UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  March 15, 2010
 
 
CHINA JO-JO DRUGSTORES, INC.
(Exact name of registrant as specified in Charter)
 
Nevada
 
333-147698
 
98-0557852
(State or other jurisdiction of
incorporation or organization)
 
(Commission File No.)
 
(IRS Employer Identification No.)
 
Room 507-513, 5th Floor, A Building, Meidu Plaza
Gongshu District, Hangzhou, Zhejiang Province
People’s Republic of China
 
(Address of Principal Executive Offices)

+86 (571) 88077078
 
  (Issuer Telephone Number)
 
N/A
 
  (Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 (d)           Appointment of New Directors

On March 15, 2010, the Registrant’s board of directors (the “Board”) unanimously approved to increase the number of directors on the Board from 4 to 9 pursuant to Article III of the Registrant’s Bylaws, and in connection therewith, appointed Mr. Marc Thomas Serrio, Mr. Bowen Zhao, Dr. Yuehai Ke, Dr. Shuizhen Wu and Mr. Xiaomeng Yu to the Board, effective March 15, 2010.

Mr. Serrio is currently chief financial officer of Zeal Corporation, a position he has held since March 2009. He has also been an independent executive consultant since January 1996, providing business and financial planning and analysis services to companies in various industries. Mr. Serrio was interim chief financial officer and interim chief operating officer of Kate Somerville LLC from July 2008 to March 2009, chief financial officer of Detection Logic, Inc. from November 2005 to March 2008, and chief financial officer of TriTech Software Systems from March 1999 to November 2005. Mr. Serrio is a graduate of the Marshall School of Business at the University of Southern California, with a B.S. in business administration in 1981 and a M.B.A. with emphasis on investment finance and business economics in 1985.

Mr. Bowen Zhao is a senior economist who has dedicated the past 54 years toward the development of the pharmaceutical industry in Zhejiang Province. Mr. Zhao is currently the deputy president of Zhejiang Province Industry and Economic Association, Zhejiang Province Entrepreneur Association and China Commercial Pharmacy Association, positions he has held since December 1994. In September 1996, Mr. Zhao was instrumental in organizing Zhejiang Province Commercial Pharmacy Association (which became Zhejiang Province Pharmaceutical Industry Association in September 2002), and has served as its president since its founding. Mr. Zhao has been with Zhejiang Pharmaceutical Co., Ltd. since September 1983 and is currently its deputy manager, and has been with Zhejiang Province Pharmaceutical Administration since May 1995, and is currently its deputy director.

Dr. Yuehai Ke is a professor of molecular genetics and cell signal transduction at the Department of Basic Medicine at Zhejiang University’s School of Medicine since September 2007, where he also advices doctorate candidates. Dr. Ke graduated from Zhejiang University in 1995, where he majored in biochemistry. After graduation, Dr. Ke joined the Chinese Center for Disease Control and Prevention from September 1995 to July 1998. Dr. Ke obtained his master degree in medicine in 1998 from Fudan University, where he studied genetic disease of human multiple genes, and his doctorate degree in 2001 also from Fudan University. In 2000, Dr. Ke was an exchange student at the School of Public Health at the University of Texas in Houston. From February 2002 to September 2007, Dr. Ke studied cell signal transduction at the Cancer and Stem Cell Research Center of the Burnham Medical Research Institute in California . From September 2005 to September 2007, Dr. Ke was an associate professor at the Chinese Academy of Medical Sciences & Peking Union Medical College, focusing his research and studies on the application development of cell kinetics models and genetic analysis.

Dr. Shuizhen Wu has been with Zhejiang No. 1 Hospital, which is affiliated with Zhejiang University’s School of Medicine, since July 2005, where she is currently a researcher and senior management personnel. From July 1978 to May 1994, Dr. Wu served as deputy director of the medical faculty at Zhejiang Medical University. Dr. Wu is a 1978 graduate of Zhejiang Medical University.

Mr. Xiaomeng Yu is president of China Mingsheng Bank’s Xiasha branch in Hangzhou, where he was previously its senior client manager from October 2005 to July 2008. From August, 2003 to September 2005, Mr. Yu was translator and site manager for Hangzhou Road Engineering Equipment Co., Ltd. Mr. Wu graduated from Japan’s Daito Bunka University in September 2003 with a degree in business management.

Based upon information submitted to the Board by each of the appointees, the Board has determined that each of them is “independent” under Rule IM-5605(a)(2) of the Nasdaq Listing rules. None of the appointees has participated in the preparation of the Registrant’s financial statements or any current subsidiary at any time during the past three years, and each of them is able to read and understand fundamental financial statements. Additionally, the Board has determined that Mr. Serrio has the requisite attributes of an “audit committee financial expert” as defined by regulations promulgated by the Securities and Exchange Commission and that such attributes were acquired through relevant education and/or experience.
 
 
 
 
 
 
Agreements with Directors
 
In connection with the foregoing appointments, the Registrant entered into written agreement with Mr. Serrio, pursuant to which Mr. Serrio will, in addition to his duties as a director, serve on the Board’s audit committee as chairman and be designated as audit committee financial expert, for an annualized compensation of $40,000 in the form of 13,794 restricted shares of the Registrant’s common stock (the “Shares”), payable in four quarterly installments beginning on the quarter ending March 31, 2010. Additionally, the Registrant is obligated to obtain directors and officers insurance policy, and to include Mr. Serrio as an insured under such policy.

Concurrently with the foregoing agreement, the Registrant also entered into an indemnification agreement with Mr. Serrio, pursuant to which the Registrant agrees to hold Mr. Serrio harmless and indemnify him from and against any expense, liability or loss paid or incurred in connection with any action, suit or proceeding arising from or related to the fact that Mr. Serrio is or was a member of the Board or anything done by him in such capacity.

The foregoing description of the material terms of the agreements with Mr. Serrio is qualified in its entirety by a copy of the director offer letter and the indemnification agreement attached to this current report on Form 8-K as Exhibits 99.1 and 99.2.

Other than the director offer letter and the indemnification agreement there are no arrangements or understandings between Mr. Serrio and any other persons pursuant to which he was selected as a director. Other than Mr. Serrio, none of the remaining appointees entered into a written agreement with the Registrant, and there are no arrangements or understandings between each of such appointees and any other persons pursuant to which such appointee was selected as a director. There are no transactions between the Registrant and any of the appointees that would require disclosure under Item 404(a) of Regulation S-K.
 
Appointments to the Audit Committee, Compensation Committee and Nominating Committee
 
Effective March 15, 2010, the Board established its audit, compensation and nominating committees, and appointed the following directors to such committees:

·          
Audit committee: Marc Thomas Serrio (chairman and financial expert), Yuehai Ke and Shuizhen Wu
·          
Compensation committee: Yuehai Ke (chairman), Bowen Zhao and Xiaomeng Yu
·          
Nominating committee: Shuizhen Wu (chairman), Bowen Zhao and Xiaomeng Yu
 
Item 8.01.   Other Events.

On March 15, 2010, the Board unanimously adopted a Code of Business Conduct and Ethics (the “Code”) applicable to all employees, officers and directors of the Registrant. The Code is intended to promote ethical conduct and compliance with compliance with laws and regulations, to provide guidance with respect to the handling of ethical issues, to implement mechanisms to report unethical conduct, to foster a culture of honesty and accountability, to deter wrongdoing, and to ensure fair and accurate financial reporting. A copy of the Code is attached to this current report on Form 8-K as Exhibit 14.1. The Code will also be placed on the Company’s website as soon as practicable.

Item 9.01   Financial Statements and Exhibits

Exhibit
Number
  
Description
     
14.1
 
China Jo-Jo Drugstores, Inc.’s Code of Business Conduct and Ethics
99.1
 
Director Offer Letter with Mr. Marc Thomas Serrio dated March 15, 2010
99.2
 
Indemnification Agreement with Mr. Marc Thomas Serrio dated March 15, 2010
 
 
 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 Date: March 16, 2010
China Jo-Jo Drugstores, Inc.
(Registrant)
 
       
 
By: 
/s/ Lei Liu
 
 
Lei Liu
 
 
Chief Executive Officer
 



Exhibit 14.1
 
 
CHINA JO-JO DRUGSTORES, INC.
CODE OF BUSINESS CONDUCT AND ETHICS


POLICY STATEMENT

Ethical business conduct is critical to our business and the responsibility of all of us.  It is the policy of China Jo-Jo Drugstores, Inc. to conduct its affairs in accordance with all applicable laws and regulations.  The Code of Business Conduct and Ethics (the “ Code ”) applies to the employees, officers and directors of China Jo-Jo Drugstores, Inc. and its subsidiaries and any subsidiaries it may form in the future (collectively, the “ Company ”).  This Code is designed to deter wrongdoing and promote:
 
 
·
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
 
·
full, fair, accurate, timely, and understandable disclosure in reports and documents the Company files with, or submits to, the Securities and Exchange Commission (“ SEC ”) and in other public communications made by the Company;
 
 
·
compliance with applicable governmental laws, rules, and regulations;
 
 
·
the prompt internal reporting to the appropriate person of violations of this Code; and
 
 
·
accountability for adherence to this Code.
 
The Company has established standards for behavior that affect the Company, and employees should pattern their daily performance in compliance with those standards.  The Company promotes ethical behavior and encourages employees to talk to supervisors, managers, the Chief Compliance Officer, the General Counsel, or other appropriate personnel when in doubt about the best course of action in a particular situation.  For purposes of this Code, the “Chief Compliance Officer” shall be the Chief Executive Officer of the Company.   If you have any questions about the Code, or are unsure about whether an action or inaction that you intend to take is permitted under the Code, please contact our Chief Compliance Officer. Additionally, employees should report violations of laws, rules, regulations, or the Code to appropriate personnel.  Employees reporting such violations in good faith will not be subject to retaliation.  Any employee in or aware of a situation that he or she believes may violate or lead to a violation of this Code should follow the guidelines under “Whistleblower Process” below.
 
This Code covers a wide range of business practices and procedures.  It does not cover every issue that may arise, but it sets out basic principles to guide all employees of the Company.  Corporate policies and procedures provide details pertinent to many of the provisions of the Code.  Employees are expected to be aware of, and to act in accordance with, both the Code and the Company’s other policies and procedures at all times.
 
Part of your job and ethical responsibility is to help enforce this Code. You should be alert to possible violations and report possible violations to our Chief Compliance Officer pursuant to the “Whistleblower Process” described below.
 
Violations of the law, this Code or other Company policies or procedures can lead to disciplinary action up to and including employment termination.
 
APPROVALS AND WAIVERS

Certain provisions of this Code require employees to act, or refrain from acting, unless prior approval is received from the appropriate person.  Employees requesting approval pursuant to this Code should request such approval in writing to the Chief Compliance Officer.  Approvals relating to the Company’s directors or principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, must be obtained from the Company’s Audit Committee (or if none, then the Board of Directors).  All other approvals may be granted by the Chief Compliance Officer.  Employees may contact the Chief Compliance Officer for additional information on obtaining approvals.
 
 
 
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Other provisions of this Code require employees to act, or refrain from acting, in a particular matter and do not permit exceptions based on obtaining an approval.  Waiver of those provisions may only be granted by the Audit Committee (or if none, then by the Board of Directors), and any such waiver and the reasons for such waiver must be promptly disclosed to the public.  Any changes in this Code may only be made by the Board of Directors

COMPLIANCE WITH GOVERNMENT AND INDUSTRY REGULATION

You must comply with all applicable federal, state, and local laws, regulations, rules, and regulatory orders applicable to our business, including healthcare services laws and regulations.  Each employee, director, agent, contractor, and consultant must acquire appropriate knowledge of the requirements of his or her locale relating to his or her duties sufficient to enable him or her to recognize potential dangers and to know when to seek advice from our legal counsel.  Violations of laws, regulations, rules, and orders may subject the employee, director, agent, contractor, or consultant to individual criminal or civil liability, as well as to discipline by the Company.   These violations also may subject the Company to civil or criminal liability and/or the loss of business.
 
CONFLICTS OF INTEREST

Each of us has a responsibility to the Company, its stockholders, and each other. Although this duty does not prevent us from engaging in personal transactions and investments, it does demand that we avoid situations where a conflict of interest might occur or appear to occur.  We should always strive to avoid even the appearance of impropriety.
 
A conflict of interest arises any time an employee’s personal interests or activities influence his or her ability to act in the best interests of the Company.  All employees must discharge their responsibilities solely on the basis of what is in the best interest of the Company and independent of personal consideration or relationships.  Employees must disclose any potential conflicts of interest to the Chief Compliance Officer or such officer’s designees, who will advise the employee as to whether or not the Company believes a conflict of interest exists.
 
BUSINESS RELATIONSHIPS

The Company seeks to outperform its competition fairly and honestly.  The Company seeks competitive advantages through superior performance, not unethical or illegal business practices.  Each employee should endeavor to deal fairly with the Company's customers, suppliers, competitors, and employees.  None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair-dealing practice.
 
No employee may enter into any agreement binding the Company without authorization.  If there are any questions about which employees have signature authority for a given contract, contact the Chief Compliance Officer or such officer’s designee.
 
CORPORATE OPPORTUNITIES

Employees, officers, and directors may not exploit for their own personal gain opportunities that are discovered through the use of corporate property, information, or position unless the opportunity is disclosed fully in writing to our Board of Directors and the Board of Directors declines to pursue such opportunity.
 
FAIR COMPETITION

Fair competition laws, including the U.S. antitrust rules, limit what the Company can do with another company and what the Company can do on its own.  Generally, the laws are designed to prohibit agreements or actions that reduce competition and harm consumers.  Employees may not enter into agreements or discussions with competitors that have the effect of fixing or controlling prices, dividing and allocating markets or territories, or boycotting suppliers or customers.
 
 
 
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GIFTS, GRATUITIES, ENTERTAINMENT, AND OTHER CONSIDERATIONS

Use of Company funds or other Company property for illegal, unethical, or otherwise improper purposes is prohibited.  The purpose of business entertainment and gifts in a commercial setting is to create goodwill and a sound working relationship, not to gain advantage with customers or suppliers.
 
Gifts
 
Except as set out below and in the Company’s policies, or with approval, employees should refrain from giving and receiving business-related gifts.
 
 
·
No employee or agent may solicit or accept a gift (including any payment, compensation, loan, or other financial favor) having a value of more than US $100 to or from a person or organization with the intention of influencing the recipient’s business judgment or conduct.  There should always be a business benefit or purpose for accepting any gift or participating in a supplier-sponsored activity, and any benefits received should not influence, or appear to influence, selection and purchasing decisions.
 
 
·
It is never appropriate or permissible to accept or give cash or a cash equivalent from or to a vendor, supplier, or customer outside the Company’s normal business.  Cash equivalents include, among other things, checks, money orders, and vouchers.
 
 
·
No employee or agent may give business-related gifts having a value greater than US $100 to any person or organization on behalf of the Company.  Rules relating to U.S. and foreign government personnel are more stringent.
 
Loans
 
Employees may not accept loans from any person or entities having or seeking business with the Company.  Executive officers and directors may not receive loans from the Company, nor may the Company arrange for any loan.  A loan from a financial institution in ordinary course at normal interest rates prevailing at the time of borrowing is permissible.
 
Meals, Entertainment, and Travel
 
Employees may provide or accept meals, entertainment, and travel, including attendance at sporting or cultural events, as long as it is business-related.  The value of the activity must be reasonable and permissible under the Company’s expense account procedures.  Each employee should express care to ensure that such activities are necessary and that their value and frequency are not excessive under all the applicable circumstances.  Rules relating to U.S. government personnel are more stringent.
 
Bribes and Kickbacks
 
The use of Company funds, facilities, or property for any illegal or unethical purpose is strictly prohibited.
 
 
·
No employee or agent is permitted to offer, give, or cause others to give any payments or anything of value for the purpose of influencing the recipient’s business judgment or conduct other than facilitating payments.
 
 
·
Employees may not solicit or accept a kickback or bribe, in any form, for any reason.
 
FOREIGN CORRUPT PRACTICES ACT

The Company requires full compliance with the Foreign Corrupt Practices Act (“FCPA”) by all of its employees, directors, agents, contractors, and consultants.  All employees, directors, agents, contractors, and consultants, whether located in the United States or abroad, are responsible for FCPA compliance and the procedures to ensure FCPA compliance.  All managers and supervisory personnel are expected to monitor continued compliance with the FCPA to ensure compliance with the moral, ethical, and professional standards. FCPA compliance includes maintaining and managing records discussed below.  In addition, no contract or agreement may be made with any business in which a government official or employee holds a significant interest, without the prior approval of our legal counsel.
 
 
 
3
 
 
POLITICAL CONTRIBUTIONS AND LOBBYING

No political contributions are to be made using Company funds or assets to any political party, political campaign, political candidate, or public official in the United States or any foreign country, unless the contribution is lawful and expressly authorized in writing.  In addition, no employee may make a political contribution on behalf of the Company, or with the appearance that such contribution is being made on behalf of the Company, unless expressly authorized in writing.  A “contribution” is any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, services, or anything of value in connection with an election or to an organization or group formed to support or defend a referendum or ballot issue.
 
Nothing in this Code is intended to discourage employees from making contributions of their own time or funds to political parties or candidates of their choice.  However, employees will not be compensated or reimbursed by the Company for any personal contributions.
 
Employees must obtain prior approval to hire outside counsel or a public affairs firm to contact government officials regarding legislation, regulatory policy, or rule making.  This includes grassroots lobbying contacts.
 
ACCURACY OF REPORTS, RECORDS, AND ACCOUNTS

The integrity of our records and public disclosures depends on the accuracy, completeness, and validity of the information supporting the entries to our books and records.  All employees are responsible for the accuracy of such information.  The records and books of account of the Company shall meet the highest standards and accurately and fairly reflect, in reasonable detail, our assets, liabilities, revenues, costs, and expenses, as well as all transactions and changes in assets and liabilities.  Specifically, the Company requires that:
 
 
·
No entry shall be made in our books and records that intentionally hides or disguises the nature of any transaction or of any of our liabilities, or misclassifies any transactions as to accounts or accounting periods;
 
 
·
Transactions shall be supported by appropriate documentation;
 
 
·
The terms of commercial transactions shall be reflected accurately in the documentation for such transactions, and all such documentation shall be reflected accurately in our books and records;
 
 
·
Employees shall comply with our system of internal controls; and
 
 
·
No cash or other assets shall be maintained for any purpose in any unrecorded or “off the books” fund.
 
All employees must not create false or misleading documents or accounting, financial, or electronic records for any purpose, and no one may direct an employee to do so.  For example, expense reports must accurately document expenses actually incurred in accordance with our policies.  All employees must not obtain or create “false” invoices or other misleading documentation or invent or use fictitious entities, sales, purchases, services, loans, or other financial arrangements for any purpose.  No employee may take or authorize any action that would cause our financial records or disclosures to fail to comply with generally accepted accounting principles, the rules and regulations of the SEC, or other applicable laws rules and regulations.  All employees are expected to cooperate fully with our accounting department, as well as our independent public accountants and outside legal counsel, respond to their questions with candor, and provide them with complete and accurate information to help ensure our books and records (and public disclosures) are accurate and complete.
 
 
 
4
 
 
Our books and records are relied upon to produce reports for our Board of Directors, management, stockholders, creditors, and government agencies.  We also rely on our books and records, particularly those relating to financial and accounting matters, to prepare periodic reports filed with the SEC.  Employees who handle, collect, provide, or analyze information for, or contribute in any way to the preparation or review of the information used in these periodic reports should use their best efforts to ensure that the information we disclose is full, fair, and accurate.  No employee should knowingly make (or cause or encourage any other person to make) any false or misleading statement in any of our reports filed with the SEC or knowingly omit (or cause or encourage any other person to omit) any information necessary to make the disclosure in any of our reports accurate in all material respects.
 
GOVERNMENT INVESTIGATIONS

Employees must promptly notify counsel of any government investigation or inquiries from government agencies.
 
Employees must not obstruct the collection of information, data, or records.  The Company provides information to the government that it is entitled to during an inspection, investigation, or request for information.  Employees must not lie to government investigators or make misleading statements.  Employees must not attempt to cause another employee to fail to provide accurate information to government investigators.
 
INSIDER TRADING; COMMUNICATIONS WITH THIRD PARTIES

Employees, officers, and directors who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business.
 
Insider Trading
 
Inside information is material information about a publicly traded company that is not known by the public.  Information is deemed “material” if it could affect the market price of a security or if a reasonable investor would attach importance to the information in deciding whether to buy, sell, or hold a security.  Inside information typically relates to financial conditions, such as progress toward achieving revenue and earnings targets or projections of future earnings or losses of the Company.  Inside information also includes changes in strategy regarding a proposed merger, acquisition or tender offer, new products or services, contract awards, and other similar information.  Inside information is not limited to information about the Company.  It also includes material non-public information about others, including the Company’s customers, suppliers, and competitors.
 
Insider trading is prohibited by law.  It occurs when an individual with material, non-public information trades securities or communicates such information to others who trade.  The person who trades or “tips” information violates the law if he or she has a duty or relationship of trust and confidence not to use the information.
 
Trading or helping others trade while aware of inside information has serious legal consequences, even if the insider does not receive any personal financial benefit.  Insiders may also have an obligation to take appropriate steps to prevent insider trading by others.
 
Communications with the Media and the Financial Community
 
The Company communicates with the press and with the financial community through official channels only.  It is our policy to provide accurate and timely information about our business to investors, the media, and the general public.  All media inquiries and well as inquiries received from financial analysts, all legal inquiries, and all inquiries regarding current or former employees should be referred to our Chief Compliance Officer.
 
 
 
5
 
 
Confidential Information
 
One of the Company’s most important assets is proprietary and confidential information.  Employees who have access to or have possession of any proprietary or confidential information entrusted to them should maintain the confidentiality of such information, except when disclosure is authorized or legally mandated.  Confidential information includes all non-public information (whether in written or verbal form), including information that might be of use to competitors, or harmful to the Company or its customers if disclosed.
 
Employees should not share confidential information of our collaborators, license partners, or suppliers with third parties or others within the Company who have no legitimate business purpose for receiving such information.  Improper disclosure of such information by an employee would violate the confidentiality agreement between the employee and the Company, and could also constitute an illegal act resulting in civil liability and/or criminal penalties.
 
Employees should take all appropriate measures to avoid inadvertent disclosure of confidential information.  Materials that contain or might contain confidential information such as presentations, memoranda, working papers, data storage devices or disks, and laptop computers should be stored and maintained in a secure location.  Unauthorized release or posting of information concerning our business via internet is prohibited, including discussions (anonymous or not) about the Company’s business in “web logs” (also known as “blogs”) and “chat rooms.”  All Company-related correspondence, e-mail, voicemail, and electronic communications are presumed to be confidential and should not be disseminated outside of the Company, except for legitimate business purposes.
 
TECHNOLOGY USE AND PRIVACY

The Company provides various technology resources (including computers, telephones, software, copying machines, Internet access, and voice mail) to authorized employees to assist them in performing their job duties for the Company.  Each employee has the responsibility to use the Company’s technology resources in a manner that complies with applicable laws and Company policies, increases productivity, enhances the Company’s public image, and is respectful of other employees.
 
Authorization
 
Access to the Company’s technology resources is within the sole discretion of the Company and subject to Company policies.  Generally, employees are given access to the Company’s various technologies consistent with their job functions.  The Company reserves the right to limit such access by any means available to it, including revoking access altogether.
 
Prohibition against Violating Copyright Laws
 
Employees may not use the Company’s technology resources to copy, retrieve, forward, or send copyrighted materials unless the employee has the author’s permission or is accessing a single copy only for the employee’s reference.  Violation of copyright laws is a potential financial and legal liability for both the Company and the offending employee.
 
Other Prohibited Uses
 
Employees may not use any of the Company’s technology resources for any illegal purpose, in violation of any Company policy, in a manner contrary to the best interests of the Company, in any way that discloses confidential or proprietary information of the Company or third parties on an unauthorized basis, or for personal gain.
 
OUR WORK ENVIRONMENT

The Company is firmly committed to providing an equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind.  In addition, the Company strives to provide each employee with a safe and healthy work environment.  Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following health and safety rules and practices and reporting accidents, injuries, and unsafe equipment, practices, or conditions.
 
 
 
6
 
 
ENVIRONMENTAL

The Company must fully comply with all state and federal laws relating to the protection of the environment in the conduct of its business.  Employees must use, store, and dispose of all hazardous materials properly and in accordance with applicable regulations.  Employees must report, in accordance with Company policies, all circumstances under which hazardous materials or wastes come in contact with the environment, are improperly handled or disposed of, or where a potential violation of law may exist.
 
DISCIPLINARY ACTION

Any employee, officer or director who violates applicable law and regulations or any provisions of this Code will be subject to disciplinary action, up to and including termination.  Willful disregard of criminal statutes underlying this Code may require the Company to refer such violation for criminal prosecution or civil action.
 
“WHISTLEBLOWER” PROCESS

The Company is committed to maintaining an atmosphere of open communications and trust between employees and management. Furthermore, as a public company, the integrity of our financial information is paramount. Our financial information guides the decisions of the Board of Directors and is relied upon by our stockholders and the financial markets. For those reasons, we must maintain a workplace where employees who reasonably believe that they are aware of conduct in violation of the Code or our legal duties (including, but not limited to, questionable accounting, internal accounting controls, or auditing matters, or the reporting of fraudulent financial information to our stockholders, the government, or the financial markets) can raise those concerns free of any harassment, discrimination, or retaliation.
 
Reporting Procedures and Other Inquiries
 
Questions regarding the policies in this Code may be directed to the Chief Compliance Officer.  Managers and supervisors are expected to provide timely advice and guidance to employees on ethics and compliance concerns and to take a leadership role in promoting ethical business conduct.  Any employee having knowledge of, or questions or concerns about, an actual or possible violation of the provisions of this Code is obligated to immediately report the matter to his or her immediate supervisor, the Chief Compliance Officer, or the General Counsel.  In addition, employees may also report suspected violations of this Code anonymously.
 
Employees with information relating to questionable accounting or auditing matters may also confidentially, and anonymously if they desire, submit the information in writing to the Company’s Audit Committee of the Board of Directors (or if none, then to the Board of Directors) at China Jo-Jo Drugstores, Inc., Room 507-513, 5th Floor, A Building, Meidu Plaza, Gongshu District, Hangzhou, Zhejiang Province, People’s Republic of China.

When reporting an actual or possible violation, employees will be asked to provide the time, location, names of the people involved, and other details so that the Company may conduct an investigation.  The Company prohibits retaliation or retribution against any person who in good faith reports an ethical concern.  However, anyone who uses the Code or any compliance program to spread falsehoods, threaten others, or damage another person’s reputation will be subject to disciplinary action up to and including termination.

When an alleged violation of the Code is reported, the Company shall take prompt and appropriate action in accordance with the law and applicable regulations and otherwise consistent with good business practice.  Employees, officers, and directors are expected to cooperate fully with any inquiry or investigation by the Company regarding an alleged violation of this Code.  Failure to cooperate with any such inquiry or investigation may result in disciplinary action up to and including termination.
 
The Company shall determine whether violations of this Code have occurred, and if so, shall determine the disciplinary measures to be taken.  If an executive officer or director is alleged to have violated this Code, the Chief Executive Officer and the Board of Directors, respectively, shall determine whether a violation of this Code has occurred, and shall determine the disciplinary measures to be taken against such executive officer or director as a result of such violation.
 
 
 
7
 
 
This document is not an employment contract between the Company and its employees, nor does it modify their employment relationship with the Company.
 
This Code is intended to clarify each employee’s existing obligation for proper conduct.  The standards and the supporting policies and procedures may change from time to time in the Company’s discretion.  Each employee is responsible for knowing and complying with the current laws, regulations, standards, policies, and procedures that apply to the Company’s work.
 
 
 
8
 
 
ACKNOWLEDGEMENT
 
I acknowledge that I have received and read a copy of the China Jo-Jo Drugstores, Inc.’s Code of Business Conduct and Ethics (the “ Code ”).  I understand that I am responsible for knowing and complying with the policies set forth in the Code during my employment with the Company.
 
I also acknowledge my responsibility to report any violation of the Code or any of the Company’s other policies and practices to my supervisor, the Chief Compliance Officer, or the Company’s General Counsel.  I understand that violations of the Code or of any other Company policy or practice may be reported anonymously.
 
I further understand that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied.  I also understand that, consistent with applicable law, the Company has the right to amend, interpret, modify, or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.
 
I understand and agree that my relationship with the Company is “at-will,” which means that my employment is for no definite period and may be terminated by me or by the Company at any time and for any reason, with or without cause or advance notice.  I also understand that the Company may demote or discipline me, or otherwise alter the terms of my employment, at any time with or without cause or advance notice.
 
Finally, I understand and agree that the terms of this Acknowledgement, and my at-will relationship with the Company, may not be modified or superseded except by a written agreement signed by the President of the Company; that no other employee or representative of the Company has the authority to enter into any such agreement; and that any agreement inconsistent with this Acknowledgement or agreeing to employ me for a specified term will be unenforceable unless in writing and signed by the Company President.
 
 
 
Employee Name:
 
 
(please print)

   
Signature
Date

Title:
 
Dept.:
 

 
Please return this completed form to_______________________________ within one week from the date of your review of these documents.  Thank you!
 
 
 
9
 
Exhibit 99.1

 
CHINA JO-JO DRUGSTORES, INC.
LOGO
Room 507-513, 5th Floor A Building
Meidu Plaza
Gongshu District, Hangzhou
Zhejiang Province, People’s Republic of China
Tel: + 86 (571) 88077078

March 15, 2010

Via Electronic Mail

Marc Thomas Serrio
P.O. Box 91836
Pasadena, CA 91109
Tel:  (626) 755-1882
Email: mserrio@hotmail.com

 
Re:
Board of Directors – Offer Letter

Dear Mr. Serrio:

China Jo-Jo Drugstores, Inc., a Nevada corporation (the “Company”), is pleased to offer you a non-executive director position on its Board of Directors (the “Board”).  The Board’s purpose is to oversee or direct the property, affairs and business of the Company.

Should you chose to accept this position as a member of the Board, this letter shall constitute an agreement between you and the Company (the “Agreement”) and contains all the terms and conditions relating to the services you are to provide.

1 .             Term .   This Agreement shall be for the ensuing year, commencing on March 15, 2010 (the “Effective Date”). Your term as director shall continue until your successor is duly elected and qualified.  The position shall be up for re-election each year at the annual shareholder’s meeting (the “Annual Meeting”) and upon re-election, the terms and provisions of this agreement shall remain in full force and effect unless otherwise revised on such terms as mutually agreed to by you and the Company.

2 .             Services .   Based on the information you have submitted, which information has been reviewed by the Board, you shall render services on the Board as a non-executive director of the Company and on the audit committee of the Board as its chairman and “audit committee financial expert” (hereinafter your “Duties”). Every year, the Board shall hold such number meetings at such times and locations as determined by the Chairman of the Board, and you shall participate in such meetings via teleconference, video conference or in person.  Upon the reasonable request of the Chairman, you agree to use reasonable efforts to attend one or more board meetings in person (each, an “Attended Meeting”).  You shall consult with the other members of the Board as necessary via telephone, electronic mail or other forms of correspondence.  In addition, you agree to participate as necessary, in person or via teleconference or video conference, in the meetings of the audit committee. During your term as a director, you shall have access to review and inspect such documents and records of the Company as you may reasonably require to effectively carry out your Duties.
 
 
 
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3 .             Services for Others .   You will be free to represent or perform services for other persons during the term of this Agreement.  However, you agree that you do not presently perform and do not intend to perform, during the term of this Agreement, similar Duties, consulting or other services for companies whose businesses are or would be, in any way, competitive with the Company’s China-based retail drugstore chain business (except for companies previously disclosed by you to the Company in writing).  Should you propose to perform similar Duties, consulting or other services for any such company, you agree to notify the Company in writing in advance (specifying the name of the organization for whom you propose to perform such services) and to provide information to the Company sufficient to allow it to determine if the performance of such services would conflict with areas of interest to the Company.

4.             Compensation .   In consideration for your service for the ensuing year as a member of the Board, as well as the Audit Committee Chairman and Audit Committee Financial Expert, the Company agrees to pay you an annual compensation of $40,000 (the “Annual Compensation”).

The Annual Compensation shall be paid to you in such number of shares of the Company’s restricted common stock (as defined in Rule 144 promulgated under the Securities Act of 1933, as amended (the “Act”)) having the aggregate value equal to the Annual Compensation, as determined by the per share closing price of the Company’s common stock as quoted on the OTC Bulletin Board or national exchange, as applicable, on the date on which you execute this Agreement.  The restricted shares of the Company’s common stock described in this Section 4 are collectively referred to as the “Shares”, which shall be duly issued, fully paid and non-assessable upon their issuance.  The Shares shall be issued and paid quarterly, within 30 days following the end of each quarter (beginning with the quarter ending March 30, 2010) of each calendar year.  In addition, the Annual Compensation will be pro rated daily (based on a 360-day year) for any portion of the year during which you serve as a director.

If the Chairman requests your presence at an Attended Meeting, the Company agrees to reimburse all of your travel and other reasonable expenses relating to the Attended Meeting.  In addition, the Company agrees to reimburse you for reasonable expenses that you incur in connection with the performance of your duties as a director of the Company, provided that such expenses are reimbursable only against itemized invoice accompanied by valid receipts. Reimbursement of expenses shall be made following receipt of such invoice and receipts, which shall be submitted to the Company within 10 days of the end of each calendar quarter during the term of this Agreement.

For the avoidance of any doubt, the Shares and the reimbursable expenses constitute the full and final consideration for your appointment, and you shall not be entitled to any additional consideration, of any form, for your appointment and service. Your compensation as a director and for service on committees in any future periods is subject to the determination of the Board, and may differ in future periods should you continue to serve on the Board.

5.             D&O Insurance Policy . The Company agrees to obtain, within a reasonable time, Directors and Officers Liability Insurance from an internationally recognized underwriter with terms of coverage appropriate for a company of our size and nature, which shall be maintained throughout the term of this Agreement. The Company shall additionally enter into a separate indemnification agreement (the “Indemnification Agreement”) with you.

6.             Termination .   Your appointment shall terminate immediately on the occurrence of any of the following events:
 
 
 
2
 
 
a.           If you resign as a director of the Company for any reason; 

b.           If you are removed or not re-appointed as a director of the Company at an Annual Meeting in accordance with the requirements of the Nevada Revised Statutes  and/or any other applicable law or regulation and/or the Company's Articles of Incorporation and/or Bylaws;

c.           If you have been disqualified from acting as a director (including, but not limited to, an event in which you are declared insane or become of unsound mind or become physically incapable of performing your functions as director for a period of at least 60 days);

d.           Upon your death; and/or

e.           If an order of a court having jurisdiction over the Company requires you to resign.
 
Any such termination shall be without payment of damages or compensation (except that you shall be entitled to any accrued Annual Compensation or expenses properly incurred under the terms of this Agreement prior to the date of such termination).

7.             No Assignment .   Because of the personal nature of the services to be rendered by you, this Agreement may not be assigned by you without the prior written consent of the Company.

8.             Confidential Information; Non-Disclosure .   In consideration of your access to the premises of the Company and/or you access to certain Confidential Information of the Company, in connection with your business relationship with the Company, you hereby represent and agree as follows:

a .             Definition .   For purposes of this Agreement the term “Confidential Information” means:

i .            Any information which the Company possesses that has been created, discovered or developed by or for the Company, and which has or could have commercial value or utility in the business in which the Company is engaged; or

ii .            Any information which is related to the business of the Company and is generally not known by non-Company personnel.

iii .            By way of illustration, but not limitation, Confidential Information includes trade secrets and any information concerning products, processes, formulas, designs, inventions (whether or not patentable or registrable under copyright or similar laws, and whether or not reduced to practice), discoveries, concepts, ideas, improvements, techniques, methods, research, development and test results, specifications, data, know-how, software, formats, marketing plans, and analyses, business plans and analyses, strategies, forecasts, customer and supplier identities, characteristics and agreements.

b .             Exclusions .   Notwithstanding the foregoing, the term Confidential Information shall not include:

i .            Any information which becomes generally available to the public other than as a result of a breach of the confidentiality portions of this agreement, or any other agreement requiring confidentiality between the Company and you;
 
 
 
3
 
 
ii .            Information received from a third party in rightful possession of such information who is not restricted from disclosing such information; and

iii .            Information known by you prior to receipt of such information from the Company.

c .             Documents . You agree that, without the express written consent of the Company, you will not remove from the Company’s premises, any notes, formulas, programs, data, records, machines or any other documents or items which in any manner contain or constitute Confidential Information, nor will you make reproductions or copies of same.  In the event you receive any such documents or items from any duly designated or authorized personnel of the Company, you shall be deemed to have received the express written consent of the Company.  In the event that you receive any such documents or items, other than through personal delivery as described in the preceding sentence, you agree to inform the Company promptly of your possession of such documents or items.  You shall promptly return any such documents or items, along with any reproductions or copies to the Company upon the Company’s demand or upon termination of this Agreement.

d .             No Disclosure .   You agree that you will hold in trust and confidence all Confidential Information and will not disclose to others, directly or indirectly, any Confidential Information or anything relating to such information without the prior written consent of the Company, except as maybe necessary in the course of his business relationship with the Company.  You further agree that you will not use any Confidential Information without the prior written consent of the Company, except as may be necessary in the course of your business relationship with the Company, and that the provisions of this paragraph (d) shall survive termination of this agreement.

9.             Certain Representations .   You represent and agree that you are accepting the Shares for your own account and not with a view to or for sale in connection with any distribution thereof.  You understand that the Shares will be subjected to the restrictions in the Company’s Articles of Incorporation and Bylaws and will not be freely transferable. You further represent that you are an “accredited” investor as this term is defined in the Act, and that by reason of your business or financial experience, you have the capacity to protect your own interest in connection with receiving the Shares as compensation.  You further represent that you were not solicited by publication of any advertisement in connection with the receipt of the Shares and that you have consulted tax counsel as needed regarding the Shares.

10.             Independent Contractor .   In performing your services on the Board, you will be an independent contractor and not an employee of the Company. Except as set forth in this Agreement, you will not be entitled to any additional compensation or participate in any benefit plans of the Company in connection with your services on the Board.  You may not bind the Company or act as a principal or agent thereof.

11.             Entire Agreement; Amendment; Waiver; Governing Law; Attorneys’ Fees .   This Agreement and the Indemnification Agreement express the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto.  Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or waiver of any other term or condition of this Agreement.  The failure of any party at any time to require performance by any other party of any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations and enforcement of this Agreement shall be commenced exclusively in the state and federal courts sitting in the City of Las Vegas, Nevada.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Nevada, for the adjudication of any dispute hereunder or in connection herewith, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an  inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
 
 
 
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12.             Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns, except that you may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.

Please sign and return this Agreement to the Company to signify your acceptance of your appointment and of the terms set forth above.

Sincerely,

CHINA JO-JO DRUGSTORES, INC.


By: /s/ Lei Liu ___________________
Lei Liu
Chief Executive Officer



AGREED AND ACCEPTED:



/s/ Marc Thomas Serrio _______
Marc Thomas Serrio

3/15/2010 _________________
Date
 

5
Exhibit 99.2

INDEMNIFICATION AGREEMENT
 
THIS AGREEMENT is entered into, effective as of March 15, 2010 by and between China Jo-Jo Drugstores, Inc., a Nevada corporation (the “Company”), and Marc Thomas Serrio (“Indemnitee”).

WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;

WHEREAS, Indemnitee is a director of the Company; and

WHEREAS, in recognition of Indemnitee’s need for substantial protection against personal liability in order to enhance Indemnitee’s continued and effective service to the Company, and in order to induce Indemnitee to provide services to the Company as a director, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted by the laws of the Company’s state of incorporation and as set forth in this Agreement, and, to the extent insurance is maintained, for the coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

NOW, THEREFORE, in consideration of the above premises and of Indemnitee’s continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:

1.             Certain Definitions .

(a)           “ Board ” means the Board of Directors of the Company.

(b)           “ Change in Control ” shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company (collectively “excluded persons”), is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.

(c)           “ Expenses ” means any expense, liability, or loss, including attorneys’ fees, expert witness fees, judgments, fines, penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, and any federal, state, local, or foreign taxes imposes as a result of the actual or deemed receipt of any payments under this Agreement, paid or incurred in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
 
 
 
 
 
 
(d)           “ Indemnifiable Event ” means any event or occurrence that takes place either prior to or after the effective date of this Agreement, related to the fact that Indemnitee is or was a director or an officer (if the Indemnitee should be appointed as an officer) of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity.

(e)           “ Independent Counsel ” means the person or body appointed in connection with Section 3.

(f)           “ Potential Change in Control ” shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control, (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions that, if consummated, would constitute a Change in Control, (iii) any person (other than an excluded Person) who is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company’s then outstanding Voting Securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person on the date hereof, or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(g)           “ Proceeding ” means (i) any formal or informal, threatened, pending, or complete action, suit, or proceeding (including actions by or on behalf of the Company), whether civil, criminal, administrative, investigative, or other, or (ii) any formal or informal inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, or proceeding.

(h)           “ Reviewing Party ” means the person or body appointed in accordance with Section 3 of this Agreement.

(i)           “ Voting Securities ” any securities of the Company that vote generally in the election of directors.

2.             Agreement to Indemnify .

(a)            General Agreement . In the event Indemnitee was, is, or become a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall hold harmless and indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Articles of Incorporation as amended, its bylaws as amended, vote of its stockholders or disinterested directors, or applicable law.

(b)            Initiation of Proceeding . Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding, (ii) the Proceeding is a proceeding under Section 5 to enforce indemnification rights, or (iii) the Proceeding is instituted after a Change in Control and Independent Counsel has approved its initiation.

(c)            Expense Advances . If so requested by Indemnitee, the Company shall advance (within ten days of such request) any and all Expenses to Indemnitee (an “Expense Advance”); provided that such request shall be accompanied by reasonable evidence of the expenses incurred by Indemnitee and that, if and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid. If Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, as provided in Section 4, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed).
 
 
 
 
 

 
(d)            Mandatory Indemnification . Notwithstanding any other provision of this Agreement (other than Section 2(f) below), to the extent that Indemnitee has been successful on the merits in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

(e)            Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

(f)            Prohibited Indemnification . No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act or similar provisions of any federal, state or local laws.

3.             Reviewing Party . Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Reviewing Party shall be the Independent Counsel referred to below. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Articles of Incorporation as amended or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorney’s fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.
  
4.             Indemnification Process and Appeal .

(a)            Suit To Enforce Rights . Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within 10 days after making a request in accordance with Section 2(c), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation, in any appropriate court having subject matter jurisdiction thereof and in which venue is proper, seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof, provided, however, that such 10-day period shall be extended for reasonable time, not to exceed another 10 days, if the Reviewing Party in good faith requires additional time for the obtaining or evaluating of documentation and information relating thereto. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee in law or equity.

(b)            Defense to Indemnification, Burden of Proof, and Presumptions . It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Company) that is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.
 
 
 
 
 
 
5.             Indemnification For Expenses Incurred In Enforcing Rights . The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten business days of such request), advance such Expenses to Indemnitee, that are incurred by Indemnitee in connection with any claim asserted against or covered action brought by Indemnitee for (i) indemnification of Expenses or Expense Advances by the Company under this Agreement or any other agreement or under applicable law or the Company’s Articles of Incorporation as amended, or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, Expense Advances, or insurance recovery, as the case may be.

6.             Notification and Defense of Proceeding .

(a)            Notice . Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof, but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).

(b)            Defense . With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company shall promptly comply with all notification requirement of the insurance policies referenced in Section 8, and the Company shall be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof within the first three months from its receipt of Indemnitee’s notice with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ his or her own legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which case all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by, in the right of or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii) above.

(c)            Settlement of Claims . The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not plead or settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in or assume the defense of such action pursuant to this Agreement; provided, however, the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement or law.
 
 
 
 
 
 
7.             Non-Exclusivity . The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Articles of Incorporation as amended, bylaws, applicable law, or otherwise. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company’s Articles of Incorporation as amended, bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.

8.             Liability Insurance . To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liability insurance, Indemnitee shall be covered by and named as an insured in such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.

9.             Amendment of this Agreement . No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

10.            Subrogation . In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

11.            No Duplication Of Payments . The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.

12.            Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he or she may have ceased to serve in such capacity at the time of any Proceeding.

13.            Severability . If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.

14.            Governing Law; Venue . This Agreement shall be governed by and construed and enforced in accordance with the laws of Nevada applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Each party agrees that all legal proceedings concerning the interpretations and enforcement of this Agreement shall be commenced exclusively in the state and federal courts sitting in the City of Las Vegas, Nevada.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Nevada, for the adjudication of any dispute hereunder or in connection herewith, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an  inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  
 
 
 
 
 

 
15.            Notices . All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, as follows:

If to the Company:
China Jo-Jo Drugstores, Inc.
Room 507-513, 5th Floor, A Building, Meidu Plaza
Gongshu District, Hangzhou
Zhejiang Province, P.R. China
Attn: Lei Liu

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

Richardson & Patel LLP
10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024
Attn: Kevin K. Leung, Esq.
Fax: (310) 208-1154

If to Indemnitee:

Marc Thomas Serrio
P.O. Box 91836
Pasadena, California 91109

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

Rutter Hobbs & Davidoff Incorporated
1901 Avenue of the Stars, Suite 1700
Los Angeles, California 90067
Attn: Andrew M. Apfelberg, Esq.
Fax: (310) 286-1728

Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of delivery or on the third business day after mailing.
 
16.            Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Indemnification Agreement as of the day specified above.
 
 
COMPANY:

CHINA JO-JO DRUGSTORES, INC.


By:/s/ Lei Liu
      _____________________________________
Lei Liu
Chief Executive Officer



INDEMNITEE:

/s/ Marc Thomas Serrio
_________________________________________
Marc Thomas Serrio