Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RDlx6wUesCF2+fPnZuDx5WEdHPbmnAZiMwr34WDHHES7BDYFMiySGLxeflfwwdtm hlZlkr2aezJIcJYcx2hzjw== 0001193125-08-059897.txt : 20080318 0001193125-08-059897.hdr.sgml : 20080318 20080318144212 ACCESSION NUMBER: 0001193125-08-059897 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20080318 DATE AS OF CHANGE: 20080318 GROUP MEMBERS: HANMAX INVESTMENT LIMITED GROUP MEMBERS: YONGCUN CHEN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TONGJITANG CHINESE MEDICINES CO CENTRAL INDEX KEY: 0001386608 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-83729 FILM NUMBER: 08695989 BUSINESS ADDRESS: STREET 1: 5/F BLK B, BAIYING MEDICAL DEVICE PARK STREET 2: NANHAI AVENUE SOUTH, NANSHAN DISTRICT CITY: SHENZHEN, GUANGDONG STATE: F4 ZIP: 518067 BUSINESS PHONE: (86-755) 2667-0969 MAIL ADDRESS: STREET 1: 5/F BLK B, BAIYING MEDICAL DEVICE PARK STREET 2: NANHAI AVENUE SOUTH, NANSHAN DISTRICT CITY: SHENZHEN, GUANGDONG STATE: F4 ZIP: 518067 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WANG XIAOCHUN CENTRAL INDEX KEY: 0001426075 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: (86-755) 2689-1550 MAIL ADDRESS: STREET 1: 5/F, BLK B, BAIYING MEDICAL DEVICE PARK STREET 2: NANHAI AVENUE SOUTH, NANSHAN DISTRICT CITY: SHENZHEN, GUANGDONG STATE: F4 ZIP: 518067 SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. )*

Tongjitang Chinese Medicines Company

(Name of Issuer)

Ordinary Shares, par value $0.001 per ordinary share

(Title of Class of Securities)

G8918E106

(CUSIP Number)

Yongcun Chen

Suite 4209, Office Tower, Convention Plaza,

1 Harbour Road, Wanchai, Hong Kong

Telephone Number : (852) 2596-1558

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

Copy to:

Richard Vernon Smith, Esq.

Orrick, Herrington & Sutcliffe LLP

405 Howard Street

San Francisco, CA 94105

(415) 773-5700

March 8, 2008

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. x

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. G8918E106		13D		Page 2 of 24


1	NAMES OF REPORTING PERSONS Xiaochun Wang
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP	(a) x (b) ¨
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)	¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION People’s Republic of China


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER 530,000 ordinary shares
		8 SHARED VOTING POWER 52,303,892 ordinary shares
		9 SOLE DISPOSITIVE POWER 530,000 ordinary shares
		10 SHARED DISPOSITIVE POWER 52,303,892 ordinary shares


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 52,833,892 ordinary shares
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	x*
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.9%**
14	TYPE OF REPORTING PERSON IN

*	Excludes 416,000 ordinary shares beneficially owned by Mr. Yongcun Chen as to which Mr. Xiaochun Wang disclaims beneficial ownership. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

Based on 135,349,722 outstanding ordinary shares of the Issuer (including outstanding American Depositary Shares of the Issuer, each representing four ordinary shares), as reported by the management of the Issuer to counsel for the Reporting Persons on March 12, 2008, and an option to purchase 400,000 ordinary shares exercisable within 60 days of the date of this report.


CUSIP No. G8918E106		13D		Page 3 of 24


1	NAMES OF REPORTING PERSONS Hanmax Investment Limited
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP	(a) x (b) ¨
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)	¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER 0 ordinary shares
		8 SHARED VOTING POWER 52,303,892 ordinary shares
		9 SOLE DISPOSITIVE POWER 0 ordinary shares
		10 SHARED DISPOSITIVE POWER 52,303,892 ordinary shares


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 52,303,892 ordinary shares
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	x*
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.6%**
14	TYPE OF REPORTING PERSON CO

*	Excludes 946,000 ordinary shares beneficially owned by the other Reporting Persons as to which Hanmax Investment Limited disclaims beneficial ownership. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

**	Based on 135,349,722 outstanding ordinary shares of the Issuer (including outstanding American Depositary Shares of the Issuer, each representing four ordinary shares), as reported by the management of the Issuer to counsel for the Reporting Persons on March 12, 2008.


CUSIP No. G8918E106		13D		Page 4 of 24


1	NAMES OF REPORTING PERSONS Yongcun Chen
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP	(a) x (b) ¨
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)	¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION People’s Republic of China


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7 SOLE VOTING POWER 416,000 ordinary shares
		8 SHARED VOTING POWER 0 ordinary shares
		9 SOLE DISPOSITIVE POWER 416,000 ordinary shares
		10 SHARED DISPOSITIVE POWER 0 ordinary shares


11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 416,000 ordinary shares
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	x*
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3%**
14	TYPE OF REPORTING PERSON IN

*	Excludes 52,833,892 ordinary shares beneficially owned by the other Reporting Persons as to which Mr. Yongcun Chen disclaims beneficial ownership. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

Item 1.

Security and Issuer.

The class of equity securities to which this Statement on Schedule 13D (“Schedule 13D”) relates is the ordinary shares, $0.001 par value per ordinary share (the “Ordinary Shares”), of Tongjitang Chinese Medicines Company (the “Issuer”), incorporated under the laws of the Cayman Islands. American Depositary Shares (each an “ADS”) of the Issuer are listed on the New York Stock Exchange under the symbol “TCM”. Each ADS represents four Ordinary Shares. The Issuer’s principal executive offices are located at 5th Floor, Block B, Baiying Medical Device Park, Nanhai Avenue South, Nanshan District, Shenzhen, Guangdong Province 518067, People’s Republic of China. The Reporting Persons previously reported their beneficial ownership of Ordinary Shares on Schedule 13G statements filed with the Securities and Exchange Commission on February 13, 2008.

Item 2.

Identity and Background.

This Schedule 13D is being filed jointly by Mr. Xiaochun Wang, Hanmax Investment Limited, a company incorporated under the laws of the British Virgin Islands (“Hanmax”), and Mr. Yongcun Chen (collectively, the “Reporting Persons”).

Mr. Wang serves as the chairman of the board of directors and chief executive officer of the Issuer. Mr. Wang is a citizen of the People’s Republic of China.

Hanmax is an investment holding company incorporated under the laws of the British Virgin Islands, wholly owned and controlled by Mr. Wang. Mr. Wang is the sole shareholder, officer and director of Hanmax. The principal business address of Mr. Wang and Hanmax is 5th Floor, Block B, Baiying Medical Device Park, Nanhai Avenue South, Nanshan District, Shenzhen, Guangdong Province 518067, People’s Republic of China.

Mr. Chen’s present principal occupation is serving as a director of CII Limited, an investment company. Mr. Chen also serves as a director of the Issuer. Mr. Chen is a citizen of the People’s Republic of China. The principal business address of Mr. Chen and CII Limited is Suite 4209, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong.

None of the Reporting Persons, during the last five years, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Item 3.

Source and Amount of Funds or Other Consideration.

In consideration for services rendered to the Issuer, Mr. Wang acquired from the Issuer (i) 400,000 Ordinary Shares as the result of a restricted stock grant (further described in Item 6) and (ii) an option to purchase 1,200,000 Ordinary Shares (further described in Item 6) of which one-third has vested.

Hanmax acquired 52,303,892 Ordinary Shares in a share swap transaction from Mr. Wang prior to the Issuer’s initial public offering, whereby Hanmax issued its shares exclusively to Mr. Wang in exchange for the Issuer’s shares then held by Mr. Wang.

In consideration for services rendered to the Issuer, Mr. Chen acquired from the Issuer (i) 50,000 Ordinary Shares as the result of a restricted stock grant (further described in Item 6) and (ii) an option to purchase 1,200,000 Ordinary Shares (further described in Item 6) of which one-third has vested.

For each Reporting Person, no borrowed funds were used to purchase any Ordinary Shares, other than any borrowed funds used for working capital purposes in the ordinary course of business.

Item 4.

Purpose of Transaction.

On March 9, 2008, Mr. Chen and Mr. Wang (collectively, the “Management Group”) submitted a proposal (the “Proposal Letter”) to the Issuer’s Board of Directors (the “Board”) pursuant to which the Management Group proposed to acquire all of the outstanding Ordinary Shares of the Issuer (including Ordinary Shares outstanding in the form of ADSs) in a transaction (the

“Transaction”) that would result in the Issuer becoming a privately-held company owned solely by the Management Group. The Management Group is prepared to value the Issuer at U.S.$2.55 per share (or U.S.$10.20 per ADS), which represents approximately a 54.78% premium to the New York Stock Exchange closing sale price of U.S. $6.59 per ADS on Friday, March 7, 2008 (each ADS represents four Ordinary Shares). The Proposal Letter is conditioned upon, among other things, the execution of mutually satisfactory definitive agreements.

The Management Group expects that the Board will form a special committee (the “Committee”), wholly comprised of independent directors, to respond to the Proposal Letter and that the Committee will retain its own legal and financial advisors to assist in this process. The Management Group does not intend to pursue the Transaction without the approval of the Committee.

If the Transaction is consummated, (i) the registered securities of the Issuer would become eligible for termination of registration pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Act”), (ii) the ADSs would be delisted from the New York Stock Exchange, (iii) the memorandum and articles of association of the Issuer may be amended or changed to the extent that such amendments or changes are deemed necessary or appropriate to carry out the Transaction, and (iv) the Issuer would be combined with a newly formed acquisition vehicle pursuant to a scheme of amalgamation under the Companies Act of the Cayman Islands (the product of such amalgamation, the “New Entity”).

Further, if the Transaction is consummated, the Management Group anticipates that (i) Mr. Xiaochun Wang will serve as chairman and chief executive officer of the New Entity, (ii) the New Entity will be operated in accordance with the Issuer’s current practice, with such changes as may be necessary in the long-term competitive environment to realize the New Entity’s business objectives, and (iii) the New Entity will maintain the Issuer’s valuable employee base.

A copy of the Proposal Letter is filed herewith as Exhibit 1 and the foregoing summary of the Proposal Letter is qualified by reference to the full text thereof.

Except as described elsewhere in this Schedule 13D, the Reporting Persons have no present plans or proposals that relate to or would result in any of the actions or transactions described in paragraphs (a) through (j) of Item 4 of Schedule 13D. However, if the Transaction does not occur for any reason, the Reporting Persons intend to evaluate on an ongoing basis the Issuer’s financial condition and prospects and their interest in, and intentions with respect to, the Issuer. Accordingly, each Reporting Person reserves the right to change its intentions and develop plans or proposals at any time, as it deems appropriate. In particular, each Reporting Person may at any time and from time to time, in privately negotiated transactions or otherwise, acquire additional securities of the Issuer; dispose of all or a portion of the securities of the Issuer, including the Ordinary Shares described in Item 5 below, that the Reporting Persons now own or may hereafter acquire; and/or enter into derivative transactions with institutional counterparties with respect to the Issuer’s securities. In addition, the Reporting Persons may engage in discussions with management, the Board, other shareholders of the Issuer and other relevant parties concerning the business, operations, board composition, management, strategy and future plans of the Issuer. The Reporting Persons reserve the right to take any and all actions that they may deem appropriate to maximize the value of their investment in the Isssuer in light of market conditions, subsequent developments affecting the Issuer and the general business and future prospects of the Issuer. However, presently the Reporting Persons are only interested in pursuing the proposed Transaction and do not intend to sell Ordinary Shares beneficially owned by them.

Item 5.

Interest in Securities of the Issuer.

(a)

The Reporting Persons comprise a group within the meaning of Section 13(d)(3) of the Act. As a result, each Reporting Person may be deemed to beneficially own 53,249,892 Ordinary Shares, representing approximately 39.1% of the Ordinary Shares outstanding as reported by the management of the Issuer to counsel for the Reporting Persons on March 12, 2008 plus options to purchase a total of 800,000 Ordinary Shares exercisable within 60 days of the date of this report.

(i)

Mr. Wang beneficially owns 52,833,892 Ordinary Shares (consisting of 530,000 Ordinary Shares held directly by Mr. Wang and 52,303,892 Ordinary Shares held directly by Hanmax), constituting approximately 38.9% of the outstanding Ordinary Shares. Mr. Wang disclaims beneficial ownership of 416,000 ordinary shares beneficially owned by Mr. Chen. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

(ii)

Hanmax beneficially owns 52,303,892 Ordinary Shares, constituting approximately 38.6% of the outstanding Ordinary Shares. Hanmax Investment Limited disclaims beneficial ownership of 946,000 ordinary shares beneficially owned by the other Reporting Persons. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

(iii)

Mr. Chen beneficially owns 416,000 Ordinary Shares, constituting approximately 0.3% of the outstanding Ordinary Shares. Mr. Chen disclaims beneficial ownership of 52,833,892 ordinary shares beneficially owned by the other Reporting Persons. This report shall not be construed as an admission that such person is the beneficial owner of such shares.

(b)

Each Reporting Person has the sole power to vote or direct the vote and to dispose or direct the disposition of the following number of Ordinary Shares:

(i)

Mr. Wang: 530,000 Ordinary Shares (consisting of 400,000 Ordinary Shares that are issuable upon the exercise of options exercisable within 60 days of the date of this report and 130,000 Ordinary Shares that were issued to Mr. Wang pursuant to a restricted shares award agreement and subsequently vested).

(ii)

Hanmax: 0 Ordinary Shares.

(iii)

Mr. Chen: 416,000 Ordinary Shares (consisting of 400,000 ordinary shares that are issuable upon the exercise of options exercisable within 60 days of the date of this report and 16,000 ordinary shares that were issued to Mr. Chen pursuant to a restricted shares award agreement and subsequently vested).

Each Reporting Person has the shared power to vote or direct the vote and to dispose or direct the disposition of the following number of Ordinary Shares:

(i)

Mr. Wang: 52,303,892 Ordinary Shares.

(ii)

Hanmax: 52,303,892 Ordinary Shares.

(iii)

Mr. Chen: 0 Ordinary Shares.

(c)

Each Reporting Person has not engaged in any transaction in the Ordinary Shares during the past 60 days.

(d)

No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities discussed above.

(e)

Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Pursuant to a Restricted Shares Award Agreement between Mr. Wang and the Issuer, dated as of August 13, 2007, a copy of which is filed herewith as Exhibit 3, the Issuer granted to Mr. Wang 400,000 Ordinary Shares in the form of restricted shares (“Mr. Wang’s Restricted Shares”), subject to a three-year staged (non-linear) vesting. As of the date hereof, 32.5% of Mr. Wang’s Restricted Shares have vested. On June 30, 2008, an additional 32.5% of Mr. Wang’s Restricted Shares will vest. On June 30, 2009, the remaining 35% of Mr. Wang’s Restricted Shares will vest. Mr. Wang’s Restricted Shares which are not vested cannot be voted or disposed of by him.

Pursuant to a Share Option Agreement between Mr. Wang and the Issuer, dated as of August 13, 2007, a copy of which is filed herewith as Exhibit 4, the Issuer granted to Mr. Wang the option to purchase 1,200,000 Ordinary Shares (“Mr. Wang’s Options”) , subject to a three-year staged (non-linear) vesting. As of the date hereof, one-third of Mr. Wang’s Options has vested and may be exercised by him. As to the remaining two-thirds, one-third will vest on June 30, 2008 and the remaining one-third will vest on June 30, 2009.

Pursuant to a Restricted Shares Award Agreement between Mr. Chen and the Issuer, dated as of August 13, 2007, a copy of which is filed herewith as Exhibit 5, the Issuer granted to Mr. Chen 400,000 Ordinary Shares in the form of restricted shares (“Mr. Chen’s Restricted Shares”), subject to a three-year staged (non-linear) vesting. As of the date hereof, 32% of Mr. Chen’s Restricted Shares have vested. On June 30, 2008, an additional 32% of Mr. Chen’s Restricted Shares will vest. On June 30, 2009, the remaining 36% of Mr. Chen’s Restricted Shares will vest. Mr. Chen’s Restricted Shares which are not vested cannot be voted or disposed of by him.

Pursuant to a Share Option Agreement between Mr. Chen and the Issuer, dated as of August 13, 2007, a copy of which is filed herewith as Exhibit 6, the Issuer granted to Mr. Chen the option to purchase 1,200,000 Ordinary Shares (“Mr. Chen’s Options”) , subject to a three-year staged (non-linear) vesting. As of the date hereof, one-third of Mr. Chen’s Options has vested and may be exercised by him. As to the remaining two-thirds, one-third will vest on June 30, 2008 and the remaining one-third will vest on June 30, 2009.

Pursuant to a Shareholders Agreement, dated as of November 8, 2006, a copy of which is filed herewith as Exhibit 7, Mr. Wang must continue to own or control, directly or indirectly, 75% of the Ordinary Shares that he beneficially owned or controlled prior the Issuer’s initial public offering on March 15, 2007 for the two year period following the closing of public offering.

The foregoing summaries of the agreements specified above and filed herewith or incorporated herein by reference are qualified by reference to the full text of each such agreement.

The Reporting Persons maintain an informal, unwritten understanding that they will hold and vote as a group their collective share holdings with respect to which they have dispositive and voting power on all matters involving action by shareholders of the Issuer. Consistent with their informal understanding, no Reporting Person is legally bound to hold their shares or vote with the other Reporting Persons.

Except as reported elsewhere in this Schedule 13D, there are no contracts, arrangements, understandings or relationships among the Reporting Persons and any other person with respect to any securities of the Issuer, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Issuer, finders fees, joint ventures, loan or option arrangements, puts or calls, guarantees or profits or loss, or the giving or withholding of proxies.

Item 7.

Material to be filed as Exhibits.



Exhibit 1	–	Letter, dated March 9, 2008, from Mr. Xiaochun Wang and Mr. Yongcun Chen to the Board of Directors of Tongjitang Chinese Medicines Company

Exhibit 2	–	Joint Filing Agreement

Exhibit 3	–	Restricted Shares Award Agreement, between Mr. Wang and the Issuer, dated as of August 13, 2007

Exhibit 4	–	Share Option Agreement, between Mr. Wang and the Issuer, dated as of August 13, 2007

Exhibit 5	–	Restricted Shares Award Agreement, between Mr. Chen and the Issuer, dated as of August 13, 2007

Exhibit 6	–	Share Option Agreement, between Mr. Chen and the Issuer, dated as of August 13, 2007

Exhibit 7	–	Shareholders’ Agreement, dated as of November 8, 2006, among the Issuer and certain shareholders thereof (incorporated herein by reference to Exhibit 4.4 to the Issuer’s F-1 Registration Statement filed on February 26, 2007)

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


March 18, 2008				/s/ Xiaochun Wang
				Xiaochun Wang

				HANMAX INVESTMENT LIMITED

March 18, 2008				/s/ Xiaochun Wang
				Xiaochun Wang
				Director

March 18, 2008				/s/ Yongcun Chen
				Yongcun Chen

EX-99.1 2 dex991.htm LETTER, DATED MARCH 9, 2008 Letter, dated March 9, 2008

Exhibit 1

March 9, 2008

Board of Directors

Tongjitang Chinese Medicines Company

5th Floor, Block B, Baiying Medical Device Park

Nanhai Avenue South, Nanshan District

Shenzhen, Guangdong Province 518067

People’s Republic of China

Members of the Board of Directors:

Xiaochun Wang and Yongcun Chen (the “Management Group”), who collectively own or have beneficial interests in approximately 39% of the outstanding ordinary shares of Tongjitang Chinese Medicines Company (the “Company”), are pleased to submit this proposal to acquire all of the outstanding ordinary shares of the Company (including ordinary shares outstanding in the form of American Depositary Shares, or ADSs) in a transaction that would result in the Company becoming a privately-held holding company owned solely by the Management Group.

We are prepared to value the Company at US$2.55 per share (or US$10.20 per ADS), which represents a 54.78% premium to the closing price of US$6.59 per ADS on Friday, March 07, 2008. Our proposal assumes an all cash purchase price.

We are actively engaged in the process of arranging committed financing from a lending syndicate and expect to be in a position shortly to provide the Board of Directors firm commitment letters.

The proposed structure of the transaction would be a one-step combination of the Company with a newly formed acquisition vehicle (“Newco”) pursuant to a scheme of amalgamation under the Companies Act of the Cayman Islands. The terms of the transaction will be specified in a definitive amalgamation agreement to be negotiated between us and the Company (the “Amalgamation Agreement”). The Amalgamation Agreement, upon completion and execution by the parties, will be submitted to the Cayman Islands Grand Court (the “Court”) under a petition requesting the Court to convene the required meetings of the Company’s shareholders to consider and approve the transaction. Thereafter, assuming the requisite shareholder approvals are obtained, we will petition the Court to file an order with the Registrar of Companies approving the scheme of amalgamation, whereupon the scheme of amalgamation will become binding on all of the Company’s shareholders.

Following the transaction, we expect that Xiaochun Wang will continue to serve as Chairman and Chief Executive Officer. In addition, we anticipate that we will continue to run the business in accordance with the Company’s current practice, with such changes as may be necessary to meet the long-term competitive environment and to realize our business objectives. We expect to maintain the Company’s valuable employee base, which we view as one of its most important assets.

Given our involvement with the Company, we anticipate that the Board of Directors will promptly form a special committee of independent directors (the “Committee”) to respond to our proposal on behalf of the Company’s public shareholders. We encourage the Committee to retain its own legal and financial advisors to assist in its review of our proposal.

The Board of Directors should be aware that we do not intend to pursue our proposal without the approval of the Committee. Accordingly, we request the opportunity to present fully our proposal to the Committee and answer any questions at the Committee’s earliest convenience. We will soon be prepared to provide the Committee and its legal and financial advisors with a draft Amalgamation Agreement and any other related agreements documenting the proposed transaction and to expeditiously negotiate definitive forms of such agreements. Of course, neither the Company, on the one hand, nor the Management Group, on the other, will have any legal obligation relating to the proposed transaction until mutually satisfactory definitive agreements have been executed by all parties.

We will, of course, promptly file with the SEC a Schedule 13D in compliance with our legal obligations, which will include a copy of this letter.

Again, we welcome the opportunity to discuss with you all aspects of this proposal and are prepared to commence negotiations with respect to the transaction immediately. Please contact us at your earliest convenience.

We look forward to hearing from you and appreciate your consideration of this important matter.

Sincerely,

/s/ Xiaochun Wang

Xiaochun Wang

/s/ Yongcun Chen

Yongcun Chen

EX-99.2 3 dex992.htm JOINT FILING AGREEMENT Joint Filing Agreement

Exhibit 2

JOINT FILING AGREEMENT

Pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to file a joint statement containing the information required by Schedule 13D, including any amendments thereto, with respect to the beneficial ownership by each of the undersigned of Ordinary Shares of Tongjitang Chinese Medicines Company.

The undersigned and each other person executing this joint filing agreement (this “Agreement”) also agree as follows:

(i) The undersigned executing this Agreement are individually eligible to use the Schedule 13D to which this Exhibit is attached and such Schedule 13D is filed on behalf of the undersigned and each other person executing this Agreement; and

(ii) The undersigned executing this Agreement are responsible for the timely filing of such Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of the undersigned or any other person executing this Agreement is responsible for the completeness or accuracy of the information statement concerning any other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate.

This agreement may be executed in any number of counterparts, each of which shall be deemed an original.


March 18, 2008				/s/ Xiaochun Wang
				Xiaochun Wang

				HANMAX INVESTMENT LIMITED

March 18, 2008				/s/ Xiaochun Wang
				Xiaochun Wang
				Director

March 18, 2008				/s/ Yongcun Chen
				Yongcun Chen

EX-99.3 4 dex993.htm RESTRICTED SHARES AWARD AGREEMENT, BETWEEN MR. WANG AND THE ISSUER Restricted Shares Award Agreement, between Mr. Wang and the Issuer

Exhibit 3

TONGJITANG CHINESE MEDICINES COMPANY

RESTRICTED SHARES AWARD AGREEMENT

Name: WANG, Xiaochun

Address: Flat B, 27/F., Block 1,

Huayuan Mansion,

3500 Kaixuan Road,

Shanghai, China

Signature: /s/ Xiaochun Wang

2006 Share Incentive Plan

Grant: 400,000 ordinary shares (the “Restricted Shares”)

of Tongjitang Chinese Medicines Company (the

“Company”)

Grant Price: US$0.00 Per Share

Grant Date: August 13, 2007

Vesting Commencement Date: August 13, 2007

Effective on the Grant Date you have been granted the Restricted Shares of the Company, in accordance with the provisions of the Tongjitang Chinese Medicines Company 2006 Share Incentive Plan (the “Plan”) and subject to the restrictions, terms and conditions set forth herein.

The Restricted Shares will vest in accordance with the following schedule:

32.5% of the Restricted Shares will be vested on August 13, 2007,

32.5% of the Restricted Shares will be vested on June 30, 2008, and

35% of the Restricted Shares will be vested on June 30, 2009.

Once vested, the Restricted Shares will no longer be subject to forfeiture and the restrictions contained in this Agreement.

In the event of the termination of your employment or service for any reason, whether such termination is occasioned by you, by the Company or any of its Subsidiaries, with or without cause or by mutual agreement (“Termination of Service”), prior to vesting in the Restricted Shares, your right to any unvested Restricted Shares will terminate effective as of the earlier of: (i) the date that you give or are provided with written notice of Termination of Service, or (ii) if you are an employee of the Company or any of its Subsidiaries, the date that you are no longer actively employed and physically present on the premises of the Company or any of its Subsidiaries, regardless of any notice period or period of pay in lieu of such notice required under any applicable statute or the common law (each, the “Notice Period”). For greater clarity, you have no rights to vest in Restricted Shares during the Notice Period.

Notwithstanding the foregoing, the Restricted Shares will fully vest and no longer be subject to forfeiture and the restrictions contained in this Agreement if your Termination of Service is as a result of death.

Until vested, the Restricted Shares are not transferable and may not be sold, pledged or otherwise transferred.

The Company may but is not obligated to cause to be issued one or more share certificates, registered in your name, evidencing the Restricted Shares or may hold the Restricted Shares in book form. If the Company issues certificate(s) evidencing the Restricted Shares each such certificate will bear the following legend:

The shares represented by this certificate are subject to forfeiture and the transferability of this certificate and the shares represented hereby are subject to the restrictions, terms and conditions (including restrictions against transfer) contained in Tongjitang Chinese Medicines Company 2006 Share Incentive Plan and a Restricted Shares Award Agreement dated thereof, entered into between the registered owner of such shares and Tongjitang Chinese Medicines Company.

Each such certificate, together with powers duly executed in blank related to such Restricted Shares, will be deposited with the Secretary of the Company or a custodian designated by the Secretary. The Secretary or custodian will issue a receipt to you evidencing the certificates held that are registered in your name. Following the vesting of any of your Restricted Shares, the Company will cause to be issued and delivered to you certificates evidencing such Restricted Shares, free of the legend provided above.

You will not be entitled to receive dividends paid on the ordinary shares of the Company, if any, until the Restricted Shares are vested. You will not be entitled to vote the Restricted Shares until such Restricted Shares are vested. Only the vested portion of the Restricted Shares shall entitle the holder thereof to receive dividends, if any, and voting right.

The Company has the authority to deduct or withhold, or require you to remit to the Company, an amount sufficient to satisfy applicable federal, state, local and foreign taxes arising from this Restricted Shares Award. You may satisfy your tax obligation, in whole or in part, by: (i) electing to have the Company withhold shares of your Restricted Shares otherwise to be delivered with a fair market value equal to the minimum amount of the tax withholding obligation; (ii) surrendering to the Company previously owned Restricted Shares with a fair market value equal to the minimum amount of the tax withholding obligation; or (iii) paying over to the Company in cash the amount of tax withholding obligation.

You acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. The Company, its affiliates and your employer hold certain personal information, including your name, home address and telephone number, date of birth, identification number, salary, nationality, job title, any shares awarded, cancelled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the PRC or elsewhere such as the European Economic Area or the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares on your behalf to a broker or other third party with whom you may elect to deposit any shares acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect your ability to participate in the Plan.

Your participation in the Plan is voluntary. The value of the Restricted Shares Award is an extraordinary item of compensation outside the scope of your employment contract, if any. As such, the Restricted Shares Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pensions or retirement benefits or similar payments unless specifically and otherwise provided. Rather, the awarding of Restricted Shares under the Plan represents a mere investment opportunity.

This Restricted Shares Award is granted under and governed by the terms and conditions of the Plan. You acknowledge and agree that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of a Restricted Shares Award under the Plan is a one-time benefit and does not create any contractual or other right to receive an award of Restricted Shares or benefits in lieu of Restricted Shares in the future. Future awards of Restricted Shares, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of the award, the number of shares, and vesting provisions. The Plan has been introduced voluntarily by the Company and in accordance with the provisions of the Plan may be terminated by the Company at any time. By execution of this Agreement, you consent to the provisions of the Plan and this Agreement. Defined terms used herein shall have the meaning set forth in the Plan, unless otherwise defined herein.

COMPANY:

TONGJITANG CHINESE MEDICINES COMPANY

/s/ Shaolan Wang

Name: WANG, Shaolan

Title: CFO

ACKNOWLEDGED AND AGREED BY:

/s/ Xiaochun Wang

Name: WANG, Xiaochun

EX-99.4 5 dex994.htm SHARE OPTION AGREEMENT, BETWEEN MR. WANG AND THE ISSUER Share Option Agreement, between Mr. Wang and the Issuer

Exhibit 4

TONGJITANG CHINESE MEDICINES COMPANY

SHARE OPTION AGREEMENT

Name: WANG, Xiaochun

Address: Flat B, 27/F., Block 1,

Huayuan Mansion,

3500 Kaixuan Road,

Shanghai, China

Nonqualified Option

Plan: 2006 Share Incentive Plan

Grant: Option to purchase 1,200,000 ordinary shares (“Shares”) of Tongjitang Chinese Medicines

Company (the “Company”)

Exercise Price: US$2.91 Per Share

Grant Date: August 13, 2007

Vesting Commencement Date: August 13, 2007

Effective on the Grant Date, you have been granted an the option to purchase the number of Shares of the Company at the exercise price designated above, in accordance with the provisions of Tongjitang Chinese Medicines Company 2006 Share Incentive Plan, as amended (the “Plan”). This option may be exercised for whole shares only.

This option will vest and may be exercised in accordance with the following schedule:

Subject to the terms of this Share Option Agreement, one third [1/3] of the Shares (rounded down to the next whole number of Shares) shall vest on August 13, 2007, one third [1/3] of the Shares shall vest on June 30, 2008, and one third [1/3] of the Shares shall vest on June 30, 2009.

In the event of the termination of your employment or service for any reason, whether such termination is occasioned by you, by the Company or any of its Subsidiaries or Related Entities, with or without cause or by mutual agreement (“Termination of Service”), your right to vest in your option under the Plan, if any, will terminate effective as of the earlier of: (i) the date that you give or are provided with written notice of Termination of Service, or (ii) if you are an employee of the Company or any of its Subsidiaries, the date that you are no longer actively employed and physically present on the premises of the Company or any of its Subsidiaries, regardless of any notice period or period of pay in lieu of such notice required under any applicable statute or the common law (each, the “Notice Period”). For greater clarity, you have no rights to vest in your option during the Notice Period.

The option may not be exercised until vested. Once vested, the option may be exercised in whole or any part, at any time. However, a vested option must be exercised, if at all, prior to the earlier of:

(a)

one year following your Termination of Service with the Company, its Subsidiaries and Related Entities by reason of death, or Disability;

(b)

30 days following your last day of active employment or service with or for the Company, its Subsidiary or Related Entities for any reason other than death or Disability; for this purpose your last day of active employment or service will be deemed to occur on the date of the closing of the sale of all or substantially all of the stock or assets of a Subsidiary or Related Entity for which you are employed at the time of the transaction;

(c)

the tenth anniversary of the Grant Date;

and if not exercised prior thereto shall terminate and no longer be exercisable.

The option will be deemed exercised upon your completing the exercise procedures established by the Company and your payment of the option exercise price per share and any applicable tax withholding to the Company. Payment may be made in cash or such other method as the Company may permit from time to time as set forth in the Plan.

The Shares acquired upon exercise of the option may in the discretion of the Company be subject to such restrictions as the Company may require such as rights of first refusal, rights of repurchase or requirements that you consent not to transfer the Shares for a period of time in connection with any public offering of the Shares.

If designated as an Incentive Share Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the U.S. Internal Revenue Code of 1986, as amended. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to an Option designated as an Incentive Share Option which become exercisable for the first time by the Grantee during any calendar year exceeds US $100,000, such excess options, to the extent the Shares covered thereby is in excess of the foregoing limitation, shall be treated as a Nonqualified Option. For this purpose, Incentive Share Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded.

In addition, if designated as an Incentive Share Option, such Incentive Share Option shall cease to be treated as an Incentive Share Option and shall be treated as a Nonqualified Option on the day three (3) months and one (1) day following the date you cease to be an employee of the Company.

The Company has the authority to deduct or withhold, or require you to remit to the Company, an amount sufficient to satisfy applicable federal, state, local and foreign taxes arising from this option. You may satisfy your tax obligation, in whole or in part, by either: (i) electing to have the Company withhold Shares otherwise to be delivered with a fair market value equal to the minimum amount of the tax withholding obligation; or (ii) surrendering to the Company previously owned Shares with a fair market value equal to the minimum amount of the tax withholding obligation.

This option is not transferable except by will or the laws of descent and distribution.

You acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. The Company, its affiliates and your employer hold certain personal information, including your name, home address and telephone number, date of birth, social security number or other employee tax identification number, salary, nationality, job title, any shares of stock awarded, cancelled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, the PRC or elsewhere such as the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with

whom you may elect to deposit any shares of stock acquired pursuant to the Plan. You may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect your ability to participate in the Plan.

Your participation in the Plan is voluntary. The value of the option is an extraordinary item of compensation outside the scope of your employment contract, if any. As such, the option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pensions or retirement benefits or similar payments unless specifically and otherwise provided. Rather, the awarding of an option under the Plan represents a mere investment opportunity.

This option is granted under and governed by the terms and conditions of the Plan. You acknowledge and agree that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of an option under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of options or benefits in lieu of options in the future. Future grants of options, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of the grant, the number of options, vesting provisions, and the exercise price. The Plan has been introduced voluntarily by the Company and in accordance with the provisions of the Plan may be terminated by the Company at any time. By execution of this Agreement, you consent to the provisions of the Plan and this Agreement. Defined terms used herein shall have the meaning set forth in the Plan, unless otherwise defined herein.

COMPANY:

TONGJITANG CHINESE MEDICINES COMPANY

/s/ Shaolan Wang

Name: WANG, Shaolan

Title: CFO

ACKNOWLEDGED AND AGREED BY:

/s/ Xiaochun Wang

Name: WANG, Xiaochun

EX-99.5 6 dex995.htm RESTRICTED SHARES AWARD AGREEMENT, BETWEEN MR. CHEN AND THE ISSUER Restricted Shares Award Agreement, between Mr. Chen and the Issuer

Exhibit 5

TONGJITANG CHINESE MEDICINES COMPANY

RESTRICTED SHARES AWARD AGREEMENT

Name: CHEN, Yongcun

Address: Suite 4209, Office Tower,

Convention Plaza,

1 Harbour Road, Wanchai,

Hong Kong

Signature: /s/ Yongcun Chen

2006 Share Incentive Plan

Grant: 50,000 ordinary shares (the “Restricted Shares”) of

Tongjitang Chinese Medicines Company (the

“Company”)

Grant Price: US$0.00 Per Share

Grant Date: August 13, 2007

Vesting Commencement Date: August 13, 2007

The Restricted Shares will vest in accordance with the following schedule:

32% of the Restricted Shares will be vested on August 13, 2007,

32% of the Restricted Shares will be vested on June 30, 2008, and

36% of the Restricted Shares will be vested on June 30, 2009.

Once vested, the Restricted Shares will no longer be subject to forfeiture and the restrictions contained in this Agreement.

Until vested, the Restricted Shares are not transferable and may not be sold, pledged or otherwise transferred.

COMPANY:

TONGJITANG CHINESE MEDICINES COMPANY

/s/ Xiaochun Wang

Name: WANG, Xiaochun

Title: CEO

ACKNOWLEDGED AND AGREED BY:

/s/ Yongcun Chen

Name: CHEN, Yongcun

EX-99.6 7 dex996.htm SHARE OPTION AGREEMENT, BETWEEN MR. CHEN AND THE ISSUER Share Option Agreement, between Mr. Chen and the Issuer

Exhibit 6

TONGJITANG CHINESE MEDICINES COMPANY

SHARE OPTION AGREEMENT

Name: CHEN, Yongcun

Address: Suite 4209, Office Tower,

Convention Plaza,

1 Harbour Road, Wanchai,

Hong Kong

Nonqualified Option

Plan: 2006 Share Incentive Plan

Grant: Option to purchase 1,200,000 ordinary shares

(“Shares”) of Tongjitang Chinese Medicines

Company (the “Company”)

Exercise Price: US$2.91 Per Share

Grant Date: August 13, 2007

Vesting Commencement Date: August 13, 2007

This option will vest and may be exercised in accordance with the following schedule:

(a)

one year following your Termination of Service with the Company, its Subsidiaries and Related Entities by reason of death, or Disability;

(b)

(c)

the tenth anniversary of the Grant Date;

and if not exercised prior thereto shall terminate and no longer be exercisable.

The Company has the authority to deduct or withhold, or require you to remit to the Company, an amount sufficient to satisfy applicable federal, state, local and foreign taxes arising from this option. You may satisfy your tax obligation, in whole or in part, by either: (i) electing to have the Company withhold Shares otherwise to be delivered with a fair market value equal to the minimum amount of the tax withholding obligation; or (ii) surrendering to the Company previously owned Shares with a fair market value equal to the minimum amount of the tax withholding obligation.

This option is not transferable except by will or the laws of descent and distribution.

You acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph. The Company, its affiliates and your employer hold certain personal information, including your name, home address and telephone number, date of birth, social security number or other employee tax identification number, salary, nationality, job title, any shares of stock awarded, cancelled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, the PRC or elsewhere such as the United States. You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other third party with

COMPANY:

TONGJITANG CHINESE MEDICINES COMPANY

/s/ Xiaochun Wang

Name: WANG, Xiaochun

Title: CEO

ACKNOWLEDGED AND AGREED BY:

/s/ Yongcun Chen

Name: CHEN, Yongcun

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