Document:

Code Green Apparel Corporation 10-Q

 

 

Exhibit 10.4

 

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of June 15, 2016, by and between Code Green Apparel Corporation,
a Nevada, with headquarters located 31642 Pacific Coast Highway, Suite 102, Laguna Beach, CA, 92651 (the “Company”),
and CAREBOURN CAPITAL, L.P., a Delaware limited partnership (the “Buyer”).

WHEREAS:

A.

The Company and the
Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules
and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act of 1933, as amended (the “1933 Act”);

B.

Buyer desires to purchase
and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a 12% convertible note
of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of US$121,325.00 (together
with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the
terms thereof, the “Note”), that may be convertible into shares of common stock, $0.001 par value per share,
of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such
Note.

C.

The Buyer wishes to
purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately below
its name on the signature pages hereto; and

NOW THEREFORE,
the Company and the Buyer severally (and not jointly) hereby agree as follows:

1.

PURCHASE AND SALE
OF NOTE.

a.

Purchase of Note.
On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the
Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

b.

Form of Payment.
On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at
the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company,
in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal
to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the
Company shall deliver such duly executed Note on behalf of the Company, to he Buyer, against delivery of such Purchase Price.

    	 		 

     

    

 

c.

Closing Date.
Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 4:30 P.M., Eastern
Standard Time on or about June 15, 2016, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

2.

REPRESENTATIONS
AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Company that:

a.

Investment Purpose.
As of the date hereof, the Buyer is purchasing the Note and any potential shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable
(i) on account of interest on the Note or (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the
Note, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively
with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act.

b.

Accredited Investor
Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited
Investor”).

c.

Reliance on Exemptions.
The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer
set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

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d.

Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer or its advisors and which are available to the public. The Buyer and its
advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask
questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information
and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure
to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives
shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section
3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware
of any facts that may constitute a breach of any of the Company’s representations and warranties made herein.

e.

Governmental Review.
The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Securities.

f.

Transfer or Re-sale.
The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act
or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant
to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost
of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable
transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from
such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees
to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the
Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion
of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion
shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case).

g.

Legends. The
Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold
pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then
be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

 

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“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 Company shall issue a certificate without such legend to the holder of any Security upon which it
is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an
effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without
any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides
the Company with 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 Security may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is affected. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements,
if any. 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.

h.

Authorization; Enforcement.
This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer,
and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

i.

Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

  

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3.

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Buyer that:

a.

Organization and
Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.

b.

Authorization; Enforcement.
(i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated
hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the
Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors
and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement
has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the
true and official representative with authority to sign this Agreement and the other documents executed in connection herewith
and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note,
each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company
in accordance with its terms.

 

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c.

Capitalization.
As of the date hereof, the authorized capital stock of the Company consists of: (i) 1,000,000,000 shares of Common Stock,
$0.001 par value per share, of which 382,849,646 shares are issued and outstanding; and (ii) 200,000 shares
of preferred stock A & B , $0.001 par value per share, of which 66,000 shares are issued and outstanding;
Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans,
no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable
for shares of Common Stock and 152,000,000 shares are reserved for issuance upon conversion of the Note. All of such outstanding
shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares
of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents,
as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts,
calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries,
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Note or the Conversion Shares. The Company has filed in its SEC Documents true and
correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company
shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of
the Company as of the Closing Date.

d.

Issuance of Shares.
The Conversion Shares are duly authorized and reserved for issuance pursuant to the terms of the Note and, upon conversion of the
Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and 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 Company and will not impose personal liability upon the holder thereof.

e.

Acknowledgment of
Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock if the issuance of the
Conversion Shares upon conversion of the Note occurs. The Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

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f.

No Conflicts.
The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares)
will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate
or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries
is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries
is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect.
The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the
Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency,
regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note
in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the-Counter
Bulletin Board (the “OTCBB”), the OTCQB or any similar quotation system, and does not reasonably anticipate that the
Common Stock will be delisted by the OTCBB, the OTCQB or any similar quotation system, in the foreseeable future. The Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

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g.

SEC Documents; Financial
Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”)
(all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto
and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as
the “SEC Documents”). The Company has delivered to the Buyer true and complete copies of the SEC Documents or they
have been publically available, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any
such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business
subsequent to November 14, 2012, and (ii) obligations under contracts and commitments incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually
or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to
the reporting requirements of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via
the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements
of this Section 3(g).

h.

Absence of Certain
Changes. Since November 14, 2012, there has been no material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status
of the Company or any of its Subsidiaries.

i.

Absence of Litigation.
There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have
a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge of
the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would
have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing.

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j.

Patents, Copyrights,
etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names,
trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future); Except as disclosed in the SEC Documents, there is no claim or action
by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right
of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or
other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.

k.

No Materially Adverse
Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in
the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement
which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

l.

Tax Status.
The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)
and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute
of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s
tax returns is presently being audited by any taxing authority.

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m.

Certain Transactions.
Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and
other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company
is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or partner.

n.

Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

o.

Acknowledgment Regarding
Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of
arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

p.

No Integrated Offering.
Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any
offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration
under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated
with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.

q.

No Brokers.
The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated hereby, with the exception of the fees identified
in the Placement Agent Agreement entered into by the Company with Moody Capital Solutions, Inc.

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r.

Permits; Compliance.
The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending
or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for
any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Since November 14, 2012, neither the Company nor any of its Subsidiaries has received any notification
with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts,
defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

s.

Environmental Matters.

(i)

There are, to the
Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability
or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing,
nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental
Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

    	 	11	 

     

    

 

(ii)

Other than those
that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about
any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released
on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the
property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

(iii)

There are no underground
storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance
with applicable law.

t.

Title to Property.
Except as disclosed in the SEC Documents the Company and its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects or such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as would not have a Material Adverse Effect.

u.

Internal Accounting
Controls. Except as disclosed in the SEC Documents the Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

v.

Foreign Corrupt
Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

    	 	12	 

     

    

 

w.

Solvency. The
Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair
market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that
would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company
did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect
to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue
a qualified opinion in respect of its current fiscal year. For the avoidance of doubt any disclosure of the Borrower’s ability
to continue as a “going concern” shall not, by itself, be a violation of this Section 3(w).

x.

No Investment Company.
The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company
is not controlled by an Investment Company.

y.

Breach of Representations
and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3
and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default
under Section 3.4 of the Note.

4.

COVENANTS.

a.

Best Efforts.
The parties shall use their commercially reasonable best efforts to satisfy timely each of the conditions described in Section
6 and 7 of this Agreement.

b.

Form D; Blue Sky
Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.

c.

Use of Proceeds.
The Company shall use the proceeds from the sale of the Note for working capital and other general corporate purposes and shall
not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership, enterprise
or other person (except in connection with its currently existing direct or indirect Subsidiaries or pending merging partner(s)).

d.

{Removed}

    	 	13	 

     

    

 

e.

Expenses. At
the Closing, the Company shall reimburse Buyer in an amount not to exceed $5,000.00 for expenses incurred by them in connection
with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed
in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’
fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow
fees, and costs of restructuring the transactions contemplated by the Documents. The Company’s obligation to reimburse Buyer’s
expenses with respect to this transaction shall be limited to the above identified $5,000.00, which such amount shall be withheld
from the proceeds paid to the Company upon the closing of this transaction.

f.

Financial Information.
The Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all
of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly
Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases
issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders
of the Company, copies of any notices or other information the Company makes available or gives to such shareholders. For the avoidance
of doubt, filing the documents required in (i) above via EDGAR or releasing any documents set forth in (ii) above via a recognized
wire service shall satisfy the delivery requirements of this Section 4(f).

g.

Listing. The
Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, OTCQB or any equivalent replacement
exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New
York Stock Exchange (“NYSE”), or the NYSE MKT and will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges,
as applicable. The Company shall promptly provide to the Buyer copies of any material notices it receives from the OTCBB, OTCQB
and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the
Common Stock for listing on such exchanges and quotation systems.

h.

Corporate Existence.
So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially
all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the
Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations
hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed for trading on the OTCBB, OTCQB, Nasdaq, Nasdaq, SmallCap, NYSE or AMEX, or any applicable trading
exchange.

 

    	 	14	 

     

    

 

i.

Failure to Comply
with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements
of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

j.

Trading Activities.
Neither the Buyer nor its affiliates has an open short position (or other hedging or similar transactions) in the common stock
of the Company and the Buyer agree that it shall not, and that it will cause its affiliates not to, engage in any short sales of
or hedging transactions with respect to the common stock of the Company.

k.

Breach of Covenants.
If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the
Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.3 of the Note.

5.

Transfer Agent
Instructions. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares
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, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.  The
Company warrants that: (i) no stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares,
prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares 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),
will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent
not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing) (electronically or in certificated
form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and
when required by the Note and this Agreement; and (iii) it will not fail 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 Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to
the Note as and when required by the Note and this Agreement.  Nothing in this Section shall affect in any way the Buyer’s
obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any,
upon re-sale of the Securities.  If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel
in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of
such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides
reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer.  The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. 
Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section may be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other security being required.

 

    	 	15	 

     

    

 

6.

CONDITIONS PRECEDENT
TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation of the Company hereunder to issue and sell the Note to the Buyer
at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided
that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

a.

The Buyer shall have
executed this Agreement and delivered the same to the Company.

b.

The Buyer shall have
delivered the Purchase Price in accordance with Section 1(b) above.

c.

The representations
and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

d.

No litigation, statute,
rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or
in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7.

CONDITIONS PRECEDENT
TO THE BUYER’S OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject
to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for
the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

a.

The Company shall have
executed this Agreement and delivered the same to the Buyer.

 

    	 	16	 

     

    

 

b.

The Company shall have
delivered to the Buyer duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

c.

The representations
and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing
Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received
a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with
respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the
transactions contemplated hereby.

d.

No litigation, statute,
rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or
in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

e.

No event shall have
occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change
in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

f.

The Conversion Shares
shall have been authorized for quotation on the OTCBB, OTCQB or any similar quotation system and trading in the Common Stock on
the OTCBB, OTCQB or any similar quotation system shall not have been suspended by the SEC or the OTCBB, OTCQB or any similar quotation
system.

g.

The Buyer shall have
received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

    	 	17	 

     

    

 

8.

GOVERNING
LAW; MISCELLANEOUS.

a.

Governing Law.
This Agreement 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 Agreement
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
Agreement 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 Company and Buyer 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 Agreement 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.

b.

Counterparts; Signatures
by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

c.

Headings. The
headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.

d.

Severability.
In the event that any provision of this Agreement 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 provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

e.

Entire Agreement;
Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

    	 	18	 

     

    

 

f.

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
Company, to:

Code Green Apparel Corporation

31642 Pacific Coast Highway

Suite 102

Laguna Beach, CA, 92651

ATTN: George@codegreenapparel.com

 

With a copy
by fax only to (which copy shall not constitute notice):

CAREBOURN
CAPITAL, L.P.

8700 Black
Oaks Lane N.

Maple
Grove MN 55311

Attn:
Chip Rice, Managing Member

ATT: info@carebourncapital.com

 

Each party shall
provide notice to the other party of any change in address.

g.

Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company
nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to any person that purchases
Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the
1934 Act, without the consent of the Company.

    	 	19	 

     

    

 

h.

Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other person.

i.

Survival. The
representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing
hereunder. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents
for loss or damage arising as a result of or related to any breach by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.

j.

Further Assurances.
Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

k.

No Strict Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party.

l.

Remedies.

(i)

The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Agreement, that the Buyer 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 Agreement
and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond
or other security being required.

(ii)

In addition to
any other remedy provided herein or in any document executed in connection herewith, Borrower shall pay Holder for all costs, fees
and expenses in connection with any litigation, contest, dispute, suit or any other action to enforce any rights of Holder against
Borrower in connection herewith, including, but not limited to, costs and expenses and attorneys’ fees, and costs and time
charges of counsel to Holder. 

 

    	 	20	 

     

    

 

m.

Publicity. The
Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCQB
or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCQB (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall
be provided with a copy thereof and be given an opportunity to comment thereon).

 

 

 

 

 

[- Signature page follows -]

 

 

 

 

 

 

 

 

    	 	21	 

     

    

 

IN WITNESS WHEREOF,
the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

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

 

	CAREBOURN CAPITAL, L.P.	 
	 	 
	 	 
	By:	/s/
    Chip Rice 	 	 
	Name:	Chip Rice	 
	Title:	Managing Member	 
	 	 

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

	Aggregate Principal Amount of Note:	$121,325.00
	 	 
	Aggregate Purchase Price:	$105,500.00

 

    	 	22Code Green Apparel Corporation 10-Q

 

 

Exhibit 10.5

 

 

  

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: $121,325	Issue
    Date: June 15, 2016
	Purchase Price: $105,500.00	 
	Original Issue Discount: $15,825.00	 

 

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 $121,325 together with any interest as set forth herein, on June 15, 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 $15,825.00 (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 $105,500.00, computed as follows: $121,325 initial principal
balance less the OID. Accordingly, the net amount to be received by the Company shall be $100,000.00, computed as follows:
the purchase price of $105,500.00, 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:

 

    	 	1	 

     

    

 

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.

 

    	 	2	 

     

    

 

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.

 

    	 	3	 

     

    

 

(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:

 

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“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.

 

    	 	5	 

     

    

 

(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.

 

    	 	6	 

     

    

 

(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.

 

    	 	7	 

     

    

 

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.

 

    	 	8	 

     

    

 

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.

 

    	 	9	 

     

    

 

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.

 

    	 	10	 

     

    

 

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) $121,325.00 / 240 Days
= $505.52 / 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.

 

    	 	11	 

     

    

 

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]

 

 

 

 

 

 

 

 

    	 	12	 

     

    

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer this June 15, 2016.

 

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

 

    	 	13	 

     

    

 

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 June 15, 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

  

    	 	14	 

     

    

 

EXHIBIT B

(see attached)

 

 

 

 

    	 	15	 

     

    

 

AUTHORIZATION AGREEMENT FOR PREAUTHORIZED
PAYMENTS

Code Green
Apparel Corporation, a Nevada corporation (the “Company”), hereby irrevocably authorizes Carebourn Capital,
L.P. (the “Holder”), to initiate debit and credit entries to its checking account indicated below (the “Account”)
and the depository named below (the “Depository”), to debit or credit the same to such Account. The Company further
authorizes the Holder to debit said Account for such total outstanding amount of the convertible promissory note issued by the
Company to Holder on June 15, 2016 (the “Note”), upon an Event of Default (as defined in the Note). The Company
hereby represents and certifies that the Account is used for commercial and/or business purposes only.

	Depository
Name:	
	 	 
	Name of
Bank Account:	
	 	 
	Bank Address:	
	 	 
	 	
	 	 
	Routing/ABA
Number:	
	 	 
	Account
Number:	

A copy of a voided check for the
Account is attached hereto as Exhibit “C”. This authority is to remain in full force and effect until the Holder confirms
in a signed writing that the Note has been satisfied in full, and in a manner as to afford the Depository a reasonable opportunity
to act on it.

 

_______________________________

Name:George Powell,
III

Title: CEO

 

 

    	 	16	 

     

    

 

EXHIBIT C

(see attached)

 

 

 

 

    	 	17	 

     

    

 

EXHIBIT D

(see attached)

Representations and Warranties
Regarding Anti-Money Laundering; OFAC.

1.1.

The Borrower should check
the Office of Foreign Assets Control (“OFAC”) website at http://www.treas.gov/ofac before making the following representations.

1.2.

The Borrower represents that
the cash amounts to be paid to Carebourn Capital, L.P. (the “Holder”) under the convertible promissory note dated June
15, 2016 (the “Note”), by the Borrower, were not and are not directly or indirectly derived from activities that
contravene U.S. federal or state or international laws and regulations, including anti-money laundering laws and regulations. U.S.
federal regulations and executive orders administered by OFAC prohibit, among other things, the engagement in transactions with,
and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited
countries, territories, persons and entities can be found on the OFAC website at http://www.treas.gov/ofac. In addition, the programs
administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals[1] or entities in certain countries
regardless of whether such individuals or entities appear on the OFAC lists.

1.3.

To the best of the Borrower’s
knowledge, none of: (1) the Borrower; (2) any person controlling or controlled by the Borrower; (3) if the Borrower is a privately-held
entity, any person having a beneficial interest in the Borrower; or (4) any person for whom the Borrower is acting as agent or
nominee is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs.

1.4.

To the best of the Borrower’s
knowledge, none of: (1) the Borrower; (2) any person controlling or controlled by the Borrower; (3) if the Borrower is a privately-held
entity, any person having a beneficial interest in the Borrower; or (4) any person for whom the Borrower is acting as agent or
nominee is a senior foreign political figure[2], or any immediate family[3] member or close associate[4]
of a senior foreign political figure, as such terms are defined in the footnotes below.

  

 

1
These
individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC
sanctions and embargo programs.

2
A
“senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military
or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or
a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes
any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

3
“Immediate
family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and
in-laws.

4
A
“close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an
unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial
domestic and international financial transactions on behalf of the senior foreign political figure.

    	 	18	 

     

    

 

1.5.

Borrower hereby represents
and warrants that the cash payments under the Note are to be made on its own behalf or, if applicable, and such cash payments do
not directly or indirectly contravene United States federal, state, local or international laws or regulations applicable to Borrower,
including anti-money laundering laws.

1.6.

If the Borrower is affiliated
with a non-U.S. banking institution (a “Foreign Bank”), or if the Borrower receives deposits from, makes payments on
behalf of, or handles other financial transactions related to a Foreign Bank, the Borrower represents and warrants to the Holder
that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank
is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities;
(3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities;
and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in
any country and that is not a regulated affiliate.

1.7.

Upon the written request
from the Holder, Borrower agrees to provide all information to the Holder to enable the Holder to comply with all applicable anti-money
laundering statutes, rules, regulations and policies. Borrower understands and agrees that the Holder may release confidential
information about Borrower and, if applicable, any of its affiliates, directors, officers, trustees, beneficiaries and grantors
related thereto, to any person if the Holder, in its sole discretion, determines that such disclosure is necessary to comply with
applicable statutes, rules, regulations and policies.

IN WITNESS WHEREOF,
Borrower has caused this representation letter to be signed in its name by its duly authorized officer this June 15, 2016.

 

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

 

 

    	 	19

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