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Date of report (Date of earliest event reported):
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May 17, 2012 (May 15, 2012)
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CHINA JO-JO DRUGSTORES, INC.
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(Exact name of registrant as specified in its charter)
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Nevada
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001-34711
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98-0557852
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(State or other jurisdiction
of incorporation)
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(Commission File No.)
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(IRS Employer
Identification No.)
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Room 507-513, 5th Floor, A Building, Meidu Plaza
Gongshu District, Hangzhou, Zhejiang Province
People’s Republic of China
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
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+86 (571) 88077078
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N/A
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(Former name or former address, if changed since last report)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement.
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Pursuant to the Consulting Services Agreement, Jiuxin Management has the exclusive right to provide Jiuying Pharmacy with general business operation services, including advice and strategic planning, as well as consulting services related to their current and future operations (the “Services”). Additionally, Jiuxin Management owns the intellectual property rights developed or discovered through research and development, in the course of providing the Services, or derived from the provision of the Services. Jiuying Pharmacy pays Jiuxin Management a quarterly consulting service fees equal to 51% of its profits for such quarter. This agreement is in effect from May 15, 2012 to the last date of Jiuying Pharmacy’s term in operation, as may be extended. Jiuxin Management may also terminate the agreement if Jiuying Pharmacy breaches the terms of the agreement, or without cause.
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Pursuant to the Operating Agreement, Jiuxin Management agrees to guarantee Jiuying Pharmacy’s performance of its agreements with any third party. In return, the Owners must appoint designees of Jiuxin Management to Jiuying Pharmacy’s board of directors and senior management. In addition, Jiuying Pharmacy agrees to pledge its accounts receivable and all of its assets to Jiuxin Management. Moreover, Jiuying Pharmacy will not engage in any transactions that could materially affect its respective assets, liabilities, rights or operations without Jiuxin Management’s prior consent. Jiuying Pharmacy will also abide by corporate policies set by Jiuxin Management with respect to its daily operations, financial management and employment issues. The term of this agreement is from May 15, 2012 until the maximum period of time permitted under PRC law. On the other hand, Jiuying Pharmacy cannot terminate this agreement.
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Pursuant to the Voting Rights Proxy Agreement, the Owners irrevocably grant Jiuxin Management and its designee with the right to exercise their voting and other ownership rights in Jiuying Pharmacy, as well as the rights to sell or transfer all or any of their equity interests in Jiuying Pharmacy. This agreement may be terminated by mutual consent of the parties or upon 30-day written notice from Jiuxin Management.
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Pursuant to the Equity Pledge Agreement, the Owners have pledged all of their equity interests in Jiuying Pharmacy to Jiuxin Management in order to guarantee Jiuying Pharmacy’s performance of its obligations under the Consulting Services Agreement. If Jiuying Pharmacy or the Owners breach their obligations to Jiuxin Management, Jiuxin Management, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The Owners have also agreed that upon occurrence of any event of default, Jiuxin Management shall be granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the Owners to carry out the security provisions of this agreement and take any action and execute any instrument that Jiuxin Management may deem necessary or advisable to accomplish the purposes of this agreement. The Owners agree not to dispose of the pledged equity interests or take any actions that would prejudice Jiuxin Management’s interests. This agreement will expire two (2) years after Jiuying Pharmacy’s obligations under the Consulting Services Agreements have been fulfilled.
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Pursuant to the Option Agreement, the Owners irrevocably grant Jiuxin Management or its designee an exclusive option to purchase, to the extent permitted under PRC law, all or part of their equity interests in Jiuying Pharmacy for the cost of their initial contributions to the registered capital or the minimum amount of consideration permitted by applicable PRC law. Jiuxin Management or its designee has sole discretion to decide when to exercise the option, whether in part or in full. The term of this agreement is from May 15, 2012 to the maximum period of time permitted by law.
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Item 8.01
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Other Events.
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Item 9.01
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Financial Statement and Exhibits.
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(d)
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EXHIBITS
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Exhibit Number
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Description
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10.1
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Consulting Services Agreement dated May 15, 2012.
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10.2
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Operating Agreement dated May 15, 2012.
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10.3
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Voting Rights Proxy Agreement dated May 15, 2012.
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10.4
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Equity Pledge Agreement dated May 15, 2012.
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10.5
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Option Agreement dated May 15, 2012.
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99.1
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Press release dated May 17, 2012.
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CHINA JO-JO DRUGSTORES, INC.
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Date:
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May 17, 2012
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(Registrant)
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By:
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/s/ Ming Zhao
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Ming Zhao
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Chief Financial Officer
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