  | The Independent Board Committee which comprises all of the Directors other than Mr Davis-Rice (who declines to give recommendations in respect of Resolution 1 due to his material personal interests in Resolution 1) have no personal interest in the outcome of Resolution 1 and unanimously recommend that Shareholders vote IN FAVOUR of Resolution 1 subject to the Independent Expert continuing to conclude the Proposed Transaction is fair and reasonable to the non-associated Shareholders. In consideration of the findings of the Independent Expert’s Report, each Independent Board Committee is of the opinion that Resolution 1 is reasonable and appropriate having regard to the circumstances of the Company, and therefore in the best interests of the Company and Shareholders for the reasons outlined in this Explanatory Memorandum including as outlined above. The Shareholders associated with Mr Davis-Rice will not be voting on Resolution 1. Otherwise, each Director intends to vote all of their (or their associates) shares in the Company in favour of Resolution 1 in which they (or their associate) are entitled to vote.
Further information |  | Other than as set out in this Explanatory Memorandum, the Independent Board Committee are not aware of any other information that would be reasonably required by shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

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| 1.7.6. | Voting exclusion statement

The Company will disregard any votes cast in favour of Resolution 1 by or on behalf of Mr Davis-Rice and Ms Johnson or any of their respective associates. However, the Company need not disregard a vote if:

| ● | it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form;
| ● | it is cast by the Chair as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides; or
| ● | it is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

| ○ | the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
| ○ | the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

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GLOSSARY

In this Notice and the Explanatory Memorandum:

Accounts Date | 31 January 2021 (AEDT)
BDO | means BDO Audit Pty Ltd.
Bendon | means Bendon Limited (company number 110935).
Bendon Group | means Bendon and each of its subsidiaries.
Bendon Share Sale Agreement | has the meaning given to that term in section 1.1.
Board | means the board of Directors.
Buyers’ Transaction Costs | has the meaning given to that term in section 1.2(k).
Company | means Naked Brand Group Limited (ACN 619 054 938).
Completion | means completion of the Bendon Share Sale Agreement.
Constitution | means the constitution of the Company as at the commencement of the Meeting.
Corporations Act | means the Corporations Act 2001 (Cth).
Deed of Debt Forgiveness | means the deed of debt forgiveness annexed to the Bendon Share Sale Agreement.
Director | means a director of the Company.
Explanatory Memorandum | means the Explanatory Memorandum attached to the Notice.
Facility Agreement | means the facility agreement between the Company and Bendon annexed to the Bendon Share Sale Agreement.
FOH Online | means FOH Online Corp.
FOH Services Agreement | means the FOH Services Agreement annexed to the Bendon Share Sale Agreement.
Independent Board Committee | means the independent board committee constituted by Simon Tripp, Andrew Shape and Kelvin Fitzalan.
Independent Expert | means FTI Consulting.
Independent Expert Report | means the independent expert report prepared by the Independent Expert.
Intra Group Loans | has the meaning given to that term in section 1.2(c).
Meeting | means the Company’s General Meeting.
Naked Group | means Naked and each of its subsidiaries but not including the Bendon Group.
Naked Facility | has the meaning given to that term in section 1.2(d).
Notice | means this notice of Meeting.
Proposed Transaction | has the meaning given to that term in section 1.1.
SEC | means the U.S. Securities and Exchange Commission.
Shareholder | means a shareholder of the Company.
Term Sheet | has the meaning given to that term in section 1.1

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Annexure A – Proxy Form

Annexure B – Independent Expert Report