CGAC Code Green Apparel Corp (PK)

Convertible Promissory Note with Sojourn Investments, LP

On April 12, 2017, pursuant to a Note Purchase Agreement, Code Green Apparel Corp. (“ we ”, “ us ” and the “ Company ”) sold a 10% Convertible Debenture in the principal amount of $32,500 (which included a $5,000 original issue discount) to Sojourn Investments, LP (“ Sojourn ” and the “ Sojourn Debenture ”). The principal amount of the debenture accrues at 10% per annum until paid or converted into common stock (18% upon the occurrence of an event of default). The Sojourn Debenture has a maturity date of January 12, 2018, provided the debenture can be repaid at any time, provided that if repaid more than 30 days after the issuance date, we are required to pay 130% of the principal amount of the debenture, together with accrued interest.

The Sojourn Debenture is convertible into shares of our common stock at any time, at a conversion price equal to 58% of the average of the lowest three (3) closing prices during the prior 20 trading days.

In the event we fail to deliver the shares of common stock issuable upon conversion of the debenture within three business days of our receipt of a conversion notice, we are required to pay Sojourn $1,000 per day for each day that we fail to deliver such shares for up to the first 30 days that the failure continues.

At no time may the Sojourn Debenture be converted into shares of our common stock if such conversion would result in Sojourn and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.

The Sojourn Debenture provides for standard and customary events of default such as failing to timely make payments under the Sojourn Debenture when due and the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements. Additionally, upon the occurrence of certain defaults, as described in the Sojourn Debenture , we are required to pay Sojourn liquidated damages in addition to the amount owed under the Sojourn Debenture .

We hope to repay the Sojourn Debenture prior to any conversion. In the event that the Sojourn Debenture is not repaid in cash in its entirety, Company shareholders may suffer dilution if and to the extent that the balance of the Sojourn Debenture is converted into common stock.

The description of the Sojourn Debenture and Note Purchase Agreement above is not complete and is qualified in its entirety by the full text of the Sojourn Debenture and Note Purchase Agreement, filed herewith as  Exhibits 10.2 and 10.1 , respectively, which are incorporated by reference in this Item 1.01.

Convertible Promissory Note with Carebourn Capital, L.P.

On April 17, 2017, we sold Carebourn Capital, L.P. (“ Carebourn ”) a Convertible Promissory Note in the principal amount of $135,575 (the “ Carebourn Convertible Note ”), pursuant to a Securities Purchase Agreement, dated April 17, 2017. The Carebourn Convertible Note bears interest at the rate of 12% per annum (22% upon an event of default) and is due and payable on April 17, 2018. The Carebourn Convertible Note had an original issue discount of $27,075. In addition, we paid $8,500 of Carebourn’s expenses and attorney fees in connection with the sale of the note, which were included in the principal amount of the note.

Periodic payments are due by us on the Carebourn Convertible Note at the rate of $565 per day ($135,575 / 240 days)(the “ Repayment Amount ”), via direct withdrawal from our bank account. The Repayment Amount automatically adjusts to a prorated higher amount in the amount any penalties or events of default occur under the Carebourn Convertible Note.

The Carebourn Convertible Note provides for standard and customary events of default such as failing to timely make payments under the Carebourn Convertible Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure to maintain a listing on the OTCQB. Additionally, upon the occurrence of certain defaults, as described in the Carebourn Convertible Note, we are required to pay Carebourn liquidated damages in addition to the amount owed under the Carebourn Convertible Note.

The principal amount of the Carebourn Convertible Note and all accrued interest is convertible at the option of the holder thereof into our common stock at any time following the 180th day after the Carebourn Convertible Note was issued. The conversion price of the Carebourn Convertible Note is equal to 50% of the average of the lowest three (3) trading prices of the Company’s common stock during the twenty trading days prior to the conversion date.

In the event we fail to deliver the shares of common stock issuable upon conversion of the note within three business days of our receipt of a conversion notice, we are required to pay Carebourn $1,500 per day for each day that we fail to deliver such shares.

At no time may the Carebourn Convertible Note be converted into shares of our common stock if such conversion would result in Carebourn and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.

We may prepay in full the unpaid principal and interest on the Carebourn Convertible Note, with at least 20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130% of the principal amount of the note together with accrued interest thereon; and (b) any time after the 180th day after the issuance date and prior to the 364 ^th day after issuance, by paying 150% of the principal amount of the note together with accrued interest thereon.

The Carebourn Convertible Note also contains customary positive and negative covenants.

We hope to repay the Carebourn Convertible Note prior to any conversion. In the event that the Carebourn Convertible Note is not repaid in cash in its entirety, Company shareholders may suffer dilution if and to the extent that the balance of the Carebourn Convertible Note is converted into common stock.

The description of the Carebourn Convertible Note and Subscription Agreement above is not complete and is qualified in its entirety by the full text of the Carebourn Convertible Note and Subscription Agreement, filed herewith as  Exhibits 10.3 and 10.4 , respectively, which are incorporated by reference in this Item 1.01.