EXHIBIT 10.6
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
Gentlemen:
SUJG, Inc. ("SUJG"), a stockholder 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 9 hereof):
1. If the Company solicits approval of its stockholders of a
Business Combination, SUJG will vote all Insider Shares owned by it 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), SUJG will vote all Insider
Shares owned by it in favor of the Company's decision to liquidate. Each of SUJG
and each officer, director or controlling person of SUJG (each a "Control
Person") 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 its Insider Shares
("Claim") and hereby waives any Claim either 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.
3. Neither SUJG, any Control Person, any family member of any
Control Person, nor any affiliate ("Affiliate") of SUJG or any Control Person
will submit to the Company for consideration, or vote for the approval of, 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.
4. Neither SUJG, any Control Person, any family member of any
Control Person, nor any Affiliate of SUJG or any Control Person 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
SUJG (and each Control Person on behalf of SUJG) shall be entitled to
reimbursement from the Company for its out-of-pocket expenses incurred in
connection with seeking and consummating a Business Combination.
5. Neither SUJG, any Control Person, any family member of any
Control Person, nor any Affiliate of SUJG or any Control Person will be entitled
to receive or accept a finder's fee or any other compensation in the event SUJG,
any Control Person, any family member of any Control Person or any Affiliate of
SUJG or any Control Person originates a Business Combination.
6. SUJG will escrow its 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 SUJG and an escrow agent
acceptable to the Company.
7. SUJG's Questionnaire furnished to the Company and EBC and annexed
as Exhibit A hereto is true and accurate in all respects. SUJG represents and
warrants that:
(a) no Control Person is 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) no Control Person has ever 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) no Control Person has ever 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.
8. SUJG has full right and power, without violating any agreement by
which he is bound, to enter into this letter agreement.
9. 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.
SUJG, INC.
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Print Name of Insider
By: /s/
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Name:
Title: