ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Agreement
and Plan of Merger
On
May 14, 2021, China Jo-Jo Drugstores, Inc., a Nevada corporation (the “Company”) and China Jo-Jo Drugstores Holdings,
Inc., an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of the Company (“CJJD
Cayman”) entered into a definitive agreement and plan of merger (the “Merger Agreement”) related to a proposed
merger transaction. The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will
merge with and into CJJD Cayman (the “Redomicile Merger”), with CJJD Cayman surviving and changing its name to China
Jo-Jo Drugstores, Inc. Following the Redomicile Merger, CJJD Cayman, together with its subsidiaries, will own and continue to conduct
the Company’s business in substantially the same manner as is currently being conducted by the Company and its subsidiaries.
Subject
to the terms and conditions of the Merger Agreement, upon completion of the Redomicile Merger, each share of common stock of the Company
issued and outstanding immediately prior to the effective time of the Redomicile Merger (the “Effective Time”) will
be converted into the right to receive one ordinary share of CJJD Cayman.
At
the Effective Time, all existing equity compensation plans of the Company, as may be amended, will be adopted and assumed by CJJD Cayman.
Each outstanding option and other equity award issued under the equity compensation plans of the Company for the purchase or receipt
of, or payment based on, each share of the Company’s common stock will represent the right to purchase or receive, or receive payment
based on, one ordinary share in the capital of CJJD Cayman on substantially the same terms. In addition, as part of the Redomicile Merger,
CJJD Cayman has agreed to assume all of the Company’s rights and obligations of any warrant, convertible debentures or other convertible
securities that may convert in the Company’s common stock. All rights to purchase or receive, or receive payment based on, each
share of the Company’s common stock arising under the Company’s warrants, convertible debentures or other convertible securities
will entitle the holder thereof to purchase or receive, or receive payment based on, as applicable, one ordinary share of CJJD Cayman.
At
the Effective Time, the obligations of the Company under or with respect to every plan, trust, program and benefit then in effect or
administered by the Company for the benefit of the directors, officers and employees of the Company or any of its subsidiaries will become
the obligations of CJJD Cayman and will be implemented and administered in the same manner and without interruption until the same are
amended or otherwise altered or terminated.
Additionally,
at the Effective Time, CJJD Cayman will adopt and assume the obligations of the Company under or with respect to certain contracts or
agreements as described in the Merger Agreement. The contracts and agreements will become the obligations of CJJD Cayman and will be
performed in the same manner and without interruption until the same are amended or otherwise lawfully altered or terminated.
The
Merger Agreement contains customary closing conditions, including, among others, approval of the Redomicile Merger by the Company’s
stockholders, the effectiveness of the registration statement on Form F-4 filed by CJJD Cayman related to the Redomicile Merger and receipt
of required regulatory approvals.
The
consent of the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote is required to approve
and adopt the Merger Agreement. The Board of Directors of the Company believes that the Redomicile Merger, to be effected by the Merger
Agreement, is advisable and in the best interests of the Company and its stockholders.
Pursuant
to the Merger Agreement, the Board of Directors of the Company may exercise its discretion to terminate the Merger Agreement, and therefore
abandon the Redomicile Merger, at any time prior to the Effective Time, including after the adoption of the Merger Agreement by the Company’s
stockholders.
Immediately
prior to the Effective Time, the directors and officers of the Company at such time will be elected or appointed as the directors and
officers of CJJD Cayman (to the extent the directors and officers of CJJD Cayman and the Company are not already identical), each such
person to have the same office(s) with CJJD Cayman (and the same class designations and committee memberships in the case of directors)
as he or she held with the Company, with the directors to serve until the earlier of the next meeting of CJJD Cayman stockholders at
which an election of directors is required for the class to which they have been elected or until their successors are elected or appointed
(or their earlier death, disability or retirement).
The
Merger Agreement has been approved by the Boards of Directors of each of the Company and CJJD Cayman. The Completion of the Redomicile
Merger is subject to the required approval of the Company’s stockholders, requisite regulatory approvals, the effectiveness of
the registration statement on Form F-4 filed by CJJD Cayman related to the Redomicile Merger, and other customary closing conditions.
The
foregoing summary of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the complete
text of the Merger Agreement, which is attached hereto as Exhibit 2.1, and is incorporated herein by reference.
Additional
information about the Redomicile Merger and where to find it
In
connection with the proposed Redomicile Merger, CJJD Cayman filed with the United States Securities and Exchange Commission (the “SEC”)
a registration statement on Form F-4 to register the ordinary shares of CJJD Cayman to be issued to the stockholders of the Company.
The registration statement will include a proxy statement/prospectus of the Company which will be sent to the stockholders of the Company
seeking their approval of the Redomicile Merger and related matters in addition to other matters. In addition, the Company may file other
relevant documents concerning the proposed Redomicile Merger with the SEC.
This
communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote
or approval. Stockholders of the Company are urged to read the registration statement on Form F-4 and the proxy statement/prospectus
included within the registration statement and any other relevant documents to be filed with the SEC in connection with the proposed
Redomicile Merger because they will contain important information about the Company, CJJD Cayman and the proposed transaction.