INVESTMENT AGREEMENT


 


 


This INVESTMENT
AGREEMENT (this “AGREEMENT”), dated as of April 16, 2019 by and between Sugarmade, Inc., a Delaware corporation
(the “Company”), and K&J Funds, LLC, a Nevada limited liability corporation (the “Investor”).


WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to Twenty
Million Dollars ($20,000,000) to purchase the Company's Common Stock with $0.001 par value per share (the “Common Stock”);



WHEREAS,
such investments will be made in reliance upon the provisions of Section 4(a)(2) under the Securities Act of 1933, as amended (the
“1933 Act”), Rule 506 of Regulation D, and the rules and regulations promulgated thereunder, and/or upon such other
exemption from the registration requirements of the 1933 Act as may be available with respect to any or all of the investments
in Common Stock to be made hereunder; and


WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto (the “Registration Rights Agreement”) pursuant to which
the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder,
and applicable state securities laws.


NOW THEREFORE,
in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements
set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Investor hereby agree as follows:


 


ARTICLE I

CERTAIN DEFINITIONS


 


DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):


 


 “AAA” shall have the
meaning specified in Section 10.


 


“Agreement” shall have the
meaning specified in the preamble hereof.


 


“Average Daily Trading Volume”
shall mean the average trading volume of the Company’s Common Stock in the ten (10) Trading Days immediately preceding the
respective Put Date.


 


“Bankruptcy Law” means Title
11, U.S. Code, or any similar federal or state law for the relief of debtors.


 


“Claim Notice” shall have
the meaning specified in Section 9.3(a).


 


“Clearing Costs” shall mean
all of the Investor’s broker and Transfer Agent fees.


 


“Clearing Date” shall be
the date on which the Investor receives the Put Shares as DWAC Shares in its brokerage account.


 


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“Closing” shall mean one
of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.


 


“Closing Date” shall mean
the date of any Closing hereunder.


 


“Commitment Period” shall
mean the period commencing on the Execution Date, and ending on the earlier of (i) the date on which the Investor shall have
purchased Put Shares pursuant to this Agreement equal to the Maximum Commitment Amount, (ii) two years from the date of an
effective Registration Statement, or (iii) written notice of termination by the Company to the Investor (which shall not occur
at any time that the Investor holds any of the Put Shares).


 


“Common Stock” shall mean
the Company’s common stock, $0.001 par value per share, and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon
liquidation of the Company).


 


“Common Stock Equivalents”
means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.


 


“Company” shall have the
meaning specified in the preamble to this Agreement.


  


“Damages” shall mean any
loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements
and costs and expenses of expert witnesses and investigation).


 


“Dispute Period” shall have
the meaning specified in Section 9.3(a).


 


“DTC” shall mean The Depository
Trust Company, or any successor performing substantially the same function for the Company.


 


“DTC/FAST Program” shall
mean the DTC’s Fast Automated Securities Transfer Program.


 


“DWAC” shall mean Deposit
Withdrawal at Custodian as defined by the DTC.


 


“DWAC Eligible” shall mean
that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including,
without limitation, transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the
DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the
Put Shares, as applicable, are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy
prohibiting or limiting delivery of the Put Shares via DWAC.


 


“DWAC Shares” means shares
of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction
on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified DWAC account
with DTC under the DTC/FAST Program, or any similar program hereafter adopted by DTC performing substantially the same function.


 


“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Exchange Cap” shall have
the meaning set forth in Section 7.1(c).


 


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“Execution Date” shall mean
the date of this Agreement.


 


“FINRA” shall mean the Financial
Industry Regulatory Authority, Inc.


 


“Investment Amount” shall
mean the Put Shares referenced in the Put Notice multiplied by the Purchase Price minus the Clearing Costs.


 


“Indemnified Party” shall
have the meaning specified in Section 9.2.


 


“Indemnifying Party” shall
have the meaning specified in Section 9.2.


 


“Indemnity Notice” shall
have the meaning specified in Section 9.3(e).


 


“Investor” shall have the
meaning specified in the preamble to this Agreement.


 


“Lien” means a lien, charge,
pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Market Price” shall mean
85% of the average of the three (3) lowest traded prices (as reported by Bloomberg Finance L.P.) during the ten (10) trading days
prior to the Put Date associated with the applicable Put Notice (the “Valuation Period” as defined below).


 


“Material Adverse Effect”
shall mean any effect on the business, operations, properties, or financial condition of the Company that is material and adverse
to the Company and/or any condition, circumstance, or situation that prohibit or otherwise materially interfere with the ability
of the Company to enter into and perform its obligations under any Transaction Document.


 


“Maximum Commitment Amount”
shall mean Twenty Million Dollars ($20,000,000).


 


“Person” shall mean an individual,
a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.


 


“Principal Market” shall
mean any of the national exchanges (i.e. NYSE, NYSE AMEX, Nasdaq), or principal quotation systems (i.e. OTCQX, OTCQB, OTC Pink
– operated by the OTC Market Group, Inc. or the OTC Bulletin Board interdealer quotation system), or other principal exchange
or recognized quotation system used for opening, closing, and managing market positions through a financial intermediary for the
Common Stock.


 


“Purchase Price” shall mean
85% of the average of the three (3) lowest traded prices (as reported by Bloomberg Finance L.P.) during the ten (10) trading days
prior to the Put Date associated with the applicable Put Notice (the “Valuation Period”).


 


“Put” shall mean the right
of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and conditions of this Agreement.


 


“Put Date” shall mean any
Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).


 


“Put Notice” shall mean
a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Put Shares which the Company intends
to require Investor to purchase pursuant to the terms of this Agreement.


 


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“Put Shares” shall mean
all shares of Common Stock issued, or that the Company shall be entitled to issue, per any applicable Put Notice in accordance
with the terms and conditions of this Agreement.


 


“Registration Statement”
shall have the meaning specified in Section 6.4.


 


“Regulation D” shall mean
Regulation D promulgated under the Securities Act.


 


 “Rule 144” shall mean
Rule 144 under the Securities Act or any similar provision then in force under the Securities Act.


 


“SEC” shall mean the United
States Securities and Exchange Commission.


 


“SEC Documents” shall have
the meaning specified in Section 4.5.


 


“Securities” means, collectively,
the Put Shares.


 


“Securities Act” shall mean
the Securities Act of 1933, as amended.


 


“Short Sales” shall mean
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.


 


“Subsidiary” means any Person
the Company wholly-owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar
voting interest, in each case that would be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the Securities
Act.


 


“Third-Party Claim” shall
have the meaning specified in Section 9.3(a).


 


“Trading Day” shall mean
a day on which the Principal Market shall be open for business.


 


“Transaction Documents”
shall mean this Agreement and all exhibits hereto and thereto.


  


“Transfer Agent Instruction Letter”
means the letter from the Company to the Transfer Agent which instructs the Transfer Agent to issue the Put Shares pursuant to
the Transaction Documents.


 


“Valuation Period” shall
mean the period of ten (10) Trading Days following the Clearing Date associated with the applicable Put Notice during which the
Purchase Price of the Common Stock is valued, provided, however, that the Valuation Period shall instead begin on the Clearing
Date if the respective Put Shares are received as DWAC Shares in Investor’s brokerage account prior to 11:00 a.m. EST on
the respective Clearing Date.


 


“Variable Security Holder”
means any holder of any securities of the Company in an amount in excess of Five Hundred Thousand Dollars ($500,000) that (A) have
or may have conversion rights of any kind, contingent, conditional or otherwise, in which the number of shares that may be issued
pursuant to such conversion right varies with the market price of the Common Stock, or (B) are or may become convertible into Common
Stock (including without limitation convertible debt, warrants or convertible preferred stock), with a conversion price that varies
with the market price of the Common Stock, even if such security only becomes convertible following an event of default, the passage
of time, or another trigger event or condition.


 




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ARTICLE II

PURCHASE AND SALE OF COMMON STOCK


 


2.1 PUTS. Upon the terms and
conditions set forth herein (including, without limitation, the provisions of Article VII), the Company shall have the right, but
not the obligation, to direct the Investor, by its delivery to the Investor of a Put Notice from time to time, to purchase Put
Shares. The Put Amount shall be equal to up to either (i) two hundred percent (200%) of the average daily volume (U.S. market only)
of the Common Stock for the Ten (10)) Trading Days prior to the applicable Put Notice Date, or (ii) an amount not to exceed Five
Hundred Thousand Dollars ($500,000) The Company shall not deliver another Put Notice to the Investor within ten (10) Trading Days
of a prior Put Notice. The Common Stock identified in the Put Notice shall be purchased for a price equal to the Purchase Price.


Section 2.2 MECHANICS.


 


(a)       PUT
NOTICE. At any time and from time to time during the Commitment Period, except as provided in this Agreement, the Company may
deliver a Put Notice to Investor, subject to satisfaction of the conditions set forth in Section 7.2 and otherwise provided herein.
The Company shall deliver, or cause to be delivered, the Put Shares as DWAC Shares to the Investor within seven (7) Trading Days
following the Put Date.


 


(b)       DATE
OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on (i) the Trading Day it is received by email by the
Investor if such notice is received on or prior to 9.00 a.m. Pacific Standard Time or (ii) the immediately succeeding Trading
Day if it is received by email after 9.00 a.m. Pacific Standard Time on a Trading Day or at any time on a day which is not a Trading
Day. The Company shall not deliver another Put Notice to the Investor within ten (10) Trading Days of a prior Put Notice.


 


Section 2.3 CLOSINGS. If the value of
the Put Shares delivered to the Investor under the Put Notice causes the Company to exceed the Maximum Commitment Amount, then
the Investor shall return to the Company the surplus amount of Put Shares associated with such Put. The Purchase Price with respect
to the Put Shares shall be reduced by any Clearing Costs related to the return of such Put Shares. The Closing Date under any Put
Notice shall occur within seven (7) Trading Day following the end of the respective Valuation Period and the delivery of the Put
Shares by the Company, whereby the Investor shall deliver the Investment Amount by wire transfer of immediately available funds
to an account designated by the Company.


 


Section 2.4 DELAY DELIVERY. The Company
understands that a delay in the issuance of Securities beyond the Closing Date could result in economic damage to the Investor.
After the Effective Date, as compensation to the Investor for such loss, the Company agrees to make payments to the Investor for
late issuance of Securities (delivery of Securities after the applicable Closing Date) in accordance with the following schedule
(where “No. of Days Late” is defined as the number of trading days beyond the Closing Date, with the Amounts being
cumulative.):


 




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LATE PAYMENT FOR EACH NO. OF DAYS LATE


 


1       $100


2       $200


3       $300


4       $400


5       $500


6       $600


7       $700


8       $800


9       $900


10       $1000


Over 10$1,000 + $200
for each Business Day late beyond 10 days


 


The Company shall make any payments incurred
under this Section in immediately available funds upon demand by the Investor. Nothing herein shall limit the Investor's right
to pursue actual damages for the Company's failure to issue and deliver the Securities to the Investor, except that such late payments
shall offset any such actual damages incurred by the Investor.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF INVESTOR


 


The Investor represents and warrants to the
Company that:


 


Section 3.1 INTENT. The Investor is
entering into this Agreement for its own account and the Investor has no present arrangement (whether or not legally binding) at
any time to sell the Securities to or through any Person in violation of the Securities Act or any applicable state securities
laws; provided, however, that the Investor reserves the right to dispose of the Securities at any time in accordance with federal
and state securities laws applicable to such disposition.


 


Section 3.2 NO LEGAL ADVICE FROM THE COMPANY.
The Investor acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement
with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice
with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.


 


Section 3.3 ACCREDITED INVESTOR. The
Investor is an accredited investor as defined in Rule 501(a) of Regulation D, and the Investor has such experience in business
and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities. The Investor acknowledges
that an investment in the Securities is speculative and involves a high degree of risk.


 




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Section 3.4 AUTHORITY. The Investor
has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction
Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and
the other Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary action and no further consent or authorization of the Investor is required. Each Transaction Document to which
it is a party has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will
constitute the valid and binding obligation of the Investor enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.


 


Section 3.5 NOT AN AFFILIATE. The Investor
is not an officer, director or “affiliate” (as that term is defined in Rule 405 of the Securities Act) of the Company.


 


Section 3.6 ORGANIZATION AND STANDING.
The Investor is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority
to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents.


 


Section 3.7 ABSENCE OF CONFLICTS. The
execution and delivery of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated
hereby and thereby and compliance with the requirements hereof and thereof, will not (a) violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Investor, (b) violate any provision of any indenture, instrument
or agreement to which the Investor is a party or is subject, or by which the Investor or any of its assets is bound, or conflict
with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to the terms
of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by the Investor to any Third-Party,
or (d) require the approval of any third-party (that has not been obtained) pursuant to any material contract, instrument,
agreement, relationship or legal obligation to which the Investor is subject or to which any of its assets, operations or management
may be subject.


 


Section 3.8 DISCLOSURE; ACCESS TO INFORMATION.
The Investor had an opportunity to review copies of the SEC Documents filed on behalf of the Company and has had access to all
publicly available information with respect to the Company.


 


Section 3.9 MANNER OF SALE. At no time
was the Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or
any other form of general solicitation or advertising.


 


Section 3.10 NO CONFLICTS. The execution,
delivery and performance of the Transaction Documents by the Investor and the consummation by the Investor of the transactions
contemplated hereby and thereby will not (1) result in a violation of the partnership agreement or other organizational documents
of the Investor, (2) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any
material agreement, contract, indenture mortgage, indebtedness or instrument to which the Investor is a party, or to the Investor’s
knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state
securities laws and regulations) applicable to the Investor or by which any property or asset of the Investor is bound or affected.


 




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Section 3.11 NO VIOLATIONS. The Investor
is not in violation of any term of, or in default under, the partnership agreement of other organizational documents of the Investor
or any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule
or regulation applicable to the Investor, except for conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations that would not, individually or in the aggregate, constitute or reasonably be expected to constitute a material
adverse effect on the Investor. The business of the Investor is not being conducted, and shall not be conducted, in violation of
any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency,
or court, except for violations the sanctions for which either, individually or in the aggregate, would not have or reasonably
be expected to have a material adverse effect on the Investor. Except as specifically contemplated by this Agreement and as required
under the 1933 Act or any securities laws of any states, to the Investor’s knowledge, the Investor is not required to obtain
any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement
as outlined in the Registration Rights Agreement) with, any court, governmental authority or agency, regulatory or self-regulatory
agency or other Third-Party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the
Equity Line Transaction Documents in accordance with the terms hereof or thereof except for those consents, authorizations, permits,
orders or filings as have been obtained or effected on or prior to the date hereof and are in full force and effect as of the date
hereof. The Investor is unaware of any facts or circumstances which might give rise to any violation or default set forth in this
Section 3(F).


 


Section 3.12 NO REGISTRATION AS A DEALER.
The Investor is not and will not be required to be registered as a “dealer” under the 1934 Act, either as a result
of its execution and performance of its obligations under this Agreement or otherwise.


 


Section 3.13 TAX LIABILITIES.
The Investor understands that it is liable for its own tax liabilities.


 


 


 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


The Company represents and warrants to the
Investor that, except as disclosed in the SEC Documents or except as set forth in the disclosure in writing and delivered prior
to the execution of this Agreement, that:


 


Section 4.1 ORGANIZATION OF THE COMPANY.
The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no
proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.


 




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Section 4.2 AUTHORITY. The Company has
the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction
Documents. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or stockholders is required. Each of this Agreement and the other
Transaction Documents has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.


 


Section 4.3
CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of (a) 1,990,000,000 shares
of Common Stock, par value of $0.001 per share, of which approximately  655,877,775
shares of Common Stock are issued and outstanding and (b) 10,000,000 shares of preferred stock, of which 0 are issued and
outstanding. Except as set forth in the Form 10Q for the Quarter Ended December 31, 2018 filed February 21, 2019, except for the
sale and issuance of 6,625,391, the Company has not issued any capital stock since its most recently filed periodic report under
the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as disclosed in the SEC Documents, and except as a result
of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable
for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.
The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no stockholders’ agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.


 


Section 4.4 LISTING AND MAINTENANCE REQUIREMENTS.
The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed
to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has
not, in the twelve (12) months preceding the date hereof, received notice from the Principal Market on which the Common Stock is
or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of
such Principal Market. The Company is and has no reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.


 




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Section 4.5 SEC DOCUMENTS; DISCLOSURE.
The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one (1) year preceding the date
hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC
Documents”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension. As of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and other federal laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents when filed 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. The financial statements of the Company included in the SEC Documents
comply as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis during the periods involved (except (a) as may be otherwise
indicated in such financial statements or the notes thereto or (b) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal, immaterial, year-end audit adjustments). Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other
Person acting on its behalf has provided the Investor or its agents or counsel with any information that it believes constitutes
or might constitute material, non-public information. The Company understands and confirms that the Investor will rely on the foregoing
representation in effecting transactions in securities of the Company.


 


Section 4.6 VALID ISSUANCES. The Securities
are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly
issued, fully paid, and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents.


 


Section 4.7 NO CONFLICTS. The execution,
delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Put Shares, do not and
will not: (a) result in a violation of the Company’s certificate or articles of incorporation, by-laws or other organizational
or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both
would become a material default) under, result in the creation of any Lien upon any of the properties or assets of the Company,
or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, instrument or
any “lock-up” or similar provision of any underwriting or similar agreement to which the Company is a party, or (c)
result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any property or asset of the Company 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) nor is the Company otherwise in violation of, conflict with or in default
under any of the foregoing. The business of the Company is not being conducted in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material
Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or the other Transaction Documents (other than any SEC, FINRA or state securities filings
that may be required to be made by the Company subsequent to any Closing or any registration statement that may be filed pursuant
hereto); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the
accuracy of the relevant representations and agreements of Investor herein.


 




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Section 4.8 NO MATERIAL ADVERSE CHANGE.
No event has occurred that would have a Material Adverse Effect on the Company that has not been disclosed in subsequent SEC filings.


 


Section 4.9 LITIGATION AND OTHER PROCEEDINGS.
Except as disclosed in the SEC Documents, there are no actions, suits, investigations, inquiries or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any of its properties, nor has the Company received
any written or oral notice of any such action, suit, proceeding, inquiry or investigation, which would have a Material Adverse
Effect. No judgment, order, writ, injunction or decree or award has been issued by or, to the knowledge of the Company, requested
of any court, arbitrator or governmental agency which would have a Material Adverse Effect. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former
director or officer of the Company.


 


Section 4.10 REGISTRATION RIGHTS. No
Person (other than the Investor) has any right to cause the Company to effect the registration under the Securities Act of any
securities of the Company.


 


Section 4.11 TRANSACTIONS WITH AFFILIATES.
Without the prior written consent of the Investor, the Company shall not, and shall cause each of its Subsidiaries not to, enter
into, amend, modify or supplement, or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction,
commitment or arrangement with any of its or any Subsidiary's officers, directors, persons who were officers or directors at any
time during the previous two (2) years, shareholders who beneficially own 5% or more of the Common Stock, or Affiliates or with
any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or individual
owns a 5% or more beneficial interest (each a “Related Party”), except for (1) customary employment arrangements and
benefit programs on reasonable terms, (2) any agreement, transaction, commitment or arrangement on an arms-length basis on terms
no less favorable than terms which would have been obtainable from a disinterested Third-Party other than such Related Party,(3)
any agreement, transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company,
or (4) extensions or amendments of any existing employment agreement. For purposes hereof, any director who is also an officer
of the Company or any Subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction,
commitment or arrangement. “Affiliate” for purposes hereof means, with respect to any person or entity, another person
or entity that, directly or indirectly, (1) has a 5% or more equity interest in that person or entity, (2) has 5% or more common
ownership with that person or entity, (3) controls that person or entity, or (4) is under common control with that person or entity.
“Control” or “Controls” for purposes hereof means that a person or entity has the power, directly or indirectly,
to conduct or govern the policies of another person or entity.


 


 


ARTICLE V

COVENANTS OF INVESTOR


 


Section 5.1 COMPLIANCE WITH LAW; TRADING
IN SECURITIES. The Investor’s trading activities with respect to shares of Common Stock will be in compliance with all
applicable state and federal securities laws and regulations and the rules and regulations of FINRA and the Principal Market.


 


Section 5.2 SHORT SALES AND CONFIDENTIALITY.
Neither the Investor, nor any affiliate of the Investor acting on its behalf or pursuant to any understanding with it, will execute
any Short Sales during the period from the date hereof to the end of the Commitment Period. For the purposes hereof, and in accordance
with Regulation SHO, the sale after delivery of a Put Notice of such number of shares of Common Stock reasonably expected to be
purchased under a Put Notice shall not be deemed a Short Sale. The Investor shall, until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company in accordance with the terms of this Agreement, maintain the confidentiality
of the existence and terms of this transaction and the information included in the Transaction Documents.


 




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ARTICLE VI

COVENANTS OF THE COMPANY


 


Section 6.1 RESERVATION OF COMMON STOCK.
On the date hereof, the Company will reserve 138,461,538 shares of Common Stock from its authorized and unissued Common Stock to
provide for all issuances of Common Stock under the Transaction Documents. The Company shall further require the Transfer Agent
to hold the shares of Common Stock reserved pursuant to the Share Reserve exclusively for the benefit of the Investor.


 


Section 6.2 LISTING OF COMMON STOCK.
The Company shall promptly secure the listing of all of the Put Shares to be issued to the Investor hereunder on the Principal
Market, if required by the Principal Market, (subject to official notice of issuance) and shall use commercially reasonable best
efforts to maintain, so long as any shares of Common Stock shall be so listed, the listing of all such Put Shares from time to
time issuable hereunder. The Company shall use its commercially reasonable efforts to continue the listing and trading of the Common
Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company’s reporting, filing and other obligations under the bylaws or rules of FINRA and the Principal
Market.


 


Section 6.3 OTHER EQUITY LINES AND CONVERTIBLE
NOTES. So long as this Agreement remains in effect, the Company covenants and agrees that it will not, without the prior written
consent of the Investor, enter into any other equity line of credit agreement with any other party or have any Variable Security
Holders, excluding the Investor, without the Investor’s prior written consent, which consent may be granted or withheld in
the Investor’s sole and absolute discretion. For the avoidance of doubt, nothing contained in the Transaction Documents shall
restrict, or require the Investor’s consent for, any agreement providing for the issuance or distribution of any equity securities
of the Company pursuant to any agreement or arrangement that is not covered in this Section 6.3.


 


Section 6.4 FILING OF CURRENT REPORT AND
REGISTRATION STATEMENT. The Company agrees that it shall file a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto, with the SEC within the time required by the Exchange Act, relating to the transactions contemplated by, and
describing the material terms and conditions of, the Transaction Documents (the “Current Report”). The Company shall
permit the Investor to review and comment upon the final pre-filing draft version of the Current Report at least two (2) Trading
Days prior to its filing with the SEC, and the Company shall give reasonable consideration to all such comments. The Investor shall
use its reasonable best efforts to comment upon the final pre-filing draft version of the Current Report within one (1) Trading
Day from the date the Investor receives it from the Company. The Company shall also file with the SEC, on or before April __. 2019,
a new registration statement (the “Registration Statement”) covering the resale of the Put Shares.


 


ARTICLE VII

CONDITIONS TO DELIVERY OF

PUT NOTICES AND CONDITIONS TO CLOSING


 


Section 7.1 CONDITIONS PRECEDENT TO THE
RIGHT OF THE COMPANY TO ISSUE AND SELL PUT SHARES. The right of the Company to issue and sell the Put Shares to the Investor
is subject to the satisfaction of each of the conditions set forth below:


 


(a)       ACCURACY
OF INVESTOR’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Investor shall be true and correct
in all material respects as of the date of this Agreement and as of the date of each Closing as though made at each such time.


 


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(b)       PERFORMANCE
BY INVESTOR. Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing.


 


(c)       PRINCIPAL
MARKET REGULATION. If applicable by the Principal Market, the Company shall not issue any Put Shares, and the Investor shall
not have the right to receive any Put Shares, if the issuance of such Put Shares would exceed the aggregate number of shares of
Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of the
Principal Market (the “Exchange Cap”).


 


Section 7.2 CONDITIONS PRECEDENT TO THE
OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES. The obligation of the Investor hereunder to purchase Put Shares is subject to
the satisfaction of each of the following conditions:


 


(a)       EFFECTIVE
REGISTRATION STATEMENT. The Registration Statement, and any amendment or supplement thereto, shall remain effective for the
resale by the Investor of the Put Shares and (i) neither the Company nor the Investor shall have received notice that the SEC has
issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to
do so and (ii) no other suspension of the use of, or withdrawal of the effectiveness of, such Registration Statement or related
prospectus shall exist.


 


(b)       ACCURACY
OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and
correct in all material respects as of the date of this Agreement and as of the date of each Closing (except for representations
and warranties specifically made as of a particular date).


 


(c)       PERFORMANCE
BY THE COMPANY. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the Company.


 


(d)       NO
INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely
affects any of the transactions contemplated by the Transaction Documents, and no proceeding shall have been commenced that may
have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by the Transaction Documents.


 


(e)       ADVERSE
CHANGES. Since the date of filing of the Company’s most recent SEC Document, no event that had or is reasonably likely
to have a Material Adverse Effect has occurred.


 


(f)       NO
SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the Common Stock shall not have been suspended by the
SEC, the Principal Market or FINRA, or otherwise halted for any reason, and the Common Stock shall have been approved for listing
or quotation on and shall not have been delisted from the Principal Market. In the event of a suspension, delisting, or halting
for any reason, of the trading of the Common Stock, as contemplated by this Section 7.2(f), the Investor shall have the right to
return to the Company any remaining amount of Put Shares associated with such Put, and the Purchase Price with respect to such
Put shall be reduced accordingly.


 


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(g)       BENEFICIAL
OWNERSHIP LIMITATION. The number of Put Shares then to be purchased by the Investor shall not exceed the number of such shares
that, when aggregated with all other shares of Common Stock then owned by the Investor beneficially or deemed beneficially owned
by the Investor, would result in the Investor owning more than the Beneficial Ownership Limitation (as defined below), as determined
in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section 7.2(g),
in the event that the amount of Common Stock outstanding, as determined in accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder, is greater on a Closing Date than on the date upon which the Put Notice associated with such
Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether
the Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement, would own more than the Beneficial
Ownership Limitation following such Closing Date. The “Beneficial Ownership Limitation” shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable pursuant
to a Put Notice.


 


(h)       PRINCIPAL
MARKET REGULATION. The issuance of the Put Shares shall not exceed the Exchange Cap, if applicable.


 


(i)       NO
KNOWLEDGE. The Company shall have no knowledge of any event more likely than not to have the effect of causing the Registration
Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen (15) Trading
Days following the Trading Day on which such Put Notice is deemed delivered).


 


(j)       NO
VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of the Put Shares shall not violate the shareholder approval requirements
of the Principal Market.


 


(k)      OFFICER’S
CERTIFICATE. On the date of delivery of each Put Notice, the Investor shall have received the Closing Certificate executed
by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as of
the date of each such certificate.


 


(l)       DWAC
ELIGIBLE. The Common Stock must be DWAC Eligible and not subject to a “DTC chill.”


 


(m)     SEC DOCUMENTS.
All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company
with the SEC pursuant to the reporting requirements of the Exchange Act (other than Forms 8-K) shall have been filed with the SEC
within the applicable time periods prescribed for such filings under the Exchange Act.


  


(n)       RESERVE.
The Company shall have reserved sufficient shares of its Common Stock for the Investor, pursuant to the terms of this Agreement
and all other contracts between the Company and Investor.


 


 


ARTICLE VIII

LEGENDS


 


Section 8.1 NO RESTRICTIVE STOCK LEGEND.
No restrictive stock legend shall be placed on the share certificates representing the Put Shares.


 


Section 8.2 INVESTOR’S COMPLIANCE.
Nothing in this Article VIII shall affect in any way the Investor’s obligations hereunder to comply with all applicable securities
laws upon the sale of the Common Stock.



 




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ARTICLE IX

NOTICES; INDEMNIFICATION


 


Section 9.1 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 (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram,
or email as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently by written
notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by email at the address 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 (ii) on the second business day following
the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, 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:


 


Sugarmade, Inc.


750 Royal Oaks Drive, Suite
#108


Monrovia, CA 91016


Telephone: (818) 929-8013


 


If to the Investor:


 


K&J Funds, LLC


11835 W. Olympic Blvd.,
Suite #1235


Los Angeles, CA 90064


Telephone: (714) 423-1513


 


Either party hereto may from time to time change
its address or email for notices under this Section 9.1 by giving at least ten (10) days’ prior written notice of such changed
address to the other party hereto.


 




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Section 9.2 INDEMNIFICATION. Each party
(an “Indemnifying Party”) agrees to indemnify and hold harmless the other party along with its officers, directors,
employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against any Damages, joint or
several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or
relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of the Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any post-effective amendment thereof or supplement thereto, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained
in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the
light of the circumstances under which the statements therein were made, not misleading, or (iv) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities
Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily
from the Indemnified Party’s failure to perform any covenant or agreement contained in this Agreement or the Indemnified
Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement; provided, however, that
the foregoing indemnity agreement shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying
Party in reliance upon and in conformity with written information furnished to the Indemnifying Party by the Indemnified Party
expressly for use in the Registration Statement, any post-effective amendment thereof or supplement thereto, or any preliminary
prospectus or final prospectus (as amended or supplemented).


 


Section 9.3 METHOD OF ASSERTING INDEMNIFICATION
CLAIMS. All claims for indemnification by any Indemnified Party under Section 9.2 shall be asserted and resolved as follows:


 


(a)       In
the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 9.2 is asserted against
or sought to be collected from such Indemnified Party by a Person other than a party hereto or an affiliate thereof (a “Third-Party
Claim”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third-Party Claim and for the Indemnified Party’s claim for indemnification that is being
asserted under any provision of Section 9.2 against an Indemnifying Party, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third-Party Claim (a “Claim Notice”) with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after
the Indemnified Party receives notice of such Third-Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third-Party Claim to the extent that the Indemnifying Party’s ability to defend has
been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as
practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice
or an Indemnity Notice (as defined below) (the “Dispute Period”) whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third-Party Claim.


 




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(i)       If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third-Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have
the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third-Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the
consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary
damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full
pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise
or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party,
at any time prior to the Indemnifying Party’s delivery of the notice referred to in the first sentence of this clause (i),
file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary
or appropriate to protect its interests; and provided, further, that if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third-Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third-Party Claim controlled by the Indemnifying Party pursuant to this clause
(i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect
to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement
of a Third-Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third-Party
Claim.


 


(ii)       If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend
the Third-Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously
and diligently or settle the Third-Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the
Third-Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third-Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions
of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third-Party
Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying
Party will not be required to bear the costs and expenses of the Indemnified Party’s defense pursuant to this clause (ii)
or of the Indemnifying Party’s participation therein at the Indemnified Party’s request, and the Indemnified Party
shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.


 


(iii)       If
the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to
the Indemnified Party with respect to the Third-Party Claim under Section 9.2 or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with
respect to such Third-Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability
of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be entitled to institute such legal action as it deems appropriate.


 




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(b)       In
the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third-Party
Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature
of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined
in good faith, of such claim (an “Indemnity Notice”) with reasonable promptness to the Indemnifying Party. The failure
by any Indemnified Party to give the Indemnity Notice shall not impair such party’s rights hereunder except to the extent
that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim
described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall
be entitled to institute such legal action as it deems appropriate.


 


(c)       The
Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.


 


(d)       The
indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party
against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.


 


ARTICLE X

MISCELLANEOUS


 


Section 10.1
GOVERNING LAW; JURISDICTION.  All disputes arising under this Agreement shall be governed by and interpreted in accordance
with the laws of the State of California, without regard to principles of conflict of laws. The parties to this agreement will
submit all disputes arising under this agreement to arbitration in Los Angeles, CA before a single arbitrator of the American Arbitration
Association (“AAA”). The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement
of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of California. No party
to this Agreement will challenge the jurisdiction or venue provisions as provided in this section. No party to this agreement will
challenge the jurisdiction or venue provisions as provided in this section. Nothing contained herein shall prevent the party from
obtaining an injunction.


 


Section 10.2 JURY TRIAL WAIVER. The
Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out of or in connection with the Transaction Documents.


 


Section 10.3 ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the Company and the Investor and their respective successors. Neither this Agreement
nor any rights of the Investor or the Company hereunder may be assigned by either party to any other Person.


 


Section 10.4 NO THIRD-PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the Company and the Investor and their respective successors, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 9.3.


 


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Section 10.5 TERMINATION. The Company
may terminate this Agreement at any time by written notice to the Investor, except while the Investor holds any of the Put Shares.
In addition, this Agreement shall automatically terminate on the earlier of (i) the end of the Commitment Period; (ii) the date
that the Company sells and the Investor purchases the Maximum Commitment Amount; or (iii) the date in which the Registration Statement
is no longer effective, or (iv) the date that, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a
voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or
substantially all of its property or the Company makes a general assignment for the benefit of its creditors; provided, however,
that the provisions of Articles III, IV, V, VI, IX and the agreements and covenants of the Company and the Investor set forth in
Article X shall survive the termination of this Agreement.


 


Section 10.6 ENTIRE AGREEMENT. The Transaction
Documents, together with the exhibits, contain the entire understanding of the Company and the Investor with respect to the matters
covered herein and therein and supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents and exhibits.


 


Section 10.7 FEES AND EXPENSES. Except
as expressly set forth in the Transaction Documents or any other writing to the contrary, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company),
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investor.


 


Section 10.8 COUNTERPARTS. This Agreement
may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to
be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which
together shall constitute one and the same instrument. This Agreement may be delivered to the other parties hereto by email of
a copy of this Agreement bearing the signature of the parties so delivering this Agreement.


 


Section 10.9 SEVERABILITY. In the event
that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective
if it materially changes the economic benefit of this Agreement to any party.


 


Section 10.10 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.


 


Section 10.11 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.


 


Section 10.12 EQUITABLE RELIEF. The
Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement,
any remedy at law may prove to be inadequate relief to the Investor. The Company therefore agrees that the Investor shall be entitled
to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.


 


Section 10.13 TITLE AND SUBTITLES. The
titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing
or interpreting this Agreement.


 


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Section 10.14 AMENDMENTS; WAIVERS. No
provision of this Agreement may be amended or waived by the parties from and after the date that is one (1) Trading Day immediately
preceding the initial filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, (i) no
provision of this Agreement may be amended other than by a written instrument signed by both parties hereto and (ii) no provision
of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver
is sought. No failure or delay 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 privilege.


 


Section 10.15 PUBLICITY. The Company
and the Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement,
other than as required by law, without the prior written consent of the other parties, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public statement. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of the Investor without the prior written consent of the Investor, except to the extent required
by law. The Investor acknowledges that this Agreement and all or part of the Transaction Documents may be deemed to be “material
contracts,” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required
to file such documents as exhibits to reports or registration statements filed under the Securities Act or the Exchange Act. The
Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the
Company, in consultation with its counsel.


 


[Signature are contained on the following page]


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


        




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IN WITNESS WHEREOF, the parties have
caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above
written.


 


	 	SUGARMADE, INC.
	 	 
	 	 
	 	By:  /s/ Jimmy Chan
	 	Name: Jimmy Chan
	 	
        Title: Chief Executive Officer

         

        K & J FUNDS, LLC

	 	 
	 	 
	 	By: /s/ Huy John Vu
	 	Name: Huy John Vu
	 	Title: Managing Partner


 


 



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EXHIBIT A


 


FORM OF PUT NOTICE


 


Date:


RE: Put Notice Number 


 


Dear Mr. Vu:


 


This is to inform you that as of today, Sugarmade, Inc., a Delaware
corporation (the "Company"), hereby elects to exercise its right pursuant to the Investment Agreement entered
into with K&J Funds, LLC (“Investor”) to require K&J Funds, LLC to purchase shares of its common stock.
The Company hereby certifies that:


 


1. The undersigned is the duly elected ______________ of the Company.


 


2. There are no fundamental changes to the information set forth
in the Registration Statement as filed which would require the Company to file a post-effective amendment or further post-effective
amendment to the Registration Statement


 


3. The Company has performed in all material respects all covenants
and agreements to be performed by the Company and has complied in all material respects with all obligations and conditions contained
in this Agreement on or prior to the Put Notice Date and shall continue to perform in all material respects all covenants and agreements
to be performed by the Company through the applicable Put Date. All conditions to the delivery of this Put Notice are satisfied
as of the date hereof.


 


4. The undersigned hereby represents, warrants and covenants that
it has made all filings (“SEC Filings”) required to be made by it pursuant to applicable securities laws (including,
without limitation, all filings required under the Securities Exchange Act of 1934, which include Forms 10-Q, 10-K, 8-K, etc.).
All SEC Filings and other public disclosures made by the Company, including, without limitation, all press releases, analysts’
meetings and calls, etc. (collectively, the “Public Disclosures”), have been reviewed and approved for release by the
Company’s attorneys and, if containing financial information, the Company’s independent certified public accountants.
None of the Company’s Public Disclosures contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.


 


5. The amount of this Put is up to  shares.


 


6. The Pricing Period runs from  until .


 


7. The Suspension Price is $.


 


8. The current number of shares issued and outstanding as of the
Company are: 


 


9. The number of shares currently available for resale pursuant
to the Registration Statement on Form S-1 for the


Equity Line are:.


 


 


SUGARMADE, INC.


 


 


By:


Name:


Title:


 


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