Code Green Apparel Corp. 10-Q


 


Exhibit 10.8


 


NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR 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: $63,825.00	Issue Date: September 23, 2016
	Purchase Price: $55,500.00 	 
	Original Issue Discount: $8,325.00	 


 


CONVERTIBLE PROMISSORY NOTE


 


FOR VALUE RECEIVED,
Code Green Apparel Corporation 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 $63,825.00 together with any interest as set forth herein, on September 23, 2017 (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. This Note may not be prepaid in whole or in part except as otherwise explicitly set
forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty
two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). 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 $8,325.00 (the “OID”). In addition, the Borrower shall authorize the Holder, pursuant
to a disbursement memorandum dated on or around the Issue Date, to pay $5,000.00 (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 and sale of
the Note, as well as $500.00 (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.
Thus, the purchase price of this Note shall be $55,500.00, computed as follows: $63,825.00 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 $55,500.00, less the Transactional Expense Amount and Legal Fee.


 


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 One Hundred and Eighty (180) 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 (3) at the Holder’s option,
Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s
option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.


 



    


     


    

 


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 50% multiplied by the Market Price
(as defined herein) (representing a discount rate of 50%). “Market Price” means the average of the lowest
three (3) Trading Prices (as defined below) for the Common Stock during the twenty (20) 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 on the OTC Markets OTCQB Marketplace, or applicable trading market (the “OTCQB”) as reported by a
reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTCQB 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 or, if no closing bid price of such security is available in any of the
foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink
sheets” by the National Quotation Bureau, Inc. 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 OTCQB, 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 two and half times (2.5) 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.


 



    


     


    

 


If, at any time the Borrower
does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 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 and Eighty Days (180) 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.


 


(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 $1,500 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.


 


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.” 


 






     


     


    

 


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.


 






     


     


    

 


(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.


 


1.7         Trading
Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note
and the other Notes issued pursuant to the Purchase Agreement more than the maximum number
of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on
which the Common Stock is then traded (the “Maximum Share Amount”), which shall be 9.99% of the total shares outstanding
on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits,
stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date
hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law
or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction
over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common
Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event
of Default under Section 3.3 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.


 


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 plus (y) Default Interest.


 


(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 and 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 plus (y) Default Interest.


 






     


     


    

 


(c)        After
the expiration of three hundred and sixty four (364) days, 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.


 


ARTICLE II. CERTAIN COVENANTS


 


2.1         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.


 


2.2         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.


 


3.3          Breach
of Covenants. The Borrower breaches any material 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 OTCQB 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.


 


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).


 


3.14         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.


 


3.19
    Event of Default. Upon the occurrence and during the continuation of any Event of Default specified
in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity
Date), 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 Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE
CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, 3.17, and/or 3.18, 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: (Y) THE
DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of
Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on
this Note upon a Trading Market Prepayment Event pursuant to Section 1. 7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9,
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”), and upon the occurrence of an Event of Default specified the remaining sections of
Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section
3,1 hereof), 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 (y) Default Interest, if any, on the amounts referred to in clauses (w)
and/or (x) plus (z) 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), (y) and (z) shall collectively be
known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity
value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such
Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the
“Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event
arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the
Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of
first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default
Amount”) 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 Corporation 

31642 Pacific Coast Highway 

Suite 102

Laguna Beach, CA 92651

Attention: George Powell, III 

Email: George@codegreanapparel.com


 


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. This Note shall be governed by and construed in accordance with the laws of the State of Florida without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of Florida or in the federal courts located in the state of Florida. 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.


 


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


 



     


     


    

 


4.9        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.


 


4.10      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.


 


4.14
     ACH Payment Authorization. Borrower irrevocably authorizes Holder’s right to
withdraw (through an ACH debit or otherwise) $63,825.00/240 Days = $265.94/ Per day (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 &
or 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.


 


[SIGNATURE PAGE FOLLOWS]


 






     


     


    

 


IN WITNESS WHEREOF, Borrower has caused this
Note to be signed in its name by its duly authorized officer this September 23, 2016. 


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


 






     


     


    

 


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
Corporation, a Nevada corporation (the “Borrower”) according to the conditions of the convertible note
of the Borrower dated as of September 23, 2016 (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:	 	 


Name:  Chip Rice

Title:    Managing Member

8700 Black Oaks Lane N

Maple Grove, Minnesota 55311