Code Green Apparel Corp. 10-Q


Exhibit 10.29


 





NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTENOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 


 





	Principal Amount: $66,700.00	Issue Date: December 18,
    2017
	Purchase Price: $58,000.00	 
	Original Issue Discount: $8,700.00	 







 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, Code Green Apparel, Inc. a Nevada corporation (hereinafter called the “Borrower”),
hereby promises to pay to the order of CAREBOURN CAPITAL, L.P., a Delaware limited partnership, or registered assigns (the
“Holder”) the sum of $66,700.00 together with any interest as set forth herein, on December 18, 2018
(the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of 12% (The “Interest
Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at
maturity or upon acceleration or by prepayment or otherwise. Interest shall commence accruing on the date that the Note is fully
paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to
the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with
the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as
the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date
on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto
in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase
Agreement”).


 






    	 



     


    

 


This
Note carries an original issue discount of $8,700.00 (the “OID”). In addition, the Borrower shall authorize
the Holder, pursuant to a disbursement memorandum dated on or around the Issue Date, to pay $8,000.00 (the “Transactional
Expense Amount”) to the Holder or the Holder’s designee, to cover the Holder’s accounting fees, due diligence
fees, monitoring (including but not limited to ACH monitoring costs), and/or other transactional costs incurred in connection
with the purchase of the Note, as well as $-0- (the “Legal Fee”) to Holder’s attorney, to cover Holder’s
legal review fees in connection with the purchase and sale of the Note, all of which are included in the initial principal balance
of this Note. The Purchase Price of this Note shall be $58,000.00, computed as follows: $66,700.00 initial principal
balance less the OID. Accordingly, the net amount to be received by the Company shall be $50,000.00, computed as follows:
the purchase price of $58,000.00, less the Transactional Expense Amount.


 


This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.


 


The
following terms shall apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1
          Conversion Right. The Holder shall have the right from time to time, and at any
time following Ninety (90) days after the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date
of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the
remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount
of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any
shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified
at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided,
however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note
upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of
the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion
or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion
of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso
to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided
in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon,
at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion
limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in
such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined
by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in
the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the
Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile
or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New
York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means,
with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion
plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date, plus (34) at the Holder’s option, any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof.


 






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1.2
          Conversion Price.


 


Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as
defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating
to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 58% multiplied by
the Market Price (as defined herein) (representing a discount rate of 42%). In the case that shares of the Borrower’s
common stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional Ten Percent (10%) discount
shall be added to the amount being converted at such time. In the event that the Borrower fails to meet the requirements of sections
3.17 & 3.18 (ACH), an additional Five percent (5%) discount shall be added to the amount being converted at such time. “Market
Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty-five (25) Trading Day period
ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as
of any date, the lowest price quoted on the OTC Markets operated by the OTC Markets Group, Inc. or applicable trading market (the
“OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e.
Bloomberg) or, if the OTC Markets is not the principal trading market for such security, the closing bid price of such security
on the principal securities exchange or trading market where such security is listed or traded. If the Trading Price cannot be
calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually
determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of
the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any
day on which the Common Stock is tradable for any period on the OTC Markets, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.


 


1.3
          Authorized Shares. The Borrower covenants that during the period the conversion
right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from
preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase
Agreement. The Borrower is required at all times to have authorized and reserved three times the number of shares that is actually
issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the “Reserved
Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant
to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure
which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion
Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i)
acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion
of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock
in accordance with the terms and conditions of this Note.


 






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If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Article III of
the Note. However, upon receipt of written notice from the Holder of Borrower’s failure to maintain the Reserved Amount,
the Borrower shall have three (3) days to cure any deficiencies in the Reserved Amount.


 


1.4
          Method of Conversion.


 


(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after One Hundred Eighty Days following the Issue Date, by (A) submitting to the Borrower a Notice of Conversion
(by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.


 


(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.


 


(c)
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 






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(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”)
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.


 


(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.


 


(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained
in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3
above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the
fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower
by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note,
in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall
be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a
valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right
are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained
in this Section 1.4(g) are justified.


 






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1.5
          Concerning the Shares. The shares of Common Stock issuable upon conversion of
this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under
the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be
sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or
transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred
to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only
in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise
provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common
Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for
shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement
or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend,
shall bear a legend substantially in the following form, as appropriate:


 


“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 






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The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.


 


1.6
          Effect of Certain Events.


 


(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.


 


(b)
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion
of all of the Notes, there shall be any merger, consolidation, or an exchange of shares, recapitalization or reorganization pursuant
to a merger or consolidation, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed
into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity,
or in case of any sale or conveyance of all or substantially all of the assets or more than 50% of the total outstanding shares
of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets
which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior
to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions
shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of
the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable
upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first
gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written
notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation
of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets
(during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if
not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply
to successive consolidations, mergers, sales, transfers or share exchanges.


 






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(c)
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock
of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.


 


(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.


 


1.8          Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower’s failure to convert this Note.


 






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1.9
          Prepayment. Notwithstanding anything to the contrary contained in this Note,
the Borrower may prepay the amounts outstanding hereunder pursuant to the following terms and conditions, and subject to the Holder’s
acceptance in Holder’s sole discretion:


 


(a)          At
any time during the period beginning on the Issue Date and ending on the date which is one hundred and eighty (180) days following
the Issue Date, the Borrower shall have the right, exercisable on not less than twenty (20) Trading Days prior written notice
to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the
Holder of an amount in cash equal to 130%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note.


 


(b)          At
any time during the period beginning the day which is one hundred and eighty one (181) days following the Issue Date and ending
on the date which is three hundred sixty four (364) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than twenty (20) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full by making a payment to the Holder of an amount in cash equal to 150%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of
this Note.


 


(c)          After
the expiration of three hundred sixty four (364), the Borrower shall have no right of prepayment.


 


Any
notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its
registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment
which shall be not more than twenty (20) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the
order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional
Prepayment Date. If the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due
to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit
its right to prepay the Note pursuant to this Section 1.9. Notwithstanding anything to the contrary in this Note, the Borrower’s
right to prepay the amounts outstanding under this Note, in accordance with the terms and conditions of this Note, is expressly
conditional upon the Holder’s written acceptance, in Holder’s sole discretion, of such applicable prepayment during
the time that the Borrower is exercising their right to prepay this Note.


 






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ARTICLE
II. CERTAIN COVENANTS


 


2.1
          Distributions on Capital Stock. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment,
any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends
on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any
subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’
rights plan which is approved by a majority of the Borrower’s disinterested directors.


 


2.3
          Sale of Assets. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder’s written consent, sell, lease, exchange
(including but not limited to an exchange for assets of equal or greater value) or
otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition
of any assets may be conditioned on a specified use of the proceeds of disposition.


 


2.4
          Advances and Loans. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person,
firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates
of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has
informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business, (c) made to a pending merging
partner pursuant to an agreement of merger or (c) not in excess of $100,000.


 


ARTICLE
III. EVENTS OF DEFAULT


 


If
any of the following events of default (each, an “Event of Default”) shall occur:


 


3.1
          Failure to Pay Principal or Interest. The Borrower fails to pay the principal
hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise, following a five (5) day
cure period.


 


3.2
          Conversion and the Shares. The Borrower fails to issue shares of Common Stock
to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder
of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent
to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not
to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated
form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note
as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or
hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof)
on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not
to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered
a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall
be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by
the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer
agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48)
hours of a demand from the Holder.


 






    	10 



     


    

 


3.3
          Breach of Covenants. The Borrower breaches any covenant or other material term
or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such
breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.


 


3.4
          Breach of Representations and Warranties. Any representation or warranty of the
Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith
(including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the
breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect
to this Note or the Purchase Agreement.


 


3.5
          Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make
an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for
a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.


 


3.6
          Judgments. Any money judgment, writ or similar process shall be entered or filed
against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall
remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent
will not be unreasonably withheld.


 


3.7
          Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings
or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall
be instituted by or against the Borrower or any subsidiary of the Borrower.


 


3.8
          Delisting of Common Stock. The Borrower shall fail to maintain the listing of
the Common Stock on at least one of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.


 


3.9
          Failure to Comply with the Exchange Act. The Borrower shall fail to comply with
the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of
the Exchange Act.


 


3.10
         Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial
portion of its business.


 






    	11 



     


    

 


3.11
         Cessation of Operations. Any cessation of operations by Borrower or Borrower
admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the
Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its
debts as they become due.


 


3.12
          Maintenance of Assets. The failure by Borrower to maintain any material intellectual
property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).


 


3.13
          Financial Statement Restatement. The restatement of any financial statements
filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note
is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted
a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.


 


3.14
          Reverse Splits. The Borrower effectuates a reverse split of its Common Stock
without twenty (20) days prior written notice to the Holder.


 


3.15
          Replacement of Transfer Agent. In the event that the Borrower proposes to replace
its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable
Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to
the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to
Borrower and the Borrower.


 


3.16
          Cross-Default. Notwithstanding anything to the contrary contained in this Note
or other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained
any other financial instrument, including but not limited to all convertible promissory notes, already issued, or issued in the
future, by the Borrower, to the Holder or any other 3rd party, after the passage of all applicable notice and cure
or grace periods, shall, at the option of the Holder, be considered a default under this Note.


 


3.17          ACH
Account Change. The Borrower changes it bank account to an account that differs from the bank account specified on Exhibit
B attached hereto, without (i) prior signed written consent of the Holder and (ii) Borrower’s execution of a signed authorization
agreement for preauthorized payments that is exactly the same as the form attached hereto as Exhibit B (except for the new bank
account information) with respect to the new bank account.


 


3.18          ACH
Payment Default. The Borrower blocks, rejects, or otherwise restricts any action taken by Holder pursuant to Holder’s
rights under this Note with respect to the Borrower’s bank account, including but not limited to Holder’s withdrawal
of the Specific Daily Repayment Amount (as defined in Exhibit B attached hereto) pursuant to an ACH debit transaction or otherwise
from the Borrower’s bank account, or the Holder’s withdrawal of the Specific Daily Repayment Amount from the Borrower’s
bank account pursuant to an ACH debit transaction or otherwise is rejected for any reason.


 






    	12 



     


    

 


3.19          Event
of Default. Upon the occurrence of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15, and/or 3.16, exercisable through the delivery of written notice to the Borrower by such Holders
(the “Default Notice”), , the Note shall become immediately due and payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of
payment (the “Mandatory Prepayment Date”) plus any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x)
and, (y) shall collectively be known as the “Default Sum”), and all other amounts payable hereunder shall immediately
become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all
costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all
other rights and remedies available at law or in equity.


 


If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.


 


ARTICLE
IV. MISCELLANEOUS


 


4.1
          Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges.
All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2
          Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:


 


If
to the Borrower, to:


 


Code
Green Apparel, Inc.





31642
Pacific Coast Highway





Suite
102





Laguna
Beach, CA, 92651





ATTN:
George@codegreenapparel.com


 






    	13 



     


    

 


If
to the Holder:


 


CAREBOURN
CAPITAL, L.P. 





8700
Black Oaks Lane N





Maple
Grove, Minnesota 55311





Attn:
Chip Rice, Managing Member 





Email:
info@carebourncapital.com


 


4.3
          Amendments. This Note and any provision hereof may only be amended by an instrument
in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed,
or if later amended or supplemented, then as so amended or supplemented.


 


4.4
          Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must
be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to
the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.


 


4.5
          Cost of Collection. If default is made in the payment of this Note, the Borrower
shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.


 


 4.6           Governing Law.




 


(a).          Except
in the case of the Mandatory Forum Selection provisions in Section 4.6(b) below, which clause shall be governed and interpreted
in accordance with Minnesota law, this Agreement and all other Transaction Documents shall be delivered and accepted in and shall
be deemed to be contracts made under and governed by the internal laws of the State of Minnesota, and for all purposes shall be
construed in accordance with the laws of such State, without giving effect to the choice of law provisions of such state. This
Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to principles
of conflicts of laws.


 


(b).         Mandatory
Forum Selection. Any action brought by either party against the other concerning the transactions contemplated by this Note shall
be brought only in the state courts or federal courts located in the state of Minnesota, County of Hennepin. The parties to this
Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial
by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.


 






    	14 



     


    

 


4.7           Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest, the Borrower and
the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine
and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the
Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired
upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the
Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder
from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.


 


4.8           Usury Savings Clause. Notwithstanding any provision in this Note or the other Transaction Documents to the contrary, the
total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees,
exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws
of the jurisdiction governing this Note or any other applicable law. In the event the total liability of payments of interest
and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at
any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month
or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Note, all sums
in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by,
between, or to any party hereto, be applied to the reduction of the outstanding principal balance due hereunder immediately upon
receipt of such sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such
excess sums to be so applied to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept
such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect,
by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible
as interest, rather than accept such sums as a prepayment of the principal balance then outstanding. It is the intention of the
parties that the Company does not intend or expect to pay, nor does the Holder intend or expect to charge or collect any interest
under this Note greater than the highest non-usurious rate of interest which may be charged under applicable law.


 






    	15 



     


    

 


4.9
          Purchase Agreement. By its acceptance of this Note, each party agrees to be bound
by the applicable terms of the Purchase Agreement.


 


4.10
        Notice of Corporate Events. Except as otherwise provided below, the Holder of
this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common
Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and
copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record
of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution,
any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization)
any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of
the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder,
at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other
event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the
Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section
4.9.


 


4.11
       Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly,
the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees,
in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled,
in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without any bond or other security being required.


 


4.12        Right
of First Refusal. If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or financing
from any 3rd party, the Borrower must first offer such opportunity to the Holder to provide such capital or financing
to the Borrower on the same terms as each respective 3rd party’s terms. Should the Holder be unwilling or unable
to provide such capital or financing to the Borrower within 15 days from receipt of written notice of the offer (the “Offer
Notice”) from the Borrower, then the Borrower may obtain such capital or financing from that respective 3rd party
upon the same terms and conditions offered by the Borrower to the Holder, which transaction must be completed within 30 days after
the date of the Offer Notice. If the Borrower does not complete such transaction within such time period, then the Borrower must
again offer the capital or financing opportunity to the Holder on the same terms, and the process detailed above shall be repeated.


 






    	16 



     


    

 


4.13          ACH
Payment Authorization. Borrower irrevocably authorizes Holder’s right to withdraw (through an ACH debit or otherwise)
$278.00 to commence on March 1st, 2017 (the “Specific Daily Repayment Amount”) (subject to adjustment
as provided herein) from the Borrower’s bank account (initially, the bank account identified on Exhibit B attached hereto,
but also including any subsequent bank account of the Borrower if such account is changed) (the “Bank Account”), on
each business day, until this Note is satisfied in full. Borrower shall provide Holder with all required access codes to effectuate
any and all ACH debit transactions as provided for in this Note. Borrower understands that it is responsible for ensuring that
at least the Specific Daily Repayment Amount remains in its Bank Account on each business day until this Note is satisfied in
full, and that the Borrower shall be responsible for any charges incurred by the Holder resulting from a rejected ACH attempt,
insufficient funds in the Bank Account, and/or all related bank charges. Such charges shall be immediately added to the outstanding
balance of the Note. The Specific Daily Repayment Amount shall automatically adjust to such prorated higher amount based upon
the addition of charges to the outstanding balance of Note, as well as to reflect any penalties incurred or events of defaults
triggered under the terms of the Note (to be calculated as follows: the total outstanding amount under the Note (including but
not limited to all principal, interest, charges, penalties, and additions due to any event of default) divided by the number of
business days remaining prior to the Maturity Date). Holder shall not be responsible for any overdrafts or rejected transactions
that result from Holder’s ACH debiting of the Specific Daily Repayment Amount as provided in this Note and the exhibits
hereto. Holder may debit the Specific Daily Repayment Amount each business day.


 


The
Holder shall be permitted to aggregate the Specific Daily Repayment Amount of all convertible promissory notes then issued by
the Borrower to the Holder, and withdraw such aggregated amount from the Borrower’s bank account, in the interest of reducing
overall fees associated with the ACH debit transactions.


 


The
Holder may, from time to time, provide a schedule to the Borrower via electronic mail (each a “Schedule”) to George@codegreenapparel.com & Tom@codegreenapparel.com, showing the outstanding balance of the Note as well as all ACH debits, conversion
amounts, and/or all other adjustments as provided in the Note (the “Schedule”). If the Borrower does not respond to
the Holder, via electronic mail to info@carebourncapital.com, stating that the respective Schedule is accurate or disputing
the amounts contained therein (with objective documentation unequivocally supporting such dispute), within two (2) business days
of receipt of the respective Schedule, then the Borrower shall be deemed to have irrevocably approved the amounts contained in
such respective Schedule.


 


4.14
          Terms of Future Financings.  So long as this Note is outstanding, upon any
issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security
or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Borrower
shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part
of the transaction documents with the Holder.  The types of terms contained in another security that may be more favorable
to the holder of such security include, but are not limited to, terms addressing conversion discounts, prepayment rate, conversion
lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.


 


[SIGNATURE
PAGE FOLLOWS]


 




    	17 



     


    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this December 18, 2017.


 





	 	Code Green Apparel, Inc.
	 	 	 
	 	By:	 
	 	Name:  George Powell III
	 	Title:	 CEO




 




    	18 



     


    

 


EXHIBIT
A: NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert $______________________ principal amount of the Note (defined below) into that number of
shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of
Code Green Apparel, Inc., a Nevada corporation (the “Borrower”) according to the conditions of the convertible
note of the Borrower dated as of December 18, 2017 (the “Note”), as of the date written below. No fee will
be charged to the Holder for any conversion, except for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 


		[   ]	The
Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned
or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).



 


Name
of DTC Prime Broker:





Account
Number:


 


		[   ]	The
undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set
forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below
or, if additional space is necessary, on an attachment hereto:



 


CAREBOURN
CAPITAL, L.P. 





8700
Black Oaks Lane N





Maple
Grove, Minnesota 55311





Attention:
Certificate Delivery





612.889.4671


 


Date
of Conversion:                                        _____________





Applicable
Conversion Price:                        $____________ 


Number
of Shares of Common Stock to be Issued





Pursuant
to Conversion of the Notes:            _____________ 


Amount
of Principal Balance Due remaining





Under
the Note after this conversion:            _____________


 


CAREBOURN
CAPITAL, L.P. 





By:         Carebourn
Partners, LLC,





a
Minnesota limited liability company,





its
General Partner



 


	 	By:	 	 
	 	Name: Chip
Rice	 
	 	Title:	   Managing Member	 


 






    	19