Exhibit 10.1


 


MEMORANDUM
OF UNDERSTANDING


 





 



 


This
Memorandum of Understanding (“MOU”) is made effective June 2, 2021 (the “Effective Date”) by and between Sugarmade,
Inc., a California corporation with an office located at 750 Royal Oaks Drive, Suite 108 Monrovia, CA 91016 (“Company”);
and Zarian Hadley, an individual resident of the State of California (“Applicant”), whose address for purposes of this MOU
shall be 4177 Figueroa St., Los Angeles, CA 90037. Company and Applicant shall be referred to herein individually as a “Party”
and collectively as the “Parties”. In addition, this MOU is witnessed by Edward Manolos (“Finder”), whose address
for purposes of this MOU shall be 446 La Terraza Street South Pasadena, CA 91030, with respect to Finder services provided by Finder
to the Parties to date and compensation to be paid Finder as further provided herein:


 


		1.	PURPOSE
                                            & SCOPE. The purpose of this MOU is to set forth the terms and conditions, scope of work
                                            and responsibilities of the Parties associated with their collaboration on 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 (collectively, the “Licenses”, in the singular “License”,
                                            each as may be awarded to a “Licensed Entity”). Specifically, the Parties will
                                            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 as well as 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”).



 


		2.	BACKGROUND.
                                            Both Parties have determined that each brings sufficient expertise, experience and resources
                                            to accomplish the objectives outlined herein, as follows.



 


		a.	Company
                                            is a publicly traded product and branding/marketing enterprise investing in operations and
                                            technologies with disruptive potential, including without limitation the Company’s
                                            present investments in California licensed cannabis cultivation, distribution and delivery
                                            concerns.



 


		b.	Applicant
                                            has experience in the Southern California cannabis industry and has submitted and maintained
                                            DCR Social Equity Program (“SEP”) Tier 1 and Tier 2 applications and confirmations
                                            which may be applied to the Licenses potentially available hereunder.



 


		3.	COMPANY
                                            RESPONSIBILITIES AND EQUITY ALLOCATION. Company shall provide and pay for miscellaneous legal
                                            and other compliance services related to the DCR/BCC License application and award process
                                            as further provided herein, as well as venture financing for Licensed entities and related
                                            cannabis cultivation, supply or procurement. In exchange for these services, Company shall
                                            be entitled to not less than sixty-six and sixty-six hundredths’ percent (66.66%) equity
                                            interest in each Licensed Entity.



 




    	 



     


    

 


		4.	APPLICANT
                                            RESPONSIBILITIES AND EQUITY ALLOCATION. Applicant shall provide services related to the DCR/BCC
                                            License application and award process hereunder, including without limitation maintaining
                                            his DCR SEP Tier 1 and Tier 2 application status in good standing, and maintaining compliance
                                            with all relevant DCR and BCC regulations. Upon the award of a License to any entity applicant
                                            as provided herein, Applicant shall be offered a position in that Licensed Entity, and shall
                                            be provided voting and profit distribution rights equal to his ownership percentage in such
                                            Licensed Entity, which shall be not less than thirty-three and thirty-four hundredths percent
                                            (33.34%).



 


APPLICANT
shall also execute, on behalf of the licensing entity a licensing and intellectual property royalty agreement for the use of Company
intellectual property (“Company IP”).


 


		5.	DEFINITIVE
                                            AGREEMENTS. This MOU is intended to and shall be implemented by more 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 more
                                            definitive documents referred to herein as the “Definitive Agreements”). For
                                            example, and not by way of limitation, the Definitive Agreements will include the LLC operating
                                            agreement, Intellectual Property Licensing agreement, and management agreements for each
                                            prospective Licensed Entity. Accordingly, this MOU shall be binding on the Parties, but they
                                            acknowledge and agree that the Definitive Agreements shall further define their rights and
                                            obligations regarding related License applications, License awards, and operation of Licensed
                                            Entities, and such Definitive Agreements may materially modify the terms and conditions herein.



 


		6.	FUNDING;
                                            COSTS. The Parties shall each be solely responsible for any and all costs associated with
                                            their responsibilities under this MOU as described above. Each Party shall bear legal and
                                            financial responsibility for the actions of its respective employees, officers, agents, representatives
                                            and contractors until otherwise allocated under related Definitive Agreements, including
                                            without limitation operating or management agreements for Licensed Entities.



 


		7.	INCENTIVE
                                            PAYMENT SCHEDULE. Payments shall be made by Company to Applicant or Finder as follows.



 


	Event	 	Payment	 	Receiving
    Party (or Finder); comments
	Execution
    of Definitive Agreements and submission of each a License application	 	$50,000.00*1	 	Applicant
	DCR
    approval of License application	 	$75,000.00*	 	Applicant
	BCC approval of License application	 	$75,000.00*	 	Applicant
	License award	 	$50,000.00**2	 	Finder fee
	TOTAL	 	$250,000.00 (per License)	 	Applicant; Finder



 


 






1
* Payments made to Applicant shall be made against Applicant’s equity share of future profit distributions by Licensed entities.
Company shall have sole responsibility for accounting and payment of future profit distributions.


2
** Payment shall be made in two installments. One half to be paid upon execution of this agreement and submission the retail delivery
application and one half to be paid upon issuances of the license by the BCC.


 




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		8.	INDEMNIFICATION.
                                            Each Party agrees to indemnify, defend and hold harmless the other to the fullest extent
                                            permitted by law from and against any and all demands, claims, actions, liabilities, losses,
                                            damages, and costs, including reasonable attorney’s fees, arising out of or resulting
                                            from the indemnifying Party’s misrepresentations, acts or omissions related to its
                                            breach or performance of this MOU, and each Party shall bear its proportionate cost of any
                                            damages attributable to the fault of such Party, its officers, agents, employees and contractors.
                                            It is the intention of the Parties that, where fault is determined to have been contributory,
                                            principles of comparative fault will be applied.



 


		9.	INSURANCE.
                                            Each Party, at its sole cost and expense, shall carry insurance or self-insure to cover its
                                            activities in connection with this MOU until the execution of Definitive Agreements regarding
                                            the insurance to be carried by each Licensed Entity in accordance with applicable law. The
                                            Parties acknowledge and agree that each Licensed Entity may be required to obtain, keep in
                                            force and maintain, insurance or equivalent programs of self- insurance, for general liability,
                                            workers compensation and business automobile liability adequate to cover potential liabilities.



 


		10.	CONFIDENTIALITY.
                                            Under this MOU the Parties and Finder may exchange trade secrets, intellectual property,
                                            technical, business and marketing plans, prospective supplier/customer information and License
                                            application information and data as are reasonably required for each to perform their obligations
                                            hereunder. Each Party and Finder mutually agrees to keep in confidence and to use the same
                                            degree of care as it uses with respect to its own proprietary information to prevent disclosure
                                            to third parties of all such trade secrets, technical information and/or confidential business
                                            information received from a Party or Finder under this MOU (collectively “Confidential
                                            Information”). Unless otherwise agreed by the Parties and Finder, the confidentiality
                                            obligations herein shall survive termination of this MOU and shall extend in perpetuity.
                                            These restrictions of confidentiality above shall not apply to any information which:



 


		a.	is
                                            in the public domain at the time of the disclosure or subsequently becomes in the public
                                            domain without any act or omission by the receiving Party, or Finder;



 


		b.	can
                                            be shown by the receiving Party or Finder to be already in its possession; or



 


		c.	is
                                            received by a Party to this MOU from a third party under no obligation of confidentiality
                                            to the other Party to this MOU.



  




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In
the event disclosure of Confidential Information is compelled by judicial or other official process, including without limitation the
License application process, the Parties and Finder will cooperate on any and all measures available to limit such disclosures, including
without limitation applications for protective orders or other protections provided by applicable law.


 


		11.	RETURN
                                            OF INFORMATION. In the event that the Parties are unsuccessful in completing any of the Definitive
                                            Agreements or receiving any or all of the Licenses contemplated by this MOU, each Party and
                                            Finder will, at its own expense, promptly return all copies of any Confidential Information
                                            to the producing Party upon request, except for that portion of the information which consists
                                            of derivative information, which will be destroyed and in the case of information stored
                                            in electronic form, it will be erased to the maximum extent practically possible. To the
                                            extent that data or electronic records containing information are retained by the receiving
                                            Party or Finder as data or records for the purposes of backup, recovery, contingency planning
                                            or business continuity planning or are otherwise not accessible in the ordinary course of
                                            business, such data or records, to the extent not otherwise permanently deleted or overwritten
                                            in the ordinary course of business, will not be accessed except as required for backup, recovery,
                                            contingency planning or business continuity purposes and, if restored or otherwise becoming
                                            accessible, will be permanently deleted forthwith. Notwithstanding the return or destruction
                                            of the information, the Parties and Finder shall continue to be bound by the confidentiality
                                            and other obligations under this MOU.



 


		12.	TERM.
                                            This MOU shall expire in whole or in part (i) on the date that the Parties enter into one
                                            or more specific Definitive Agreements governing the obligations herein (for example and
                                            not by way of limitation, upon execution of a licensing agreement with Company or an LLC
                                            operating agreement for a Licensed Entity granting the equity shares recited herein); or
                                            (ii) upon the Parties’ failure to receive any or all the Licenses sought hereunder.
                                            The rights and obligations of the Parties contained in the Confidentiality sections 10 and
                                            11 of this MOU shall continue in effect notwithstanding the termination of this MOU.



 


		13.	DISPUTE
                                            RESOLUTION.



 


		a.	Dispute
                                            Resolution. In the event a dispute arises, the parties shall attempt in good faith to resolve
                                            any dispute arising out of or relating to this Agreement, including without limitation the
                                            determination of the scope or applicability of this Agreement to arbitrate (each, a “Dispute”),
                                            promptly by negotiation between the signatories who have authority to settle the controversy.
                                            Any party may give the other party written notice of any Dispute not resolved in the normal
                                            course of business. Within fifteen (15) days after delivery of the written notice, the receiving
                                            party shall submit to the other a written response. The notice and response shall include
                                            with reasonable particularity (i) a statement of each party’s position and a summary
                                            of arguments supporting that position, and (ii) the name and title of the executive who will
                                            represent that party and of any other person who will accompany the executive. Within thirty
                                            (30) days after delivery of the written notice, the executives of both parties shall meet
                                            at a mutually acceptable time and place. Unless otherwise agreed in writing by the negotiating
                                            parties, the above-described negotiation shall end at the close of the first meeting of executives
                                            described above (“First Meeting”). Such closure shall not preclude continuing
                                            or later negotiations, if desired.



 




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		b.	Arbitration.
                                            If the parties do not agree on a written resolution of a Dispute pursuant to the procedures
                                            set forth in this section, Section 13, by the end of the First Meeting, then, except as otherwise
                                            provided in this Agreement, any Dispute shall be submitted to binding arbitration in Los
                                            Angeles County, California by a single arbitrator mutually chosen by the parties in writing,
                                            who shall be a retired judge or litigator with ten (10) years or more of experience with
                                            claims similar to the Dispute (provided, that lack of experience with claims involving the
                                            cannabis industry shall not be a cause for disqualification). If the parties cannot agree
                                            on an arbitrator, JAMS shall provide a list of six (6) candidates, and each party shall take
                                            turns striking candidates (beginning with the party who received the notice of arbitration)
                                            until there is a single arbitrator. The costs of the arbitration, including any JAMS administration
                                            fee, the arbitrator’s fee, and costs for the use of facilities during the hearings,
                                            shall be borne equally by the parties to the arbitration; provided that all costs and expenses
                                            of the dispute, including arbitrator fees and reasonable attorneys’ fees and costs
                                            incurred, shall be awarded to the prevailing or most prevailing party as determined by the
                                            arbitrator. The arbitrator shall not have any power to alter, amend, modify or change any
                                            of the terms of this Agreement nor to grant any remedy which is either prohibited by the
                                            terms of this Agreement, or not available in a court of law. The arbitrator shall render
                                            a written opinion not later than thirty (30) days after conclusion of the arbitration proceedings
                                            setting forth a determination of award, if any, and the basis for awarding (or not awarding)
                                            the relief sought by the parties, including findings of fact and conclusions of law. If JAMS
                                            refuses to arbitrate a Dispute, the parties shall cooperate in good faith to find an alternative
                                            arbitrator reasonably acceptable to the parties in writing. An arbitrator exceeds his or
                                            her powers by voiding or refusing to enforce any contracts or arbitration agreements between
                                            Parties based solely on the cannabis related nature of the contract.



 


		c.	Irreparable
                                            Harm. Notwithstanding anything to the contrary in Section 13 if either Party in its sole
                                            judgment, acting reasonably, believes that any such dispute could cause it irreparable harm,
                                            such Party (a) will be entitled to seek equitable relief in order to avoid such irreparable
                                            harm and (b) will not be required to follow the procedures set forth in this Section 13.



 


		14.	GENERAL
                                            PROVISIONS.



 


		a.	Governing
                                            Law and Venue.This MOU shall be governed and interpreted in accordance with the laws of the
                                            State of California excepting its rules regarding choice or conflicts of law. Any dispute
                                            regarding the terms of the conditions of this MOU shall be resolved in the County of Los
                                            Angeles, State of California.



 


		b.	Amendments.
                                            This MOU may only be amended or modified by a mutually executed written instrument between
                                            the Parties, including without limitation a Definitive Agreement.



 


		c.	Entire
                                            Agreement. This MOU represents the entire agreement between the Parties as of the Effective
                                            Date and supersedes all prior negotiations, representations and agreements, whether written
                                            or oral between the Parties; provided, it is expressly subject to further definition and
                                            implementation via the Definitive Agreements.



 


		d.	Severability.
                                            Should any portion of this MOU be judicially determined to be illegal or unenforceable, the
                                            remainder of the MOU shall continue in full force and effect, and either Party may renegotiate
                                            the terms affected by the severance.



 




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IN
WITNESS WHEREOF the parties have each caused this MOU to be executed and delivered by a duly authorized representative as of the Effective
Date.


 


	SUGARMADE,
    INC. (COMPANY)	 	 	 
	 	 	 	 
	/s/ Jimmy Chan	 	6/3/2021	 
	Jimmy
    Chan, CEO	 	Date	 
	 	 	 	 
	APPLICANT	 	 	 
	 	 	 	 
	/s/ Zarian Hadley	 	6/6/2021	 
	Zarian
    Hadley	 	Date	 
	 	 	 	 
	FINDER	 	 	 
	 	 	 	 
	/s/ Edward Manolos	 	6/3/2021	 
	Edward
    Manolos	 	Date	 


 




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