CODE GREEN APPAREL CORP. (OTCMKTS:CGAC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement. |
Convertible Promissory Note with Sojourn Investments,
LP
On April 12, 2017, 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 asExhibits 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), 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
Carebourns 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 Companys
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 364th 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 asExhibits 10.3 and
10.4, respectively, which are incorporated by reference in
this Item 1.01.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosures above in Item 1.01, below the headings
Convertible Promissory Note with Sojourn Investments, LP
and Convertible Promissory Note with Carebourn Capital,
L.P., are incorporated by reference in this Item 2.03 in
their entirety.
| Item 3.02 | Unregistered Sales of Equity Securities. |
As described above under Item 1.01, which disclosures are
incorporated by reference in this Item 3.02, on April 12, 2017,
we sold Sojourn the Sojourn Debenture and April 17, 2017, we sold
Carebourn the Carebourn Convertible Note. The note and debenture
are convertible into our common stock at a discount to the
trading price of our common stock as described in greater detail
above. We claim an exemption from registration for the issuance
of such convertible securities to Section 4(a)(2) and/or Rule 506
of Regulation D of the Securities Act of 1933, as amended (the
Securities Act), since the foregoing issuances did not
involve a public offering, the recipients were (i) an
accredited investor; and/or (ii) had access to similar
documentation and information as would be required in a
Registration Statement under the Securities Act, and the
recipients acquired the securities for investment only and not
with a view towards, or for resale in connection with, the public
sale or distribution thereof. The securities were offered without
any general solicitation by us or our representatives. No
underwriters or agents were involved in the foregoing issuance
and we paid no underwriting discounts or commissions. The
securities sold are subject to transfer restrictions, and the
certificates evidencing the securities contain an appropriate
legend stating that such securities have not been registered
under the Securities Act and may not be offered or sold absent
registration or to an exemption therefrom. The securities were
not registered under the Securities Act and such securities may
not be offered or sold in the United States absent registration
or an exemption from registration under the Securities Act and
any applicable state securities laws.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. | Description | |
| 10.1* |
Note Purchase Agreement dated April 12, 2017, by and between Code Green Apparel Corp. and Sojourn Investments, LP |
|
| 10.2* |
10% Convertible Debenture dated April 12, 2017, by Code Green Apparel Corp. in favor of Sojourn Investments, LP |
|
| 10.3* |
Securities Purchase Agreement dated April 17, 2017, by and between Code Green Apparel Corp. and Carebourn Capital, L.P. |
|
| 10.4* |
$135,575 Convertible Promissory Note dated April 17, 2017, by Code Green Apparel Corp. in favor of Carebourn Capital, L.P. |
*Filed herewith.
About CODE GREEN APPAREL CORP. (OTCMKTS:CGAC)
Code Green Apparel Corp., formerly J.D. Hutt Corporation, is engaged in the business of manufacturing, selling, marketing and outfitting companies of all sizes and industries with eco-friendly apparel. The Company offers apparels made from recycled textiles. The Company’s corporate apparel market encompasses a range of apparel products and accessories, including uniforms, caps, t-shirts, aprons, pants, shorts, jackets and accessories. The Company provides its line of recycled clothing to organizations of various sizes, hosting promotional, fundraising and special events. Its apparel collection is also available to distributors and screen printers through its wholesale distribution channel. As of December 31, 2015, the Company had not generated any revenues. CODE GREEN APPAREL CORP. (OTCMKTS:CGAC) Recent Trading Information
CODE GREEN APPAREL CORP. (OTCMKTS:CGAC) closed its last trading session down -0.00280 at 0.00600 with 3,537,426 shares trading hands.