EXHIBIT 10.4
April 30, 2005
Chardan China Acquisition Corp. II
625 Broadway
Suite 1111
San Diego, California 92101
EarlyBirdCapital, Inc.
275 Madison Avenue
Suite 1203
New York, New York 10016
Re: Initial Public Offering
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Gentlemen:
The undersigned stockholder, officer and director of Chardan China
Acquisition Corp. II ("Company"), in consideration of EarlyBirdCapital, Inc.
("EBC") entering into a letter of intent ("Letter of Intent") to underwrite an
initial public offering of the securities of the Company ("IPO") and embarking
on the IPO process, hereby agrees as follows (certain capitalized terms used
herein are defined in paragraph 12 hereof):
1. If the Company solicits approval of its stockholders of a Business
Combination, the undersigned will vote all Insider Shares owned by him in
accordance with the majority of the votes cast by the holders of the IPO Shares.
2. In the event that the Company fails to consummate a Business
Combination within 18 months from the effective date ("Effective Date") of the
registration statement relating to the IPO (or 24 months under the circumstances
described in the prospectus relating to the IPO), the undersigned will (i) cause
the Trust Fund (as defined in the Letter of Intent) to be liquidated and
distributed to the holders of IPO Shares and (ii) take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably
practicable. The undersigned hereby waives any and all right, title, interest or
claim of any kind in or to any distribution of the Trust Fund and any remaining
net assets of the Company as a result of such liquidation with respect to his
Insider Shares ("Claim") and hereby waives any Claim the
Chardan China Acquisition Corp. II
EarlyBirdCapital, Inc.
April 30, 2005
Page 2
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and will not seek recourse against the
Trust Fund for any reason whatsoever. In the event of the liquidation of the
Trust Fund, the undersigned agrees to indemnify and hold harmless the Company,
pro rata with the other directors of the Company and several individuals
affiliated with companies they are associated with based on the number of
Insider Shares beneficially owned by each such individual, against any and all
loss, liability, claims, damage and expense whatsoever (including, but not
limited to, any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, whether pending or
threatened, or any claim whatsoever) which the Company may become subject as a
result of any claim by any vendor or other person who is owed money by the
Company for services rendered or products sold or contracted for, or by any
target business, but only to the extent necessary to ensure that such loss,
liability, claim, damage or expense does not reduce the amount in the Trust
Fund.
3. In order to minimize potential conflicts of interest which may arise
from multiple affiliations, the undersigned agrees to present to the Company for
its consideration, prior to presentation to any other person or entity, any
suitable opportunity to acquire an operating business, until the earlier of the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the undersigned ceases to be an officer or
director of the Company, subject to any pre-existing fiduciary and contractual
obligations the undersigned might have.
4. The undersigned acknowledges and agrees that the Company will not
consummate any Business Combination which involves a company which is affiliated
with any of the Insiders unless the Company obtains an opinion from an
independent investment banking firm reasonably acceptable to EBC that the
business combination is fair to the Company's stockholders from a financial
perspective.
5. Neither the undersigned, any member of the family of the undersigned,
nor any affiliate ("Affiliate") of the undersigned will be entitled to receive
and will not accept any compensation for services rendered to the Company prior
to the consummation of the Business Combination; provided that commencing on the
Effective Date, Chardan Capital, LLC ("Related Party"), shall be allowed to
charge the Company an allocable share of Related Party's overhead, up to $7,500
per month, to compensate it for the Company's use of Related Party's offices,
utilities and personnel. Related Party and the undersigned shall also be
entitled to reimbursement from the Company for their out-of-pocket expenses
incurred in connection with seeking and consummating a Business Combination.
Chardan China Acquisition Corp. II
EarlyBirdCapital, Inc.
April 30, 2005
Page 3
6. Neither the undersigned, any member of the family of the undersigned,
or any Affiliate of the undersigned will be entitled to receive or accept a
finder's fee or any other compensation in the event the undersigned, any member
of the family of the undersigned or any Affiliate of the undersigned originates
a Business Combination.
7. The undersigned will escrow his Insider Shares for the three year
period commencing on the Effective Date subject to the terms of a Stock Escrow
Agreement which the Company will enter into with the undersigned and an escrow
agent acceptable to the Company.
8. The undersigned agrees to be the Executive Vice President and a
Director of the Company until the earlier of the consummation by the Company of
a Business Combination or the liquidation of the Company. The undersigned's
biographical information furnished to the Company and EBC and attached hereto as
Exhibit A is true and accurate in all respects, does not omit any material
information with respect to the undersigned's background and contains all of the
information required to be disclosed pursuant to Item 401 of Regulation S-K,
promulgated under the Securities Act of 1933. The undersigned's Questionnaire
furnished to the Company and EBC and annexed as Exhibit B hereto is true and
accurate in all respects. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any
injunction, cease-and-desist order or order or stipulation to desist or refrain
from any act or practice relating to the offering of securities in any
jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i)
involving any fraud or (ii) relating to any financial transaction or handling of
funds of another person, or (iii) pertaining to any dealings in any securities
and he is not currently a defendant in any such criminal proceeding; and
(c) he has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or
commodities license or registration denied, suspended or revoked.
9. The undersigned has full right and power, without violating any
agreement by which he is bound, to enter into this letter agreement and to serve
as Executive Vice President and a Director of the Company.
Chardan China Acquisition Corp. II
EarlyBirdCapital, Inc.
April 30, 2005
Page 4
10. The undersigned authorizes any employer, financial institution, or
consumer credit reporting agency to release to EBC and its legal representatives
or agents (including any investigative search firm retained by EBC) any
information they may have about the undersigned's background and finances
("Information"). Neither EBC nor its agents shall be violating the undersigned's
right of privacy in any manner in requesting and obtaining the Information and
the undersigned hereby releases them from liability for any damage whatsoever in
that connection.
11. This letter agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without giving effect to
conflicts of law principles that would result in the application of the
substantive laws of another jurisdiction. The undersigned hereby (i) agrees that
any action, proceeding or claim against him arising out of or relating in any
way to this letter agreement (a "Proceeding") shall be brought and enforced in
the courts of the State of New York of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive, (ii) waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum and
(iii) irrevocably agrees to appoint Graubard Miller as agent for the service of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding. If for any reason such agent is
unable to act as such, the undersigned will promptly notify the Company and EBC
and appoint a substitute agent acceptable to each of the Company and EBC within
30 days and nothing in this letter will affect the right of either party to
serve process in any other manner permitted by law.
12. As used herein, (i) a "Business Combination" shall mean an acquisition
by merger, capital stock exchange, asset or stock acquisition, reorganization or
otherwise, of an operating business; (ii) "Insiders" shall mean all officers,
directors and stockholders of the Company immediately prior to the IPO; (iii)
"Insider Shares" shall mean all of the shares of Common Stock of the Company
owned by an Insider prior to the IPO; and (iv) "IPO Shares" shall mean the
shares of Common Stock issued in the Company's IPO.
Jiangnan Huang
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Print Name of Insider
/s/ Jiangnan Huang
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Signature
EXHIBIT A
JIANGNAN HUANG has been our executive vice president and a member of our
board of directors since our inception and has been the chairman of the board of
directors of Chardan China III since its inception. Mr. Huang has also served as
the chief executive officer and a member of the board of directors of Chardan
China Acquisition Corp. since its inception in December 2003. Mr. Huang has also
served as a member and manager of Chardan Capital, LLC since August 2003. Mr.
Huang has been a senior advisor to CITIC Securities, a Chinese broker dealer,
with principal responsibility for its large international investment banking
projects, since October 2002. He has also held a number of other senior
positions in Chinese financial companies, including his tenure as president of
Hong Kong Southern Capital Financial Group and director and general manager of
Hong Kong Southern Capital Securities Co., Ltd. from July 2000 to October 2002.
From October 1997 until July 2000, he also served in a number of capacities with
China Everbright Securities Co., Ltd. (Hong Kong), including a role as chief
investment officer of the China Everbright Growth Fund. Mr. Huang received an
MBA from the China Social Sciences University in 1981, where he engaged in
advanced study at The Regional Economic Research & Development Center at the
United Nations.