CHINA JO-JO DRUGSTORES, INC. (NASDAQ:CJJD) Files An 8-K Entry into a Material Definitive Agreement

CHINA JO-JO DRUGSTORES, INC. (NASDAQ:CJJD) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01

Entry into a Material Definitive Agreement.

On January 3, 2017, China Jo-Jo Drugstores, Inc. (the Company)
entered into a Securities Purchase Agreement (the Purchase
) with CareRetail Holdings Limited, an exempt
company incorporated under the laws of the Cayman Islands (the
Investor) to which the Company agreed to sell to the
Investor, and the Investor agreed to purchase from the Company,
through a private placement, an aggregate of 4,840,000 shares
(the Shares) of the common stock, par value $0.001 per
share, of the Company (Common Stock), at a purchase price
of $2.20 per share, for aggregate gross proceeds to the Company
of $10,648,000 (the Private Placement). The Shares are
restricted shares and cannot be resold without an effective
registration statement or a valid exemption.

The Private Placement is expected to close (the Closing)
on or about January 6, 2017, subject to satisfaction of customary
closing conditions, the Companys receipt of the approval from the
NASDAQ Stock Market regarding the listing of the Shares on the
NASDAQ Stock Exchange and the entry into a joint venture
agreement as described below. The Company intends to use the
proceeds from the Private Placement for working capital and
general corporate purposes. As a result of the Private Placement,
upon and as of the Closing, the Investor will own approximately
19.2% of the Companys issued and outstanding shares of Common
Stock, or 18.0% on a fully-diluted basis.

Concurrently to the entry into the Purchase Agreement, the
Company entered into an Investor Rights Agreement (the
IRA) with the Investor, Mr. Lei Liu, Ms. Li Qi (Mr. Liu
and Ms. Qi are collectively referred to as the Founder
) and certain other parties. to the IRA, the Investor
shall be entitled to appoint one director to the Companys board
of directors. In no event can the Investor have the right to
designate such a director if it holds less than 5% of the total
outstanding shares of the Company. The Investor also has certain
consent rights over actions such as, without limitation, change
of control transactions, issuances of preferred stock, amendments
to the charter or bylaws of the Company, the incurrence of
indebtedness over $2 million and certain material asset purchases
and dispositions. The Investor shall have the demand registration
rights, piggy-back registration rights and Form S-3/F-3
registration rights over the Shares, as customary in such types
of transactions, exercisable six months after the Closing. The
Investor shall, to the IRA, also has first refusal and tag-along
rights over the sale of Common Stock by the Founder Parties and
the preemptive rights on the Companys future issuance of
securities (with certain customary exceptions such as equity
grants to the Companys employees, directors, consultants and
other service providers) until the Investor holds less than 50%
of the Shares and such holding is less than 10% of the total
issued and outstanding shares of Common Stock. The Investor shall
not transfer its Shares to a competitor of the Company without
the prior written consent of the Founder Parties.

On or prior to the Closing, the Company shall direct Hangzhou
Jiuzhou Grand Pharmacy Chain Co., Ltd., a company organized under
the laws of the Peoples Republic of China, to enter into a joint
venture agreement with the Investors designated entity.

The foregoing descriptions of the Purchase Agreement and the IRA
do not purport to be complete and are qualified in their entirety
by reference to the Purchase Agreement and the IRA which are
attached as Exhibit 10.1 and Exhibit 10.2, respectively, to this
Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description
10.1 Securities Purchase Agreement dated January 3, 2017
10.2 Investor Rights Agreement dated January 3, 2017


China Jo-Jo Drugstores, Inc. is a retailer and distributor of pharmaceutical and other healthcare products found in a retail pharmacy in the People’s Republic of China. The Company’s segments include retail drugstores, online pharmacy, drug wholesale and herb farming. The retail drugstores segment sells prescription and over-the-counter (OTC) medicines, traditional Chinese medicine (TCM), dietary supplement, medical devices and sundry items to retail customers. Its online pharmacy segment sells OTC drugs, dietary supplement, medical devices and sundry items to customers through Alibaba’s Tmall and its own platform all over China. The drug wholesale segment supplies its own retail drugstores with prescription and OTC medicines, TCM, dietary supplement, medical devices and sundry items, and also sells them to other drug vendors and hospitals. Its herb farming segment cultivates selected herbs for sales to other drug vendors. It is also involved in online sales and clinic services.


CHINA JO-JO DRUGSTORES, INC. (NASDAQ:CJJD) closed its last trading session up +0.09 at 1.85 with 53,818 shares trading hands.

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