Document:

Exhibit 10.1

 

CONFIDENTIAL

EXECUTION VERSION

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of January 3, 2017, between China Jo-Jo Drugstores,
Inc., a Nevada corporation (the “Company”), and CareRetail Holdings Limited, an exempt company incorporated
under the laws of the Cayman Islands (the “Purchaser” ).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section
1.1 Definitions. In addition to the terms defined elsewhere
in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.

 

“Action”
shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board
of Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.

 

“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later
than the 20th Trading Day following the date hereof, unless the parties agree in writing to extend the Closing Date.

 

“Commission”
means the United States Securities and Exchange Commission.

 

     

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

“Common
Stock” means the common stock of the Company, par value US$0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries 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
Nevada Counsel” means Holley Driggs Walch Fine Wray, a law firm based in the State of Nevada with attorneys licensed
in the State of Nevada.

 

“Company
N.Y. Counsel” means Pryor Cashman LLP, with offices located at 7 Times Square, New York, New York 10036.

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).

 

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

 

“Existing
Preemptive Right” means the preemptive right granted to each of Sabby Volatility Warrant Master Fund, Ltd. and Sabby
Healthcare Master Fund, Ltd. pursuant to Section 4.11 of the Securities Purchase Agreement dated as of July 19, 2015 entered into
by and among the Company, Sabby Volatility Warrant Master Fund, Ltd. and Sabby Healthcare Master Fund, Ltd.

 

“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Governmental
Authority” means any international, domestic or foreign federal, state or local governmental, regulatory or administrative
authority, department, court, agency or official, including any political subdivision thereof.

 

“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).

 

“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

 

“Investor
Rights Agreement” means the investor rights agreement entered into by and among (i) the Company, (ii) Hangzhou Jiuzhou
Grand Pharmacy Chain Co., Ltd. (杭州九洲大药房连锁有限公司),
(iii) Lei Liu, (iv) Li Qi, (v) Super Marvel Limited and (vi) the Purchaser, on the date hereof.

 

“Joint
Venture Agreements” means, collectively, the agreements substantially in the forms of Exhibit A-1 and Exhibit A-2 attached
hereto.

 

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CONFIDENTIAL

EXECUTION VERSION

 

“knowledge”
of any Person that is not an individual means the knowledge of such Person’s directors and officers, and the knowledge that
each such person would have reasonably obtained after making due and appropriate inquiry.

 

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

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).

 

“Onshore
Restructuring” means the transfer of all operations and assets of Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (杭州九洲大药房连锁有限公司),
a variable interest entity controlled by the Company, to the Company and/or its designated wholly-owned Subsidiaries, subject
to and conditional upon such terms as agreed to by the Company and the Purchaser.

 

“Per
Share Purchase Price” equals US$2.20, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Preferred
Stock” means the preferred stock of the Company, par value US$0.001 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h). “Securities” means the Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

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CONFIDENTIAL

EXECUTION VERSION

 

“Shares”
means the shares of Common Stock issued or issuable to the Purchaser pursuant to this Agreement.

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription
Amount” means, as to the Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified below
the Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

 

“Subsidiary”
means, with respect to the Company, any entity of which a majority of the outstanding equity securities or other ownership interests
representing a majority of the outstanding equity interests or otherwise having voting power to elect a majority of the board
of directors or other Persons performing similar functions are at the time directly or indirectly owned by the Company. For the
avoidance of doubt, the Subsidiaries of the Company shall include any variable interest entity over which the Company or any of
its Subsidiaries effects control pursuant to contractual arrangements and which is consolidated with the Company in accordance
with generally accepted accounting principles applicable to the Company.

 

“Trading
Day” means a day on which the principal Trading Market is open for trading.

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

 

“Transaction
Documents” means this Agreement, the Investor Rights Agreement, the Joint Venture Agreements, and any other documents
or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, and any successor
transfer agent of the Company.

 

ARTICLE
II

PURCHASE AND SALE

 

Section
2.1 Closing. On the Closing Date, upon the terms and
subject to the conditions set forth herein, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to
purchase, an aggregate of US$10,648,000 of Common Stock, with a per Common Stock purchase price equal to the Per Share Purchase
Price. The Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to the Purchaser’s
Subscription Amount as set forth on the signature page hereto executed by the Purchaser, and the Company shall deliver to the
Purchaser its Shares pursuant to Section 2.2(a), and the Company and the Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing shall occur remotely via exchange of documents and signatures.

 

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CONFIDENTIAL

EXECUTION VERSION

 

Section
2.2 Deliveries.

 

(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the
following:

 

(i)
this Agreement duly executed by the Company;

 

(ii)
a legal opinion letter of Company N.Y. Counsel and a legal opinion letter of Company Nevada Counsel, in each case addressed to
the Purchaser and in such form that is satisfactory to the Purchaser;

 

(iii)
a notarized true copy of the complete stockholder ledger of the stockholders of the Company as of the Closing Date, reflecting
the issuance of the Shares to, and the ownership of the Shares by, the Purchaser;

 

(iv) an original stock certificate representing the Shares duly executed on behalf of the Company and registered in the name of the
Purchaser;

 

(v)
certified true copies of the resolutions of the Board of Directors and any other required corporate approvals of the Company
duly authorizing and approving this Agreement and the other Transaction Documents and the transactions contemplated hereunder
and thereunder;

 

(vi)
certified true copies of all approvals, consents and waivers necessary for the consummation of the transactions contemplated
hereby or by any other Transaction Document, including without limitation all consents and waivers, each in such form that is
reasonably satisfactory to the Purchaser, of all stockholders of the Company having preemptive rights consenting to the
transactions contemplated hereby and by any other Transaction Document and fully waiving the preemptive rights of such
stockholders with respect to the issuance and sale of the Shares, as well as authorizations, approvals or permits, if any, of
any Governmental Authority; and

 

(vii)
a copy of each of the Joint Venture Agreements, duly executed and delivered by the Subsidiaries that is a party
thereto.

 

(b)
On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the
following:

 

(i)
this Agreement duly executed by the Purchaser; and

 

(ii)
the Purchaser’s Subscription Amount by wire transfer to the bank account of the Company, which account information the Company
shall have provided to the Purchaser no later than five (5) Business Days prior to the Closing Date.

 

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CONFIDENTIAL

EXECUTION VERSION

 

Section
2.3 Closing Conditions.

 

(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met,
any or all of which may be waived in whole or in part by the Company to the extent permitted by applicable law:

 

(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchaser contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)
all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and

 

(iii) 
the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)
The obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met,
any or all of which may be waived in whole or in part by the Purchaser to the extent permitted by applicable law:

 

(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;

 

(iii) 
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv) 
there shall have been no Material Adverse Effect with respect to the Company or any Subsidiary since the date hereof;

 

(v)
the Company shall have obtained any and all approvals, consents and waivers necessary for the consummation of the transactions
contemplated hereby or by any other Transaction Document, including without limitation all consents and waivers, each in such
form that is reasonably satisfactory to the Purchaser, of all stockholders of the Company having preemptive rights consenting
to the transactions contemplated hereby and by any other Transaction Document and fully waiving the preemptive rights of such
stockholders with respect to the issuance and sale of the Shares, as well as all authorizations, approvals or permits, if any,
of any Governmental Authority;

 

(vi) 
the parties to the Joint Venture Agreements shall have obtained any and all approvals, consents and waivers necessary for the
consummation of the transactions contemplated by the Joint Venture Agreements or have provided evidence of the submission of all
requisite materials to the Governmental Authority for the purpose of obtaining its authorizations, approvals or permits, if any,
of such Governmental Authority; and

 

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CONFIDENTIAL

EXECUTION VERSION

 

(vii)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES

 

Section
3.1 Representations and Warranties of the Company. The
Company hereby makes the following representations and warranties to the Purchaser:

 

(a) Subsidiaries.
All of the Subsidiaries are set forth on Schedule A hereto. The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.

 

(b)  Organization
and Qualification. The Company and each of the Subsidiaries 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. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the
Subsidiaries 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: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
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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CONFIDENTIAL

EXECUTION VERSION

 

(c) 
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each of 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 action
on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including, without limitation, federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e) 
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than: (i) the filing of certain current reports on Form 8-K with the Commission in respect of the transactions contemplated hereunder
and (ii) application(s) to each applicable Trading Market for the listing of the Shares for trading thereon in the time and manner
required thereby (the items listed in clauses (i) and (ii) above collectively, the “Required Approvals”) and
(iii) such consents and waivers of the stockholders of the Company regarding the Existing Preemptive Rights.

 

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CONFIDENTIAL

EXECUTION VERSION

 

(f) 
Issuance of the Securities; No Registration. 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 nonassessable and free and clear of
all Liens. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement. It is not necessary in connection with the issuance and sale of the Shares to register the Shares
under the Securities Act or to qualify or register the Shares under applicable U.S. state securities laws. None of the Company,
its Subsidiaries or their respective Affiliates or any Person acting on its or their behalf have engaged in any “directed
selling efforts” within the meaning of Rule 903 of Regulation S under the Securities Act (“Regulation S”)
or any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act with
respect to the Shares.

 

(g)
Capitalization. The capitalization of the Company is as set forth on Schedule B hereto. The Company has not issued any
capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange Act. Except for the Existing Preemptive Right, 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 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, Preferred Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, Preferred
Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate
the Company or any Subsidiary to issue shares of Common Stock, Preferred Stock or other securities to any Person (other than the
Purchaser) 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 outstanding securities or instruments of the Company or any Subsidiary
that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company
does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the 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.

 

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CONFIDENTIAL

EXECUTION VERSION

 

(h)
SEC Reports; Financial Statements. The Company has filed or furnished, as applicable, all reports, schedules, forms, statements
and other documents required to be filed or furnished by the Company under the Securities Act and the Exchange Act, including,
without limitation, pursuant to Section 13(a) or 15(d) thereof, (all of the foregoing materials filed with or furnished to the
Commission, including all exhibits thereto, financial statements, notes and schedules thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing or furnishing and has filed or furnished, as applicable, any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed or furnished, 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 the light of the circumstances under which they were made, not misleading. The financial statements of
the Company included or incorporated by reference in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial
statements (including without limitation any related notes thereto) have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for 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.

 

(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included or incorporated by reference the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior
to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability,
fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect
to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least three Trading Days prior to the date that this representation is
made.

 

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CONFIDENTIAL

EXECUTION VERSION

 

(j)
Litigation. Other than as disclosed in the SEC Reports, there is no material action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary
or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an “Action”). Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current
or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement
or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any material indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it
or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and
labor matters, except in each case as disclosed in the SEC Reports or immaterial defaults or violations.

 

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(m) 
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws
relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder
(“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable
Environmental Laws tic induct their respective businesses; and (iii) are in compliance with all terms and conditions of any such
permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

(n)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary and material to conduct their respective businesses
as described in the SEC Reports, except as disclosed in the SEC Reports (“Material Permits”), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(o)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance
with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company
and the Subsidiaries are in compliance.

 

(p)
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or required for use in connection with their respective businesses as described in
the SEC Reports, except as disclosed in the SEC Reports or where the failure to do so could not reasonably be expected to result
in a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company
nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned, within three (3) years from the date of this Agreement.
Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within
the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(q)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries
are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription
Amount. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

 

(r)
Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of
the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is
presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner,
in each case in excess of US$120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) equity grants under any stock option plan of the Company.

 

(s) 
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The
Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company
and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or
is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

    	 	13	 

     

    

 

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(t)
Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees
or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be
due in connection with the transactions contemplated by the Transaction Documents.

 

(u)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.

 

(v)
Registration Rights. Other than the Purchaser, no Person has any right to cause the Company or any Subsidiary to effect
the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(w) 
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 Commission is contemplating
terminating such registration. The Company has not received notice from any Trading 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
Trading 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. The Common Stock is currently eligible for electronic transfer through the
Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the
Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

 

(x)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of
the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.

 

    	 	14	 

     

    

 

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(y)
Disclosure. 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 Purchaser 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 Purchaser will rely on the foregoing representation in effecting transactions in securities
of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated hereby, is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company preceding
the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit 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 and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(z) 
No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would (i) cause
this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the Company are listed or designated or (ii) require
registration of the issuance of any of the Shares under the Securities Act, whether through integration with prior offerings or
otherwise.

 

(aa)
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend
to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule C hereto sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company
or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of US$50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of US$50,000 due under leases required
to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

    	 	15	 

     

    

  

CONFIDENTIAL

EXECUTION VERSION

 

(bb)
Tax Status. Except as disclosed in the SEC Reports, or for matter(s) that are not, individually or in the aggregate, material,
the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim.

 

(cc)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material
respect any provision of FCPA.

 

(dd) 
Accountants. The Company’s accounting firm is set forth on Schedule D hereto. To the knowledge and belief of the
Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express
its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending
March 31, 2017.

 

(ee)
Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and
any advice given by the Purchaser or any of its representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further
represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

    	 	16	 

     

    

 

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(ff) 
Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding, it is understood and acknowledged by the Company that: (i) the Purchaser has not been asked by the Company to
agree, nor has the Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open
market or other transactions by the Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities; (iii) the Purchaser, and counter-parties in “derivative” transactions
to which the Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock,
and (iv) the Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in
any “derivative” transaction. The Company further understands and acknowledges that (y) the Purchaser may engage in
hedging activities at various times during the period that the Securities are outstanding, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute
a breach of any of the Transaction Documents.

 

(gg)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company.

 

(hh)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(ii)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.

 

(jj)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

    	 	17	 

     

    

 

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(kk) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in
compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

Section
3.2 Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless
as of a specific date therein):

 

(a) Organization;
Authority. The Purchaser is an entity duly incorporated or formed, validly existing and in good standing under the laws
of the jurisdiction of its 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 otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by the Purchaser of
the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a
party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(b) Understandings
or Arrangements. The Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this
representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance with
applicable federal and state securities laws).

 

(c) Experience
of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities and has so evaluated the merits and risks of such investment. Such Purchaser is able
to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of
such investment.

 

(d) 
Regulation S Compliance.

 

(i)
The Purchaser is not a U.S. Person as such term is defined under Rule 902 of Regulation S (“U.S. Person”). The Purchaser
is at the time of the offer and execution of this Agreement, domiciled outside the United States.

 

(ii)
The Purchaser agrees that all offers and sales of the Shares from the date hereof and through the expiration of any restricted
period set forth in Rule 903 of Regulation S (as the same may be amended from time to time hereafter) shall not be made to U.S.
Persons or for the account or benefit of U.S. Persons and shall otherwise be made in compliance with the provisions of Regulation
S and any other applicable provisions of the Securities Act.

 

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EXECUTION VERSION

 

(iii) 
The Purchaser shall not engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act.
This Agreement and the transactions contemplated herein are not part of a plan or scheme to evade the registration provisions
of the Securities Act, and the Shares are being acquired for investment purposes by the Purchaser.

 

(iv) 
The Purchaser acknowledges that the Company will refuse to register any transfer of any of the Shares not made in accordance with
the provisions of Regulation S, pursuant to an effective registration statement under the Securities Act or pursuant to an available
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

 

(v)
Purchaser acknowledges and agrees that the certificate(s) representing the Shares will bear a legend substantially as follows:

 

THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. THE SHARES HAVE BEEN
ISSUED IN AN OFFSHORE TRANSACTION BY CHINA JO-JO DRUGSTORES, INC., IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT PROVIDED BY REGULATION S. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, EITHER
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH REGULATION
S, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE SATISFACTION OF CHINA JO-JO DRUGSTORES, INC.
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

(e) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the
Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, directly or
indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period
commencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any other
Person representing the Company setting forth the material pricing terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of the Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other
portions of the Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this
Agreement. Other than to other Persons party to this Agreement or to the Purchaser’s representatives, including,
without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the
Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the
future.

 

    	 	19	 

     

    

 

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EXECUTION VERSION

 

The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect the Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE
IV

OTHER AGREEMENTS OF THE PARTIES

 

Section
4.1 Further Assurances; Joint Venture. The Company and
the Purchaser shall use their reasonable best efforts to take all actions necessary or advisable and do all things (including
to execute and deliver documents and other papers) necessary or advisable to promptly consummate the transactions contemplated
by this Agreement and the other Transaction Documents, including without limitation the formation of the joint venture pursuant
to the terms of the Joint Venture Agreements. The Company covenants to the Purchaser that the Company shall, at its own cost,
promptly (i) obtain all Required Approvals and (ii) procure the completion of the Onshore Restructuring in no event later than
the first anniversary of the Closing Date.

 

Section
4.2 Furnishing of Information. Until the time that the
Purchaser owns no Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even
if the Company is not then subject to the reporting requirements of the Exchange Act.

 

Section
4.3 Integration. The Company shall not, and shall cause
its Affiliates and any Person acting on its or their behalf not to, directly or indirectly, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would (i) be integrated
with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing
of such subsequent transaction or (ii) require registration of the issuance of any of the Shares under the Securities Act whether
through integration with prior offerings or otherwise.

 

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EXECUTION VERSION

 

Section
4.4 Securities Laws Disclosure; Publicity. Each party
hereto agrees to consult with the other parties hereto before issuing or making, and to provide each other reasonable prior opportunity
to review, comment upon and concur with, and use all reasonable efforts to agree on, any press release, public statement or disclosure
with respect to this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby. Notwithstanding
anything herein to the contrary, the Company agrees not to issue any such press release, public statement or disclosure in respect
of the Purchaser or its Affiliates without the prior written consent of the Purchaser.

 

Section
4.5 Shareholder Rights Plan. No claim will be made or
enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or
similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed
to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or
under any other agreement between the Company and the Purchaser.

 

Section
4.6 Non-Public Information. Except with respect to the
material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information
that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto the Purchaser
shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The
Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. To the extent that the Company delivers any material, non-public information to the Purchaser without the Purchaser’s
consent, the Company hereby covenants and agrees that the Purchaser shall not have any duty of confidentiality to the Company,
any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company,
any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis
of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. The Company understands
and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

Section
4.7 Use of Proceeds. The Company shall use the net proceeds
from the sale of the Securities hereunder only for working capital and general corporate purposes, and shall not use such proceeds:
(a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course
of the Company’s business and prior practices), (b) for the redemption of any Common Stock, Preferred Stock or Common Stock
Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

 

    	 	21	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Section
4.8 Indemnification of Purchaser. Subject to the provisions
of this Section 4.8, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or
any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur
as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company
in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity,
or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party,
with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of
such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities
laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If
any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right
to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between
the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this
Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall
not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is directly attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section
4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills
are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar
right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law or
equity.

 

Section
4.9 Reservation of Common Stock. As of the date hereof,
the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement.

 

    	 	22	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Section
4.10   Listing of Common Stock. The Company hereby agrees to take all actions necessary
and to use best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently
listed, and concurrently with the execution of this Agreement, the Company shall, at its own cost, apply to list or quote all
of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading Market, no later than
such date as reasonably requested by the Purchaser. The Company further agrees, if the Company applies to have the Common Stock
traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action
as is necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company
will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the
Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository
Trust Company or such other established clearing corporation in connection with such electronic transfer.

 

Section
4.11   Capital Changes. Until the one year anniversary of the Closing Date, the
Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written
consent of the Purchaser except for the purposes of maintaining its compliance with Section 4.10 herein.

 

Section
4.12   Notification of Certain Matters. From and after the date of this Agreement
until the earlier to occur of the Closing Date or termination of this Agreement in accordance with its terms, the Company shall
give prompt notice to the Purchaser of (i) the discovery of any fact or circumstance, or the occurrence, or non-occurrence, of
any event which would reasonably be expected to cause any condition to the obligation of any party to effect the transactions
contemplated hereunder or by the other Transaction Documents not to be satisfied or the satisfaction of those conditions being
materially delayed, and (ii) any failure of the Company to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or the other Transaction Documents which would reasonably be expected to cause any
condition to the obligation of any party to effect the transactions contemplated hereunder or thereunder not to be satisfied or
the satisfaction of those conditions being materially delayed. From and after the date of this Agreement until the earlier to
occur of the Closing Date or termination of this Agreement in accordance with its terms, the Company shall give prompt notice
to the Purchaser of any written notice or other written communication from any Governmental Authority in connection with the transactions
contemplated hereunder or by the other Transaction Documents.

 

ARTICLE
V

MISCELLANEOUS

 

Section
5.1 Termination. In the event that the Closing shall
not have occurred within twenty (20) Trading Days after the date hereof, then this Agreement may be terminated by the Purchaser;
provided, however, that (a) the right to terminate this Agreement under this Section 5.1 shall not be available
to the Purchaser if the failure of the transactions contemplated by this Agreement to have been consummated by the Closing Date
is the result of the Purchaser’s failure to fulfill any condition or requirement set forth in this Agreement; and (b) no
such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

    	 	23	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Section
5.2 Fees and Expenses. Except as expressly set forth
in the Transaction Documents 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 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 Purchaser.

 

Section
5.3 Entire Agreement. The Transaction Documents, together
with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof
and thereof 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, exhibits and schedules.

 

Section
5.4 Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the
earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail attachment at
the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
set forth on the signature pages attached hereto.

 

Section
5.5 Amendments; Waivers. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company
and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
Any amendment effected in accordance with this Section 5.5 shall be binding upon the Purchaser and holder of Securities and the
Company.

 

Section
5.6 Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

Section
5.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger). The Purchaser
may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities,
provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of
the Transaction Documents that apply to the “Purchaser.”

 

    	 	24	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Section
5.8 No Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.

 

Section
5.9 Governing Law; Dispute Resolution. All questions
concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York. Any dispute, controversy or claim arising out of or relating
to this Agreement, including, but not limited to, any question regarding the breach, termination or invalidity thereof shall be
finally resolved by arbitration in Hong Kong in accordance with the administered rules (the “Rules”) of the
Hong Kong International Arbitration Centre (the “HKIAC”) in force at the time of commencement of the arbitration,
which Rules are deemed to be incorporated by reference into this Section. The number of arbitrators shall be three and shall be
selected in accordance with the Rules. All selections shall be made within thirty (30) days after the selecting party gives or
receives, as the case may be, the demand for arbitration. The seat of the arbitration shall be in Hong Kong and the language to
be used shall be English. Any arbitration award shall be (i) in writing and shall contain the reasons for the decision, (ii) final
and binding on the parties hereto and (iii) enforceable in any court of competent jurisdiction, and the parties hereto agree to
be bound thereby and to act accordingly.

 

Section
5.10   Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.

 

Section
5.11   Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’ format data
file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf’ signature page were an original thereof.

 

Section
5.12   Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

Section
5.13   Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever the Purchaser exercises
a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations
within the periods therein provided, then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions
and rights.

 

    	 	25	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Section
5.14   Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for
a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary
indemnity) associated with the issuance of such replacement Securities.

 

Section
5.15   Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance
under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason
of any breach of obligations contained in this Agreement and hereby agree to waive and not to assert in any Action for specific
performance of any such obligation the defense that a remedy at law would be adequate.

 

Section
5.16   Payment Set Aside. To the extent that the Company makes a payment or payments
to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

 

Section
5.17   Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate
until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

Section
5.18   Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may
be taken or such right may be exercised on the next succeeding Business Day.

 

Section
5.19   Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of
the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common
Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

(Signature
Pages Follow)

 

    	 	26	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

	CHINA
    JO-JO DRUGSTORES, INC.	 	Address
    for Notice:
	 	 	 	 
	By:	/s/
    Lei Liu	 	Hangzhou
    Jiuzhou Grand Pharmacy Chain Co., Ltd.
	 	Name:
    Lei Liu	 	(杭州九洲大药房连锁有限公司)
	 	Title:
    Chief Executive Officer	 	 1st
Floor, Yuzheng Plaza, No. 76,

	 	 	 	Yuhuangshan
    Road, Hangzhou, 

Zhejiang Province, Zip Code: 310002
	 	 	 	People’s
Republic of China

Attention: Lei Liu, c/o: Ming Zhao

	 	 	 	Facsimile:
        0571-88219579

        E-mail:hz.liulei@163.com;
        

frank.zhao@jojodrugstores.com

 

With
a copy to (which shall not constitute notice):

 

Pryor
Cashman LLP

7 Times Square, New York, NY 10036

Attention: Elizabeth Fei Chen, Esq.

Facsimile: 212-798-6366

E-mail: echen@pryorcashman.com

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	 	27	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

PURCHASER
SIGNATURE PAGE TO CJJD SECURITIES PURCHASE AGREEMENT

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

Name
of Purchaser:CareRetail Holdings Limited

 

Signature
of Authorized Signatory of Purchaser:/s/ Dai Feng

 

Name
of Authorized Signatory:Dai Feng

 

Title
of Authorized Signatory:Director

 

Email
Address of Authorized Signatory:dai@carecapitalpartners.com

 

Facsimile
Number of Authorized Signatory:+852-2179 1900

 

Address
for Notice to Purchaser:

 

c/o
Suite 1608, One Exchange Square,

8
Connaught Place, Central, Hong Kong 

Attention:
Dai Feng

Fax:
+852-2179 1900

Email: 
dai@carecapitalpartners.com

 

With
copies to (which shall not constitute notice):

 

Legal@hillhousecap.com;
and

 

Skadden,
Arps, Slate, Meagher & Flom LLP

42/F, Edinburgh Tower, The Landmark

15 Queen’s Road Central

Hong Kong

Attention: Z. Julie Gao

Facsimile: +852.3910.4863

E-mail: julie.gao@skadden.com

 

Address
for Delivery of Securities to Purchaser (if not same as address for notice):

 

Subscription
Amount:US$10,648,000

 

Shares:4,840,000

 

    	 	28	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Schedule
A

List of Subsidiaries

 

	1.	Renovation
    Investment (Hong Kong) Co., Ltd. (“Renovation”) is a Hong Kong company and is wholly-owned by the Company.
	 	 
	2.	Hangzhou
    Jiutong Medical Technology Co., Ltd. (“Jiutong Medical”) is a Chinese company and is wholly-owned by Renovation.
	 	 
	3.	Zhejiang
    Shouantang Pharmaceutical Technology Co., Ltd. (“Shouantang Technology”) is a Chinese company and is wholly-owned
    by Renovation.
	 	 
	4.	Zhejiang
    Jiuxin Investment Management Co., Ltd. (“Jiuxin Management”) is a Chinese company and is wholly-owned by Renovation.
	 	 
	5.	Hangzhou
    Jiuxin Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”) is a Chinese company and is wholly-owned
    by Jiuxin Management.
	 	 
	6.	Hangzhou
    Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”) is a Chinese company controlled by Jiuxin Management
    through contractual arrangements.
	 	 
	7.	Hangzhou
    Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) is (“Jiuzhou Clinic”) a Chinese
    partnership controlled by Jiuxin Management through contractual arrangements.
	 	 
	8.	Hangzhou
    Jiuzhou Medical & Public Health Service Co., Ltd. (“Jiuzhou Service”) is a Chinese company controlled by Jiuxin
    Management through contractual arrangements.
	 	 
	9.	Zhejiang
    Jiuxin Medicine Co., Ltd. (“Jiuxin Medicine”) is a Chinese company and is wholly-owned by Jiuzhou Pharmacy.
	 	 
	10.	Shouantang
    Bio-technology Co., Ltd. (“Shouantang Bio”) is a Chinese company and is wholly-owned by Jiuzhou Pharmacy.
	 	 
	11.	Hangzhou
    Jiuyi Medical Technology Co. Ltd. (“Jiuyi Technology”) is a Chinese company and is wholly owned by Renovation.

 

    	 	S-A-1	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Schedule
B

Capitalization

 

	Capitalization	 	 	 
	CJJD Capitalization as of December 31, 2016 prior to the Closing	 	 	 	 
	 	 	 	 	 
	Common Stock 	 	 	Shares	 
	Total Authorized Common Shares 	 	 	250,000,000	 
	Par Value       	 	$	0.001	 
	Total Issued and Outstanding Common Shares, not on a fully diluted basis	 	 	20,374,678	 
	 	 	 	 	 
	Options	 	 	 	 
	Total Issued and Outstanding Options	 	 	967,000	 
	 	 	 	 	 
	Warrants	 	 	 	 
	Total Issued and Outstanding Warrants	 	 	672,000	 
	 	 	 	 	 
	 On a fully diluted basis 	 	 	22,013,678	 

 

    	 	S-B-1	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Schedule
C

Indebtedness

 

The
Company has credit facilities with Hangzhou United Bank (“HUB”), Bank of Hangzhou (“BOH”), Industrial
and Commercial Bank of China (“ICBC”) and Zhejiang Tailong Commercial Bank (“ZTCB”) that provided working
capital in the form of the following bank acceptance notes at September 30, 2016 and March 31, 2016:

 

	 	 	 	 	 	 	Origination	 	 	Maturity	 	 	September 30,	 	 	March 31,	 
	Beneficiary	 	 	Endorser	 	 	date	 	 	date	 	 	2016	 	 	2016	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	04/22/15	 	 	 	04/21/16	 	 	 	-	 	 	 	1,550,550	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	04/29/15	 	 	 	04/28/16	 	 	 	-	 	 	 	3,333,683	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	10/09/15	 	 	 	04/09/16	 	 	 	-	 	 	 	1,708,706	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	11/02/15	 	 	 	05/02/16	 	 	 	-	 	 	 	2,553,756	 
		Jiuzhou Pharmacy(2)	 	 	 	BOH	 	 	 	12/27/15	 	 	 	05/27/16	 	 	 	-	 	 	 	1,592,415	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	12/28/15	 	 	 	06/28/16	 	 	 	-	 	 	 	2,741,372	 
		Jiuzhou Pharmacy(2)	 	 	 	BOH	 	 	 	12/29/15	 	 	 	06/29/16	 	 	 	-	 	 	 	58,913	 
		Jiuzhou Pharmacy(3)	 	 	 	ICBC	 	 	 	02/03/16	 	 	 	08/03/16	 	 	 	-	 	 	 	1,307,114	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	03/07/16	 	 	 	09/07/16	 	 	 	-	 	 	 	2,749,125	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	04/05/16	 	 	 	10/05/16	 	 	 	1,280,317	 	 	 	-	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	05/06/16	 	 	 	11/06/16	 	 	 	1,601,737	 	 	 	-	 
		Jiuzhou Pharmacy(2)	 	 	 	BOH	 	 	 	06/06/16	 	 	 	12/06/16	 	 	 	2,128,394	 	 	 	-	 
		Jiuzhou Pharmacy(4)	 	 	 	ZTCB	 	 	 	06/24/16	 	 	 	12/24/16	 	 	 	599,680	 	 	 	-	 
		Jiuzhou Pharmacy(2)	 	 	 	BOH	 	 	 	06/27/16	 	 	 	12/27/16	 	 	 	749,600	 	 	 	-	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	06/29/16	 	 	 	12/29/16	 	 	 	1,247,334	 	 	 	-	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	08/05/16	 	 	 	02/05/17	 	 	 	1,462,141	 	 	 	-	 
		Jiuzhou Pharmacy(1)	 	 	 	HUB	 	 	 	08/29/16	 	 	 	02/28/17	 	 	 	2,604,963	 	 	 	-	 
			 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
		Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	11,674,166	 	 	$	17,595,634	 

 

	(1)	As
    of March 31, 2016, the Company had $14,696,105 (RMB94,779,950) of notes payable from HUB. The Company is required to hold
    restricted cash of $11,278,693 (RMB72,739,950) with HUB as collateral against these bank notes. As of September 30, 2016,
    the Company had $8,196,492 (RMB 54,672,441) of notes payable from HUB. The Company is required to hold restricted cash of
    $2,561,032 (RMB17,082,660) with HUB as collateral against these bank notes.
	(2)	As
    of March 31, 2016, the Company had $1,592,415 (RMB10,270,000) of notes payable from BOH. The land use right of the farmland
    in Lin’An, Hangzhou is pledged as collateral for these bank acceptance notes (see Note 12). The Company is required
    to hold restricted cash of $480,671 (RMB3,100,000) with BOH as collateral against these bank notes. As of September 30, 2016,
    the Company had $2,877,994 (RMB 19,196,865) of notes payable from BOH. The land use right of the farmland in Lin’An,
    Hangzhou is pledged as collateral for these bank acceptance notes (see Note 12). The Company is required to hold restricted
    cash of $1,738,837 (RMB 11,598,432) with BOH as collateral against these bank notes.
	(3)	As
    of March 31, 2016, the Company had $1,307,114 (RMB8,430,000) of notes payable from ICBC, with restricted cash of $928,051
    (RMB5,985,300) held at the bank. As of September 30, 2016, the Company had no notes payable from ICBC.
	(4)	As
    of September 30, 2016, the Company had $599,680 (RMB4,000,000) of notes payable from ZTCB, with restricted cash of $299,840
    (RMB2,000,000) held at the bank.

 

    	 	S-C-1	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

As
of September 30, 2016, the Company had a credit line of approximately $14.02 million in the aggregate from HUB, BOH, ICBC
and ZTCB. By putting up the restricted cash of $4.30 million deposited in the banks, the total credit line was $18.32 million.
As of September 30, 2016, the Company had approximately $11.67 million of bank notes payable and approximately $6.65 million bank
credit line was still available for further borrowing. The bank notes are also secured by buildings owned by the Company’s
major shareholders, land use rights of Jiutong Medical, a shop of Jiuzhou Pharmacy, and guaranteed by Jiuxin Medical.

 

Amounts
payable to related parties are summarized as follows:

 

	 	 	September 30,

2016	 	 	March 31,

2016	 
	Due to cofounders (1):	 	$	576,818	 	 	$	576,818	 
	Due to a director and CEO (2):	 	 	1,694,972	 	 	 	1,622,957	 
	Total	 	$	2,271,790	 	 	$	2,199,775	 

 

	(1)	As
    of September 30, 2016 and March 31, 2016, amount due to cofounders represents contributions from the Owners to Jiuxin Management
    to enable Jiuxin Management to meet its approved PRC registered capital requirements.
	(2)	Due
    to foreign exchange restrictions, the Company’s director and CEO, Mr. Lei Liu personally lent U.S. dollars to the Company
    to facilitate its payments of expenses in the United States.

 

As
of September 30, 2016 and March 31, 2016, notes payable totaling $4,943,875 and $5,302,881 were secured by the personal properties
of certain of the Company’s shareholders, respectively.

 

The
Company leases from Mr. Lei Liu a retail space which expires in September 2016. Rent expense amounted to $4,499 and $23,940 for
the three months ended September 30, 2016 and 2015, respectively.  Rent expense amounted to $9,092 and $48,510 for the
six months ended September 30, 2016 and 2015, respectively. The amounts were not paid to Mr. Liu as of September 30, 2016.

 

    	 	S-C-2	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Schedule
D

Accountant

 

BDO
CHINA SHU LUN PAN Certified Public Accountants LLP

 

    	 	S-D-1	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Exhibit
A-1

 

Joint Venture Operation Agreement

 

    	 	E-A-1-1	 

     

    

 

CONFIDENTIAL

EXECUTION VERSION

 

Exhibit
A-2

 

Joint Venture Charter

 

 

E-A-2-1Exhibit
10.2

 

CONFIDENTIAL

 

Execution
Version

 

 

 

 

 

 

 

 

 

 

INVESTOR
RIGHTS AGREEMENT

dated as of January 3, 2017

among

China Jo-Jo Drugstores, Inc.,

CARERETAIL HOLDINGS LIMITED

and

CERTAIN OTHER PARTIES NAMED HEREIN

 

 

 

 

 

 

 

 

 

 

     

     

    

 

TABLE
OF CONTENTS

 

	Article
    1 

    

    DEFINITIONS
	 
	Section
    1.01  Definitions	1
	Section
    1.02  Other Definitional and Interpretative Provisions	5
	 	 
	Article
    2
	 
	CORPORATE
    GOVERNANCE
	 
	Section
    2.01  Board Representation	6
	Section
    2.02  Investor Observer	7
	Section
    2.03  Expenses and Indemnification	7
	Section
    2.04  No Inconsistent Amendments	7
	Section
    2.05  Actions Requiring Consent by the Investor	7
	Section
    2.06  Action Requiring Consent by the Founder Parties	8
	 	 
	Article
    3
	 
	RIGHT
    OF FIRST REFUSAL; TAG-ALONG RIGHTS; PREEMPTIVE RIGHTS; REGISTRATION RIGHTS
	 
	Section
    3.01  General Transfer Restriction	9
	Section
    3.02  Right of First Refusal	9
	Section
    3.03  Tag-Along Rights	10
	Section
    3.04  Preemptive Rights	11
	Section
    3.05  Termination of Rights	12
	Section
    3.06  Registration Rights	12
	 	 
	Article
    4
	 
	CERTAIN
    COVENANTS AND AGREEMENTS
	 
	Section
    4.01  Additional Major Shareholders	13
	Section
    4.02  Conflicting Agreements	13
	Section
    4.03  Performance of Company Obligations	13
	Section
    4.04  Information Rights	13
	Section
    4.05  Mirror Share Ownership in the VIE	13
	 	 

 

     ii

     

    

 

	Article
    5
	 
	MISCELLANEOUS
	 
	Section
    5.01  Binding Effect; Assignability; Benefit	14
	Section
    5.02  Notices	14
	Section
    5.03  Severability	16
	Section
    5.04  Entire Agreement	16
	Section
    5.05  Counterparts	16
	Section
    5.06  Descriptive Headings	16
	Section
    5.07  Amendment; Termination	16
	Section
    5.08  Governing Law	16
	Section
    5.09  Arbitration	16
	Section
    5.10  Expenses	16
	Section
    5.11  Further Assurances	16

 

Schedules
and Exhibits

 

	Schedule
    1 REGISTRATION RIGHTS	S-1
	Exhibit
    A FORM OF JOINDER TO INVESTOR RIGHTS AGREEMENT	E-1

 

     iii

     

    

 

INVESTOR
RIGHTS AGREEMENT

 

INVESTOR
RIGHTS AGREEMENT, dated as of January 3, 2017 (this “Agreement”), among (1) China Jo-Jo Drugstores, Inc., a
company incorporated under the laws of the State of Nevada (the “Company”), (2) Hangzhou Jiuzhou Grand Pharmacy
Chain Co., Ltd. (杭州九洲大药房连锁有限公司), a
company organized under the laws of the PRC (“Jiuzhou Grand Pharmacy” or the “VIE”), (3)
Lei Liu (“Mr. Liu”), (4) Li Qi (“Ms. Qi,” and together with Mr. Liu, the “Founders”),
(5) Super Marvel Limited, a company incorporated under the laws of the British Virgin Islands (“Founders SPV,”
and together with the Founders, the “Founder Parties”) and (6) CareRetail Holdings Limited, an exempt company
organized under the laws of the Cayman Islands (the “Investor”).

 

W
I T N E S S E T H:

 

WHEREAS,
pursuant to the Securities Purchase Agreement, dated as of January 3, 2017 (the “Investment Agreement”), between
the Company and the Investor, the Investor has agreed to acquire certain Company Securities (as defined below); and

 

WHEREAS,
in connection with the consummation of the transactions contemplated by the Investment Agreement, the parties hereto desire to
enter into this Agreement to govern certain of their rights, duties and obligations after consummation of the transactions contemplated
by the Investment Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:

 

Article
1

DEFINITIONS

 

Section
1.01  Definitions. (a) As used in this Agreement, the following terms have the
following meanings:

 

“Adverse
Person” means such Persons that is either (i) a Person listed (during any of the three completed calendar years prior
to the date of determination) in China Medicine Retail Company Top 100 (中国医药零售企业100强排名)
published by the Ministry of Commerce of the PRC or (ii) a Person listed (during any of the three completed calendar years prior
to the date of determination) in China Medicine Store Chains Comprehensive Capabilities Top 100 (中国连锁药店综合实力百强榜)
published by the 21st Century Medicine Store (21世纪药店), as well as any Associate
or Subsidiary of such Persons in clauses (i) or (ii),

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control
with such Person. For purposes of this definition, “control” when used with respect to any Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise, and the terms “controlling” and “controlled” have correlative
meanings.

 

    	 	1	 

     

    

 

“Aggregate
Ownership” means, with respect to any Person, the total number of Common Stock Equivalents which are, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, held by such Person (including any of its Permitted
Transferees) as of the date of such calculation.

 

“Aggregate
Ownership Percentage” means, with respect to the Investor, at the time of determination, the quotient (expressed as
a percentage) obtained by dividing (i) the Aggregate Ownership held by the Investor by (ii) the Aggregate Ownership of all holders
of Common Stock.

 

“Applicable
Law” means, with respect to any Person, any transnational, domestic or foreign federal, state or local law (statutory,
common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree,
ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon
or applicable to such Person, as amended unless expressly specified otherwise.

 

“Articles
and Bylaws” means the Articles of Incorporation and Bylaws of the Company in effect from time to time.

 

“Associate”
means, with respect to any Person, any other Person (together with any individual, firm, corporation, partnership, trust and incorporated
or unincorporated association controlling it, controlled by it or under the same control with it) which, directly or indirectly,
through voting securities or contractual arrangements or otherwise, (i) holds or has the right to acquire 25% or more of the capital
stock, either in terms of economic interests or voting power, of the Person specified; (ii) is the single largest shareholder
of the Person specified, or (iii) has the power to appoint or nominate or designate at least one-third of the members of the board
of directors (or other equivalent authority, as applicable) or one-third or more of the senior executive officers of the Person
specified.

 

“Board”
means the board of directors of the Company.

 

“Business
Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York, Hong Kong
or the PRC are authorized or required by Applicable Law to close.

 

“Change
of Control” means the occurrence of (i) the consummation of any transaction or series of related transactions (including,
without limitation, any merger, consolidation or other business combination), the result of which is that any Person or group
becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Company’s
Common Stock Equivalents or voting rights; (ii) the consummation of any transaction or series of related transactions (including,
without limitation, any merger, consolidation or other business combination), the result of which is that any Person or group
acquires the power to appoint and/or remove all or the majority of the members the Board, in each case whether obtained directly
or indirectly, and whether obtained by ownership of capital, the possession of voting rights, contract or otherwise; (iii) any
sale or disposition by the Company or any of its Subsidiaries, directly or indirectly, of all or substantially all of its assets;
or (iv) an exclusive licensing of all or substantially all of the intellectual property of the Company or any of its Subsidiaries
to any third party.

 

    	 	2	 

     

    

 

“Closing”
means the consummation of the transactions contemplated by the Investment Agreement.

 

“Common
Stock” means common stock, par value US$0.001 per share, in the share capital of the Company and any other security
into which such Common Stock may hereafter be converted or changed.

 

“Common
Stock Equivalents” means (i) with respect to Common Stock, the number of Common Stock and (ii) with respect to any Company
Securities that are convertible into or exchangeable for Common Stock, the number of Common Stock issuable in respect of the conversion
or exchange of such securities into Common Stock.

 

“Company
Securities” means (i) Common Stock, (ii) Preferred Stock, (iii) securities convertible into or exchangeable for Common
Stock or Preferred Stock, (iv) any options, warrants or other rights to acquire Common Stock or Preferred Stock and (v) any depository
receipts or similar instruments issued in respect of Common Stock or Preferred Stock.

 

“Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended, and any rules and regulations promulgated thereunder.

 

“Governmental
Authority” means any international, domestic or foreign federal, state or local governmental, regulatory or administrative
authority, department, court, agency or official, including any political subdivision thereof.

 

“Hong
Kong” means the Hong Kong Special Administrative Region of the PRC.

 

“Investor
Nominee Shareholder” means such individual(s) as designated by the Investor to hold equity interests in the VIE.

 

“Onshore
Restructuring” means the transfer of all operations and assets of Jiuzhou Grand Pharmacy, a variable interest entity
controlled by the Company, to the Company and/or its designated wholly-owned Subsidiaries, subject to and conditional upon such
terms as agreed to by the Company and the Purchaser.

 

“Person”
means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization,
including a Government Entity.

 

“PRC”
means the People’s Republic of China, but, for the purposes of this Agreement, shall not include Hong Kong, the Macau Special
Administrative Region or Taiwan.

 

“Preferred
Stock” means preferred stock, par value US$0.001 per share, in the share capital of the Company and any other security
into which such Preferred Stock may hereafter be converted or changed.

 

“Securities”
means any shares, stocks, debentures, funds, bonds, notes or any rights, warrants, options or interests in respect of any of the
foregoing or any other derivatives or instruments having similar economic effect.

 

“Securities
Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

    	 	3	 

     

    

 

“Shareholder”
means at any time, any Person who is a record holder of Company Securities.

 

“Subsidiary”
means, with respect to a Person, any entity of which a majority of the outstanding equity securities or other ownership interests
representing a majority of the outstanding equity interests or otherwise having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person.
For the avoidance of doubt, the Subsidiaries of the Company shall include any variable interest entity over which the Company
or any of its Subsidiaries effects control pursuant to contractual arrangements and which is consolidated with the Company in
accordance with generally accepted accounting principles applicable to the Company.

 

“Tag-Along
Portion” means, for any Tag-Along Sale, the number of Company Securities (rounded to the nearest whole number) equal
to (i) the Aggregate Ownership of the Investor immediately prior to such Tag-Along Sale multiplied by (ii) a fraction the
numerator of which is the number of Company Securities proposed to be sold by the Tag-Along Seller in such Tag-Along Sale and
the denominator of which is the Aggregate Ownership of the Tag-Along Seller immediately prior to such Tag-Along Sale.

 

“Third
Party” means, with respect to a proposed Transfer of Company Securities by a Person, any Person who is not a Permitted
Transferee of such Person.

 

“Transaction
Documents” mean this Agreement, the Investment Agreement, and each of the other agreements and documents entered into
or delivered by the parties hereto in connection with the transactions contemplated by the Investment Agreement.

 

“Transfer”
means, with respect to any Company Securities, (i) when used as a verb, to, directly or indirectly, sell, assign, dispose of,
exchange, pledge, encumber, hypothecate or otherwise transfer such Company Securities or any participation or interest therein,
whether directly or indirectly (including pursuant to a derivative transaction or a transfer of ownership or beneficial interests
in a direct or indirect holder of such Company Securities), or agree or commit to do any of the foregoing and (ii) when used as
a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of
such Company Securities or any participation or interest therein or any agreement or commitment to do any of the foregoing.

 

“U.S.”
means the United States of America.

 

(b) 
Each of the following terms is defined in the Section set forth opposite such term:

  

	Term	Section
	Agreement	Preamble
	Cause	Section
    2.01(d)
	Company	Preamble
	Exercise
    Notice	Section
    3.04(b)
	Founder
    Parties	Preamble,
    Preamble
	Founders	Preamble
	Founders
    SPV	Preamble

 

    	 	4	 

     

    

 

	HKIAC	Section
    5.09
	Investment
    Agreement	Recitals
	Investor	Preamble
	Investor
    Director	Section
    2.01(a)
	Investor
    Observer	Section
    2.02
	Issuance
    Notice	Section
    3.04(a)
	Mr.
    Liu	Preamble,
    Preamble
	Ms.
    Qi	Preamble
	Offer	Section
    3.02(a)
	Offer
    Notice	Section
    3.02(a)
	Offer
    Period	Section
    3.02(b)
	Offer
    Price	Section
    3.02(a)
	Offered
    Securities	Section
    3.02(a)
	Offeree	Section
    3.02(a)
	Permitted
    Transferee	Section
    4.01
	ROFR
    Offer	Section
    3.02(b)
	ROFR
    Seller	Section
    3.02(a)
	Rules	Section
    5.09
	Subject
    Securities	Section
    3.04(a)
	Subscriber	Section
    3.04(a)
	Tag-Along
    Notice	Section
    3.03(a)
	Tag-Along
    Response Notice	Section
    3.03(b)
	Tag-Along
    Right	Section
    3.03(b)
	Tag-Along
    Sale	Section
    3.03(a)
	Tag-Along
    Seller	Section
    3.03(a)

 

Section
1.02  Other Definitional and Interpretative Provisions. The words “hereof”,
“herein” and “hereunder” and words of like import used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Clauses,
Annexes, Exhibits and Schedules are to Articles, Sections, Clauses, Exhibits and Schedules of this Agreement unless otherwise
specified. All Annexes, Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined
therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether
or not they are in fact followed by those words or words of like import. “Writing”, “written”
and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible
form. References to any Person include the successors and permitted assigns of that Person. References from or through any date
mean, unless otherwise specified, from and including or through and including, respectively. References to “law”,
“laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law. References
to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated
thereunder. References to “dollars” or “$” shall refer to U.S. dollars. References from
or through any date mean, unless otherwise specified, from and including or through and including, respectively.

 

    	 	5	 

     

    

 

Article
2

CORPORATE GOVERNANCE

 

Section
2.01 Board Representation. (a) The Investor shall be entitled to designate at
least one (1) director to the Board (such director, or such other individual who may be designated by the Investor from time to
time, the “Investor Director”), and the Company shall promptly cause, and the Founder Parties shall promptly
cause and otherwise agree not take any action to prevent, the appointment or election of such Investor Director to the Board,
including, convening a meeting of the Board pursuant to the Articles and Bylaws and appointing such Investor Director to the Board,
and in the case of an election, (i) nominating such individual to be elected as a director as provided herein, (ii) recommending
to the Shareholders the election of such Investor Director to the Board in any meeting of Shareholders to elect directors, (iii)
including such nomination and recommendation regarding such individual in the Company’s notice for any meeting of Shareholders
to elect directors, (iv) if necessary, expanding the size of the Board in order to appoint the Investor Director, and (v) in the
case of the Founder Parties, vote for electing the Investor Director to the Board in any meeting of Shareholders to elect director(s).

 

(b) 
In the event of the death, disability, retirement, removal or resignation of the Investor Director (or any other vacancy created
by removal thereof), the Investor shall have the exclusive right to designate a replacement to fill such vacancy and serve on
the Board, and the Company shall cause the Board to appoint such individual to the Board (who shall, following such appointment,
be the Investor Director for purposes of this Agreement). Each Founder Party shall take any required actions to cause and otherwise
agrees not to take any action to prevent any such appointment.

 

(c) 
At any meeting of the Board or any annual general or other meeting of the Shareholders that may be held from time to time at which
the Investor Director is up for re-appointment to the Board, the Company shall cause the Board to re-appoint the Investor Director
to serve on the Board and shall use best efforts to ensure that the Investor Director is re-appointed by the Shareholders to the
Board pursuant to the terms of the Articles and Bylaws and any Applicable Law, and the Founder Parties shall vote for, and not
take any action to prevent, the re-appointment of such Investor Director to the Board.

 

(d) 
Each of the Founder Parties agrees that, if at any time it is then entitled to vote for the removal of directors from the Board,
it shall not vote, or cause to be voted, or execute proxies or written consents, as the case may be, and the Company agrees that
it shall not take any action, in favor of the removal of the Investor Director unless such removal shall be for Cause. Removal
for “Cause” shall mean removal of a director because of such director’s (i) willful misconduct that is
materially injurious, monetarily or otherwise, to the Company or any of its Subsidiaries, (ii) conviction for, or guilty plea
to, a felony or a crime involving moral turpitude or (iii) abuse of illegal drugs or other controlled substances or habitual intoxication.

 

(e) 
The Investor shall be entitled to nominate and appoint the same or similar proportion of directors to the boards of directors
of Jiuzhou Grand Pharmacy, Zhejiang Jiuxin Medicine Co., Ltd. (浙江九欣医药有限公司)
and all other Subsidiaries (that are material operating entities of the Company) as the Investor is entitled to appoint to the
Board, so far as it is permitted by Applicable Law.

 

    	 	6	 

     

    

 

Section
2.02  Investor Observer. If at any time the Investor Director is not a member
of any committee of the Board (including without limitation, the audit committee, the compensation committee and the nominating
and corporate governance committee), the Investor shall be entitled to appoint the Investor Director as a non-voting observer
to any such committee of the Board (acting in such capacity, the “Investor Observer”). The Investor Observer
shall be entitled to attend all meetings of, observe all deliberations of, and receive copies of materials provided to, any such
committees, provided that such Investor Observer shall have no voting rights with respect to actions taken or elected not
to be taken by any such committees.

 

Section
2.03  Expenses and Indemnification. The Company agrees to reimburse the Investor
Director for all reasonable out-of-pocket expenses incurred in connection with the performance of his or her services as an Investor
Director, including without limitation reasonable out-of-pocket expenses incurred in attending meetings of the Board or any committee
thereof, to the same extent as other members of the Board, and the Company shall indemnify and hold harmless the Investor Director
under indemnification arrangements and director and officer insurance coverage equivalent to such arrangements and insurance coverage
applicable to all non-employee directors of the Company or to which all non-employee directors of the Company are entitled to
receive.

 

Section
2.04  No Inconsistent Amendments. For so long as the Investor has the right to
designate an Investor Director, the Company shall not amend its Articles and Bylaws in any manner (or take any similar action),
and the Founder Parties agree not to take any action, that would adversely affect in any material respect the Investor’s
rights under this ‎Article 2 or the Company’s ability to comply with its obligations under this ‎Article
2.

 

Section
2.05  Actions Requiring Consent by the Investor. Notwithstanding anything in this
Agreement to the contrary, without the prior written approval of the Investor, to the extent permitted by Applicable Law, (x)
the Company shall not take, and shall cause each of its Subsidiaries not to take, any action (including any action by its board
of directors or any committee thereof or any action at a meeting of their shareholders or otherwise) with respect to, (y) each
of the Founder Parties shall not vote any of their Company Securities or execute proxies or written consents, as the case may
be, in favor of (as applicable), and (z) each Founder Party (with respect to ‎(c), ‎(d), ‎Error! Reference source
not found. and (m) below only) shall not take any action with respect to, the entry into, engagement or participation in,
any of the following matters:

 

(a) 
any Change of Control with, involving or to any Adverse Person;

 

(b) 
any authorization, designation or issuance of Preferred Stock, any issuance of Company Securities to any Adverse Person, any issuance
of any equity securities by any Subsidiary of the Company or any sale or transfer of any equity securities of any Subsidiary of
the Company;

 

(c) 
any Transfer (other than Transfers that are open market transactions) of any Company Securities held or beneficially owned by
any Founder Party to an Adverse Person;

 

(d) 
any Transfer of any equity securities held or beneficially owned by the Company or any Founder Party in any Subsidiary of the
Company, directly or indirectly, to an Adverse Person;

 

    	 	7	 

     

    

 

(e) 
any adoption, amendment or repeal of any provision of the articles of incorporation, bylaws, memorandum and articles of association
or other equivalent constitutional document of the Company or any of the Subsidiaries of the Company;

 

(f) 
any purchase or disposition of the business or assets of the Company or of any of the Subsidiaries of the Company in excess of
US$500,000 individually or in the aggregate in a twelve (12)-month period;

 

(g) 
any transaction, in excess of US$500,000 individually or in the aggregate in a twelve (12)-month period, between (A) the Company
or any of the Subsidiaries of the Company and (B) the Company’s or any of its Subsidiaries’ shareholders, directors,
officers, employees, or other insiders, or any Founder, or any of the foregoing Persons’ family members or Affiliates;

 

(h) 
entry into any agreement by the Company, any of the Subsidiaries of the Company (including without limitation the VIE) or any
of the Founder Parties in relation to the Onshore Restructuring;

 

(i)  
declare or pay any dividend on, or make any distributions relating to, any Company Securities or redeem, purchase or acquire for
value any Company Securities, other than purchases, redemptions or other acquisitions of such Company Securities in connection
with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors
or consultants;

 

(j)  
distribute (by way of dividend, share distribution, exchange, redemption, recapitalization or similar transaction) securities
of any entity holding a significant portion of the assets and business of the Company or any of its Subsidiaries, including by
way of spin-off, split-off or other distribution transaction;

 

(k) 
enter into, or permit any Subsidiary of the Company to enter into, any agreement, or any modification or amendment to an existing
agreement, which, in the absence of a default under such agreement, would by its terms prevent the Company from fully performing
its obligations under this Agreement;

 

(l)  
incur any indebtedness in excess of US$2,000,000 individually or in the aggregate in a twelve (12)-month period, except as permitted
under the terms of any credit facility then in place, renewing existing credit facilities in similar terms, or as provided in
the Company’s annual business plan; or

 

(m)   
approve, authorize or enter into any agreement with respect to any of the foregoing.

 

Section
2.06  Action Requiring Consent by the Founder Parties. Notwithstanding anything
in this Agreement to the contrary, without the prior written approval of the Founder Parties, to the extent permitted by Applicable
Law, the Investor shall not Transfer any Company Securities held or beneficially owned by it to an Adverse Person; provided
that the foregoing restriction on Transfer in this Section 2.06 shall not apply to open market transactions.

 

    	 	8	 

     

    

 

Article
3 

 

RIGHT
OF FIRST REFUSAL; TAG-ALONG RIGHTS; PREEMPTIVE RIGHTS; REGISTRATION RIGHTS

 

Section
3.01  General Transfer Restriction. Each Founder Party agrees that it shall not
Transfer any Company Securities (or solicit any offers in respect of any Transfer of any Company Securities), except in compliance
with applicable law and the terms and conditions of this Agreement (including for the avoidance of doubt the provisions of ‎Section
3.02 and ‎Section 3.03). Any attempt to Transfer any Company Securities not in compliance with this Agreement shall
be null and void, and the Company shall not, and shall cause any transfer agent or registrar not to, give any effect in the Company’s
share register or equivalent documents to such attempted Transfer, and no party hereto, including the Company, shall otherwise
recognize any such Transfer, sale or issuance or change in beneficial ownership of the Company. Each Founder Party further agrees
not to circumvent or otherwise avoid the transfer restrictions or intent thereof set forth in this Agreement, whether by holding
any Company Securities indirectly through another Person (including a holding company) or by causing or effecting, directly or
indirectly, the Transfer or issuance of any Company Securities by any such Person (including a holding company), or otherwise.

 

Section
3.02  Right of First Refusal.

 

(a) 
If, any Founder Party receives from or otherwise negotiates with a Third Party an offer to purchase any or all of the Company
Securities owned or held by such Founder Party (an “Offer”) and such Founder Party (the “ROFR Seller”)
intends to pursue the Transfer of such Company Securities to such Third Party, such ROFR Seller shall give notice (an “Offer
Notice”) to the Investor (the “Offeree”), that such ROFR Seller desires to accept the Offer and that
sets forth the number and kind of Company Securities (the “Offered Securities”), the price per share that such
ROFR Seller proposes to be paid for such Offered Securities (the “Offer Price”) and all other material terms
and conditions of the Offer.

 

(b) 
The giving of an Offer Notice to the Offeree shall constitute an offer by such ROFR Seller to Transfer all or any part of the
Offered Securities to the Offeree at the Offer Price and on the other terms set forth in the Offer Notice (the “ROFR
Offer”). Such ROFR Offer shall be irrevocable for twenty (20) Business Days after receipt of such Offer Notice by the
Offeree (“Offer Period”). The Offeree shall have the right to accept such ROFR Offer within the Offer Period
by giving an irrevocable notice of acceptance to such ROFR Seller. If the Offer Notice specifies (i) a form of consideration other
than cash, a cash equivalent or a promissory note, the ROFR Offer may be accepted by the Offeree for a payment, in lieu of such
form of consideration, of cash in an amount equal to the fair market value of such consideration and (ii) a form of consideration
consisting of a promissory note, the promissory note of the Offeree shall be deemed the equivalent of the promissory note specified
in the Offer Notice. If the Offeree fails to notify the ROFR Seller prior to the expiration of the Offer Period, it shall be deemed
to have declined the ROFR Offer.

 

(c) 
If the Offeree elects to purchase any of the Offered Securities, the Offeree shall purchase and pay, by wire transfer of immediately
available funds to an account designated by the ROFR Seller, for all Offered Securities within twenty (20) Business Days after
the date on which all such Offered Securities have been accepted; provided that, if the Transfer of such Offered Securities
is subject to any prior regulatory approval, the time period during which such Transfer may be consummated shall be extended until
the expiration of five (5) Business Days after all such approvals shall have been received, but in no event shall such period
be extended for more than an additional ninety (90) days without the consent of the ROFR Seller.

 

    	 	9	 

     

    

 

(d) 
Upon the earlier to occur of (i) rejection (or deemed rejection) of the ROFR Offer in full by the Offeree and (ii) the failure
to obtain any required consent or regulatory approval for the purchase of the Offered Securities to be purchased by the Offeree
within the time period specified above, the ROFR Seller shall, subject to ‎Section 3.03, have a 60-day period during
which to effect a Transfer to the Third Party making the Offer of any or all of the Offered Securities on substantially the same
or more favorable (as to the ROFR Seller) terms and conditions as were set forth in the Offer Notice at a price not less than
the Offer Price; provided that (i) such Third Party shall have agreed in writing to be bound by the terms of this Agreement
and (ii) the Transfer to such Third Party is not in violation of applicable federal, state or foreign securities laws. If the
ROFR Seller does not consummate the Transfer of the Offered Securities in accordance with the foregoing time limitation, then
the right of the ROFR Seller to Transfer such Offered Securities shall terminate and the ROFR Seller shall again comply with the
procedures set forth in this Section with respect to any proposed Transfer of Company Securities to a Third Party.

 

Section
3.03  Tag-Along Rights.

 

(a) 
If any Founder Party proposes to Transfer any Company Securities in a number that is equal to or exceeds ten percent (10%) of
the Company Securities held by all Founder Parties (the “Tag-Along Seller”, and such transaction, a “Tag-Along
Sale”), the Tag-Along Seller shall provide the Investor with written notice (the “Tag-Along Notice”)
of the number and class of Company Securities proposed to be sold by the Tag-Along Seller, the consideration for which the Transfer
is proposed to be made, and all other material terms and conditions of such proposed Transfer, and shall offer the Investor the
opportunity to participate in such Transfer in accordance with this Section.

 

(b) 
Upon receipt of a Tag-Along Notice, the Investor shall have the right (a “Tag-Along Right”), exercisable by
written notice (a “Tag-Along Response Notice”) given to the Tag-Along Seller within a period of time equal
to the Offer Period, to request that the Tag-Along Seller include in the proposed Transfer up to a number of Company Securities
representing the Investor’s Tag-Along Portion; provided that, in the event such proposed Transfer represents or would
result in a Change of Control, the Investor shall have the right to include all (100%) of its Company Securities in such proposed
Transfer. Each Tag-Along Response Notice shall include wire transfer or other instructions for payment to the Investor of any
consideration for the Company Securities being transferred in such Tag-Along Sale. If at the end of the exercise period, the Investor
shall not have elected to participate in the Tag-Along Sale, the Investor shall be deemed to have waived its Tag-Along Right with
respect to such Tag-Along Sale.

 

(c) 
If the Tag-Along Seller has not completed the Transfer of all Company Securities proposed to be sold by the Tag-Along Seller and
the Investor on the same terms and conditions set forth in the Tag-Along Notice within 90 days of receipt of the Tag-Along Response
Notice, all the restrictions on sale contained in this Agreement or otherwise applicable at such time with respect to such Company
Securities shall continue in effect.

 

    	 	10	 

     

    

 

(d) 
With respect to any Tag-Along Sale in which the Investor has elected to participate, the Investor shall only be required to (i)
make customary representations and warranties with respect to its ownership of the Company Securities being Transferred in the
Tag-Along Sale and its ability to legally convey title thereto (for the avoidance of doubt, the Investor shall not be required
to make any other representations or warranties), (ii) provide an indemnity with respect to the representations and warranties
that are provided by the Investor pursuant to clause ‎(i) above, which indemnity shall be limited to no more than the Investor’s
amount of proceeds actually received by the Investor in the Tag-Along Sale; (iii) make such covenants and enter into such definitive
agreements as are customary for transactions of the nature of the proposed sale, (iv) bear the Investor’s proportionate
share of any escrows, holdbacks, indemnities or adjustments in purchase price related to the indemnities that are provided by
the Investor pursuant to clause ‎(ii) above, and (v) pay its pro rata share (based on the number of Company Securities
Transferred) of expenses incurred in connection with any consummated Tag-Along Sale to the extent such expenses are incurred for
the benefit of the Tag-Along Seller and the Investor and such expenses are not otherwise paid by the Company or another Person,
provided that that the Investor shall not be obligated to pay for any expenses incurred in connection with any Tag-Along
Sale that is not consummated.

 

(e) 
Promptly after the consummation of the Tag-Along Sale, the Tag-Along Seller shall (i) notify the Investor thereof, (ii) remit,
or cause to be remitted, to the Investor the total consideration for the Company Securities of the Investor sold pursuant thereto
less the Investor’s pro rata share of any escrows, holdbacks or adjustments in purchase price and any transaction
expenses as determined in accordance with Section 3.03(d), with the cash portion of the purchase price paid by wire transfer
of immediately available funds in accordance with the wire transfer instructions in the Tag-Along Response Notice and (iii) furnish
such other evidence of the completion and the date of completion of such transfer and the terms thereof as may be reasonably requested
by the Investor. To the extent the Person that acquired the Investor’s Company Securities pursuant to the Tag-Along Sale
has not remitted the consideration payable to the Investor upon the consummation of the Tag-Along Sale or remitted any additional
consideration payable upon the release of any escrows, holdbacks or adjustments in purchase price, the Tag-Along Seller shall
take all actions reasonably within its control to cause the Person that acquired the Investor’s Company Securities pursuant
to the Tag-Along Sale to promptly remit any such consideration payable to the Investor upon consummation of the Tag-Along Sale
and promptly remit any additional consideration payable upon the release of any escrows, holdbacks or adjustments in purchase
price.

 

Section
3.04  Preemptive Rights. (a) Subject to ‎Section 3.04(e), the
Company shall, or shall cause its Subsidiaries, as the case may be, to give the Investor notice (an “Issuance Notice”)
of any proposed issuance by the Company of any Company Securities (together, “Subject Securities”) at least
twenty (20) Business Days prior to the proposed issuance date. The Issuance Notice shall specify the price at which such Subject
Securities are to be issued, the Person to which the Subject Securities shall be issued (the “Subscriber”)
and the other material terms of the issuance. Subject to ‎Section 3.04(e), the Investor shall be entitled to
purchase up to an amount equal to its Aggregate Ownership Percentage (determined immediately before giving effect to the issuance)
multiplied by the Subject Securities proposed to be issued, at the price and on the terms specified in the Issuance Notice.

 

    	 	11	 

     

    

 

(b) 
The Investor may elect to purchase any or all of the amount equal to its Aggregate Ownership Percentage multiplied by the Subject
Securities specified in the Issuance Notice by delivering written notice to the Company (each, an “Exercise Notice”)
of its election to purchase such Subject Securities within ten (10) Business Days following receipt of the Issuance Notice, specifying
the number (or amount) of Subject Securities to be purchased by the Investor and shall constitute exercise by the Investor of
its rights under this Section and a binding agreement of the Investor to purchase, at the price and on the terms specified in
the Issuance Notice, the number (or amount) of Subject Securities specified in the Exercise Notice. If, at the termination of
such 10-Business-Day period, the Investor shall not have delivered an Exercise Notice to the Company, the Investor shall be deemed
to have waived all of its rights under this ‎Section 3.04 with respect to the purchase of such Subject Securities.

 

(c) 
The Company or the applicable Subsidiary of the Company, as the case may be, shall have sixty (60) days from the date of the Issuance
Notice to consummate the proposed issuance of any or all of such Subject Securities that the Investor has not elected to purchase
to the Subscriber at the price and upon terms that are not less favorable to the Company or such Subsidiary, as the case may be,
than those specified in the Issuance Notice; provided that, if such issuance is subject to regulatory approval, such 60-day
period shall be extended until the expiration of five (5) Business Days after all such approvals have been received, but in no
event later than ninety (90) days from the date of the Issuance Notice. If the Company or the applicable Subsidiary of the Company,
as the case may be, proposes to issue any such Subject Securities after such 60-day (or 90-day) period, it shall again comply
with the procedures set forth in this ‎Section 3.04.

 

(d) 
At the consummation of the issuance of such Subject Securities, the Company shall issue upon the written request of the Investor,
certificates representing the Subject Securities to be purchased by the Investor registered in the name of the Investor, against
payment by the Investor of the purchase price for such Subject Securities in accordance with the terms and conditions as specified
in the Issuance Notice.

 

(e) 
Notwithstanding the foregoing, the Investor shall not be entitled to purchase Subject Securities as contemplated by this ‎Section
3.04 in connection with any grant of options, restricted shares, performance units or the issuance of any Subject Securities
pursuant to the exercise of share options, restricted shares or performance units granted (whether prior to, on or after the date
of this Agreement), pursuant to any duly approved equity compensation, share purchase or share option plans of the Company in
effect from time to time established for the purpose of retaining and compensating employees, consultants, directors and other
service providers of the Company.

 

Section
3.05  Termination of Rights. In the event that, any time after the date hereof,
(i) the Aggregate Investor Ownership Percentage is less than 10% and (ii) the Investor has Transferred to third part(y)(ies) over
50% of the Company Securities purchased by the Investor pursuant to Investment Agreement, the Investor’s and the Founder
Parties’ rights under ‎ Section 2.01, Section 2.02, Section 2.03, Section 2.04, Section
2.05, Section 2.06, Section 3.02, ‎Section 3.03 and ‎Section 3.04 shall automatically
terminate and be of no further force and effect. Notwithstanding the foregoing, in the event the Aggregate Investor Ownership
Percentage is less than 5%, the Investor’s rights under Section 2.01, Section 2.02, Section 2.03 and
Section 2.04 shall automatically terminate and be of no further force and effect.

 

Section
3.06  Registration Rights. The Investor shall have the rights, and the Company
shall have the obligations, set forth in Schedule 1 hereto, provided that the rights of the Investor under Clauses
‎3, ‎4 and ‎5 of Schedule 1 shall (i) not be exercised until the first day of the seventh months from the Closing
and (ii) terminate and be of no further force and effect at the earlier of (x) the fifth anniversary of the date hereof and (y)
such time at which all Registrable Securities held by the Investor (and any Associate of the Investor with whom the Investor must
aggregate its sales under Rule 144 of the Securities Act) proposed to be sold may be sold under Rule 144 of the Securities Act
in any ninety (90)-day period without registration in compliance with Rule 144 of the Securities Act.

 

    	 	12	 

     

    

 

Article
4

CERTAIN COVENANTS AND AGREEMENTS

 

Section
4.01  Additional Major Shareholders. The Investor agrees to cause any Affiliate
to which it has validly Transferred any Company Securities on or after the date of this Agreement in compliance with the terms
of this Agreement (and who is not a party hereto) to execute and deliver to the Company and each other party hereto, a Joinder
Agreement in the form of Exhibit A hereto (each such Transferee, a “Permitted Transferee”).

 

Section
4.02  Conflicting Agreements. The Company and each Founder Party agrees that it
shall not (i) enter into any agreement or arrangement of any kind with any Person with respect to any Company Securities inconsistent
with the provisions of this Agreement or for the purpose or with the effect of denying or reducing the rights of the Investor
under this Agreement or (ii) act, for any reason, as a member of a group or in concert with any other Person in connection with
the transfer or voting of its Company Securities in any manner that is inconsistent with the provisions of this Agreement or for
the purpose or with the effect of denying or reducing the rights of the Investor under this Agreement.

 

Section
4.03  Performance of Company Obligations. Without limitation of any provision
of this Agreement, the Founder Parties shall take all reasonably necessary actions to cause the Company to perform and comply
with its obligations under this Agreement.

 

Section
4.04  Information Rights.

 

(a) 
The Company shall afford the Investor and its directors, officers, employees, auditors and advisors, upon reasonable notice, reasonable
access to the offices, properties and books and records and management of the Company and its Subsidiaries; provided, however,
that any such access shall be conducted at the Investor’s expense, during normal business hours and in such a manner as
not to interfere with the normal operations of the Company or its Subsidiaries.

 

Section
4.05  Mirror Share Ownership in the VIE.

 

(a) 
In the event that the Onshore Restructuring has not been completed to the reasonable satisfaction of the Investor within twelve
(12) months after the date hereof and when requested in writing by the Investor, the Company, the VIE and the Founder Parties
shall promptly procure (i) the acquisition of such percentage of the total equity interest of Jiuzhou Grand Pharmacy as equal
to the Aggregate Ownership Percentage, by the Investor Nominee Shareholder, for nominal consideration, (ii) the filing and registration
in any required Governmental Authority for the change of the shareholders of Jiuzhou Grand Pharmacy recording the Investor Nominee
Shareholder as the shareholder of Jiuzhou Grand Pharmacy holding such percentage of the total equity interest of Jiuzhou Grand
Pharmacy as equal to the Aggregate Ownership Percentage, (iii) the execution of the restated controlling documents by all parties
thereto, which restated controlling documents shall be prepared by the Investor, to the reasonable satisfaction of the Company,
and (iv) the filing of the aforementioned restated controlling documents in any required Governmental Authority.

 

    	 	13	 

     

    

 

(b) 
In the event that, any time after the date hereof, (i) the Aggregate Investor Ownership Percentage is less than 10% and (ii) the
Investor has Transferred to third part(y)(ies) over 50% of the Company Securities purchased by the Investor pursuant to Investment
Agreement, the Investor’s rights under ‎Section 4.05 shall automatically terminate and be of no further force
and effect.

 

Article
5

MISCELLANEOUS

 

Section
5.01  Binding Effect; Assignability; Benefit. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted
assigns.

 

(b) 
Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable
by any party without the prior written consent of the other parties hereto; provided that except as otherwise specified
herein, the Investor may assign any right, remedy, obligation or liability arising under this Agreement or by reason hereof to
any of its Affiliates that executes and delivers to each party hereto a Joinder Agreement in the form of Exhibit A hereto.

 

(c) 
Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, and their
respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.

 

Section
5.02  Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long
as a receipt of such e-mail is requested and received) and shall be given,

 

if
to the Company, to:

 

China
Jo-Jo Drugstores, Inc.

Hangzhou
Jiuzhou Grand Pharmacy Chain Co., Ltd. 

(杭州九洲大药房连锁有限公司)

1st Floor, Yuzheng Plaza, No. 76, 

Yuhuangshan
Road Hangzhou, Zhejiang Province 

People’s
Republic of China 

Zip
Code: 310002

Attention: Lei Liu, c/o: Ming Zhao 

Facsimile:
0571-88219579

E-mail: hz.liulei@163.com; frank.zhao@jojodrugstores.com

 

    	 	14	 

     

    

 

with
a copy (which shall not constitute notice) to:

 

Pryor
Cashman LLP

7 Times Square, New York, NY 10036

Attention: Elizabeth Fei Chen, Esq.

Facsimile: 212-798-6366

E-mail: echen@pryorcashman.com

 

if
to any Founder Party, to:

 

Hangzhou
Jiuzhou Grand Pharmacy Chain Co., Ltd.

(杭州九洲大药房连锁有限公司)

1st
Floor, Yuzheng Plaza, No. 76, 

Yuhuangshan
Road Hangzhou, Zhejiang Province 

People’s
Republic of China 

Zip
Code: 310002

Attention: Mr. Lei Liu, Ms. Li Qi

Facsimile:
0571-88219579

E-mail: hz.liulei@163.com

 

if
to the Investor, to

 

CareRetail
Holdings Limited

Suite 1608, One Exchange Square,

8
Connaught Place, Central, Hong Kong

Attention: Dai Feng

Facsimile: +852-2179 1900

E-mail: dai@carecapitalpartners.com

 

with
copies (which shall not constitute notice) to:

 

Legal@hillhousecap.com;
and 

 

Skadden,
Arps, Slate, Meagher & Flom LLP

42/F, Edinburgh Tower, The Landmark

15 Queen’s Road Central

Hong Kong

Attention: Z. Julie Gao

Facsimile: +852.3910.4863

E-mail: julie.gao@skadden.com

 

or
such other address or facsimile number as the parties may hereafter specify by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to
5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request
or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

    	 	15	 

     

    

 

Section
5.03  Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

Section
5.04  Entire Agreement. This Agreement and the other Transaction Documents constitutes
the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements
and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

 

Section
5.05  Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
Signatures in the form of facsimile or electronically imaged “PDF” shall be deemed to be original signatures for all
purposes hereunder.

 

Section
5.06  Descriptive Headings. The descriptive headings of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.

 

Section
5.07  Amendment; Termination. (a) The provisions of this Agreement may be amended
or modified only upon the prior written consent of all parties hereto. The failure of any party to enforce any of the provisions
of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter
to enforce each and every provision of this Agreement in accordance with its terms.

 

(b) 
This Agreement shall terminate and be of no further force and effect upon the Investor and its Affiliates ceasing to own any Company
Securities acquire; provided that the provisions of this Article shall survive any termination of this Agreement.

 

Section
5.08  Governing Law. This Agreement, the rights and obligations of the parties
hereto, and all claims or disputes relating hereto, shall be governed by and construed in accordance with the law of the State
of New York.

 

Section
5.09  Arbitration. Any dispute, controversy or claim arising out of or relating
to this Agreement, including, but not limited to, any question regarding the breach, termination or invalidity thereof shall be
finally resolved by arbitration in Hong Kong in accordance with the administered rules (the “Rules”) of the
Hong Kong International Arbitration Centre (the “HKIAC”) in force at the time of commencement of the arbitration,
which Rules are deemed to be incorporated by reference into this Section. The number of arbitrators shall be three and shall be
selected in accordance with the Rules. All selections shall be made within thirty (30) days after the selecting party gives or
receives, as the case may be, the demand for arbitration. The seat of the arbitration shall be in Hong Kong and the language to
be used shall be English. Any arbitration award shall be (i) in writing and shall contain the reasons for the decision, (ii) final
and binding on the parties hereto and (iii) enforceable in any court of competent jurisdiction, and the parties hereto agree to
be bound thereby and to act accordingly.

 

Section
5.10  Expenses. Except as otherwise provided herein, all costs and expenses incurred
in connection with this Agreement, or any amendment or waiver hereof, and the transactions contemplated hereby shall be paid by
the party incurring such costs or expenses.

 

Section
5.11  Further Assurances. From time to time following the date hereof, the parties
hereto shall execute and deliver such other instruments of assignment, transfer and delivery and shall take such other actions
as any other party hereto reasonably may request in order to consummate, complete and carry out the transactions contemplated
by this Agreement.

 

[Signature
Pages Follow]

 

    	 	16	 

     

    

  

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

 

	 	China Jo-Jo Drugstores, Inc.  
	 	 	 
	 	By:	/s/ Lei Liu
	 	 	Name: Lei Liu
	 	 	Title:   Chief Executive Officer
	 	 	 
	 	CARERETAIL HOLDINGS LIMITED  
	 	 	 
	 	By: 	/s/ Dai Feng
	 	 	Name: Dai Feng
	 	 	Title:   Director
	 	 	 
	 	LEI LIU  
	 	 	 
	 	/s/ Lei Liu  
	 	 	 
	 	LI QI  
	 	 	 
	 	/s/ Li Qi        
	 	 	 
	 	SUPER MARVEL LIMITED  
	 	 	 
	 	By: 	/s/ Lei Liu
	 	 	Name: Lei Liu
	 	 	Title:   Director

 

 

 

 

[Signature Page to Investor Rights Agreement]

 

     

     

    

  

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

 

	 	HANGZHOU
    JIUZHOU GRAND 

    PHARMACY CHAIN CO., LTD.  
	 	 	 
	 	杭州九洲大药房连锁有限公司
     
	 	 	 
	 	By:
    	/s/
    Lei Liu      
	 	 	Name:
    Lei Liu
	 	 	Title:
      Director                       

 

	 	Company
    Chop:  
	 	 
	 	Company
    Chop Affixed

  

 

 

 

 

 

 

 

 [Signature Page to Investor Rights Agreement]

 

     

     

    

 

Schedule
1

 

REGISTRATION
RIGHTS

		1.	Applicability
                                         of Rights. The Investor shall be entitled to the following rights with respect to
                                         any potential public offering of Common Securities in the United States and shall be
                                         entitled to reasonably analogous or equivalent rights with respect to any other offering
                                         of Company Securities in any other jurisdiction pursuant to which the Company undertakes
                                         to publicly offer or list such Company Securities for trading on a recognized securities
                                         exchange. References to “Clauses” herein are to Clauses of this Schedule
                                         1.

		2.	Definitions.
                                         For purposes of this Schedule 1:

		(a)	Registration.
                                         The terms “register,” “registered,” and “registration”
                                         refer to a registration effected by preparing and filing a registration statement in
                                         compliance with the Securities Act, and the declaration or ordering of effectiveness
                                         of such registration statement.

		(b)	Registrable
                                         Securities. The term “Registrable Securities” means: (1) the Company
                                         Securities acquired by the Investor pursuant to the Investment Agreement; (2) any Company
                                         Securities issued as (or issuable upon the conversion or exercise of any warrant, right
                                         or other security which is issued as) a dividend or other distribution with respect to,
                                         or in exchange for or in replacement of, any Company Securities described in clause ‎(1)
                                         of this subsection (1); and (3) any other Company Securities of the Company owned or
                                         hereafter acquired by the Investor. Notwithstanding the foregoing, “Registrable
                                         Securities” shall exclude any Registrable Securities sold by a person in a
                                         transaction in which rights under this Schedule 1 are not assigned in accordance
                                         with this Agreement or any Registrable Securities sold in a public offering, whether
                                         sold pursuant to Rule 144 promulgated under the Securities Act, or in a registered offering,
                                         or otherwise.

		(c)	Form
                                         S-3 and Form F-3. The terms “Form S-3” and “Form F-3”
                                         mean such respective form under the Securities Act as is in effect on the date hereof
                                         or any successor registration form under the Securities Act subsequently adopted by the
                                         SEC which permits inclusion or incorporation of substantial information by reference
                                         to other documents filed by the Company with the SEC.

		(d)	SEC.
                                         The term “SEC” means the U.S. Securities and Exchange Commission.

		3.	Demand
                                         Registration.

		(a)	Request
                                         by Investor. If the Company shall receive a written request from the Investor that
                                         the Company file a registration statement under the Securities Act covering the registration
                                         of Registrable Securities pursuant to this Clause ‎3, then the Company shall use
                                         all reasonable efforts to effect, as soon as practicable, the registration under the
                                         Securities Act of all Registrable Securities that the Investor request to be registered,
                                         subject only to the limitations of this Clause ‎3; provided that the Company
                                         shall not be obligated to effect any such registration if the Company has, within the
                                         six (6) month period preceding the date of such request, already effected a registration
                                         under the Securities Act pursuant to this Clause ‎3 or Clause ‎5, or in which
                                         the Investor had an opportunity to participate pursuant to Clause ‎4, other than
                                         a registration from which the Registrable Securities of the Investor have been excluded
                                         (with respect to all or any portion of the Registrable Securities the Investor requested
                                         be included in such registration) pursuant to Clause 4(b).

 

    	 	S-1	 

     

    

		(b)	Underwriting.
                                         If the Investor intends to distribute the Registrable Securities covered by its request
                                         by means of an underwriting, then it shall so advise the Company as a part of its request
                                         made pursuant to this Clause. In such event, the right of the Investor to include its
                                         Registrable Securities in such registration shall be conditional upon the Investor’s
                                         participation in such underwriting and the inclusion of the Investor’s Registrable
                                         Securities in the underwriting to the extent provided herein. The Investor shall enter
                                         into an underwriting agreement in customary form with the managing underwriter or underwriters
                                         selected for such underwriting by the Investor and reasonably acceptable to the Company.
                                         Notwithstanding any other provision of this Clause, if the underwriter(s) advise(s) the
                                         Company in writing that marketing factors require a limitation of the number of securities
                                         to be underwritten then the Company shall so advise the Investor, and the number of Registrable
                                         Securities that may be included in the underwriting shall be reduced as required by the
                                         underwriter(s); provided, however, that the number of shares of Registrable Securities
                                         to be included in such underwriting and registration shall not be reduced unless all
                                         other Securities are first entirely excluded from the underwriting and registration.
                                         If the Investor disapproves of the terms of any such underwriting, the Investor may elect
                                         to withdraw therefrom by written notice to the Company and the underwriter(s), delivered
                                         at least ten (10) Business Days prior to the effective date of the registration statement.
                                         Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded
                                         and withdrawn from the registration. If the underwriter has not limited the number of
                                         Registrable Securities to be underwritten, the Company may include its securities for
                                         its own account in such registration if the underwriter so agrees and if the number of
                                         Registrable Securities which would otherwise have been included in such registration
                                         and underwriting will not thereby be limited.

		(c)	Maximum
                                         Number of Demand Registrations. The Company shall be obligated to effect three (3)
                                         such demand registrations for the Investor.

		(d)	Deferral.
                                         Notwithstanding the foregoing, the Company shall not be required to effect a registration
                                         pursuant to this Clause:

		(i)	during
                                         the period starting with the date sixty (60) Business Days prior to the Company’s
                                         good faith estimate of the date of the filing of, and ending on a date one hundred eighty
                                         (180) Business Days following the effective date of, a Company-initiated registration
                                         subject to Clause ‎4 below, provided that the Company is actively employing in good
                                         faith all reasonable efforts to cause such registration statement to become effective;

 

    	 	S-2	 

     

    

 

		(ii)	if
                                         the Investor proposes to dispose of Registrable Securities that may be registered on
                                         Form S-3 or Form F-3 pursuant to Clause ‎5 hereof; or

		(iii)	if
                                         the Company shall furnish to the Investor a certificate signed by the Chief Executive
                                         Officer of the Company stating that in the good faith judgment of the Board, it would
                                         be materially detrimental to the Company and its shareholders for such registration statement
                                         to be filed, then the Company shall have the right to defer such filing for a period
                                         of not more than ninety (90) days after receipt of the request of the Investor; provided,
                                         however, that the Company may not utilize this right more than once in any twelve (12)
                                         month period; provided further, that the Company shall not register any of its
                                         Securities during such twelve (12) month period other than its Securities offered to
                                         its directors, officers, employees and consultants pursuant to its equity incentive plan.
                                         A demand right shall not be deemed to have been exercised until such deferred registration
                                         shall have been effected.

		(e)	Expenses.
                                         All expenses incurred in connection with any registration pursuant to this Clause, including
                                         without limitation all U.S. federal, “blue sky” and all foreign registration,
                                         filing and qualification fees, printer’s and accounting fees, and fees and disbursements
                                         of counsel for the Company including reasonable expenses of one legal counsel for the
                                         Investor (but excluding underwriters’ discounts and commissions relating to shares
                                         sold by the Investor) not exceeding US$50,000, shall be borne by the Company. The Investor
                                         shall bear all discounts, commissions or other amounts payable to underwriter(s) or brokers,
                                         in connection with such offering by the Investor.

		4.	Piggyback
                                         Registrations. The Company shall notify the Investor in writing at least twenty (20)
                                         days prior to filing any registration statement under the Securities Act for purposes
                                         of effecting a public offering of Securities of the Company (including, but not limited
                                         to, registration statements relating to secondary offerings of Securities of the Company,
                                         but excluding registration statements relating to any registration under Clause
                                         ‎3 or Clause ‎5 or to any employee benefit plan or a corporate reorganization)
                                         and will afford the Investor an opportunity to include in such registration statement
                                         all or any part of the Registrable Securities then held by the Investor. The Investor
                                         shall within twelve (12) days after receipt of the above-described notice from the Company,
                                         so notify the Company in writing, and in such notice shall inform the Company of the
                                         number of Registrable Securities the Investor wishes to include in such registration
                                         statement. If the Investor decides not to include all of its Registrable Securities in
                                         any registration statement thereafter filed by the Company, the Investor shall nevertheless
                                         continue to have the right to include any Registrable Securities in any subsequent registration
                                         statement or registration statements as may be filed by the Company with respect to offerings
                                         of its Securities, all upon the terms and conditions set forth herein.

		(a)	Right
                                         to Terminate Registration. The Company shall have the right to terminate or withdraw
                                         any registration initiated by it under this Clause prior to the effectiveness of such
                                         registration whether or not the Investor has elected to include Securities in such registration.
                                         The expenses of such withdrawn registration shall be borne by the Company in accordance
                                         with Clause ‎4(c) hereof.
	 	 	 

    	 	S-3	 

     

    

 

		(b)	Underwriting.
                                         If a registration statement under which the Company gives notice under this Clause is
                                         for an underwritten offering, then the Company shall so advise the Investor. In such
                                         event, the right of the Investor to be included in a registration pursuant to this Clause
                                         shall be conditional upon the Investor’s participation in such underwriting and
                                         the inclusion of the Investor’s Registrable Securities in the underwriting to the
                                         extent provided herein. The Investor shall enter into an underwriting agreement in customary
                                         form with the managing underwriter or underwriters selected for such underwriting. Notwithstanding
                                         any other provision of this Agreement, if the managing underwriter(s) determine(s) in
                                         good faith that marketing factors require a limitation of the number of shares to be
                                         underwritten, then the managing underwriter(s) may exclude up to seventy percent (70%)
                                         of the Registrable Securities from the registration and the underwriting, and the number
                                         of shares that may be included in the registration and the underwriting shall be allocated,
                                         first to the Company, second, to the Investor; and third, to holders
                                         of other Securities of the Company, provided, however, that the right of the underwriter(s)
                                         to exclude shares (including Registrable Securities) from the registration and underwriting
                                         as described above shall be restricted so that (i) the number of Registrable Securities
                                         included in any such registration is not reduced below thirty percent (30%) of the aggregate
                                         number of Registrable Securities for which inclusion has been requested; and (ii) all
                                         shares that are not Registrable Securities and are held by any other person, including,
                                         without limitation, the Founders and any other person who is an employee, officer, consultant
                                         or director of the Company (or any Subsidiary of the Company) shall first be excluded
                                         from such registration and underwriting before any Registrable Securities are so excluded.
                                         If the Investor disapproves of the terms of any such underwriting, the Investor may elect
                                         to withdraw therefrom by written notice to the Company and the underwriter(s), delivered
                                         at least ten (10) days prior to the effective date of the registration statement. Any
                                         Registrable Securities excluded or withdrawn from such underwriting shall be excluded
                                         and withdrawn from the registration.

		(c)	Expenses.
                                         All expenses incurred in connection with a registration pursuant to this Clause (excluding
                                         underwriters’ and brokers’ discounts and commissions relating to shares sold
                                         by the Investor), including, without limitation all U.S. federal, “blue sky”
                                         and all foreign registration, filing and qualification fees, printers’ and accounting
                                         fees, and fees and disbursements of counsel for the Company and reasonable expenses of
                                         one legal counsel for the Investor not exceeding US$50,000, shall be borne by the Company.

		(d)	Not
                                         Demand Registration. Registration pursuant to this Clause shall not be deemed to
                                         be a demand registration as described in Clause ‎3 above. Except as otherwise provided
                                         herein, there shall be a maximum of two (2) times the Investor may request registration
                                         of Registrable Securities under this Clause ‎4 during any twelve-month period.

 

    	 	S-4	 

     

    

		5.	Form
                                         S-3 or Form F-3 Registration. In case the Company shall receive from the Investor
                                         a written request or requests that the Company effect a registration on Form S-3 or Form
                                         F-3 and any related qualification or compliance with respect to all or a part of the
                                         Registrable Securities owned by the Investor, then the Company will:

		(a)	Registration.
                                         As soon as practicable, effect such registration and all such qualifications and compliances
                                         as may be so requested and as would permit or facilitate the sale and distribution of
                                         all or such portion of the Investor’s Registrable Securities as are specified in
                                         such request; provided, however, that the Company shall not be obligated to effect
                                         any such registration, qualification or compliance pursuant to this Clause:

		(i)	if
                                         Form S-3 or Form F-3 is not available for such offering by the Investor;

		(ii)	if
                                         the Company shall furnish to the Investor a certificate signed by the President or Chief
                                         Executive Officer of the Company stating that in the good faith judgment of the Board
                                         of Directors of the Company, it would be materially detrimental to the Company and its
                                         shareholders for such Form S-3 or Form F-3 registration to be effected at such time,
                                         in which event the Company shall have the right to defer the filing of the Form S-3 or
                                         Form F-3 registration statement no more than once during any twelve month period for
                                         a period of not more than ninety (90) days after receipt of the request of the Investor
                                         under this Clause 5; provided that the Company shall not register any of its other
                                         Securities during such ninety (90) day period; or

		(iii)	if
                                         the Company has, within the twelve (12) month period preceding the date of such request,
                                         already effected two (2) registrations under the Securities Act other than a registration
                                         from which the Registrable Securities of the Investor have been excluded (with respect
                                         to all or any portion of the Registrable Securities the Investor requested be included
                                         in such registration) pursuant to the provisions of Clause 3(b) or Clause ‎4(b).

		(b)	Expenses.
                                         The Company shall pay all expenses incurred in connection with each registration requested
                                         pursuant to this Clause (excluding underwriters’ or brokers’ discounts and
                                         commissions relating to shares sold by the Investor), including without limitation all
                                         U.S. federal, “blue sky” and all foreign registration, filing and qualification
                                         fees, printers’ and accounting fees, and fees and disbursements of counsel for
                                         the Company and reasonable expenses of one legal counsel for the Investor.

		(c)	Not
                                         Demand Registration. Form S-3 or Form F-3 registrations shall not be deemed to be
                                         demand registrations as described in Clause ‎3 above. Except as otherwise provided
                                         herein, there shall be a maximum of two (2) times the Investor may request registration
                                         of Registrable Securities under this Clause 5 during any twelve-month period.

		6.	Obligations
                                         of the Company. Whenever required to effect the registration of any Registrable Securities
                                         under this Agreement the Company shall, as expeditiously as reasonably possible:

		(a)	Registration
                                         Statement. Prepare and file with the SEC a registration statement with respect to
                                         such Registrable Securities and use all reasonable efforts to cause such registration
                                         statement to become effective, provided, however, that the Company shall not be
                                         required to keep any such registration statement effective for more than sixty (60) days.
	 	 	 

    	 	S-5	 

     

    

 

		(b)	Amendments
                                         and Supplements. Prepare and file with the SEC such amendments and supplements to
                                         such registration statement and the prospectus used in connection with such registration
                                         statement as may be necessary to comply with the provisions of the Securities Act with
                                         respect to the disposition of all securities covered by such registration statement.

		(c)	Prospectuses.
                                         Furnish to the Investor such number of copies of a prospectus, including a preliminary
                                         prospectus, in conformity with the requirements of the Securities Act, and such other
                                         documents as it may reasonably request in order to facilitate the disposition of the
                                         Registrable Securities owned by it that are included in such registration.

		(d)	Blue
                                         Sky. Use all reasonable efforts to register and qualify the securities covered by
                                         such registration statement under such other securities or Blue Sky laws of such jurisdictions
                                         as shall be reasonably requested by the Investor, provided that the Company shall
                                         not be required in connection therewith or as a condition thereto to qualify to do business
                                         or to file a general consent to service of process in any such states or jurisdictions.

		(e)	Underwriting.
                                         In the event of any underwritten public offering, enter into and perform its obligations
                                         under an underwriting agreement in usual and customary form, with the managing underwriter(s)
                                         of such offering. The Investor participating in such underwriting shall also enter into
                                         and perform its obligations under such an agreement.

		(f)	Notification.
                                         Notify the Investor at any time when a prospectus relating thereto is required to be
                                         delivered under the Securities Act of (i) the issuance of any stop order by the SEC in
                                         respect of such registration statement, or (ii) the happening of any event as a result
                                         of which the prospectus included in such registration statement, as then in effect, includes
                                         an untrue statement of a material fact or omits to state a material fact required to
                                         be stated therein or necessary to make the statements therein not misleading in the light
                                         of the circumstances then existing.

		(g)	Opinion
                                         and Comfort Letter. Furnish, at the request of the Investor, on the date that such
                                         Registrable Securities are delivered to the underwriter(s) for sale, if such securities
                                         are being sold through underwriters, or, if such securities are not being sold through
                                         underwriters, on the date that the registration statement with respect to such securities
                                         becomes effective, (i) an opinion, dated as of such date, of the counsel representing
                                         the Company for the purposes of such registration, in form and substance as is customarily
                                         given to underwriters in an underwritten public offering and reasonably satisfactory
                                         to the Investor, addressed to the underwriters, if any, and to the Investor and (ii)
                                         a “comfort” letter dated as of such date, from the independent certified
                                         public accountants of the Company, in form and substance as is customarily given by independent
                                         certified public accountants to underwriters in an underwritten public offering and reasonably
                                         satisfactory to the Investor, addressed to the underwriters, if any, and to the Investor.
	 	 	 

    	 	S-6	 

     

    

		(h)	Notwithstanding
                                         any of the foregoing provisions, the Company shall not be required to pay for any expenses
                                         of any registration proceeding begun pursuant to Clause ‎3 or 5 if the registration
                                         request is subsequently withdrawn at the request of the Investor (in which case the Investor
                                         shall bear such expenses), unless, in the case of a registration requested under Clause
                                         3, the Investor agrees to forfeit such right to demand registration pursuant to Clause
                                         ‎3; provided further, however, that if at the time of such withdrawal, the
                                         Investor has learnt of a material adverse change in the condition, business, or prospects
                                         of the Company not known to the Investor at the time of its request for such registration
                                         and have withdrawn its request for registration with reasonable promptness after learning
                                         of such material adverse change, then the Investor shall not be required to pay any of
                                         such expenses and such registration shall not constitute the use of a demand registration
                                         pursuant to Clause ‎3.

		7.	Furnish
                                         Information. It shall be a condition precedent to the obligations of the Company
                                         to take any action pursuant to this Schedule 1 with respect to the Registrable
                                         Securities of the Investor that the Investor shall furnish to the Company such information
                                         regarding itself, the Registrable Securities held by it and the intended method of disposition
                                         of such securities as shall be required to timely effect the registration of their Registrable
                                         Securities. In connection therewith, the Investor shall be required to represent and
                                         warrant to the Company that all such information which is given in writing expressly
                                         for inclusion in such registration is true and accurate in all material respects.

		8.	No
                                         Registration Rights to Third Parties. Without the prior consent of the Investor,
                                         the Company covenants and agrees that it shall not grant, or cause or permit to be created,
                                         for the benefit of any person or entity any registration rights of any kind (whether
                                         similar to the demand, “piggyback” or Form S-3 or Form F-3 registration rights
                                         described in this Schedule 1, or otherwise) relating to any Securities of the
                                         Company, other than rights that are subordinate in right to the Investor.

		9.	Assignment.
                                         The registration rights under this Schedule 1 may be transferred or assigned by
                                         the Investor to any transferee or assignee of its Company Securities representing five
                                         percent (5%) or more of the issued share capital of the Company.

		10.	Re-sale
                                         Rights. The Company shall at its own cost use its best efforts to assist the Investor
                                         in the sale or disposition of, and to enable the Investor to sell under Rule 144 promulgated
                                         under the Securities Act the maximum number of, its Registrable Securities, including
                                         without limitation (a) the prompt delivery of applicable instruction letters to the Company’s
                                         transfer agent to remove legends from the Investor’s share certificates, (b) causing
                                         the prompt delivery of appropriate legal opinions from the Company’s counsel in
                                         forms reasonably satisfactory to the Investor’s counsel, (c) if the Company has
                                         depository receipts listed or traded on any exchange or inter-dealer quotation system,
                                         (i) the prompt delivery of instruction letters to the Company’s share registrar
                                         and depository agent to convert the Investor’s securities into depository receipts
                                         or similar instruments to be deposited in the Investor’s brokerage account(s),
                                         (ii) the prompt payment of all costs and fees related to such depositary facility, including
                                         conversion fees and maintenance fees for Registrable Securities held by the Investor
                                         and (iii) taking any and all other steps necessary to facilitate the conversion into
                                         depository receipts or similar instruments. The Company acknowledges that time is of
                                         the essence with respect to its obligations under this Clause, and that any delay will
                                         cause the Investor irreparable harm and constitutes a material breach of its obligations
                                         under this Agreement.

 

		11.	Rule 144 Reporting. The Company agrees to: (a)
make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at
all times; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and (c) so long as the Investor owns any Registrable Securities, to furnish to the Investor promptly
upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, or its qualification as a registrant whose securities may be resold pursuant to Form S-3 or Form F-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such
other reports and documents of the Company as the Investor may reasonably request in availing itself of any rule or regulation
of the SEC that permits the selling of any such securities without registration or pursuant to Form S-3 or Form F-3.

 

    	 	S-7	 

     

    

  

Exhibit
A

FORM OF JOINDER TO INVESTOR RIGHTS AGREEMENT

 

This
Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (the “Joining
Party”) in accordance with the Investor Rights Agreement dated as of January 3, 2017 (as amended, restated or otherwise
modified from time to time, the “Investor Rights Agreement”) among China Jo-Jo Drugstores, Inc., Lei Liu, Li
Qi, Super Marvel Limited and CareRetail Holdings Limited. Capitalized terms used, but not defined, herein shall have the meaning
ascribed to such terms in the Investor Rights Agreement.

 

The
Joining Party hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the Joining Party shall
be deemed to be a party to the Investor Rights Agreement as of the date hereof and shall have all of the rights and obligations
of Investor thereunder as if it had executed the Investor Rights Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Investor Rights Agreement.

 

IN
WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of the date written below.

 

Date:
_________________ ____, _________

 

	 	[NAME OF JOINING PARTY]
	 	 	 
	 	By:
    	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Address, fax number and email for notices:
	 	 	 
	 	 
	 	 
	 	 
	 	 

  

    	 	E-1	 

     

    

  

Accepted
and Agreed:

  

	[OTHER
    PARTIES TO INVESTOR RIGHTS AGREEMENT AT THE TIME JOINDER AGREEMENT IS EXECUTED]	 
	 	 	 
	By:
    	 	 
	 	Name:	 
	 	Title:	 

 

 

E-2

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