SGMD Sugarmade Inc (PK)

Item 1.01 Entry into a Material Definitive Agreement.

On June 6, 2021, Sugarmade, Inc. (the “Company”) entered into a binding Memorandum of Understanding (the “MOU”) with Zarian Hadley, an individual (and for purposes of the MOU, the “Applicant”). The MOU was also witnessed Edward Manolos, an individual (and for purposes of the MOU, the “Finder”).

The purpose of the MOU is to set forth the terms and conditions, scope of work and responsibilities of the parties to the MOU pertaining to a collaboration between the parties for the purpose of obtaining up to three (3) Los Angeles Dept. of Cannabis Regulation (“DCR”) retail delivery-only licenses and related California Bureau of Cannabis Control (“BCC”) licenses as required (each, a “License”, and collectively, the “Licenses”) each as may be awarded to an entity (a “Licensed Entity”). The parties agreed to cooperate on developing and submitting all documentation reasonably necessary to obtain each License in accordance with DCR and BCC regulations, including without limitation, filing all ownership documentation, corporate governance documents or documents required by any government agency, including but not limited to the DCR, BCC and/or the Security and Exchange Commission (“SEC”).

The Company agreed to provide and pay for miscellaneous legal and other compliance services related to the DCR/BCC License application(s), as well as to provide venture financing for any Licensed Entities that result from the efforts of the parties pursuant to the MOU, as well as to finance any related cannabis cultivation, supply or procurement expenses of any such Licensed Entities. In exchange for these services, the Company will be entitled at least a 66.66% equity interest in each Licensed Entity that is created pursuant to the MOU. The Applicant agreed to provide services related to the DCR/BCC License application(s) and any applicable related award process, and, as compensation, will be entitled at least a 33.34% equity interest in each Licensed Entity that is created pursuant to this MOU. Further, the parties agreed that the Applicant will be offered a position in Licensed Entities that result from these efforts, and will be provided voting and profit distribution rights equal to his ownership percentage in such Licensed Entity or Licensed Entities.

While the MOU is binding on the parties, the terms and conditions set forth in the MOU are intended to be implemented by definitive documents containing further material terms and conditions regarding the transactions discussed herein, which shall include all provisions, mechanisms, covenants indemnities, and performances which are reasonably required for the award and operation of the Licenses to be procured (the “Definitive Agreements”). Accordingly, the parties agreed that the Definitive Agreements will further define their rights and obligations set forth in the MOU, and such Definitive Agreements may materially modify the terms and conditions of the MOU, and may replace the MOU entirely. As of the date of this Current Report on Form 8-K, the parties have not yet entered into any such Definitive Agreements.

Pursuant to the MOU, the Company agreed to make certain payments to the Applicant and/or the Finder upon the occurrence of certain events as described below.

The MOU has an effective date of June 2, 2021 and will expire (i) on the date that the parties enter into one or more specific Definitive Agreements governing the obligations of the parties set forth in the MOU; or (ii) upon the parties’ failure to receive any or all the Licenses sought as set forth in the MOU.

The foregoing descriptions of the terms of the MOU do not purport to be complete, and are qualified in their entirety by reference to the full text of the MOU, a copy of which is attached hereto as Exhibit 10.1.