EX-99.1 2 v169712_ex99-1.htm

CHARDAN 2008 CHINA ACQUISITION CORP.
No. 2206, A Zone
Chaowai, Soho
No. 6B Chaowai Street
Chaoyang District
Beijing 100021, China
  
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
To Be Held January 11, 2010

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of shareholders of Chardan 2008 China Acquisition Corp., a British Virgin Islands company, will be held at 10:00 a.m., EST on January 11, 2010, at the offices of Chardan 2008’s counsel, Loeb & Loeb LLP, 345 Park Ave., New York, NY 10154, to consider and vote upon the following proposals:

Acquisition Proposal — to approve the transactions contemplated by the Master Acquisition Agreement (the “Acquisition Agreement”), sometimes referred to herein as the “acquisition,” including the acquisition of a controlling interest in DAL Group, LLC (the “Acquisition Proposal”);
Election of Directors — to elect seven (7) directors to the Board of Directors of Chardan 2008, each to serve until his or her term has expired and until his or her successor is duly elected and qualified (the “Election of Directors”);
Incentive Plan Proposal — to adopt the 2009 Equity Incentive Plan, the “Equity Incentive Plan,” which reserves 1,570,000 Chardan 2008 ordinary shares for issuance to the directors, employees and consultants of Chardan 2008 and its subsidiaries (the “Incentive Plan Proposal”);
Name Change Proposal — to amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to change the name of Chardan 2008 to “DJSP Enterprises, Inc.” (the “Name Change Proposal”);
Amendment Proposal — to amend and restate Chardan 2008’s Amended and Restated Memorandum and Articles of Association to give effect to the transactions contemplated in the Acquisition Agreement (the “Amendment Proposal”); and
Adjournment Proposal — to approve of any adjournment or postponement of the extraordinary general meeting for the purpose of soliciting additional proxies (the “Adjournment Proposal”).

The Acquisition Proposal, the Election of Directors, the Incentive Plan Proposal, the Name Change Proposal, the Amendment Proposal and the Adjournment Proposal are collectively referred to herein as the “Proposals.”

The Board of Directors has fixed December 23, 2009 as the date for determining Chardan 2008 shareholders who are entitled to receive notice of and vote at the extraordinary general meeting and any adjournment thereof. Only holders of record of Chardan 2008 ordinary shares on such record date are entitled to have their votes counted at the extraordinary general meeting or any adjournment.

Chardan 2008’s ordinary shares, warrants and units are quoted on NASDAQ under the symbols CACA, CACAW and CACAU. Chardan 2008 expects its securities to continue to be quoted on NASDAQ following consummation of the Acquisition Proposal.

After careful consideration of all relevant factors, Chardan 2008’s Board of Directors has determined that these Proposals are fair to and in the best interests of Chardan 2008 and its shareholders and has recommended that you vote or give instruction to vote “FOR” adoption of each of them and “FOR” the election of each director.

Your Vote is Important.  Please sign, date and return your proxy card as soon as possible to make sure that your shares are represented at the extraordinary general meeting.

 
Dated: December 28, 2009   By Order of the Board of Directors,
     Kerry Propper
Chief Executive Officer


 
 

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CHARDAN 2008 CHINA ACQUISITION CORP.

TABLE OF CONTENTS

 
Summary of the Material Terms of the Acquisition Proposal     3  
Questions and Answers about the Chardan 2008 Extraordinary General Meeting     8  
Summary     15  
Risk Factors     30  
Selected Historical Financial Information     44  
Price Range of Securities and Dividends     45  
The Chardan 2008 Extraordinary General Meeting     46  
Proposal to Acquire DAL     51  
Material United States Federal Income Tax Considerations     73  
Proposal to Elect Directors     80  
Proposal to Approve the Equity Incentive Plan     81  
Proposal to Amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to Change Its Corporate Name     88  
Proposal to Amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to Remove Restrictive Provisions     89  
Proposal to Adjourn or Postpone the Extraordinary General Meeting for the Purpose of Soliciting Additional Proxies     92  
Information About DAL LLC     93  
DAL Management’s Discussion and Analysis of Financial Condition and Results of Operations     124  
Information About Chardan 2008     133  
Chardan 2008 Management’s Discussion and Analysis or Plan of Operations     136  
Capitalization of Chardan 2008 China Acquisition Corp.     138  
Unaudited Pro Forma Combined Financial Statements     139  
Directors and Management     149  
Certain Relationships and Related Transactions     154  
Beneficial Ownership of Securities     156  
Shares Eligible for Future Sale     159  
Chardan 2008 Securities     161  
Delivery of Documents to Shareholders     164  
Where You Can Find More Information     164  
Index to Financial Statements     F-1  

Annexes

A   —  Fairness opinion of Ladenburg Thalman
B   —  Proposed Form of Second Amended and Restated Memorandum and Articles of Association for Chardan 2008
C   —  Master Acquisition Agreement
D   —  Proposed Form of Contribution and Membership Interest Purchase Agreement
E   —  2009 Equity Incentive Plan

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PROXY STATEMENT
  
CHARDAN 2008 CHINA ACQUISITION CORP.

Extraordinary General Meeting of Shareholders
January 11, 2010

This Proxy Statement is furnished in connection with the solicitation by our Board of Directors of proxies to be used at the Extraordinary General Meeting of Shareholders of the Company to be held at the offices of our counsel, Loeb & Loeb LLP, 345 Park Ave., New York, NY 10154 on January 11, 2010, at 10:00 a.m., EST, and at any and all adjournments thereof (the “Meeting”). It is anticipated that the proxy statement and the form of proxy will be mailed to shareholders on or about December 28, 2009. In accordance with rules and regulations adopted by the SEC, the proxy statement is posted on the following Internet Website: www.vfnotice.com/Chardan2008.

Under its Amended and Restated Memorandum and Articles of Association as currently in effect, if Chardan 2008 does not acquire at least majority control of a target business by February 11, 2011, Chardan 2008 will dissolve and distribute to its public shareholders the amount in its trust account established in connection with the consummation of its initial public offering, plus any remaining net assets, on a pro rata basis. Following dissolution, Chardan 2008 would no longer exist as a corporation. In the event that the Acquisition Proposal being voted upon at the Meeting is not consummated, Chardan 2008 expects to continue to seek an alternative business combination.

Pursuant to Chardan 2008’s Amended and Restated Memorandum and Articles of Association, Chardan 2008 is required to obtain shareholder approval of the acquisition of a majority membership interest in DAL Group, LLC (“DAL”). DAL, through the ownership of three operating limited liability companies, will provide non-legal residential mortgage foreclosure processing services consisting of processing documentation in support of foreclosure actions, performing title searches and assisting lenders in the liquidation of foreclosed properties, primarily in Florida.

Only holders of ordinary shares of record at the close of business on December 23, 2009 will be entitled to vote at the Meeting. At such date, the Company had outstanding 9,166,666 ordinary shares. Each share entitles the holder to one vote upon each matter to be voted upon at the Meeting. A majority of the outstanding shares entitled to vote represented in person or by proxy will constitute a quorum for the Meeting.

If you have returned valid proxy instructions or attend the Meeting in person, your shares will be counted for the purpose of determining whether there is a quorum. If you are a shareholder of record, you may also cast your vote in person at the Meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank how to vote your shares, or you may cast your vote in person at Meeting by obtaining a legal proxy from your brokerage firm or bank.

If you would like additional copies of this proxy, or if you have questions about the acquisition, you should contact:

Advantage Proxy
24925 13th Place South
Des Moines, Washington 98198
206-870-8565
Attention: Karen Smith


 
 

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SUMMARY OF THE MATERIAL TERMS OF THE ACQUISITION PROPOSAL

Parties to the Acquisition:  Chardan 2008; DAL Group LLC (“DAL”) (limited liability holding company for the Target Business being acquired); Professional Title and Abstract Company of Florida, Inc. (“PTA”), Default Servicing, Inc. (“DSI”) and the Law Offices of David J. Stern, P.A. (“DJS”); David J. Stern (“Stern,” together with DSI, PTA and DJS the “Stern Contributors”); FlatWorld DAL, LLC (“FlatWorld”), Fortuna Capital Partners LP (“Fortuna,” and together with FlatWorld, the “Existing Members”); Raj K. Gupta (“Gupta”), Jeffrey A. Valenty (“Valenty”) and DJS Processing, LLC (“DJS LLC”), Professional Title and Abstract Company of Florida, LLC (“PTA LLC”) and Default Servicing, LLC (“DSI LLC”) (the new limited liability companies which will operate the Target Business).

Target Business:  PTA, DSI and DJS currently operate the Target Business being acquired (the Target Business being acquired is non-legal residential mortgage foreclosure processing services, primarily in Florida, consisting of processing documentation in support of foreclosure actions, performing title searches and assisting lenders in the liquidation of foreclosed properties).

Material Terms:  The material terms of the Acquisition Proposal are as follows:

Initial Contribution of Funds for Acquisition.  Chardan 2008 will make a capital contribution to DAL of approximately $64,550,000 (the “Initial Contribution”) to acquire its initial majority ownership interest in DAL. The Initial Contribution will consist of the entire amount of approximately $54,300,000 that is being held in Chardan 2008’s trust account plus up to $10,250,000 of the proceeds from the private placement of approximately 1,500,000 Chardan 2008 ordinary shares (the “Private Placement”) that will be completed simultaneously with the closing of the acquisition. In the event that Chardan 2008 does not have sufficient funds for the Initial Contribution, the balance required for the Initial Contribution will be added to the Stern Note (defined herein), provided that the principal amount of the Stern Note shall not exceed $54,000,000. The difference between the Initial Contribution and the Initial Cash (defined herein) will be used to pay expenses of the transactions contemplated by the acquisition and the obligations of Chardan 2008 being assumed by DAL (“Contribution Difference”). The exact percentage of Chardan 2008’s initial gross ownership interest in DAL is subject to reduction to the extent any shares purchased in Chardan 2008’s initial public offering (“Public Shares”) are redeemed in exchange for a pro rata portion of the trust account. The percentage membership interest in DAL which Chardan 2008 may receive will range from 65.42% to 70.95% on a DAL common unit equivalent basis. See section titled “Chardan 2008’s Rights and Obligations under the Acquisition Agreement.”
Chardan 2008 Membership Interests in DAL.  Chardan 2008 will receive, assuming there are no redemptions of its Public Shares or assuming that there are a maximum number of permitted redemptions (35% of outstanding Public Shares), 10,666,666 DAL Common Units or 8,260,416 DAL Common Units, which will represent 70.95% or 65.42%, respectively, of the outstanding DAL membership units on a common unit equivalent basis. Immediately following the consummation of the acquisition, the Stern Contributors and the Existing Members, collectively, will own the remaining 29.05% or 34.58%, respectively, of outstanding DAL membership units on a common unit equivalent basis. See section titled “Proposal to Acquire DAL” Chardan shall also receive warrants and options to acquire up to 11,441,666 DAL Common Units as described in “Chardan 2008’s Rights and Obligations under the Acquisition Agreement” below.
Assumption of Chardan 2008 Obligations and Transaction Expenses.  DAL will acquire the responsibility for all accrued and outstanding obligations of Chardan 2008 as of the date that the acquisition closes, consisting of accrued expenses in the aggregate approximate amount of $8,100,000. Of such expenses, a portion will be deferred and the remainder will be paid out of Contribution Difference. See section titled “Chardan 2008’s Rights and Obligations under the Acquisition Agreement.”
Transfer of Target Business Assets to Operating Companies.  Immediately prior to the closing of the acquisition, each of PTA and DSI will contribute all their assets and certain liabilities to PTA LLC

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and DSI LLC, respectively. DJS will contribute all of the assets, and certain liabilities, relating to the non-legal residential mortgage foreclosure processing business and related service operations to DJS LLC. See section titled “Summary.”
Acquisition of Interests in Operating Companies.  DAL will acquire all of the membership interests in DJS LLC, PTA LLC and DSI LLC. In consideration for their contribution of their membership interests in DJS LLC, PTA LLC and DSI LLC to DAL, the Stern Contributors will receive the following consideration from DAL:
Up to a maximum of approximately $58,310,000 in cash (the “Initial Cash”);
A minimum of approximately $52,659,000 and maximum of $54,000,000 in a promissory note issued by DAL (the “Stern Note”)
1,200,000 DAL Common Units;
1,666,667 DAL Series A Preferred Units;
3,133,333 DAL Series B Preferred Units; and
the right to receive $35 million in post-closing cash (the “Post-Closing Cash”).

The final amount of the Initial Cash and the Stern Note will depend on the final transaction expenses payable at closing, the amount raised in the Private Placement and the amount of Chardan 2008 share redemptions. The amount of the Stern Note is subject to adjustment in order to reflect working capital in DAL at closing of the acquisition. The Stern Note will have the terms set forth in the section of this proxy statement titled “Payment of the Closing Consideration to the Stern Contributors and issuance of the Stern Note in Exchange for their Contribution of the Non-Legal Assets of DJS, DSI and PTA.”

After the closing of the transactions contemplated by the Acquisition Proposal the membership interests in DAL will be held by the Existing Members, the Stern Contributors and Chardan 2008 as follows:

DAL Membership Interests Post-Acquisition Preferred Units

     
Member   Common Units   Series A   Series B
Existing Members     1,500,000       0       766,667  
Stern Contributors     1,200,000       1,666,667       3,133,333  
Chardan 2008     8,260,416 to 10,666,666       0       0  
DAL Common Units.  The Existing Members, the Stern Contributors and Chardan 2008 will hold the number of DAL Common Units set forth in the above table. The DAL Common Units held by the Existing Members and Stern Contributors are exchangeable for Chardan 2008 ordinary shares on a one share per one unit basis, generally at the option of the holder. See section titled “Payment of the Closing Consideration to the Stern Contributors and issuance of the Stern Note in Exchange for their Contribution of the Non-Legal Assets of DJS, DSI and PTA.”
DAL Series A Preferred Units.  The Stern Contributors will hold 1,666,667 DAL Series A Preferred Units. The DAL Series A Preferred Units are convertible into DAL Common Units on a one for one basis and are exchangeable for Series A Preferred Shares of Chardan 2008 on a one share per one unit basis generally at the option of the holder. Upon liquidation of Chardan 2008 or DAL, each Series A Preferred Share or DAL Series A Preferred Unit would receive $15.00 as a liquidation preference over Chardan 2008 ordinary shares or DAL Common Units, respectively. Otherwise, the Series A Preferred Units participate pro rata with the Common Units, including in voting and non-liquidating distributions. See section titled “Payment of the Closing Consideration to the Stern Contributors and issuance of the Stern Note in Exchange for their Contribution of the Non-Legal Assets of DJS, DSI and PTA.”
DAL Series B Preferred Units.  The Stern Contributors and the Existing Members will hold 3,133,333 and 766,667 DAL Series B Preferred Units, respectively. The DAL Series B Preferred Units will be divided into five subclasses. The DAL Series B Preferred Units will have no rights,

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other than to be converted into DAL Common Units in the event that: (i) Chardan 2008’s ordinary shares achieve certain price targets (each subclass having a different price target) prior to the fifth anniversary of the closing of the acquisition; or (ii) in the event of a change in control of DAL or Chardan 2008 within such five-year period, any subclass of DAL Series B Preferred that has not previously converted will convert upon closing of such a transaction if the per share consideration received by holders of Chardan 2008 ordinary shares in the transaction equals or exceeds the price target for that subclass. See section titled “Preferred Units and Escrow.”
Registration Rights Agreement.  Chardan 2008 will also enter into a registration rights agreement (the “Rights Agreement”), pursuant to which Chardan 2008 will be required to register for resale any Chardan 2008 securities that the Stern Contributors and the Existing Members receive upon exchange of their DAL membership interests. See section titled “Additional Agreements.”
Services Agreement.  DJS LLC will enter into a long term services agreement (the “Services Agreement”) with DJS that is expected to provide DJS LLC with substantial ongoing revenue. Pursuant to the Services Agreement, DJS LLC will ensure DJS that it has earnings before income, taxes, depreciation and amortization of $2,000,000 each year for the first four years following the closing, subject to certain conditions and adjustments. See section titled “Obligations of DJS Under the Acquisition Agreement.”
Share Escrow Agreement.  Chardan 2008, DAL and the Stern Contributors will enter into an Escrow Agreement in order to secure to any payment obligations that may arise out of the indemnification obligations of the Stern Contributors. See section titled “Indemnification of Chardan 2008 by the Stern Contributors.
Tax Indemnification Agreements.  The structure of the Acquisition is designed to provide FlatWorld and the Stern Contributors with certain tax benefits. As a result of the adopted structure, Chardan 2008, may, under certain circumstances, incur adverse tax consequences. In consideration for Chardan 2008’s willingness to utilize the structure described elsewhere in these proxy materials, DAL, the Stern Contributors, FlatWorld, Gupta and Valenty have agreed to indemnify and protect Chardan 2008 against certain adverse tax consequences, should they occur under three separate tax indemnification agreements (collectively, the “Tax Indemnification Agreements”). The agreements pertain only to specified circumstances and are subject to a limit of $8,500,000 in the case of the Stern Contributors and $1,750,000 in the case of FlatWorld, Gupta and Valenty.
Private Placement.  Simultaneously with the closing of the transactions contemplated by the Acquisition Proposal, Chardan 2008 will close a private placement of up to 1,500,000 Chardan 2008 ordinary shares for an amount up to $10,500,000, $10,250,000 of which will be used to pay the Initial Cash and closing costs (the “Private Placement”). Chardan Capital Markets, LLC, of which Kerry Propper, our Chief Executive Officer, is also Chief Executive Officer, will act as placement agent for the Private Placement that will close in conjunction with the acquisition. Chardan Capital Markets, LLC is expected to receive a placement fee of $500,000 in connection with the financing, of which $250,000 will be deferred and paid pursuant to a promissory note made by DAL in favor of Chardan Capital Markets, LLC (the “Chardan Capital Markets Note”). The terms of the Chardan Capital Markets Note provide for a 5% interest rate and amortizing payments equal to the remaining unpaid principal balance divided by 12 beginning on the first day of each month following the date that the Stern Note is paid in full. The maturity date of the Chardan Capital Markets Note is the earlier of the one year anniversary of the payment in full of the Stern Note or twenty-four (24) months after the closing of the transactions contemplated by the Acquisition Proposal.
Closing Conditions.  The consummation of the transactions contemplated by the Acquisition Proposal is subject to certain conditions, including but not limited to the approval of the Acquisition Proposal by Chardan 2008’s shareholders, provided that holders of fewer than 35% of the ordinary shares sold in Chardan 2008’s initial public offering (the “Public Shares”) exercise their redemption rights, and delivery by DAL to the Stern Contributors of the Stern Note in an amount not to exceed $54,000,000. See the sections entitled “The Chardan 2008 Extraordinary General Meeting” and “Proposal to Acquire DAL.” See section titled “Closing Conditions.”

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Interests of Chardan 2008 Management Team.  Upon consummation of the acquisition, the initial shareholders of Chardan 2008 (not including holders of Public Shares), including its current officers and directors, will indirectly own 18.15% or 15.24% of DAL, assuming that no Chardan 2008 Public Shares are redeemed or the maximum number of permitted redemptions (35%) occurs, respectively. Following the closing of the transactions contemplated by the Acquisition Proposal, the officers and directors of Chardan 2008 and DAL combined will indirectly own approximately 32.43% and 38.61%, respectively, of Chardan 2008’s ordinary shares, assuming that no Chardan 2008 Public Shares are redeemed or that the maximum number of permitted redemptions (35%) occurs.
Fair Market Value Test:  DAL must have a fair market value equal to at least 80% of the net assets of Chardan 2008 at the time of acquisition. Based on the financial analysis of Ladenburg, Thalman used by the Board in reaching its recommendation to approve the Acquisition Proposal, the acquisition of the Target Business meets or exceeds this level. See the section titled “Proposal to Acquire DAL — Satisfaction of 80% Test.”
Initial Cash.   In the event that holders of more than approximately 2.50% of Chardan 2008’s Public Shares both vote against the Acquisition Proposal and elect to exercise their redemption rights, there may not be enough cash available to consummate the acquisition under the current terms unless the parties waive the requirement that the Stern Note not exceed the principal amount of $54,000,000.

Actions That May Be Taken to Secure Approval of Chardan 2008 Shareholders

In order to ensure that that the Acquisition Proposal is approved, Chardan 2008 and Stern and their respective affiliates may enter into transactions to purchase ordinary shares of Chardan 2008 from shareholders who have indicated their intention to vote against the Acquisition Proposal and seek conversion of their shares. In addition, Chardan 2008, and Stern and their respective affiliates may also purchase warrants from warrantholders. Transactions of such nature would only be entered into and effected at a time when the purchasers of such securities or any of their affiliates are not aware of any material nonpublic information regarding Chardan 2008, the Target Business or the Acquisition Proposal. No transactions have been entered into as of the date of these proxy materials, but such transactions may include:

Purchases by Chardan 2008, Stern or their respective affiliates of shares or warrants of Chardan 2008;
Agreements with third parties to purchase shares or warrants of Chardan 2008 that may then be resold to Chardan 2008 after the consummation of the transactions contemplated by the Acquisition Proposal using funds that were previously in the trust account;
Agreements with third parties pursuant to which Chardan 2008, Stern or their respective affiliates would borrow funds to make purchases of ordinary shares or warrants of Chardan 2008. The combined company would repay such borrowings using funds that were previously in the trust account; and
The granting of securities to third party purchasers of ordinary shares or warrants of Chardan 2008 as an inducement for such third parties to purchase such securities.

In the event that it appeared that the Acquisition Proposal would not be approved at the Meeting of Chardan 2008’s shareholders, such meeting could be adjourned (assuming that the Adjournment Proposal was approved by the shareholders and such adjournment was not past February 11, 2011, the date on which Chardan 2008’s corporate existence terminates unless it consummates a business combination) to enter into arrangements similar to the foregoing.

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In the event that any purchases of Chardan 2008’s ordinary shares or warrants are made by Chardan 2008, or affiliates of either of them after the mailing of this proxy statement to shareholders but prior to the extraordinary general meeting, Chardan 2008 will file a Current Report on Form 6-K relating to such purchases within four business days of such purchases prior to the Meeting.

Chardan 2008 will file a Current Report on Form 6-K with respect to any arrangements entered into by Chardan 2008, Stern or their respective affiliates which is intended to increase the likelihood that the Acquisition Proposal and the other Proposals are approved by Chardan 2008’s shareholders. Any Chardan 2008 shares purchased by Chardan 2008 will not be considered outstanding for purposes of the Meeting and will therefore not be permitted to vote at the Meeting. In the event that Public Shares are purchased by Chardan 2008, such shares would no longer be deemed to be outstanding for purposes of determining the vote required for the approval of any of the Proposals presented at the extraordinary general meeting. Therefore, this would reduce (i) the number of Public Shares outstanding voting on each matter and (ii) the number of shares required to be voted in favor of each Proposal. Conversely, if Chardan 2008’s directors and officers purchased such shares, those shares would still be considered to be outstanding and could be voted in favor of the Proposals, reducing the number of shares required to be voted in favor of such proposals by a number of shares equal to those purchased. Neither Chardan 2008 nor its officers or directors purchasing shares would affect the number of shares that could be redeemed by Chardan 2008 with the acquisition still being permitted to be consummated.

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QUESTIONS AND ANSWERS ABOUT THE CHARDAN 2008
EXTRAORDINARY GENERAL MEETING

These questions and answers are only summaries of the matters they discuss. Please read this entire proxy statement in order to receive more complete information regarding the proposals on which you are being asked to vote.

   
Q.   What is being voted on?   A.  You are being asked to vote on the following six proposals:
         

    •  

Authorizing Chardan 2008 to consummate the transactions contemplated by the Acquisition Agreement (the “Acquisition Proposal”);

         

    •  

To elect seven (7) directors to the Board of Directors of Chardan 2008, each to serve until his or her term has expired and until his or her successor is duly elected and qualified (the “Election of Directors”);

         

    •  

To adopt the Equity Incentive Plan, which reserves 1,570,000 Chardan 2008 ordinary shares for issuance to the directors, employees and consultants of Chardan 2008 and its subsidiaries (the “Incentive Plan Proposal”);

         

    •  

To amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to change the name of Chardan 2008 to “DJSP Enterprises, Inc.” (the “Name Change Proposal”);

         

    •  

To amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to give effect to the transactions contemplated in the Acquisition Agreement (the “Amendment Proposal”); and,

         

    •  

To approve any adjournment or postponement of the Meeting for the purpose of soliciting additional proxies (the “Adjournment Proposal”).

Q.   In the prospectus that Chardan 2008 furnished in connection with its initial public offering, it stated that Chardan 2008 would acquire a company with its principal operations in China. Why is it not doing that?   A.  Soon after the completion of Chardan 2008’s initial public offering in August 2008, the global financial crisis occurred. The board and management of Chardan 2008 determined that the value of Chinese stocks, which are viewed by some as more speculative than stocks in the United States, were suffering disproportionately as a result. For that reason, Chardan 2008 sought out a business combination with not only Chinese companies, but others as well, in an effort to deliver the greatest value to Chardan 2008 shareholders. They determined that the transactions contemplated by the Acquisition Proposal were the most attractive of the opportunities that they had identified, and for that reason decided to pursue it. Although the value of Chinese stocks subsequently recovered, that did not occur prior to the time that Chardan 2008 had committed substantial resources to the acquisition of DAL, and Chardan 2008 therefore continued to pursue the acquisition rather than revisit acquiring a Chinese company.

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Q.   What can I do if the reason that I bought Chardan 2008 stock is because I wanted to invest in a company with its principal operations in China?   A.  The answer to that question depends on several things, including the price that you paid for the stock and when you bought it. You could, for example, sell your stock in the market. You could vote against the Acquisition Proposal and demand redemption, so that if the Acquisition Proposal goes forward you will be entitled to receive a pro rata portion of the trust account, approximately $7.89 per share. You may also have a right to rescind your purchase, again depending on a number of factors that would vary from shareholder to shareholder. If you want to consider these and other alternatives, you should consult legal counsel.
Q.   Why is Chardan 2008 proposing the Chardan 2008 Equity Incentive Plan?   A.  Chardan 2008 is proposing to adopt the Equity Incentive Plan to provide incentives to its employees, directors, consultants and those of its subsidiaries to increase shareholder value and attract and retain qualified employees, directors and consultants.
Q.   Why is Chardan 2008 proposing to amend and restate its Amended and Restated Memorandum and Articles of Association?   A.  Chardan 2008 is proposing to amend and restate its Amended and Restated Memorandum and Articles of Association at the time of the closing of the transactions contemplated by the Acquisition Proposal to change Chardan 2008’s corporate name to DJSP Enterprises, Inc., to eliminate provisions made extraneous by the consummation of the acquisition and to give effect to the provisions of the Acquisition Agreement, all as described more fully in the sections of this proxy statement titled “Proposal to Amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to Change its Corporate Name” and “Proposal to Amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to Remove Restrictive Provisions.” The removal of the extraneous provisions will reflect that Chardan 2008 is no longer a “blank check company” and will have become an operating company.
Q.   Why is Chardan 2008 proposing to approve any adjournment or postponement of the extraordinary general meeting?   A.  Chardan 2008 is proposing to approve any adjournment or postponement of the Meeting so that it may delay the meeting in the event that it appears that an insufficient number of votes or proxies have been received to allow for the approval of the Proposals to be presented at the Meeting. This will provide Chardan 2008 with additional time to solicit proxies or to attempt to persuade shareholders opposing any of the proposals to change their votes.
Q.   Are any proposals conditioned on the approval of the other proposals?   A.  None of the Acquisition Proposal, the Election of Directors, the Name Change Proposal or the Amendment Proposal will be given effect unless all are approved and holders of less than 35% of the ordinary shares sold in Chardan 2008’s initial public offering (the “Public Shares”) vote against the Acquisition Proposal and exercise their redemption rights. The Incentive Plan Proposal will not be given effect unless the Acquisition Proposal and the Amendment Proposal are approved, and holders of less than 35% of Chardan 2008’s Public Shares both vote against the Acquisition Proposal and exercise their redemption rights and each director nominee is elected.

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Q.   How do the Chardan 2008 initial shareholders intend to vote their shares?   A.  Chardan 2008’s initial shareholders have agreed to vote 2,291,666 ordinary shares of Chardan 2008 (all of which are owned by Chardan 2008’s current officers and directors and their affiliates, acquired by them prior to Chardan 2008’s initial public offering) in accordance with the majority of the votes cast by holders of the Public Shares. As a result, if a majority of Public Shares (or 3,437,501 shares) are voted in favor of the Acquisition Proposal, Chardan 2008’s founding shareholders, including all of its officers and directors, will vote all of their 2,291,666 initial shares in favor of the Acquisition Proposal.
              The initial shareholders have agreed to vote any of the Public Shares that they own in favor of the Acquisition Proposal and the other Proposals. As a result, they will not be entitled to demand redemption of those shares, nor will they seek appraisal rights with respect to such shares if appraisal rights are available to them.
Q.   What vote is required to approve the Acquisition Proposal?   A.  Under Chardan 2008’s Amended and Restated Memorandum and Articles of Association, approval of the Acquisition Proposal requires the affirmative vote of the holders of a majority of the outstanding ordinary shares. However, if the holders of 2,406,250 (35%) or more of the Public Shares vote against the Acquisition Proposal and demand that Chardan 2008 redeem their shares for a pro rata portion of the trust account established at the time of the initial public offering (as described below), Chardan 2008 will not consummate the Acquisition Proposal.
Q.   What vote is required to adopt the Amendment Proposal?   A.  Approval of the amendment and restatement of the Amended and Restated Memorandum and Articles of Association will require the affirmative vote of the shareholders holding a majority of the outstanding ordinary shares voting at the Chardan 2008 extraordinary general meeting, provided that there is a quorum. However, the Amendment Proposal will not be given effect, even if approved by shareholders, unless the Acquisition Proposal and Election of Directors are also approved and holders of less than 35% of the holders of the Public Shares both vote against the Acquisition Proposal and exercise their redemption rights.
Q.   What vote is required to adopt the Equity Incentive Plan?   A.  Adoption of the Equity Incentive Plan will require the affirmative vote of the shareholders holding a majority of the outstanding ordinary shares voting at the Meeting, provided that there is a quorum. However, the Equity Incentive Plan will not be given effect, even if approved by shareholders, unless the Acquisition Proposal, the Amendment Proposal, the Name Change Proposal and the Election of Directors are also approved and holders of less than 35% of the Public Shares both vote against the Acquisition Proposal and exercise their redemption rights.
Q.   What vote is required to elect the directors?   A.  The election of each director will require the affirmative vote of shareholders holding a majority of the outstanding ordinary shares voting at the Chardan 2008 annual meeting, provided that there is a quorum. However, the new directors will not be appointed and qualified as directors, even if approved by shareholders in such manner, unless the Acquisition Proposal, the Name Change Proposal and the Amendment Proposal are also approved and holders of less than 35% of the Public Shares both vote against the Acquisition Proposal and exercise their redemption rights.
Q.   Who will manage Chardan 2008 and DAL?   A.  Following consummation of the acquisition, the current management of the non-legal operations of DJS, PTA and DSI will remain in place. Some of Chardan 2008’s current management team will serve on Chardan 2008’s Board of Directors.

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Q.   How much of Chardan 2008 will its current shareholders own upon consummation of the Acquisition Proposal?   A.  Chardan 2008 will issue up to 1,500,000 ordinary shares in the Private Placement in connection with the closing of the transactions associated with the Acquisition Proposal in addition to those currently outstanding. Following those issuances, the current owners of Chardan 2008 ordinary shares will hold 85.94% of Chardan 2008’s issued and outstanding ordinary shares, assuming that there are no redemptions and that there is no exercise of Chardan Warrants or the underwriter’s purchase option. If the maximum number of redemptions occurs, the current Chardan 2008 shareholders will own 63.38% of Chardan 2008’s issued and outstanding shares upon closing of the acquisition and the Private Placement. Upon closing of the transactions contemplated by the Acquisition Proposal, Chardan 2008 will own 70.95% of the outstanding DAL membership units on a common unit equivalent basis, assuming that there are no redemptions of Public Shares. In the event that there are redemptions, the Chardan 2008 ownership interest in DAL will be reduced on a corresponding basis (one less DAL common unit per redeemed Chardan 2008 ordinary share). If the maximum number of shares is redeemed, Chardan 2008 will own 65.42% of the outstanding DAL membership units on an common unit equivalent basis. For a more complete discussion of how the redemption can affect ownership in Chardan 2008 and DAL, please see section titled “Redemption Rights.”
Q.   How much dilution will Chardan 2008 shareholders experience?   A.  As noted, Chardan 2008 will issue up to 1,500,000 ordinary shares in connection with the Private Placement upon the closing of the transactions contemplated by the Acquisition Proposal, but will not issue any shares to the Stern Contributors or the Existing Members. As a result of the Initial Contribution by Chardan 2008 to DAL, Chardan 2008 will acquire an initial interest in DAL of up to 70.95% of the outstanding DAL membership units on a common unit equivalent basis (assuming no redemptions of Chardan 2008 Public Shares).
              A number of things could reduce the ownership interest of Chardan 2008’s current shareholders in Chardan 2008 and Chardan 2008’s ownership interest in DAL following the consummation of the acquisition. These things include: (i) the exercise of Chardan 2008’s issued and outstanding warrants (the “Chardan Warrants”), including whether the warrants issued in a private placement prior to our initial public offering (the “Private Placement Warrants”) are exercised; (ii) whether the underwriter’s purchase option (“UPO”) issued in connection with Chardan 2008’s initial public offering and the warrants included in them are exercised; (iii) whether the Stern Contributors exercise their rights to exchange their DAL Common Units and DAL Series A Preferred Units and whether the Existing Members exercise their rights to exchange their DAL Common Units for corresponding securities of Chardan 2008, which they are entitled to do at any time after the first anniversary of the closing of the acquisition; (iv) whether any or all of the DAL Series B Preferred Units convert into DAL Common Units upon the ocurrence of the Chardan 2008 share price reaching certain specified levels and are subsequently exchanged for Chardan 2008 ordinary shares; (v) whether Chardan 2008 issues up to 233,010 additional ordinary shares in connection with the sale or exercise of Chardan Warrants pursuant to the terms of the Warrant Sale Agreement; and (vi) whether and to what extent shares are issued pursuant to the Equity Incentive Plan.

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              If the Stern Contributors and the Existing Members convert all of their DAL Common Units and DAL Series A Preferred Units, as the case may be, into ordinary shares of Chardan 2008 (and assuming that all of the DAL Series B Preferred Units have converted to DAL Common Units), then DAL will become a wholly owned subsidiary of Chardan 2008, and the Stern Contributors would own 19.75% of Chardan 2008’s outstanding shares and the Existing Members would own 7.46% of Chardan 2008’s outstanding shares. The foregoing assumes that there are no redemptions of the Public Shares and that all of the Chardan Warrants and the UPO are fully exercised and 1,500,000 Chardan 2008 ordinary shares are issued in connection with the Private Placement. If the maximum amount of redemptions of the Public Shares occurred (i.e., 2,406,249 Public Shares, the Stern Contributors and the Existing Members converted their interests into ordinary shares of Chardan 2008 and 1,500,000 ordinary shares are issued in connection with the Private Placement), then Chardan 2008’s shareholders other than the Stern Contributors and the Existing Members would own 70.44% of Chardan 2008’s outstanding shares, the Stern Contributors would own 21.45% and the Existing Members would own 8.10%, respectively, of Chardan 2008’s outstanding shares.
Q.   Do Chardan 2008 shareholders have redemption rights?   A.  If you hold Public Shares and you vote against the Acquisition Proposal, you will have the right to demand that Chardan 2008 redeem your Public Shares in exchange for payment of a pro rata portion of the trust account.
Q.   What happens if I vote against the Acquisition Proposal and demand redemption of my shares, but the acquisition is not consummated?   A.  If the acquisition is not consummated, you will not be entitled to redeem your shares. Instead, the funds will remain in the trust account and Chardan 2008’s management will have until the time permitted in its Amended and Restated Memorandum and Articles of Association (February 2011) to find another candidate for a business combination.
Q,   Is it possible that the acquisition is approved, but the Acquisition Proposal will not be completed?   A.  Yes, it is. There are several conditions to the closing of the transactions contemplated by the Acquisition Proposal besides the approval of Chardan 2008’s shareholders that may not be met. For example, the Stern Contributors are not obligated to close the transactions contemplated by the Acquisition Proposal unless and until Chardan 2008 has made the Initial Contribution that, together with the Stern Note, will enable DAL to pay approximately $58,310,000 in Initial Cash to the Stern Contributors at closing of the transactions contemplated by the Acquisition Proposal. Unless all of the parties’ conditions to closing the transactions contemplated by the Acquisition Proposal are satisfied or waived, the transactions contemplated by the Acquisition Proposal will not be completed, even though Chardan 2008 shareholders have approved the Acquisition Proposal. Similarly, if the Stern Note is proposed to exceed $54,000,000 because of redemptions of Public Shares (which it would if shareholders owning more than approximately 170,000 shares elect to redeem such shares) or otherwise, the Stern Contributors are not required to close the transactions contemplated by the Acquisition Proposal.
              In addition, if the Election of Directors or the Amendment Proposal is not approved, the Acquisition Proposal will not be given effect, even if it is approved.

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Q   Is there a limitation on my redemption?   Our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate or other person with whom such public shareholder is acting in concert or as a “group” (within the meaning of Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from seeking redemption rights with respect to an aggregate of more than 10% of the ordinary shares sold in Chardan 2008’s public offering (but only with respect to the amount over 10% of the ordinary shares sold in the public offering). A “group” will be deemed to exist if public shareholders: (i) file a Schedule 13D or 13G indicating the presence of a group, or (ii) acknowledge to us that they are acting, or intend to act, as a group. Such public shareholders would still be entitled to vote against the Acquisition Proposal with respect to all ordinary shares owned, whether directly or indirectly through one or more affiliates.
Q.   If the closing does not occur, what happens to my demand to redeem my shares?   A.  Your demand for redemption will only take effect if the transactions contemplated by the Acquisition Proposal are completed. If the transactions contemplated by the Acquisition Proposal do not close, then there will be no distribution of the trust funds to shareholders, as Chardan 2008 intends to continue to seek another business combination in such a case.
Q.   Do Chardan 2008 shareholders have dissenter or appraisal rights under British Virgin Islands law?   A.  If the Acquisition Proposal is approved, a dissenting Chardan 2008 shareholder would have rights comparable to the appraisal rights ordinarily available to dissenting shareholders of United States corporations or under a BVI merger. Those rights provide for the dissenting shareholder to receive payment in cash for the statutorily determined value of the ordinary shares, determined prior to the closing of the transactions contemplated by the Acquisition Proposal.
Q.   What happens following the closing of the transactions contemplated by the Acquisition Agreement to the funds deposited in the trust account?   A.  Chardan 2008 shareholders exercising redemption rights will receive their pro rata portions of the trust account. The balance of the funds in the account will be used to acquire membership interests in DAL. Chardan 2008 will likely have accrued expenses, which DAL will assume as a term of the Acquisition Proposal. DAL will be obligated to use the funds received from Chardan 2008 to pay the Initial Cash to the Stern Contributors, as well as transaction expenses.
Q.   What happens if the Acquisition Proposal is not approved?   A.  If the shareholders of Chardan 2008 do not approve the Acquisition Proposal, Chardan 2008 will seek an alternative business combination. Chardan 2008 has until February 11, 2011 to consummate another business combination. If Chardan 2008 does not acquire at least majority control of a target business by February 11, 2011, Chardan 2008 will dissolve and distribute to holders of the Public Shares the amount in the trust account, plus any remaining net assets.
              In any liquidation, the funds then held in the trust account, plus any interest earned thereon (net of taxes payable and up to the amount of interest earned on the trust account that has been released to Chardan 2008 to fund its working capital and repay management loans), together with any remaining out-of-trust net assets, will be distributed pro rata to the holders of the Public Shares. See the risk factors in the section titled “Risks to Chardan 2008 Security Holders,” of this proxy statement relating to risks associated with the dissolution of Chardan 2008.
Q.   When do you expect the transactions contemplated by the Acquisition Proposal to be completed?   A.  Chardan 2008 expects to consummate the transactions contemplated by the Acquisition Proposal promptly after shareholder approval is received.

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Q.   If I am not going to attend the annual meeting in person, should I return my proxy card instead?   A.  Yes. After carefully reading and considering the information in this document, please fill out and sign your proxy card. Then return it in the return envelope as soon as possible, so that your shares may be represented at the extraordinary general meeting. A properly executed proxy will be counted for the purpose of determining the existence of a quorum.
Q.   What will happen if I abstain from voting or fail to vote?   A.  Abstaining from voting or not voting on the Acquisition Proposal (including broker non-votes), either in person or by proxy or voting instruction, will have the same effect as a vote against the proposal, since the vote to approve the Acquisition Proposal requires affirmative votes of holders of a majority of Chardan 2008’s outstanding ordinary shares. Abstaining from voting or not voting on the Amendment Proposal, the Election of Directors, the Incentive Plan Proposal, the Name Change Proposal and the Adjournment Proposal, (including broker non-votes), either in person or by proxy or voting instruction, will have no effect on the vote to approve each such Proposal, since the vote to approve each of these Proposals requires the affirmative vote of the holders of a majority of the outstanding ordinary shares cast by the shareholders at the Meeting, provided that there is a quorum. An abstention will not count toward the 35% “against and redeeming” vote that would result in the acquisition’s abandonment, and you would be unable to exercise any redemption rights upon approval of the Acquisition Proposal if you fail to vote against the Acquisition Proposal. To demand redemption, you must vote against the Acquisition Proposal and elect to redeem your shares. If the Acquisition Proposal is not approved, Chardan 2008’s Board of Directors will not go forward with the acquisition, the Name Change Proposal, the Amendment Proposal, the Election of Directors or the Incentive Plan Proposal.
Q.   How do I change my vote?   A.  Send a later-dated, signed proxy card to Chardan 2008’s secretary prior to the date of the Meeting or attend the Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Gong Li, Chardan 2008 China Acquisition Corp., No. 2206, A Zone, Chaowai, SOHO, No. 6B Chaowai Street, Chaoyang District, Beijing 100021, China.
Q.   If my shares are held in “street name,” will my broker automatically vote them for me?   A.  No. Your broker can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares. Your broker can tell you how to provide these instructions.
Q.   Who can help answer my questions?   A.  If you have questions, you may write or call Chardan 2008’s proxy solicitor, Advantage Proxy, 24925 13th Place South, Des Moines, Washington 98198, 206-870-8565, Attention: Karen Smith.
Q.   Where will the Meeting be held?   A.  The Meeting will be held at the offices of Chardan 2008’s counsel, Loeb & Loeb LLP, 345 Park Ave., New York, NY 10154.

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SUMMARY

This section summarizes information related to the Proposals to be voted on at the Meeting and to the consideration to be offered to DAL and the Stern Contributors. These items are described in greater detail elsewhere in this proxy statement. You should carefully read this entire proxy statement and the other documents to which it refers you.

The Parties

Chardan 2008 China Acquisition Corp.

Chardan 2008 China Acquisition Corp. (“Chardan 2008”) is a British Virgin Islands business company with limited liability formed on February 19, 2008. Chardan 2008 is a blank check company that was formed for the purpose of acquiring, engaging in a merger, share exchange or contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with, an unidentified operating business.

Chardan 2008’s initial business combination must be with a target business or businesses with a collective fair market value equal to at least 80% of Chardan 2008’s net assets (excluding any funds held in the trust account for the benefit of the underwriters) at the time of such transaction. If Chardan 2008 acquires less than 100% of a target business (as is proposed), the 80% of net assets test will be calculated based only on that portion of the business that Chardan 2008 acquires, and not the value of the entire business. If Chardan 2008 is unable to consummate a business combination within the allotted time periods set forth in its initial public offering prospectus and in its Amended and Restated Memorandum and Articles of Association, Chardan 2008 will implement a plan of dissolution and distribution which will include the liquidation of the trust account for distribution to the holders of the Public Shares.

The mailing address of Chardan 2008’s principal executive office is No. 2206, A Zone, Chaowai, SOHO, No. 6B Chaowai Street, Chaoyang District, Beijing 100021, China and its telephone number is 86-10-5900-2666. Upon the closing of the transaction the combined company’s mailing address will become that of DAL.

DAL

At the time of the closing of the acquisition, DAL will have acquired membership interests in three limited liability companies that together will constitute a provider of non-legal residential mortgage foreclosure processing and other services, principally in the State of Florida (referred to herein as the “Target Business”). DAL will not acquire any portion of such companies that involves the provision of legal services. At the time of the closing of the transactions contemplated by the Acquisition Proposal, the Target Business’ only customer will be DJS, whose customers are primarily mortgage lenders and mortgage servicers. The Target Business will provide non-legal services to support various judicial proceedings brought by, and other legal services provided by, DJS on behalf of its clients, including foreclosures, bankruptcy and eviction proceedings, second lien monitoring and real estate owned (“REO”) closings. At the time of closing of the transactions contemplated by the Acquisition Proposal, DAL’s principal offices will be located at 900 Pine Island Dr., Suite 400, Plantation, Florida 33324.

DJS LLC

DJS LLC is the entity that, at the time of closing of the transactions contemplated by the Acquisition Proposal, will have received all of the non-legal operations of DJS. These non-legal operations include the processing of various documents connected with the legal services that DJS provides to its clients, principally in the State of Florida and involving proceedings such as real estate foreclosure actions and related bankruptcy and other proceedings. At the time of closing of the transactions contemplated by the Acquisition Proposal, DJS LLC’s principal offices will be located at 900 Pine Island Dr., Suite 400, Plantation, Florida 33324.

PTA LLC

At the time of the closing of the transactions contemplated by the Acquisition Proposal, PTA LLC will have acquired the assets and business of PTA. PTA’s business involves the performing of title searches and the preparation of title abstracts that are used to support the various legal services the DJS provides to its clients. At the time of closing of the transactions contemplated by the Acquisition Agreement, PTA LLC’s principal offices will be located at 900 Pine Island Drive, Suite 400, Plantation, Florida 33324.

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DSI LLC

At the time of the closing of the transactions contemplated by the Acquisition Proposal, DSI, LLC will have acquired all of the business and operations of DSI. DSI is principally involved in the liquidation of real estate that lenders come to own as a result of the foreclosure of a mortgage loan. At the time of closing DSI LLC’s principal offices will be located in Louisville, Kentucky.

The Acquisition Agreement

On December 10, 2009, Chardan 2008, DAL, David J. Stern (“Stern”), Professional Title and Abstract Company of Florida, Inc. (“PTA”), Default Servicing, Inc. (“DSI”), the Law Offices of David J. Stern, P.A. (“DJS,” which together with Stern, PTA and DSI are referred to collectively as the “Stern Contributors”), along with DJS LLC, DSI LLC and PTA LLC, Raj K. Gupta (“Gupta”), Jeffrey A. Valenty (“Valenty”), FlatWorld DAL LLC (“FlatWorld”), and Fortuna Capital Partners LP (“Fortuna” and collectively with FlatWorld, the “Existing Members”) entered into that certain Master Acquisition Agreement (the “Acquisition Agreement”) which governs Chardan 2008’s acquisition of a controlling membership interest in DAL in exchange for its contribution of capital to DAL. The Acquisition Agreement establishes the various rights and obligations that Chardan 2008, DAL, the Stern Contributors, Gupta, Valenty and the Existing Members will have with respect to each other.

Chardan 2008’s Rights and Obligations under the Acquisition Agreement

The principal rights and obligations of Chardan 2008 under the Acquisition Agreement are as follows:

•   The Initial Contribution

Chardan 2008 is required to make a capital contribution of the entire balance of its trust fund, net of any redemptions of the Public Shares, and the proceeds from the Private Placement, net of underwriter commissions, expected to aggregate approximately $64,550,000, (the “Initial Contribution”), in exchange for which it will receive 10,666,666 DAL Common Units, plus warrants and options to purchase up to an additional 11,441,666 DAL Common Units as discussed below. Up to approximately $58,310,000 of the Initial Contribution will be used to make an initial cash payment to the Stern Contributors (“Initial Cash”). The difference between the Initial Contribution and the Initial Cash (“Contribution Difference”) will be used to pay expenses related to the acquisition and certain other expenses described below. The initial 10,666,666 (assuming no redemption of Chardan 2008’s shares) DAL Common Units will represent 70.95% of DAL’s issued and outstanding ownership interests in DAL on a common unit equivalent basis. In the event that any of the Public Shares are redeemed for a pro rata portion of the trust account, the ownership interest of Chardan 2008 in DAL will be reduced by one common unit for each Public Share that is redeemed. If the maximum number of Public Shares is redeemed (i.e., 2,406,249 Public Shares), the DAL Common Units issued to Chardan 2008 will equal 8,260,417, representing 65.42% of DAL’s ownership interests on a common unit equivalent basis. In any case, Chardan 2008 will not acquire less than a controlling interest (as determined by voting power) of the securities of DAL. In such event, the parties would be required to waive the closing condition that the Stern Note be no greater than $54,000,000 in order to close the transaction. If that occurred and Stern were to waive the minimum required amount for the Initial Contribution, the Initial Contribution could be reduced to $45,545,000 and the amount of the Stern Note could be increased to approximately $65,000,000. DAL will assume and pay Chardan 2008’s deferred and accrued expenses and the transaction costs (estimated to be in the aggregate about $8.1 million). The Contribution Difference will be used to pay such expenses and closing costs.

•   The Chardan and DAL Warrants and Options.

Chardan 2008 is required to utilize the net proceeds of the exercise of its (i) 11,166,666 issued and outstanding warrants (the “Chardan Warrants”) to acquire additional DAL Common Units through the exercise of warrants that DAL will issue to Chardan 2008 (the “DAL Warrants”) at the closing of the acquisition and (ii) 137,500 issued and outstanding options (the “Chardan Options”) to acquire additional DAL Common Units and DAL Warrants issued to Chardan 2008 upon the consummation of the acquisition. Each DAL Warrant is exercisable into one DAL Common Unit for an exercise price of $5.00. For each Chardan Warrant that is exercised, Chardan 2008 will exercise a DAL Warrant and acquire a DAL Common Unit. For each

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Chardan Option that is exercised Chardan 2008 will exercise a DAL warrant and acquire one DAL Common Unit and one DAL Warrant. For that reason, if all of the Chardan Warrants and Chardan Options are exercised for cash, Chardan 2008 will acquire an additional 11,441,666 DAL Common Units.

Included in the Chardan Warrants are 2,000,000 warrants issued to Chardan 2008’s initial shareholders in a private placement at a price of $0.50 prior to Chardan 2008’s initial public offering (the “Private Placement Warrants”). These warrants have a “cashless exercise” feature, which means that the holders could exchange some or all of their warrants for a lesser amount of Chardan 2008 ordinary shares rather than paying the exercise price to exercise the Private Placement Warrants. However, in order to increase the amount of cash available to DAL to pay the Stern Note and the Post-Closing Cash, certain holders of the Private Placement Warrants have agreed to exercise their Private Placement Warrants for cash or to sell them to third parties who agree to do so. The obligation to sell or exercise the Private Placement Warrants arises on the later of the 6-month anniversary of the closing of the acquisition or once there is a registration statement in effect for the resale of the Private Placement Warrants and the shares underlying them. In addition, the closing price of Chardan 2008 ordinary shares must be $9.00 or greater. The aggregate number of the Private Placement Warrants to be sold or exercised each day is equal to the greater of 10% of the average daily trading volume of Chardan 2008 ordinary shares or 50,000.

In exchange for their agreement to exercise the Private Placement Warrants for cash or to sell them to third parties that will do so, Chardan 2008 will issue to the holders of those warrants up to an additional 233,010 ordinary shares, which it will also agree to register.

•   Exchange of Chardan 2008 Securities or Cash for the DAL Ownership Interests of the Stern Contributors and the Existing Members.

Chardan 2008 will also be obligated to exchange the Stern Contributors’ DAL Common Units or DAL Series A Preferred Units, and the Existing Members’ DAL Common Units, at their election, for corresponding Chardan 2008 securities on a one-for-one basis. However, Chardan 2008 may elect instead to pay the Stern Contributors and Existing Members cash in an amount equal to the fair market value of those interests in lieu of the Chardan 2008 securities, subject to the agreement of the Stern Contributors, the Existing Members and Kerry Propper, the current Chief Executive Officer of Chardan 2008, so long as he owns any Chardan 2008 ordinary shares.

•   Contribution of Assets Acquired in a Chardan 2008 Capital Transaction.

In the event that, post-closing, Chardan 2008 engages in a capital transaction (such as the acquisition of another business or a portion of another business) or there is a permanent equity investment in Chardan 2008, Chardan 2008 will contribute the proceeds of such transaction to DAL in exchange for additional DAL Common Units at their then fair market value, which will be presumed to be the share price of Chardan 2008 ordinary shares on which the transaction is based.

•   Registration Rights Agreement.

Chardan 2008 will also enter into a registration rights agreement (the “Rights Agreement”) pursuant to which Chardan 2008 will be required to register for resale any Chardan 2008 securities that the Stern Contributors and the Existing Members receive upon exchange of their DAL ownership interests.

•   Equity Incentive Plan.

Chardan 2008 will, subject to approval by its shareholders, adopt the Equity Incentive Plan, reserving 1,570,000 of its ordinary shares for issuance as restricted shares or upon the exercise of share options, share appreciation rights, performance awards, incentive awards, director share purchase rights and the like. In the event that it does so, Chardan 2008 will receive corresponding rights to purchase additional DAL Common Units on the same terms as Chardan 2008 grants awards under the Equity Incentive Plan.

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Payment of the Closing Consideration to the Stern Contributors and issuance of the Stern Note in Exchange for their Contribution of the Non-Legal Assets of DJS, DSI and PTA.

At or immediately prior to the closing of the transactions contemplated by the Acquisition Proposal, the Stern Contributors will have transferred all of the non-legal business and assets of DJS, DSI and PTA (the “Stern Contributors’ Contribution”) to DJS LLC, DSI LLC and PTA LLC, respectively. In consideration for their contribution of their ownership interests in DJS LLC, PTA LLC and DSI LLC to DAL, the Stern Contributors will receive from DAL the following (the “Consideration”):

Up to approximately $58,310,000 in cash (the “Initial Cash”);
A minimum of approximately $52,659,000 (and a maximum of $54,000,000) in a promissory note issued by DAL (the “Stern Note”);
1,200,000 DAL Common Units (the “Stern DAL Common Units”);
1,666,667 DAL Series A Preferred Units (the “Stern DAL Series A Preferred Units”);
3,133,333 DAL Series B Preferred Units (the “Stern Series B Preferred Units”); and
The right to receive $35 million in Post-Closing Cash (as defined in the Section titled “Post Closing Cash”).

The Initial Cash is subject to a downward adjustment to the extent that any Public Shares are redeemed in exchange for a pro rata portion of the trust account. In that event, the shortfall will be added to the Stern Note. In the event that holders of more than approximately 2.50% of Chardan 2008’s Public Shares both vote against the Acquisition Proposal and elect to exercise their redemption rights, there may not be enough cash available to consummate the acquisition under the current terms unless the parties waive the requirment that the Stern Note not exceed the principal amount of $54,000,000. A portion of the Initial Cash will be paid using proceeds from the Private Placement that will close simultaneously with the transactions contemplated by the Acquisition Proposal.

The Stern Note will have the following principal terms:

The principal amount of approximately $52,659,000 (subject to adjustment up to a maximum of $54,000,000 depending on the amount of the shortfall in Initial Cash);
Interest of 3.0% per annum, payable monthly, with a default rate equal to the lesser of (a) the current interest rate plus 10% or (b) the highest lawful rate;
A maturity date that is 36 months after the closing of the acquisition;
All assets of DAL and its subsidiaries will secure repayment of the Stern Note, the security interest to be junior to obligations owed by DAL to its commercial lender.
Payment in the amount of 90% of its free positive cash flow (equal to EBITDA, plus accrued taxes, less debt service, cash taxes, capital expenditures and net changes in working capital) (“Designated Free Cash Flow”) will be made monthly. In addition, all proceeds from the exercise of the DAL Warrants by Chardan 2008 will be used to repay the Stern Note, with any proceeds not required for that purpose to be used to pay the Post Closing Cash.
Customary events of default including, without limitation, breaches of covenants or representations, material adverse change or any merger or other change in control transaction; and
Customary affirmative and negative covenants including, without limitation, liens, restricted payments, sales of assets and business combination transactions.

The DAL Series A Preferred Units will be convertible into DAL Common Units at the option of the holder on a one-for-one basis. They will vote with the DAL Common Units on an as converted basis, have a $15.00 per unit non-participating liquidation preference and participate pro rata with the DAL Common Units in all non-liquidating distributions.

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The DAL Series B Preferred Units will be issued in five subclasses (Series B-1 through Series B-5). The Stern Contributors will hold 596,666 shares of each of Series B-1 and Series B-2, and 646,667 shares each of Series B-3, Series B-4 and Series B-5. Each subclass of the DAL Series B Preferred Units will be convertible into DAL Common Units if the Chardan 2008 share price achieves certain price targets for 10 out of any 30 consecutive trading days prior to the fifth anniversary of the closing of the transactions contemplated by the Acquisition Proposal, as reflected below:

 
DAL Series B Subclass   Price Target
B-1   $ 10.00  
B-2   $ 12.50  
B-3   $ 15.00  
B-4   $ 17.50  
B-5   $ 20.00  

In the event that there is a change in control of Chardan 2008 or DAL prior to the fifth anniversary of the closing of the transactions contemplated by the Acquisition Proposal, if any subclass of DAL Series B Preferred has not previously converted, it will convert upon closing of such a transaction if the per share consideration received by Chardan 2008 ordinary shareholders in the transaction equals or exceeds the price target for such subclass.

Any DAL Series B Preferred Units that have not converted within five (5) years of the closing of the Acquisition Proposal will no longer carry the right to convert, and each DAL Series B Preferred Unit not converted by then may be repurchased by DAL for $0.001 per unit.

Borrowing to Pay the Initial Cash.

DAL will be authorized to borrow that portion of the Initial Cash that Chardan 2008 does not contribute, including any shortfall in the Initial Contribution by Chardan to DAL as a result of shareholder redemptions.

Sale of Ordinary Shares in Private Placement to Pay the Initial Cash

In connection with the transactions contemplated by the Acquisition Proposal, Chardan 2008 will consummate a sale of up to 1,500,000 ordinary shares at a per share price of $7.00, in a private placement. Chardan Capital Markets LLC, an affiliate of our CEO, Kerry S. Propper, will be paid a fee for placing these shares of $500,000, or 4.76%, of which $250,000 will be paid at closing and $250,000 will be deferred. See “Private Placement” under section titled “Summary of Material Terms to Acquisition Proposal

Transaction Expenses

Expenses

The following are the estimated expenses related to the transaction:

 
Amount   Description
$2,617,000   Legal Fees
$2,200,000   IPO Deferred Underwriters’ Compensation
$1,000,000   Payable to FlatWorld
$1,000,000   Rodman & Renshaw Investment Banking Fees
$   500,000   Chardan Private Placement fee
$   265,000   Accounting Fees
$   191,000   Miscellaneous
$  115,000   Financial Due Diligence
$   100,000   Fairness Opinion
$  100,000   Financing Fees and Expenses

Of such amount $6,238,000 will be paid at closing and $1,850,000 will be deferred, as described below; of the total estimated expenses, approximately $4.1 million are Chardan 2008 expenses and costs which are being assumed by DAL.

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Deferred Amounts

In order to make available as much cash as possible to pay the Initial Cash, certain parties that would otherwise have been entitled to receive payments at closing have agreed to allow DAL to defer these payments to a date that is the earlier of the one year anniversary of the payment in full of the Stern Note or twenty four (24) months following the closing of the transactions contemplated by the Acquisition Proposal. These deferred payments, totalling approximately $1.85 million, consist of the following:

 
Deferred Amount   Description
$1,100,000   IPO Deferred Underwriters’ Compensation
$   500,000   Rodman & Renshaw Investment Banking Fees
$   250,000   Chardan Capital Markets Private Placement fees
$1,850,000     

DAL’s obligation to make these deferred payments will be evidenced by promissory notes, and the outstanding principal amount of the notes will bear interest at the rate of 5% per annum. When the Stern Note is indefeasibly repaid in full, DAL will make monthly payments to each payee equal to the remaining principal balance of such payee’s note, divided by 12.

The Post-Closing Cash

The Stern Contributors will be entitled to be paid $35,000,000 in cash after the closing of the acquisition (the “Post-Closing Cash”). The Post-Closing Cash must be paid in full no later than the fifth anniversary of the closing. The principal source of the funds to pay the Post-Closing Cash will be approximately 90% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit, with the balance of such proceeds being used by DAL to meet obligations owed to FlatWorld and Chardan Capital, LLC. To the extent that there are not sufficient proceeds from that source to pay in full the Post-Closing Cash to the Stern Contributors within 180 days of the closing of the acquisition, a late fee of 0.25% per month will be added to the outstanding balance of Post-Closing Cash due until paid in full. In that event, DAL will also utilize approximately 90% of its Designated Free Cash Flow, together with any remaining proceeds from the exercise of the Chardan Warrants, to pay the Post-Closing Cash, until it is paid in full. Payments from DAL’s Designated Free Cash Flow will be made quarterly (or sooner at Chardan 2008’s option) until such payments, together with the proceeds from exercise of the DAL Warrants that are used to pay the Post-Closing Cash, result in the Post-Closing Cash, plus any late fees, being paid in full. To the extent that the Post-Closing Cash has not been paid in full by the eighteen month “anniversary” of the closing of the Acquisition Proposal, 0.67% per month will be added to the outstanding balance of the Post-Closing Cash due until paid in full. The payment of the Post-Closing Cash will be guaranteed by each of DJS LLC, PTA LLC and DSI LLC and secured by all of the assets of DAL, DJS LLC, PTA LLC AND DSI LLC.

Payment of Expenses.

In the event that the closing of the transactions contemplated by the Acquisition Proposal occurs, DAL will bear all of the Stern Contributors’ reasonable legal and other third-party fees and expenses (other than financial advisor fees) incurred in the negotiation and execution of the Acquisition Agreement and the transactions contemplated thereby, estimated to be approximately $1.3 million.

Obligations of DAL to the Existing Members under the Acquisition Agreement.

In connection with the Acquisition Proposal, DAL will have the following obligations to the Existing Members:

DAL Ownership Interests.

Upon the closing of the acquisition, the Existing Members will hold 1,500,000 DAL Common Units and 766,667 DAL Series B Preferred Units, which will consist of 153,334 shares of each of Series B-1 and Series B-2 and 153,333 shares of each of Series B-3, Series B-4 and Series B-5. Each of the Series B Preferred Units will be convertible into DAL Common Units upon the occurrence of the events as described in the section titled “Obligations of DAL to the Stern Contributors under the Acquisition Agreement.”

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Payment of Proceeds to FlatWorld.

In connection with the transactions contemplated by the Acquisition Proposal, DAL has agreed to pay FlatWorld $1,000,000 upon the closing of the Acquisition Proposal, $2,000,000 (the “FlatWorld Warrant Proceeds”) as described below, and another $1,000,000 upon the earlier of the first anniversary after the Stern Note has been paid in full or 24 months after the closing of the acquisition (the “FlatWorld Additional Warrant Proceeds”). The principal source of the funds to pay the FlatWorld Warrant Proceeds will be approximately 5% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit. If the FlatWorld Warrant Proceeds are not paid in full by the six month anniversary of the closing, FlatWorld is also entitled to receive approximately 5% of DAL’s Designated Free Cash Flow until the FlatWorld Warrant Proceeds are paid in full. If the Post-Closing Cash is paid in full prior to the time that the FlatWorld Warrant Proceeds are paid in full, then FlatWorld will be entitled to receive 50% of the remaining proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit and 50% of the Designated Free Cash Flow until the FlatWorld Warrant Proceeds are paid in full.

Commencing on the closing, a finance charge of 5% per annum on the unpaid principal balance of the FlatWorld Additional Warrant Proceeds shall be added to the additional outstanding unpaid balance until such amount is paid in full. If any amount to be paid to FlatWorld for the FlatWorld Additional Warrant Proceeds is paid more than three days late, the finance charge will increase to 8% per annum. The finance charge is payable quarterly, in arrears, commencing on April 1, 2010. If the FlatWorld Additional Warrant Proceeds are not paid in full by the time that the Stern Note is paid in full then FlatWorld will be entitled to receive the remaining amount of FlatWorld Additional Warrant Proceeds from the remaining proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit and the cash flow of DAL in monthly installments equal to the remaining unpaid amount of the FlatWorld Additional Warrant Proceeds, at the time the Stern Note is paid in full, divided by twelve.

Payment of Consulting Fees to FlatWorld.

DAL and FlatWorld, will also enter into an agreement (the “FlatWorld Services Agreement”) to provide ongoing consulting services to DAL for three years following the first anniversary after the closing of the acquisition (the “Management Services Term”). FlatWorld will be paid a monthly amount of $111,111.11 during the Management Services Term. In addition, DAL will pay FlatWorld a 2% acquisition fee based on the total enterprise value of any acquisition made by DAL post-closing for which FlatWorld has acted as a financial intermediary.

Payment of Expenses

In the event that the closing the acquisition occurs, DAL shall pay up to $400,000 of reasonable legal expenses incurred in the negotiation and execution of the Acquisition Agreement and the transactions contemplated thereby.

Obligations of DAL to Chardan Capital, LLC under the Acquisition Agreement.

DAL is obligated to pay to Chardan Capital, LLC, which is affiliated with Zhang Li, the Chairman of Chardan 2008, a consulting fee of $2,000,000 (the “Chardan Capital Fee”) out of the proceeds of Chardan 2008’s exercise of the DAL Warrants and Designated Free Cash Flow. The principal source of the funds to pay the Chardan Capital Fee will be approximately 5% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Acquisition Debt. If the Post-Closing Cash is paid in full prior to the time that the Chardan Capital Fee is paid in full, then Chardan Capital, LLC will be entitled to receive 50% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit. If the Chardan Capital Fee is not paid in full by the six month anniversary of the closing, Chardan Capital LLC is also entitled to receive approximately 5% of DAL’s Designed Free Cash Flow until the Chardan Capital Fee is paid in full. If the Post-Closing Cash is paid in full prior to the time that the Chardan Capital Fee is paid in full, then Chardan Capital, LLC will be entitled to receive 50% of the

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remaining proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit and 50% of the Designated Free Cash Flow until the Chardan Capital Fee is paid in full. In addition, DAL and Chardan Capital, LLC will enter into a management services agreement, effective as of January 1, 2011, which will call for Chardan Capital, LLC to provide certain management services to DAL in exchange for a $40,000 monthly fee.

Obligations of the Stern Contributors and the Existing Members under the Acquisition Agreement.

Contribution of the Assets of the Business

The Stern Contributors are obligated under the Acquisition Agreement to contribute all of the assets and business of PTA and DSI, as well as the DJS assets relating to the non-legal processing portion of its operations and certain liabilities, to wholly owned limited liability company subsidiaries, PTA LLC, DSI LLC and DJS LLC, which will be acquired by DAL.

Indemnification of Chardan 2008 by the Stern Contributors

The Stern Contributors will indemnify Chardan 2008, DAL and their respective parents, officers, directors, employees, affiliates, agents, successors and assigns against losses incurred that are based on breaches of covenants or agreements entered into in connection with the acquisition and misrepresentations or breaches of warranties made under the Acquisition Agreement, subject to a $500,000 basket and a $15,000,000 limit of liability. The indemnification obligations of the Stern Contributors are not subject to either the basket or the limit of liability if the loss results from breaches of certain restrictive covenants, misrepresentations or breaches of representations and warranties concerning particular matters such as authority and ownership of assets, taxes, employment matters, environmental matters, employee benefits or as a result of fraud or relating to liabilities not assumed by DAL. In addition, the Stern Contributors will indemnify Chardan 2008 against certain adverse tax consequences suffered by Chardan 2008 as a result of the structure of the acquisition and related transactions up to a limit of $8,500,000.

Indemnification of the Stern Contributors by Chardan 2008

Chardan 2008 will indemnify the Stern Contributors for losses based on misrepresentations or breaches of warranties or covenants made under the Acquisition Agreement, subject to a basket of $250,000 and a limit of $5,000,000. The basket and cap do not apply to certain specified misrepresentations or breaches of warranties or covenants by Chardan 2008, including those regarding capitalization, authority to enter into the transactions, brokerage fees owed, as a result of fraud or, post-closing, with respect to any of the liabilities assumed by Chardan

Indemnification of Chardan 2008, DAL and the Stern Contributors by the Existing Members, Gupta and Valenty

FlatWorld, Gupta and Valenty will indemnify Chardan 2008 and the Stern Contributors and their respective partners, officers, directors, employees, Affiliates, agents, successors and assigns for losses based on misrepresentations or breaches of a warranty or covenant by DAL, FlatWorld, Fortuna, Gupta or Valenty, subject to a $50,000 basket and a limit that is the lesser of (a) 55% of the after-tax cash proceeds received by FlatWorld as a result of the transactions contemplated by the Acquisition Agreement and (b) $1,500,000. The basket and limit do not apply to certain specified misrepresentations or breaches of warranty or covenants, including those related to the conduct of DAL’s business, taxes or as a result of fraud. Furthermore, with respect to Gupta and Valenty, any liability for indemnification shall be several and not joint and shall be shared pro rata in the ratio of 60% from Gupta and 40% from Valenty.

Indemnification of the Stern Contributors by DAL, DJS LLC, PTA LLC and DSI LL

Each of DAL, DJS LLC, PTA LLC and DSI LLC will indemnify the Stern Contributors against losses based on the breach of any covenant or other agreement on the part of any of DJS LLC, PTA LLC or DSI LLC under such entity’s respective contribution agreement, subject to a basket of $250,000.

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Obligations of DJS under the Acquisition Agreement.

DJS will be obligated to enter into a twenty-five year services agreement (the “Services Agreement”) with DJS LLC, pursuant to which, among other things, DJS generally will be obligated to utilize DJS LLC as the provider for substantially all non-legal services required by DJS, to the extent that DJS LLC provides those services or comes to provide the services in exchange for fees already agreed upon by the parties to the Services Agreement. Under the terms of the Services Agreement, DJS LLC will be obligated to make payments to DJS for the first four years of the term of the Services Agreement, so that DJS does not have less than $2 million of EBITDA during each year, subject to certain adjustments and conditions in exchange for supervisory services performed by DJS personnel for DJS LLC. The amount of the payments made by DJS LLC to DJS under the Services Agreement, if any, are not yet known and are expected to vary.

Conditions to Closing

Under the terms of the Acquisition Agreement, there are conditions that must be met or waived before the transactions contemplated by the Acquisition Proposal can close, even if the Acquisition Proposal is approved by the Chardan 2008 shareholders. Those conditions include the following:

Shareholder Approval

Under Chardan 2008’s Amended and Restated Memorandum and Articles of Association, a majority of the shareholders holding Chardan 2008 ordinary shares must approve the Acquisition Proposal. However, notwithstanding adoption of the Acquisition Proposal, Chardan 2008 will proceed with the transactions contemplated by the Acquisition Proposal only if holders of less than 35% of the Public Shares both vote against the Acquisition Proposal and exercise their redemption rights. If 35% or more of Chardan 2008’s Public Shares both voted against the Acquisition Proposal and holders elect to exercise their redemption rights, Chardan 2008’s Board of Directors will abandon the Acquisition Proposal, notwithstanding approval by a majority of its shareholders. Each Chardan 2008 public shareholder has the right to vote against the Acquisition Proposal and elect to redeem his, her or its shares for their pro rata portion of the trust account, except that Chardan 2008’s initial shareholders have agreed to vote any Public Shares that they have come to own in favor of the Acquisition Proposal. As a result, they cannot demand redemption of their Public Shares. Promptly after obtaining approval from its shareholders to proceed with the Acquisition Proposal, the parties will consummate the transactions contemplated by the Acquisition Agreement (assuming all other conditions are met).

The holders of Chardan 2008 ordinary shares issued prior to its initial public offering, all of which are owned by Chardan 2008’s officers, directors and their affiliates, agreed to vote the 2,291,666 shares of Chardan 2008 ordinary shares owned by them, representing 25% of Chardan 2008’s currently outstanding ordinary shares, in accordance with the majority of the votes cast by holders of the Public Shares.

Stern Note

The Stern Note to be issued to the Stern Contributors by DAL at the closing of the transactions contemplated by the Acquisition Proposal shall not exceed the principal amount of $54,000,000. In the event that holders of a certain percentage of Chardan 2008’s Public Shares both vote against the Acquisition Proposal and elect to exercise their redemption rights, there may not be enough cash available to consummate the acquisition under the current terms unless the parties waive the requirement that the Stern Note not exceed the principal amount of $54,000,000.

Fairness Opinion

On December 10, 2009 Ladenburg Thalman rendered an opinion to Chardan 2008’s Board of Directors, based upon and subject to the matters stated in the opinion, that the consideration to be paid by Chardan 2008 for the majority interest in DAL that it will receive is fair from a financial point of view to Chardan 2008’s shareholders.

The full opinion is attached as Annex A to this proxy statement. Chardan 2008 encourages its shareholders to review the opinion carefully for a discussion of valuation methodology, procedures followed, assumptions made and factors considered in developing the opinion. A more detailed discussion of the fairness opinion can be found in the section of this proxy statement titled “Proposal to Acquire DAL.”

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If the Transactions Contemplated by the Acquisition Agreement are not Consummated

If Chardan 2008 does not consummate the transactions contemplated by the Acquisition Proposal for any reason, it will continue to seek another target business until it is required to liquidate and dissolve pursuant to its Amended and Restated Memorandum and Articles of Association. As provided in its Amended and Restated Memorandum and Articles of Association, Chardan 2008 is required to consummate a business combination by February 11, 2011. Under its Amended and Restated Memorandum and Articles of Association as currently in effect, if Chardan 2008 does not acquire at least majority control of a target business by at latest February 11, 2011, Chardan 2008 will dissolve and distribute to its public shareholders the amount in the trust account plus any remaining net assets. See the risk factors in the section titled “Risks to Chardan 2008 Security Holders” of this proxy statement relating to risks associated with the dissolution of Chardan 2008.

The Acquisition Agreement and Related Documents

The Acquisition Agreement, the form of the proposed amendments to Chardan 2008’s Amended and Restated Memorandum and Articles of Association and the fairness opinion of Ladenburg Thalman are annexed to this proxy statement. We encourage you to read them in their entirety, as they are the key legal documents underlying the transactions contemplated by the Acquisition Proposal. They are also described in detail elsewhere in this proxy statement. The Acquisition Agreement and related Contribution and Membership Interest Purchase Agreement, which are attached as Annex C and Annex D, respectively.

Amendment and Restatement of the Amended and Restated Memorandum and Articles of Association

The Chardan 2008 Board of Directors has also determined that it is in Chardan 2008’s best interests to amend and restate its Amended and Restated Memorandum and Articles of Association to, among other things (i) change Chardan 2008’s name to DJSP Enterprises, Inc., (ii) remove provisions rendered extraneous by the consummation of the transactions contemplated by the Acquisition Proposal and (iii) designate 1,666,667 of its authorized shares of preferred shares as Series A Preferred Shares. The Series A Preferred Shares have a non-participating liquidation preference of $15.00 per share. In addition they vote on an as-converted basis with Chardan 2008 ordinary shares, participate in non-liquidating distributions with ordinary shares and are convertible at the option of the holder into ordinary shares on a one-for-one basis. A more complete description of the amendments to the Amended and Restated Memorandum and Articles of Association can be found in the section of this proxy statement titled “Proposal to Amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to Remove Restrictive Covenants”. The proposed Amended and Restated Memorandum and Articles of Association are attached to this proxy statement as Annex B.

The Equity Incentive Plan.

Under the terms of the Equity Incentive Plan, up to 1,570,000 Chardan 2008’s authorized ordinary shares will be reserved for issuance in accordance with its terms. Chardan 2008 currently anticipates that, shortly after the closing of the transactions contemplated by the Acquisition Proposal, its compensation committee will grant a number of awards which have not yet been determined to its directors and certain employees and consultants of DAL and its subsidiaries, including persons who are also employees of DJS. The purpose of the Equity Incentive Plan is to assist Chardan 2008 in attracting, retaining and providing incentives to its employees, directors and consultants, or the employees, directors and consultants of its subsidiaries, whose past, present and/or potential future contributions to Chardan 2008 have been, are or will be important to the success of Chardan 2008, and to align the interests of such persons with the interests of Chardan 2008’s shareholders. It is also designed to motivate employees and consultants and directors to contribute significantly toward Chardan 2008’s growth and profitability, and to provide incentives to Chardan 2008’s directors, employees and consultants who, by their position, ability and diligence are able to make important contributions to Chardan 2008’s growth and profitability. The various types of incentive awards that may be issued under the Equity Incentive Plan will enable Chardan 2008 to respond to changes in compensation practices, tax laws, accounting rules and standards and the size and diversity of its business as it comes to exist in the future. Directors, employees and consultants of Chardan 2008 and its subsidiaries selected by Chardan 2008’s Board of Directors or its Compensation Committee including employees of DJS, will be eligible for awards under the Equity Incentive Plan.

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We encourage you to read the plan in its entirety. A copy of the Equity Incentive Plan is attached as Annex E to this proxy statement.

Election of Directors

The Nominating Committee of the Chardan 2008 Board of Directors has nominated the following seven (7) persons for election to the Board of Directors at the Extraordinary General Meeting:

 
Class A Directors
(initial term of one (1) year and subsequent terms of four (4) years)
  Kumar Gursahaney
Nicholas Adler
Class B Directors
(initial term of two (2) years and subsequent terms of four (4) years)
  Mark P. Harmon
Class C Director
(initial term of three (3) years and subsequent term of four (4) years)
  Matthew S. Kayton
Juan V. Ruiz
Class D Director
(initial and subsequent term of four (4) years)
  David J. Stern
Jerry Hutter

See biographical information for each of the nominees in the section entitled “Directors and Management.”

Management

Following the acquisition, the current members of the management of Target Business prior to its contribution to DAL will remain in place, as discussed below under the “Management” section.

Chardan 2008 Extraordinary Meeting

Date, Time and Place.  The extraordinary meeting of Chardan 2008’s shareholders will be held at 10:00 a.m., local time, on January 11, 2010 at the offices of Chardan 2008’s counsel, Loeb & Loeb LLP, 345 Park Ave., New York, NY 10154.

Voting Power; Record Date.  You will be entitled to vote or direct votes to be cast at the extraordinary general meeting if you owned Chardan 2008 ordinary shares at the close of business on December 23, 2009, the record date for the extraordinary general meeting. You will have one vote for each ordinary share of Chardan 2008 you owned at that time. Warrants to purchase Chardan 2008 ordinary shares do not have voting rights.

Votes Required.  Under Chardan 2008’s Amended and Restated Memorandum and Articles of Association, approval of the Acquisition Proposal requires the affirmative vote of the holders of a majority of the outstanding ordinary shares. Approval of the Amendment Proposal, the Board of Director Proposal, and the Incentive Plan Proposal and the Name Change Proposal will require the affirmative vote of the holders of a majority of the outstanding ordinary shares cast by the shareholders at the Meeting, provided that there is a quorum. On December 23, 2009, there were 9,166,666 shares outstanding (including the 2,291,666 shares held by shareholders not purchased in Chardan 2008’s initial public offering). Each Chardan 2008 ordinary share entitles its holder to cast one vote per proposal.

Chardan 2008 will not be authorized to complete the Acquisition Proposal if the holders of 2,406,250 or more of the Public Shares are both voted against the Acquisition Proposal and they demand that Chardan 2008 redeem their shares in exchange for a pro rata portion of the trust account. In addition, none of the Acquisition Proposal, the Amendment Proposal, the Name Change Proposal and the Election of Directors will be given effect unless all of them are approved and given effect.

Abstaining from voting or not voting on the Acquisition Proposal (including broker non-votes), either in person or by proxy or voting instruction, will have the same effect on passage as a vote against it, since the vote to approve the Acquisition Proposal requires affirmative votes of holders of a majority of Chardan 2008’s outstanding ordinary shares. An abstention on the Acquisition Proposal will not count toward the 35% “against and redeeming” vote that would result in the acquisition’s abandonment, and if you abstain, you would be unable to exercise any redemption rights upon approval of the acquisition. To demand redemption, you must vote against the Acquisition Proposal and elect to redeem your shares.

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Abstaining from voting or not voting on the Amendment Proposal, the Name Change Proposal the Election of Directors, the Incentive Plan Proposal and the Adjournment Proposal (including broker non-votes), either in person or by proxy or voting instruction, will have no effect on the vote to approve each such Proposal, since the vote to approve each of these Proposals requires the affirmative vote of a majority of the outstanding ordinary shares cast by the shareholders at the extraordinary general meeting, provided that there is a quorum. If the Acquisition Proposal is not approved, Chardan 2008’s Board of Directors will not go forward with the Acquisition Proposal, and the Election of Directors, the Amendment Proposal, Name Change Proposal and the Incentive Plan Proposal will not be given effect, even if approved. Even if the Acquisition Proposal is approved, it will be given effect only if the Election of Directors, the Name Change Proposal and the Amendment Proposal are also approved. The failure to approve the Incentive Plan Proposal will not affect any of the other Proposals.

Under British Virgin Islands law, no other business, general notice of which has not been given, may be transacted at the extraordinary general meeting.

Redemption Rights.  Under its Amended and Restated Memorandum and Articles of Association, a holder of Chardan 2008 Public Shares who votes against the Acquisition Proposal may demand that Chardan 2008 redeem his or her shares for cash, but such shareholder will only receive the redemption amount if the transactions contemplated by the Acquisition Proposal are subsequently consummated. This demand must be made in writing at the same time the shareholder votes against the Acquisition Proposal, on the form of proxy card used to vote against the Acquisition Proposal. If you so demand, and the Acquisition Proposal is approved and the transactions contemplated thereby are consummated, Chardan 2008 will redeem your shares into a pro rata portion of the trust account, net of taxes payable and up to $510,000 of interest earned on the trust account that has been released to Chardan 2008 through June 30, 2009 to fund its working capital and repay management loans, as of two business days prior to the consummation of the transactions contemplated by the Acquisition Proposal. You will be entitled to receive this cash only if you continue to hold your shares through the closing of the transactions contemplated by the Acquisition Proposal and tender your share certificate(s) per the instructions included on the proxy card. In connection with tendering your shares for redemption, you must elect either to physically tender your share certificates to Chardan 2008’s transfer agent prior to the Meeting or to deliver your shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined based on the manner in which you hold your shares. The requirement for physical or electronic delivery prior to the special meeting ensures that a converting holder’s election to convert is irrevocable once the Acquisition Proposal is approved. Upon redemption of your shares, you will no longer own them. You must follow the instructions on the proxy card and send your share certificate(s) with your proxy card in order to exercise your redemption rights.

If the Acquisition Proposal is not approved, Chardan 2008 intends to pursue another business combination. In such a case, Chardan 2008’s shareholders would not be entitled to redemption of their Public Shares. However, holders of Chardan 2008’s Public Shares would still be entitled to receive a pro rata portion of the trust account if no other business combination is approved within the time allowed, and Chardan 2008 subsequently liquidates.

Appraisal Rights.  If a Chardan 2008 shareholder votes against the Acquisition Proposal and the acquisition is consummated, such shareholder has dissenter’s rights pursuant to the BVI Business Companies Act (the “Act”). Section 179 of the Act allows a member of a company to dissent from certain transactions and receive payment for the fair value of his or her shares. In order to receive fair value, the dissenting shareholder must give written notice of dissent and a demand of payment for the ordinary shares held by such shareholder prior to the vote to approve Acquisition Proposal. Once the acquisition is consummated and the dissenter confirms his or her demand for fair value, Chardan 2008 must make a fair value offer to purchase such dissenters’ shares. If the dissenting shareholder and Chardan 2008 disagree on the price, Chardan 2008 and the dissenting shareholder will participate in the following appraisal process: (i) Chardan 2008 and the dissenter each select an appraiser, (ii) the two appraisers select a third appraiser, (iii) the appraisers determine a fair value for the Chardan 2008’s ordinary shares on the day prior to the transaction, and (iv) the resulting price is binding on both Chardan 2008 and the dissenting member.

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Rescission Rights.  Because Chardan 2008’s IPO prospectus indicated that Chardan 2008 could only acquire a target business that did business in China, each holder of Public Shares and public warrants at the time of the merger who purchased his Public Shares in the IPO and who has not converted his shares into cash may have securities law claims against Chardan 2008 for rescission (under which a successful claimant has the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of a security).

In general, a person who purchased shares or warrants pursuant to a defective prospectus or other representation must make a claim for rescission within the applicable statute of limitations period, which, for claims made under Section 12 of the Securities Act and some state statutes, is one year from the time the claimant discovered or reasonably should have discovered the facts giving rise to the claim, but not more than three years from the occurrence of the event giving rise to the claim. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of his or her shares caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining the shares. Claims under the anti-fraud provisions of the federal securities laws must generally be brought within two years of discovery, but not more than five years after occurrence.

Even if you do not pursue such claims, others, who may include all holders of ordinary shares, may. Chardan 2008 cannot predict whether shareholders will bring such claims, how many might bring them or the extent to which they might be successful.

Proxies; Board Solicitation.  Your proxy is being solicited by the Chardan 2008 Board of Directors on each Proposal being presented to shareholders at the extraordinary general meeting. Proxies may be solicited in person or by mail, telephone or other electronic means. In addition, Chardan 2008 has hired Advantage Proxy to assist it in soliciting proxies for the meeting of shareholders. Chardan 2008 is paying Advantage Proxy approximately $15,000 for its services, plus reasonable expenses.

If you grant a proxy, you may still vote your shares in person if you revoke your proxy before the extraordinary general meeting.

Significant Shareholdings.  The holdings of Chardan 2008’s directors and significant shareholders are detailed in “Beneficial Ownership of Securities.”

Chardan 2008’s Recommendation; Interests of Chardan 2008’s Management

After careful consideration, Chardan 2008’s Board of Directors has determined that the Acquisition Proposal and the other Proposals that will be presented at the Meeting are fair to, and in the best interests of, Chardan 2008 and its shareholders. The Board of Directors has approved and declared advisable each and all of the Proposals and recommends that you vote or direct that your vote be cast “FOR” the adoption of each.

When you consider the recommendation of the Chardan 2008 Board of Directors, you should keep in mind that the members of the Board of Directors have certain interests in the Acquisition Proposal that are different from, or in addition to, yours. These interests include the following:

If the transactions contemplated by the Acquisition Proposal are not completed, and Chardan 2008 is subsequently required to liquidate, the shares owned by Chardan 2008’s initial shareholders, which consist entirely of its officers, directors and their affiliates, will be worthless, because the shares will no longer have any value and the initial shareholders are not entitled to liquidation distributions from Chardan 2008 on the initial shares.
Certain of Chardan 2008’s officers and directors agreed to indemnify Chardan 2008 for debts and obligations to potential target businesses or other persons for services rendered or contracted for or products sold to Chardan 2008, but only to the extent necessary to ensure that the payment of those liabilities does not reduce funds in the trust account. If the transactions contemplated by the Acquisition Proposal are consummated, these officers and directors will not have to perform their indemnity obligation. However, if the transactions contemplated by the Acquisition Proposal are not consummated, and Chardan 2008 is not able to find and consummate a transaction with another target, these

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officers and directors could be liable for any claims against the trust account by vendors who did not sign waivers. As of December 28, 2009, Chardan 2008 believes that Chardan 2008’s officers and directors do not have any risk of being required to provide indemnification, since all persons who have entered into agreements with Chardan 2008 have either been paid in full (or will be paid in accordance with Chardan 2008’s past practices), waived their right to assert claims against Chardan 2008’s trust account or are not entitled to be paid unless the acquisition is completed.
All rights of Chardan 2008’s officers and directors to be indemnified by Chardan 2008, and of Chardan 2008’s directors to be exculpated from monetary liability with respect to prior acts or omissions, will continue after the closing of the transactions contemplated by the Acquisition Proposal, pursuant to provisions in Chardan 2008’s Amended and Restated Memorandum and Articles of Association. However, if the Acquisition Proposal is not approved and Chardan 2008 subsequently liquidates, its ability to perform its obligations under those provisions will be substantially impaired, since it will cease to exist. If the acquisition is ultimately completed, Chardan 2008’s ability to perform such obligations will be substantially enhanced. Those factors could affect the exercise of judgment by the Chardan 2008 officers and directors who are obligated under the indemnification agreement.
Chardan Capital, LLC, an affiliate of Chardan 2008’s chairman, Zhang Li, will be entitled to receive the $2 million Chardan Capital Fee if the acquisition closes, to be paid as set forth in the section entitled “Obligations of DAL to Chardan Capital, LLC under the Acquisition Agreement”. Beginning in January 2011, Chardan Capital, LLC will also receive $40,000 per month under a management consulting agreement with DAL. Mr. Zhang would derive a direct benefit from the payment of those fees. You should consider whether that benefit to Chardan Capital, LLC, may have affected Mr. Zhang’s judgment in voting to recommend approval of the Acquisition Proposal.
Chardan Capital Markets, LLC, an affiliate of our CEO, Kerry S. Propper, will receive a commission of $500,000 if the Private Placement occurs. One half of this commission will be paid at the closing of the Private Placement and one half will be paid in accordance with the terms of the Chardan Capital Markets Note. Mr. Propper will receive a benefit from payment of that commission, but only if the Acquisition Proposal is consummated. You should consider whether that benefit to Chardan Capital Markets may have affected Mr. Propper’s judgment in voting to recommend approval of the acquisition.

Certain U.S. Federal Income Tax Consequences

For a discussion of certain U.S. federal income tax consequences of the Initial Contribution and of owning and disposing of ordinary shares and warrants in Chardan 2008 after the acquisition, see “Material United States Federal Income Tax Considerations,” below.

Quotation/Listing

Chardan 2008’s ordinary shares (CACA), warrants (CACAW) and units (CACAU) are quoted on the NASDAQ exchange.

Accounting Treatment for the Acquisition

Management determined that the weight of the factors favored treating the Target Business as the accounting acquirer. As a result, the historical financial statements of Chardan 2008 will be those of the Target Business. In determining the accounting treatment for this transaction, we considered, among other things, the guidance in the Business Combinations Topic of the FASB Accounting Standards Codification (ASC) to identify the accounting acquirer.

Three of the five factors in the Business Combinations Topic of the ASC favor treating the Target Business as the accounting acquirer:

The management of the Target Business will be the senior management of Chardan 2008 and the Target Business following the closing of the acquisition.
The Stern Contributors will have designated the majority (4 out of 7) directors of Chardan 2008 if the acquisition closes.

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The Stern Contributors will potentially have a significant ownership interest in Chardan 2008 (approximately 20% and perhaps higher) should they exchange their DAL ownership interests for corresponding Chardan 2008 equity interests, which would represent the largest single block of Chardan 2008 ownership interests.

A fourth factor, that Chardan 2008 will own 71% of DAL (which owns 100% of the Target Business), favors treating Chardan 2008 as the accounting acquirer. However, management believes that the weight of the last factor is diminished by the fact that the senior management of the Target Business will control the management and Board of Directors of Chardan 2008 and thus control DAL on behalf of Chardan 2008.

The last factor for consideration in the Business Combination Topic of the ASC is the terms of the exchange of equity interests, which favors neither Chardan 2008 nor the Target Business as the accounting acquirer. While it is usually the case in a reverse acquisition that the legal acquirer exchanges its stock for stock of the legal acquiree, in this case Chardan 2008 is acquiring its interest in DAL in exchange principally for cash. However, all of the equity interests in DAL to be held by someone other than Chardan 2008 (Stern Contributors and Existing Members) as a result of the transaction are all exchangeable for Chardan 2008 equity interests commencing a year after the transaction closes. The value of those interests represents a significant part of the consideration being received by Existing Members and the Stern Contributors, which was considered to render this factor neutral in the determination. It is unclear at this point as to which entity (Target Business or Chardan 2008) is paying a premium over fair value for their respective interests in the other entity.

Although management determined that the weight of the factors favored treating the Target Business as the accounting acquirer, there is no bright line test in the Business Combination Topic of the ASC, and such a determination necessarily involved the exercise of judgment in a complex area of accounting in connection with a structure that is, in some respects, atypical. As a result, it is possible that reasonable people could reach a different conclusion from that of Chardan 2008’s management on this accounting treatment.

Should this accounting treatment be challenged by regulators at some future time, it is possible that Chardan 2008 would be required to adopt a different accounting treatment. Should that occur, it could result in a restatement of Chardan 2008’s financial statements. For example, if it were determined that either DAL or Chardan 2008 is the accounting acquirer, Chardan 2008 would have to record the acquired assets and liabilities of the Target Business at fair value. This could result in increased future amortization and depreciation charges for certain assets with fair values in excess of their carrying values at the acquisition date, which would reduce the profits of Chardan 2008 as reported in its financial statements.

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RISK FACTORS

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before you decide whether to vote or direct your vote to be cast to approve the Acquisition Proposal.

Risks Related to the Target Business

David J. Stern, who will upon the closing of the transactions contemplated by the Acquisition Proposal be the President and Chief Executive Officer of DAL, is also the sole owner of DJS, which will be DJS LLC’s primary law firm customer, and may, under certain circumstances, have interests that differ from or conflict with the interests of Chardan 2008 shareholders.

David J. Stern, who will upon the closing of the transactions contemplated by the Acquisition Agreement be DAL’s President and Chief Executive Officer, is the sole shareholder of DJS, which will be DJS LLC’s primary law firm customer; DJS LLC will, in turn, be owned by DAL. As a result of this relationship with both DAL and DJS, Mr. Stern may encounter conflicts of interest in the execution of his duties on behalf of DAL. These conflicts may not be resolved in a manner favorable to DAL. For example, he may be precluded by his ethical obligations as an attorney or may otherwise be reluctant to take actions on behalf of DAL that are in its best interests but are not in the best interests of DJS, his law firm, or its clients. Further, as a licensed attorney, he may be obligated to take actions on behalf of DJS or its clients that are not in DAL’s best interests. Mr. Stern has other direct and indirect relationships with DAL that could cause similar conflicts including as the largest creditor for DAL. See “Related Party Transactions and Policies — David J. Stern” in this proxy statement and Note 2 to the Target Business’ consolidated financial statements for a description of these relationships.

David J. Stern plays a critical role in the success of both DJS and the Target Business. Should Mr. Stern become incapacitated or die, it is likely that the Target Business’ business and results would be adversely affected to a significant degree.

Although both DJS and the Target Business have substantial management teams that are capable and experienced, the majority of the client relationships of DJS and the customer relationships of the Target Business were established and continue to be managed by Mr. Stern. Mr. Stern will enter into a long-term employment agreement that will obligate him to manage the Target Business for at least five years. However, should Mr. Stern become unable to perform his duties or die, it is possible that the client relationships of DJS, and therefore the volume of referrals that the Target Business receives from DJS, would suffer, materially reducing the Target Business’ revenues and profitability.

If the Election of Directors is approved, Mr. Stern will have recommended four members of the Board, which may make it difficult or impossible to remove him as CEO of DAL, even if that were considered desirable.

Chardan 2008 has agreed to have Mr. Stern propose four of seven directors for election by Chardan 2008 shareholders, with the Existing Members having the right to propose one director. In the event that Mr. Stern does not diligently and faithfully discharge his responsibilities as CEO of DAL, the fact that he chose four of the directors of Chardan 2008 may make taking disciplinary action against him difficult, if not impossible, notwithstanding that all of the directors will have fiduciary duties to Chardan 2008’s shareholders to do so. In such a case, the only recourse available to Chardan 2008’s shareholders may be to bring an action against the directors for breach of their fiduciary duty, but as with any litigation, it can be costly, time-consuming and drawn out, and there is no assurance that it will succeed.

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If the number of case files referred to DJS LLC by DJS, which will be its principal foreclosure processing service law firm client after the closing of the transactions contemplated by the Acquisition Proposal, do not increase, the Target Business’ operating results and ability to execute its growth strategy could be adversely affected.

Upon the closing of the transactions contemplated by the Acquisition Proposal, DJS LLC will have just one law firm customer in Florida, i.e., DJS. Each foreclosure, bankruptcy, eviction, litigation, and other mortgage default related case file referred to DJS will typically have a fixed fee associated with it that is based on a schedule established by government sponsored entities, such as Freddie Mac and Fannie Mae. DJS LLC will be paid a fixed fee by DJS for the services it renders to DJS. Therefore, the success of the Target Business’ mortgage default processing services business is tied to the number of these case files that DJS receives from its mortgage lending and mortgage loan servicing firm clients and DJS LLC’s and DAL’s ability to control costs. There is little or no opportunity for DJS LLC to increase revenues on a per file basis unless the fee schedule that DJS has with its clients is adjusted upward. Such upward adjustments may or may not keep pace with increases in DJS LLC’s costs. Because DJS receives a fixed fee from its client, it has limited financial ability to pay increased fees to DJS LLC. As a result, if the number of referrals that the Target Business receives through DJS decreases, it would likely result in a decrease in revenues and profits for DJS LLC.

The majority of file referrals to DJS come from fewer than a dozen lenders and loan servicing firms. If DJS were to lose any of these sources of business, in whole or in part, it would adversely affect DAL’s financial performance.

In 2008, the top ten clients for DJS, on an aggregate basis, accounted for 94% of its case files referred to DJS for mortgage default and other processing services; and its largest single customer, accounted for 21% of DJS’ total foreclosure file volumes for the same period. The Target Business’ operating results and ability to execute its growth strategy could be adversely affected if (i) its current law firm customer, DJS, loses business from these clients; (ii) these clients are affected by changes in the market and industry or other factors that render them unable to pay for the services we have rendered; or (iii) our law firm customer is unable to attract additional business from current or new clients for any reason, including any of the following: a decline in the quality of legal services provided, the loss of key attorneys (such as David J. Stern, who has developed and maintains a substantial amount of DJS’s client relationships), the desire of the law firm’s clients to allocate files to other firms or among a larger number of firms, decreasing the share received by DJS, or the customers experience a decrease in the number of residential mortgage foreclosure actions that they initiate in Florida, our principal market, whether due to business considerations or governmental action impeding foreclosures. The reduction in work received from DJS or the inability or failure of DJS to pay DJS LLC as a result of any one or more of these factors could materially reduce DAL’s cash flow, revenues and profits. Please refer to the risk factors below for more information about governmental or other voluntary action on the part of the clients of DJS that could negatively affect DJS LLC and in turn negatively affect DAL.

DJS LLC could lose its law firm customer if we materially breach our Services Agreement.

Under the terms of the Services Agreement, DJS has the right to terminate the Services Agreement in the event we breach the terms of that agreement. DJS may have an ethical duty to take such action if DJS LLC does not provide services of a quality necessary for DJS to properly serve its clients. In addition, under the Services Agreement, if one of DJS’ clients require DJS not to use DJS LLC to provide services for their accounts, DJS may provide those services itself or use another party to do so. In the event of the occurrence of any of these events, our revenues and earnings could be materially adversely affected.

Regulation of the legal profession may constrain DJS LLC’s, PTA LLC’s and DSI LLC’s s operations, and numerous issues arising out of that regulation, its interpretation or evolution could impair the Target Business’ ability to provide professional services to customers and reduce revenues and profitability.

Each state has laws, regulations and codes of professional responsibility that govern the conduct and obligations of attorneys to their clients and the courts. Adherence to those codes of professional responsibility are a requirement to retaining a license to practice law in the licensing jurisdiction. The boundaries of the “practice of law,” however, can be indistinct, vary from one state to another and are the product of complex interactions among state law, bar association standards and constitutional law as formulated by the U.S.

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Supreme Court. Many states define the practice of law to include the giving of advice and opinions regarding another person’s legal rights, the preparation of legal documents or the preparation of court documents for another person. Although we are not aware of any ruling or interpretation of laws, regulations or other applicable standards that would result in the operations that DJS LLC will perform being considered the practice of law, we cannot say with certainty that no existing law, regulation or standard will be interpreted to produce that result, or that a new law, regulation or standard leading to that result will not be adopted in the future. In addition, all states and the American Bar Association prohibit attorneys from sharing fees for legal services with non-attorneys, so that if any aspect of the Target Business is deemed to constitute the practice of law, it would not be possible for DJS LLC, PTA LLC or DSI LLC to perform those services.

DJS LLC’s principal business activity involves providing foreclosure processing services, usually in connection with legal proceedings, such as foreclosure actions. Current laws, regulations and codes of professional responsibility governing the practice of law pose the following principal risks to DJS LLC’s business:

State or local bar associations, state or local prosecutors or other persons may claim that some portion of the services that DJS LLC provides constitute the unauthorized practice of law. Any such challenge could have a disruptive effect on the operations of the Target Business, including the diversion of significant time and attention of the Target Business’ senior management in order to respond. DJS LLC, PTA LLC, DSI LLC or DAL may also incur significant expenses in connection with such a challenge, including substantial fees for attorneys and other professional advisors. If a challenge to the legitimacy of DJS LLC’s or another Target Business’ operations were successful, the service operations may need to be modified in a manner that could adversely affect the Target Business’ and DAL’s revenues and profitability, the Target Businesses and DAL could be subject to a range of penalties and suffer damage to the Target Business’ reputation; and
The Services Agreement to which DJS LLC is a party could be deemed to be unenforceable, in whole or in part, if a court were to determine that such agreements constitute an impermissible fee sharing arrangement between the law firm customer and DJS LLC.

In addition, applicable laws, regulations and codes of professional responsibility, including their interpretation and enforcement, could change in a manner that restricts DJS LLC’s operations. Any such change in laws, policies or practices could increase our cost of doing business or adversely affect our revenues and profitability.

Failure to customize the proprietary case management software systems that we will acquire at the closing of the transactions contemplated by the Acquisition Proposal, so that it can be used to serve additional law firm customers both in Florida and in new jurisdictions, could adversely affect the growth prospects of our mortgage default processing service business.

The Target Business will rely heavily on a proprietary case management software system, which stores, manages and reports on the large amount of data associated with each foreclosure, bankruptcy, REO liquidation or eviction case file the Target Business will process, to achieve a high level of efficiency, accuracy and customer service. The system was initially developed for use in the State of Florida, and it is adapted specifically to the procedural requirements of that jurisdiction. We intend to expand the Target Business beyond Florida, and in order to do so profitably, we will need to modify our system to accommodate the specific procedural and legal requirements associated with those additional jurisdictions. While DJS modified the system for use in foreclosures processed in Puerto Rico, whether the system can be modified to conform to other jurisdictions at an acceptable cost is unknown. That will depend on how significant the needed changes are and whether we can develop a volume of business in those jurisdictions that will justify the cost of making them.

We may decide to enter into a service agreement with customers in other jurisdictions prior to modifying our software systems, based on a judgment that we can do so in a timely, effective and efficient manner to fulfill our contractual obligations. It is possible that our judgment will turn out to be incorrect, notwithstanding that it was made in good faith, in which case we could find that we are unable to provide the services that we agreed to provide or that we are unable to do so profitably. If we are unable to provide the agreed upon services in a timely and effective way, the harm to our business reputation may adversely affect our business

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in Florida or in other markets that we seek to enter, both reducing our revenues and profits from those other jurisdictions and making future expansion more difficult.

In addition, Florida is a “judicial” foreclosure state, which means that the foreclosure process is overseen at each step by a judge in a court of law. The processing services required, and the fees generated as a result, in a judicial state are significantly greater than those in a non-judicial state, which has minimal, if any, proceedings in a court of law in processing a foreclosure. If we choose to market our services in a non-judicial state, the revenue per file will be substantially less that we are currently generating in Florida, and that decreased revenue per file may prove not to be sufficient to justify the expense of modifying our software systems to expand our business into those jurisdictions.

Claims, even if not valid, that the case management software system that we will acquire at the closing of the transactions contemplated by the Acquisition Proposal or other proprietary software products and information systems infringe on the intellectual property rights of others could increase our expenses or inhibit the Target Business from offering certain services.

Other persons could claim that they have patents and other intellectual property rights that cover or affect our use of software products and other components of information systems on which we will rely to operate the Target Business, including the proprietary case management software system that we are acquiring to upon the closing of the transactions contemplated by the Acquisition Proposal that we will use to provide mortgage default processing services. Litigation may be necessary to determine the validity and scope of third-party rights or to defend against claims of infringement. Any litigation, regardless of the outcome, could result in substantial costs and diversion of resources and could have a material adverse effect on the Target Business. If a court determines that one or more of the software products or other components of information systems used infringe on intellectual property owned by others or we agree to settle such a dispute, we may be liable for money damages. In addition, we may be required to cease using those products and components unless we obtain licenses from the owners of the intellectual property or redesign those products and components in such a way as to avoid infringement. In any event, such situations may increase our expenses or adversely affect our ability to provide services.

We are subject to risks relating to litigation due to the nature of our products and service offerings.

The Target Business may, from time to time, be subject to or be named as a party in legal proceedings in the ordinary course of its mortgage default processing business. It could incur significant legal expenses and management’s attention may be diverted from operations in defending against and resolving lawsuits or claims. An adverse resolution of any future lawsuits or claims against the Target Business could result in a negative perception of the Target Business and cause the market price of Chardan 2008’s ordinary shares to decline or otherwise have an adverse effect on its operating results and growth prospects.

Risks Relating to the Mortgage Foreclosure Industry

State and federal regulation and limitation of lenders’ ability to pursue foreclosure actions, along with voluntary foreclosure relief programs developed by lenders, loan servicers and the Hope Now Alliance, a consortium that includes loan servicers, may have an adverse effect on the volume of the Target Business’ mortgage default processing services and public notice operations.

The prevalence of sub-prime, Alternative A paper mortgage and other non-traditional mortgage products, rising unemployment and the increasing number of defaults and delinquencies in connection with those and other mortgages have led to the adoption of governmental regulations that incentivize lenders and loan servicers not to pursue, or restrict the ability of lenders and loan servicers to pursue, foreclosure against defaulting mortgagors. While the effects of these regulations to date has not been substantial, if new or more stringent regulations are enacted, the clients of DJS would likely be subject to these regulations, and it could adversely affect the number of mortgage default files that DJS receives from its clients and can then refer to the Target Business for processing. Similarly, these new or more stringent regulations could impose new requirements on the processing of foreclosures, which could adversely affect when foreclosure referrals are sent to DJS LLC for processing. In the past year, the federal government has enacted the Housing and Economic Recovery Act of 2008, which contains reforms intended to reduce the volume of mortgages in foreclosure, including the

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development of a refinance program for homeowners with sub-prime loans. This refinance program took effect on October 1, 2008. In September 2008, the government also enacted the Economic Emergency Stabilization Act, which provides funding to purchase troubled assets from financial institutions.

Most recently, the new administration announced the Homeowner Affordability and Stability Plan, an attempt to address the continuing rise in mortgage delinquencies and mortgage defaults. Under this plan, the federal government set forth detailed requirements for the “Making Home Affordable” program, which offers qualified homeowners with a loan-to-value ratio above 80% the opportunity to apply for mortgage refinancing at lower interest rates. The “Making Home Affordable” program also announced loan modification guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. The loan modification program guidelines are expected to work in tandem with an expanded Hope for Homeowners program. If this legislation or any other bills being considered, including the proposed bankruptcy legislation that would allow bankruptcy judges in Chapter 13 cases to revise the terms of a mortgage on a primary residence, are successful, they will likely reduce the number of mortgages going into default and, thus, the number of mortgage default files that DJS or other customers refer to DJS LLC for processing. If either of these occurs, it could have a negative impact on our earnings and growth.

Furthermore, a number of lenders and loan servicers, including clients of DJS, are focusing greater attention on loss mitigation, loan modifications and similar efforts which may delay or prevent foreclosures. For example, programs have been announced to manage certain delinquent loans that banks hold in a manner that will attempt to avoid foreclosure. To the extent that lenders, loan servicers and others over whom we have no control, voluntarily, or are required to, continue these efforts, the number of files referred to DJS for mortgage default processing, and the number of foreclosure files referred to DJS LLC, could decline, which would have a negative impact on the Target Business’ revenue and earnings. You should also refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments — Regulatory Environment” later in this proxy statement for more information about regulatory and similar changes that could affect the volume of referrals we receive for our mortgage default processing services.

Changes in court practices or procedures may affect the filing and service requirements for case filings or may reduce or eliminate the amount of case filings, either of which could adversely affect the Target Business revenues, profitability and growth opportunities or adversely restrict its operations.

Florida and other jurisdictions are facing unprecedented levels of foreclosure activity in recent years, which has led to a substantial burden on the court systems in those states. It is possible that those jurisdictions, in order to relieve that burden and eliminate what has become a growing backlog of cases, will adopt modifications to their foreclosure proceedings in order to streamline them. Should they do so, it could reduce the amount of fees that DJS LLC receives per file, thus leading to a reduction in our revenues and profits, even if foreclosure volumes remain constant or even increase.

If “judicial” foreclosure states adopted “non-judicial” procedures for filing foreclosures, mortgage foreclosure processing firms operating in “judicial” states would be materially and adversely affected. “Judicial” foreclosure states require foreclosures to follow a set of rules, compliance with which is overseen by a judge in a court of law. The level of processing fees associated with a foreclosure in a judicial state is significantly greater than would be expected in a non-judicial state. Should Florida (or another judicial state in which the Target Business comes to operate) choose to adopt a non-judicial mortgage foreclosure process in order to expedite the processing of foreclosures, it would result in a substantial reduction in the revenues derived from that jurisdiction, with an accompanying reduction in profits.

Risks Relating to the Acquisition Proposal

Mr. Stern will receive a significant amount of cash consideration in connection with the transactions contemplated by the Acquisition Agreement, which may reduce his incentive to devote his full efforts to continue to develop and expand the business of DJS and the Target Business.

Under the terms of the Acquisition Agreement, Mr. Stern and his affiliates will receive approximately $58.5 million in Initial Cash in exchange for contributing the Target Business to DAL, plus another approximately $88 million in the Stern Note and Post-Closing Cash. Those amounts will be paid to the Stern

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Contributors regardless of how the Target Business performs. Although he will also have a substantial equity stake in DAL, which will give him an incentive to improve the Target Business, there can be no assurance that he will do so, or that his efforts to do so, however diligent, will succeed.

The combined company’s available cash could be reduced if Chardan 2008 shareholders exercise their redemption rights, requiring increased borrowings at closing of the transactions contemplated by the Acquisition Proposal to pay the closing consideration or if such borrowings are not available, an increase in the Stern Note or an inability to close the transaction.

Pursuant to Chardan 2008’s Memorandum and Articles of Association, holders of shares purchased in Chardan 2008’s initial public offering may vote against the Acquisition Proposal and demand that Chardan 2008 redeem their shares for pro rata portions of the trust account, net of taxes payable and up to $510,000 of interest earned on the trust account that has been released to Chardan 2008 through June 30, 2009 to fund its working capital and repay management loans, as of the record date. Chardan 2008 will not consummate the transactions contemplated by the Acquisition Agreement if holders of 2,406,250 or more Public Shares exercise these redemption rights. To the extent that the acquisition is consummated and some of the holders of the Public Shares have demanded to redeem their shares, there will be a corresponding reduction in the number of membership units of DAL owned by Chardan 2008 and a larger reduction in the amount of funds available to the DAL for payment of the Initial Cash. As of December 23, 2009, the record date, assuming the Acquisition Proposal is approved, and holders of 35% of the Public Shares exercise their redemption rights (the maximum number of redemption rights that could be exercised without terminating the Acquisition Proposal), the maximum amount of funds that could be disbursed to the holders of the Public Shares upon the exercise of their redemption rights is approximately $18.99 million, which would leave approximately $35.3 million to use for the Initial Cash. Any such shortfall in cash will have to be provided by increased borrowings by DAL, including increased borrowings from the Stern Contributors. Additional debt financing from third parties for this purpose is not likely to be available. If DAL is forced to increase its borrowings to close the acquisition, it may decrease the value of Chardan 2008’s shares, as the terms of such loans may not be advantageous. In addition, the Stern Contributors may elect not to consummate the transactions contemplated by the Acquisition Agreement if the Stern Note would exceed $54,000,000.

The working capital provided by Chardan 2008’s contribution may not be sufficient to meet the Target Business’ short-term operational needs.

Historically, DJS has been required to advance filing fees of approximately $350 on behalf of the customer when filing a new foreclosure case in Florida. Beginning June 2009, Florida raised the filing fees significantly creating a short-term demand on DJS’s cash resources as DJS agreed to advance approximately $1,900 per each new foreclosure file. Currently, DJS advances the filing fee of $1,900 for each file and bills its clients for full amount of such fee. After the closing of the acquisition, DJS LLC will advance the filing fee on behalf of DJS’s clients. Although, the Target Business will receive reimbursement of those fees, that reimbursement may not occur for as long as two months after they are paid. Given that DJS currently receives more than 6,000 referrals per month, on average, and such volumes could increase, these additional fees could increase DJS LLC’s cash needs, which could leave DJS LLC without sufficient financial resources to operate its business if it is unable to secure the needed financing.

Upon the closing of the transactions contemplated by the Acquisition Agreement, the Target Business is expected to have, from operations and a new line of credit, that amount of working capital deemed sufficient to fund the ongoing operations of the Target Business. However, if additional debt financing is required because of redemptions of shares held by Chardan 2008’s shareholders, the line of credit lender may not be willing to provide the line.

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The acquisition may not be treated as a reverse recapitalization, resulting in adverse consequences to Chardan 2008’s financial statements.

In this proxy statement, the acquisition is being accounted for as a reverse recapitalization of the Target Business. However, this accounting treatment is dependent on a number of factors that Chardan 2008 believes result in this transaction being considered a reverse recapitalization that may be subsequently determined to have been improperly considered by management or outweighed by other factors. If Chardan 2008’s auditors or the SEC determined that the acquisition were not a reverse recapitalization, Chardan 2008’s financial results could be significantly impacted because Chardan 2008 would have increased future amortization and depreciation charges for certain assets acquired in the acquisition with fair values in excess of their carrying values, which could reduce the profits of Chardan 2008.

If any funds held in Chardan 2008’s trust account are used to purchase ordinary shares of Chardan 2008 from holders who would have otherwise voted against the transaction, holders of the Public Shares may be entitled to rescission rights.

As a result of pressures in the equity markets dating back to the summer of 2007, many “blank check” companies such as Chardan 2008 have entered into arrangements to buy back from shareholders the shares that would otherwise vote against the Acquisition Proposal and seek redemption of their shares. This has the effect of converting shares that would otherwise have voted against the Acquisition Proposal into “yes” votes, allowing the transactions contemplated by the Acquisition Proposal to proceed. However, Chardan 2008’s initial public offering prospectus did not disclose that funds in the trust account might be used to purchase ordinary shares from holders thereof who have indicated their intention to vote against the acquisition and convert their shares into cash. Consequently, such use of the funds in the trust account might be grounds for a holder of the Public Shares to seek rescission of the purchase of those shares. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of the shares caused by the action that departed from the terms of the prospectus, together with interest, while retaining the shares, or simply to recover the amount that they had paid for their shares.

Purchasers of Chardan 2008 shares may also be entitled to rescission on the grounds that the Acquisition Proposal does not involve a company whose principal operations are in China.

In the prospectus that Chardan 2008 used to consummate its initial public offering, Chardan 2008 stated that it intended to enter into a business combination with a company whose principal operations are in China. Although the management of Chardan 2008 considered a business combination with a number of companies that met that description, it determined that the Acquisition Proposal was an alternative that was more beneficial to Chardan 2008’s shareholders than any of the China-based opportunities. However, as a result of this change in strategy, the holders of the Public Shares who acquired them before we announced the intention to engage in the acquisition may have a right to rescind their purchase, including a right to receive the difference between the value of the shares that they hold and the value that the shares would have had if Chardan 2008 had entered into a business combination with a company based in China.

The outstanding Chardan Warrants could decrease the Chardan 2008 share price.

If outstanding warrants are called or exercised, the underlying ordinary shares will be eligible for future resale in the public market. “Market overhang” from the warrants may cause investors to assume that there will be additional ordinary shares of Chardan 2008 outstanding that were purchased at the warrant exercise price that will likely be below the then current Chardan 2008 share price. That possibility could reduce the market price of Chardan 2008’s ordinary shares, even prior to a call of the warrants.

Chardan 2008 has 11,166,666 warrants outstanding which were issued prior to and in connection with Chardan 2008’s initial public offering exercisable at a price of $5.00 per share. Those warrants will become exercisable after consummation of the acquisition, and 6,875,000 of them (the “Public Warrants”) will be callable at a price of $0.01 per warrant and upon thirty (30) days’ notice if the closing Chardan 2008 share price equals or exceeds $10 for 20 out of 30 consecutive trading days. The shares underlying these 6,875,000 warrants have been registered pursuant to the Chardan 2008 F-1 registration statement. In the event that the Public Warrants are called, all or nearly all of them are likely to be exercised. Another 2,291,666 warrants are

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not subject to a call, but they may be exercised at any time after the acquisition is completed, although it is unlikely that they will be exercised until released from escrow on the first anniversary of the closing. If they are exercised or called, a substantial number of additional Chardan 2008 ordinary shares will be eligible for resale in the public market. Those additional shares will have been purchased at a price of $5.00, and as a result the exercise or the prospect of the exercise or call of these warrants may reduce the market price at which the ordinary shares of Chardan 2008 trade.

Immediately prior to the consummation of its initial public offering, Chardan 2008 issued 2,000,000 warrants at a price of $0.50 to the management of Chardan 2008 and their affiliates (the “Private Placement Warrants”). The Private Placement Warrants were issued on terms equivalent to those of the Public Warrants, except that (i) the Private Placement Warrants are not callable; and (ii) the Private Placement Warrants contain a “cashless” or “net” exercise provision, which allows the holders of the Private Placement Warrants to exercise them by receiving a reduced amount of Chardan 2008 shares compared to a “cash” exercise of the warrants, in exchange for not having to pay the $5.00 exercise price. The exact terms of the cashless exercise will depend on the share price of Chardan 2008 shares. The shares underlying the Private Placement Warrants were also registered pursuant to Chardan 2008’s F-1 registration statement, and the prospect that those warrants may be exercised for $5.00 may reduce the market price at which the ordinary shares of Chardan 2008 trade.

In order to generate additional cash for payment of the Stern Note, certain of the holders of the Private Placement Warrants have agreed to exercise or sell those warrants to third parties beginning on the later of six months following the closing of the transaction or the date that the warrants and the shares underlying them are covered by an effective resale registration statement and provided that Chardan 2008 ordinary shares are trading at or above $9.00. In exchange for their agreement to do so, the holders of those warrants will receive, in the aggregate, 233,010 Chardan 2008 ordinary shares. As a result of this agreement, the time at which the Private Placement Warrants will be exercised may be accelerated, thus causing the increase in the number of issued and outstanding Chardan 2008 shares to occur at an earlier time than might otherwise have happened.

The 2,291,666 units of Chardan 2008 securities held by its management and their affiliates are currently held in escrow, but they will be released from escrow on the first anniversary of the closing of the acquisition Those shares, which were registered pursuant to the F-1 under which Chardan 2008 conducted its initial public offering, will add to the “float” of Chardan 2008 shares when released from escrow, which could reduce Chardan 2008’s share price.

The units of Chardan 2008 securities purchased prior to the initial public offering (the “Insider Units”), each consisting of one ordinary share and one warrant to purchase an ordinary share of Chardan 2008 for $5.00, along with the Private Placement Warrants, are currently held in escrow. The Insider Units will be released from escrow one year after the date that the transactions contemplated by the Acquisition Agreement close. If the Public Warrants have not been called or exercised prior to that time, the release of these shares from escrow will increase the public “float” of Chardan 2008 shares by approximately 33%, which may cause a decrease in the Chardan 2008 share price.

Registration rights held by the holders of DAL’s membership interests could reduce the market price of Chardan 2008’s ordinary shares.

Initially, neither the Stern Contributors nor the Existing Members will hold an ownership interest directly in Chardan 2008. However, the DAL Common Units and DAL Series A Preferred Units that the Stern Contributors will hold and the DAL Common Units that the Existing Members will hold will be convertible into comparable ownership interests in Chardan 2008 one year after the acquisition is consummated. Should the Stern Contributors, the Existing Members or both decide to convert some or all of their ownership interests in DAL into ownership interests in Chardan 2008, they are entitled to have Chardan 2008 register the Chardan 2008 securities issued to them. If the Stern Participants, the Existing Members or both convert their DAL ownership interests into Chardan 2008 shares and exercise their registration rights, it will increase the number of registered Chardan 2008 shares in the public float, which could negatively affect the Chardan 2008 share price.

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Chardan 2008’s directors and officers have interests in the Acquisition Proposal that are different from yours, because if the Acquisition Proposal is not approved, their shares may become worthless.

In considering the recommendation of Chardan 2008’s Board of Directors to vote to approve the Acquisition Proposal, you should be aware that Chardan 2008’s directors, officers and initial shareholders have agreements or arrangements that provide them with interests in the Acquisition Proposal that differ from, or are in addition to, those of Chardan 2008 shareholders generally. Chardan 2008’s initial shareholders, including its directors and officers, are not entitled to receive any of the funds that would be distributed upon liquidation of the trust account. Therefore, if the Acquisition Proposal is not approved, the 2,291,666 original units and 2,000,000 Private Placement Warrants may become worthless. In addition, if the Acquisition is consummated, Chardan Capital, LLC, an affiliate of our Chairman, Zhang Li, will be entitled to receive a $2 million fee from DAL. The personal and financial interests of directors and officers and their affiliates may have influenced their motivation in identifying and selecting a target business and in timely completion of a business combination. Consequently, their discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in the best interests of Chardan 2008’s shareholders.

Because Chardan 2008 does not intend to pay dividends on its ordinary shares, shareholders will benefit from an investment in Chardan 2008’s ordinary shares only if it appreciates in value.

Chardan 2008 has never declared or paid any cash dividends on its ordinary shares. Following the closing of the transactions contemplated by the Acquisition Proposal, Chardan 2008 currently intends to retain all future earnings, if any, for use in the operations and expansion of the business. As a result, Chardan 2008 does not anticipate paying cash dividends in the foreseeable future. Any future determination as to the declaration and payment of cash dividends will be at the discretion of Chardan 2008’s Board of Directors and will depend on factors Chardan 2008’s Board of Directors deems relevant, including, among others, Chardan 2008’s results of operations, financial condition and cash requirements, business prospects and the terms of Chardan 2008’s credit facilities and other financing arrangements. Accordingly, realizing a gain on your investment in Chardan 2008 will most likely depend on the appreciation of the price of Chardan 2008’s ordinary shares. There is no guarantee that Chardan 2008’s Ordinary Shares will appreciate in value.

Risks to Chardan 2008’s Security Holders

Chardan 2008 may choose to call its outstanding warrants at a time that is disadvantageous to the warrant holders.

Subject to there being a current prospectus under the Securities Act of 1933, Chardan 2008 may call, at a price of $.01 per warrant, all of the outstanding Public Warrants at any time after they become exercisable, upon a minimum of 30 days prior written notice of redemption, provided that the last sale price of Chardan 2008’s ordinary shares equals or exceeds $10.00 per share for any 20 trading days within a 30 consecutive trading day period ending three business days before Chardan 2008 sends the notice of redemption. Calling all of Chardan 2008’s outstanding warrants for redemption could force the warrant holders:

To exercise the warrants and pay the exercise price for such warrants at a time when it may be disadvantageous for the holders to do so;
To sell the warrants at the then current market price when they might otherwise wish to hold the warrants; or
To accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants.

Holders of Chardan 2008’s warrants may not be able to exercise their warrants, which may create liability for Chardan 2008.

Holders of both Chardan 2008’s Public Warrants and the Private Placement Warrants may receive shares upon exercise of the warrants only if: (i) a current registration statement under the Securities Act of 1933 relating to its ordinary shares underlying the warrants is then effective; and (ii) such shares are qualified for

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sale or exempt from qualification under the applicable securities laws of the states in which the various holders of warrants reside. Although Chardan 2008 has agreed to use its best efforts to maintain a current registration statement covering the shares underlying the warrants to the extent required by federal securities laws, and Chardan 2008 intends to comply with such agreement, Chardan 2008 cannot assure you that it will be able to do so. In addition, some states may not permit Chardan 2008 to register the shares issuable upon exercise of its warrants for sale. The value of the warrants will be greatly reduced if a registration statement covering the shares issuable upon the exercise of the warrants is not kept current or if the securities are not qualified, or exempt from qualification, in the states in which the holders of warrants reside. Holders of warrants who reside in jurisdictions in which the shares underlying the warrants are not qualified and in which there is no exemption will be unable to exercise their warrants and would either have to sell their warrants in the open market or allow them to expire unexercised. If and when the warrants become redeemable by Chardan 2008, Chardan 2008 may exercise its redemption right, even if Chardan 2008 is unable to qualify the underlying securities for sale under all applicable state securities laws. Since Chardan 2008’s obligations in this regard are subject to a “best efforts” standard, it is possible that, even if Chardan 2008 is able to defend successfully against a claim by warrant holders that it was not possible to maintain the registration of the underlying shares, despite Chardan 2008’s best efforts, a court may impose monetary damages on Chardan 2008 to compensate warrant holders due to the change in circumstances that led to Chardan 2008 being unable to fulfill its obligations.

Failure to close the transactions contemplated by the Acquisition Proposal could reduce the market price of Chardan 2008’s ordinary shares and may make it more difficult for Chardan 2008 to attract another acquisition candidate, resulting, ultimately, in the disbursement of the trust proceeds, potentially causing some investors to experience a loss on their investment.

If the transactions contemplated by the Acquisition Proposal are not completed for any reason, Chardan 2008 shareholders may be subject to a number of material risks, including:

The market price of its ordinary shares may decline if the current market price of its ordinary shares reflects a market assumption that such acquisition would be consummated;
Costs related to the Acquisition Proposal, such as legal and accounting fees and the costs of the fairness opinion and due diligence, must be paid, even if the Acquisition Proposal is not completed; and
Charges will be made against earnings for Acquisition Proposal-related expenses, which could be higher than expected.

Such decreased market price and added costs and charges of the failed Acquisition Proposal, together with the history of failure in consummating an acquisition, may make it more difficult for Chardan 2008 to attract another acquisition candidate, resulting, ultimately, in the disbursement of the trust proceeds, which could cause investors to experience a loss on their investment. In addition, Chardan 2008 would likely need to borrow the funds required to pursue a business combination with a different target, reducing its net asset value and making it a less attractive party with which to consummate a transaction.

If holders of Chardan 2008’s ordinary shares purchased in Chardan 2008’s initial public offering owning 35% or more of the ordinary shares issued in its initial public offering vote against the Acquisition Proposal and opt to redeem their shares for cash, Chardan 2008 may be forced to dissolve and liquidate, shareholders will receive less than the price per share they paid for their units, and Chardan 2008’s warrants may expire worthless.

Under the terms of Chardan 2008’s Amended and Restated Memorandum and Articles of Association, if holders of Chardan 2008’s ordinary shares owning 35% or more of the ordinary shares issued in its initial public offering both vote against the Acquisition Proposal and demand redemption of their shares for cash, Chardan 2008 may ultimately be forced to dissolve and liquidate. Although Chardan 2008 will continue efforts to acquire an operating company, now that Chardan 2008 has entered into a definitive agreement to consummate a business combination, its Amended and Restated Memorandum and Articles of Association require it to liquidate if it does not complete a business combination by February 11, 2011. If Chardan 2008 does not

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consummate the transactions contemplated by the Acquisition Agreement or an alternative business combination by that time, it will be forced to dissolve and liquidate in accordance with the provisions of British Virgin Islands law.

In any liquidation, the net proceeds of Chardan 2008’s initial public offering held in the trust account, plus any interest earned thereon (net of taxes payable and any interest earned on the trust account that may be released to Chardan 2008 to fund its working capital and repay management loans), will be distributed on a pro rata basis to the holders of Chardan 2008’s Public Shares. Chardan 2008 anticipates that the amount in trust will be approximately $54,300,000 at the time of liquidation, should that occur. Based on that number, the per share liquidation price would be approximately $7.89, or $0.11 less than the price ($8.00 per unit) that Chardan 2008 sold each unit for in its initial public offering. The proceeds deposited in the trust account could, however, become subject to the claims of Chardan 2008’s creditors, which could be prior to the claims of Chardan 2008’s public shareholders. Chardan 2008 cannot assure you that the actual per share liquidation price will not be less than $7.89 due to claims of creditors. Furthermore, there will be no distribution from the trust account with respect to Chardan 2008’s outstanding warrants and, accordingly, in a liquidation the warrants will expire worthless.

If Chardan 2008 is unable to consummate the transactions contemplated by the Acquisition Agreement, its public shareholders may be forced to wait until at least February 11, 2011 before receiving liquidation distributions.

If the transactions contemplated by the Acquisition Agreement are not consummated, Chardan 2008 has until February 11, 2011 to complete a business combination. Chardan 2008 has no obligation to return funds to investors prior to such date unless Chardan 2008 consummates a business combination prior thereto, and then only to redeeming shareholders. Only after the expiration of this time period will public shareholders be entitled to liquidation distributions if Chardan 2008 is unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until such date.

Chardan 2008’s shareholders may be held liable for claims by third parties against Chardan 2008 to the extent of distributions received by them.

Chardan 2008’s Amended and Restated Memorandum and Articles of Association provide that Chardan 2008 will continue in existence until February 11, 2011. If Chardan 2008 has not completed a business combination by then or amended such provision to allow it additional time to effect a business combination, its corporate existence will cease except for the purposes of winding-up Chardan 2008’s affairs and liquidating. This will have the same effect as if Chardan 2008 had gone through a voluntary liquidation procedure under British Virgin Islands law. In such a situation, a liquidating company must give notice to creditors of its intention to make a distribution by placing a public advertisement in the British Virgin Islands Gazette and one local newsaper, although in practice this notice requirement would not necessarily delay the distribution of assets, as the liquidator may be convinced that no creditors would be adversely affected as a consequence of a distribution before this time period has expired. Chardan 2008 anticipates the trust account would be liquidated shortly following publication of such notices. As soon as the affairs of the company are fully wound-up, the liquidator must present his final report and accounts before a final general meeting which must be called by a public notice at least one month before it takes place. After the final meeting, the liquidator must make a return to the Registrar of Corporations confirming the date on which the meeting was held, and three months after the date of such filing the company is dissolved.

Additionally, in any liquidation proceedings of Chardan 2008 under British Virgin Islands’ law, the funds held in Chardan 2008’s trust account may be included in its estate and subject to the claims of third parties with priority over the claims of its shareholders. To the extent any such claims deplete the trust account, Chardan 2008 cannot assure you it will be able to return to its public shareholders the liquidation amounts that would otherwise have been payable to them. Furthermore, a liquidator of the company might seek to hold a shareholder liable to contribute to Chardan 2008’s estate to the extent of distributions received by the shareholder pursuant to the dissolution of the trust account beyond the date of dissolution of the trust account.

If there are insufficient funds held outside the trust account for such purpose, Kerry Propper and Xiaosong Zhong have agreed that they will be jointly and severally liable (on a pro rata basis relative to the number of initial shares owned by them prior to the initial public offering) to ensure that the proceeds in the

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trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Chardan 2008 for services rendered or contracted for or products sold to Chardan 2008. Notwithstanding the foregoing, Chardan 2008 has questioned Kerry Propper and Xiaosong Zhong on their financial net worth and reviewed their financial information and believe they will be able to satisfy any indemnification obligations that may arise, although there can be no assurance of this. Furthermore, if they refused to satisfy their obligations, Chardan 2008 would be required to bring a claim against them to enforce Chardan 2008’s indemnification rights. Therefore, Chardan 2008 cannot assure you that the per-share distribution from the trust fund, if Chardan 2008 liquidates, will not be less than $7.89, plus interest then held in the trust fund, due to such claims.

If Chardan 2008 is forced to declare insolvency or a case for involuntary liquidation is filed against it which is not dismissed, the proceeds held in the trust account will be subject to applicable British Virgin Islands’ insolvency law, and they may be included in Chardan 2008’s estate and subject to the claims of third parties with priority over the claims of Chardan 2008’s shareholders. Furthermore, because Chardan 2008 intends to distribute the proceeds held in the trust account to its redeeming holders of the Public Shares promptly after the approval of the proposal to acquire DAL, this may be interpreted as giving preference to Chardan 2008’s public shareholders over any potential creditors with respect to access to or distributions from Chardan 2008’s assets. Furthermore, the Chardan 2008 Board of Directors may be viewed as having breached its fiduciary duties to Chardan 2008’s creditors and/or to have acted in bad faith, and thereby exposing itself and Chardan 2008 to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. Chardan 2008 cannot assure you that claims will not be brought against it for these reasons or that any such claims brought will not succeed.

If third parties bring claims against Chardan 2008, the proceeds held in the trust account could be reduced and the per share liquidation price received by shareholders could be less than $7.89 per share.

Chardan 2008’s placement of funds in trust may not protect those funds from third party claims against it. Although Chardan 2008 has sought to have vendors, potential target businesses, consultants or other entities with which Chardan 2008 does business execute valid and enforceable agreements waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of Chardan 2008’s public shareholders, it is possible that not all have executed such agreements. Those parties who have not entered into such agreements may have claims they will attempt to assert, and those who have may claim that the waiver is unenforceable or assert claims based on fraudulent inducement, breach of fiduciary responsibility or other similar claims. Nor is there any guarantee that, even if such entities have executed such agreements with Chardan 2008, they will not seek recourse against the trust account. A court could also conclude that such agreements are not legally enforceable. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of Chardan 2008’s public shareholders. Because many of Chardan 2008’s vendors, potential target businesses, consultants or other entities with which Chardan 2008 has done business executed agreements waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of Chardan 2008’s public shareholders, Chardan 2008 believes the likelihood of Chardan 2008 having to pay any such obligations in a liquidation is low.

Chardan 2008 has had limited ability to evaluate the target business’ management.

Although Chardan 2008 closely examined the management of DAL, DJS, DSI and PTA, Chardan 2008 cannot assure you that its assessment of their management will prove to be correct, that current management will remain in place indefinitely or that future management will have the necessary skills, qualifications or abilities to manage the Target Business successfully. All of the current management of such companies have indicated their intention to continue in their roles with the combined company and will, for the most part, conduct the day to day operations.

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As a foreign private issuer, we are not be subject to certain SEC regulations that companies incorporated in the United States are subject to.

We are currently a foreign private issuer. Accordingly, we are exempt from certain provisions applicable to United States public companies including:

The sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
Provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and
The sections of the Securities Exchange Act requiring our insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short swing” trading transactions (i.e., a purchase and sale, or a sale and purchase, of the issuer's equity securities within less than six months).

Because of these exemptions, our shareholders will not be afforded the same protections or information generally available to investors holding shares in public companies organized in the United States. For example, as a foreign private issuer, this proxy statement is not subject to SEC requirements or review. Although we have attempted to include in these proxy materials substantially similar information as a United States public company, it has not been and will not be reviewed by the SEC and it may not contain all of the disclosures that would be required had we been a United States public company.

Risks Relating to the Target Business’ Corporate Structure and Restrictions on its Industry

If DJS LLC’s current single customer law firm, DJS, were to have any claims brought against it, such claims could directly affect the operations of DJS LLC, resulting in DAL’s being unable to meet its obligations.

Until the Target Business succeeds in substantially expanding its customer base beyond DJS, any claim brought against DJS that adversely affected it could also adversely affect the Target Business and consequently DAL.

It is management’s goal to increase significantly the number of case files it handles from customers other than DJS, but there is no guarantee how soon, or to what extent, if at all, this can be accomplished. Until that occurs, if DJS were forced to quit operations due to claims brought against it, or if its business otherwise suffered a significant decline in case volumes, the Target Business and DAL could be left unable to afford to service its debt and meet its operational obligations or to operate profitably.

IF DJS LLC’s current single customer law firm, DJS, were to experience financial difficulties or bankruptcy, its ability to pay amounts due to DJS LLC could be adversely impacted.

At the time of the closing, DJS LLC will have one customer, DJS. If DJS were unable to pay amounts due to DJS LLC because it was experiencing financial difficulties or was in bankruptcy, Chardan 2008 and DAL’s business financial condition and results of operations would likely be materially adversely impacted.

Chardan 2008 has not had operations, and the Target Business has not operated as a public company. Fulfilling the obligations attendant with being a public company after completing the transactions contemplated by the Acquisition Agreement will be expensive and time consuming.

Each of Chardan 2008, as a company without operations, and the Target Business, comprised of private companies, have maintained relatively small finance and accounting staffs. Neither Chardan 2008 nor the Target Business currently has an internal audit group. Although Chardan 2008 has maintained disclosure controls and procedures and internal control over financial reporting as required under the United States securities laws with respect to its very limited activities, it has not been required to maintain and establish these disclosure controls and procedures and internal control as will be required with respect to businesses such as the Target Business with substantial operations. Under the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the combined company will need to implement additional corporate governance practices and adhere to a variety of reporting requirements

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and complex accounting rules. Compliance with these obligations will require significant management time, place significant additional demands on the combined company’s finance and accounting staff and on its financial, accounting and information systems, and increase its insurance, legal and financial compliance costs. The Target Business may also need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

Chardan 2008 may qualify as a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.

In general, Chardan 2008 will be treated as a PFIC for any taxable year of Chardan 2008 in which either (1) at least 75% of its gross income (including the gross income of certain 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of its assets (including the assets of certain 25% or more-owned corporate subsidiaries) is attributable to assets that produce, or are held for the production of, passive income. Passive income generally includes, without limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets. If Chardan 2008 is determined to be a PFIC for any taxable year (or portion thereof) of Chardan 2008 that is not included in the holding period of a U.S. Holder (as defined in the section of this proxy statement captioned “Material United States Federal Income Tax Considerations — General”) of Chardan 2008’s ordinary shares or warrants, the U.S. Holder may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. Based on the expected composition of the assets and income of Chardan 2008 and DAL after the acquisition, it is not anticipated that Chardan 2008 will be treated as a PFIC following the acquisition. Chardan 2008’s actual PFIC status for its current taxable year or any subsequent taxable year, however, will not be determinable until after the end of the taxable year. Accordingly, there can be no assurance with respect to the status of Chardan 2008 as a PFIC for its current taxable year or any future taxable year. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of this proxy statement captioned “Material United States Federal Income Tax Considerations — Tax Consequences to U.S. Holders of Ordinary Shares and Warrants — Passive Foreign Investment Company Rules.”

Chardan 2008 could be subject to U.S. federal income tax and branch profits tax in any given taxable year in excess of any distributions it receives from DAL under the LLC Agreement and any payments it may be entitled to receive under the Tax Indemnification Agreements

After the acquisition, Chardan 2008 will hold membership units in DAL. Since DAL is expected to be treated as a partnership for U.S. federal income tax purposes, Chardan 2008 generally will be subject to U.S. federal income tax (and possibly branch profits tax) on its distributive share of DAL’s taxable income or gain, regardless of whether Chardan 2008 receives any distributions from DAL. In addition, as a result of the adopted structure described elsewhere in these proxy materials, Chardan 2008 may, under certain circumstances, incur adverse tax consequences relative to the structure. Certain of these adverse tax consequences are covered by the Tax Indemnification Agreements; however, these agreements pertain only to specified circumstances and, in certain cases, are subject to limits on the amount of the indemnity payments receivable thereunder. Thus, in any given year, the taxes imposed in respect of Chardan 2008’s distributive share of taxable income or gain from DAL and the taxes imposed on any other items of income or gain that Chardan 2008 may recognize, including those covered by the Tax Indemnification Agreements, could exceed the amounts, if any, that Chardan 2008 receives as distributions from DAL under the LLC Agreement, as well as any payments that Chardan 2008 may receive under the Tax Indemnification Agreements.

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SELECTED HISTORICAL FINANCIAL INFORMATION

We are providing the following financial information to assist you in your analysis of the financial aspects of the Acquisition Proposal. We derived the December 31, 2008 historical information concerning Chardan 2008 from its audited financial statements for the year ended December 31, 2008 (from inception February 19, 2008) and from its June 30, 2009 unaudited financial statements. The information is only a summary and should be read in conjunction with each company’s historical consolidated financial statements and related notes contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Chardan 2008 or the enterprise resulting from the acquisition.

CHARDAN 2008 HISTORICAL FINANCIAL INFORMATION

     
  Six Months
Ended
June 30, 2009
  Period from
February 19, 2008
(Inception) to
June 30,
2009
(Cumulative)
  Period from
February 19,
2008
(Inception) to
Year Ended
December 31,
2008
Revenues   $     $        
Interest income on trust account     25,000       509,758       484,894  
Net income/(loss)     (264,000 )      (323,997 )      (59,789 ) 
Net income/(loss) per share – basic and diluted     (0.03 )      (0.04 )      (0.01 ) 
Weighted average number of shares outstanding – basic and diluted     9,166,666       9,166,666       9,166,666  
Net income/(loss) per share exclusive of shares and related interest subject to possible redemption – basic and diluted     (0.04 )            (0.01 ) 
Weighted average number of shares outstanding exclusive of shares subject to possible redemption – basic and diluted     6,760,416             6,760,416  

   
  At December 31,
2008
  At June 30,
2009
Total assets     54,610,307       54,379,453  
Ordinary shares and deferred interest subject to possible redemption     18,985,305       18,985,305  
Shareholders’ equity     34,185,148       33,926,148  

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PRICE RANGE OF SECURITIES AND DIVIDENDS

Chardan 2008

Shares, Warrants, Units

Chardan 2008’s ordinary shares, warrants and units are quoted on the NASDAQ Capital Markets under the symbols CACA, CACAW and CACAU, respectively. The units have been quoted since August 25, 2008 and the ordinary shares and warrants since August 25, 2008. Our securities did not trade on any market or exchange prior to August 25, 2008. The closing price for these securities on December 11, 2009, the last trading day before announcement of the Acquisition Proposal, was $7.75, $1.20 and $8.27, respectively. The closing price for the securities on December 22, 2009, the most recent trading day practicable before the date of this proxy statement, was $8.85, $3.32 and $12.23, respectively.

The table below sets forth, for the calendar quarters indicated, the high and low bid closing prices for Chardan 2008’s units for the period from August 25, 2008 through December 22, 2009 and Chardan 2008’s ordinary shares and warrants for the period from August 25, 2008 through December 22, 2009.

           
  Ordinary Shares   Warrants   Units
     High   Low   High   Low   High   Low
2008
                                                     
Third Quarter (From August 25)     7.28       6.60       1.54       1.05       8.90       8.00  
Fourth Quarter     7.04       6.11       1.05       0.09       7.80       6.35  
2009
                                                     
First Quarter     7.15       6.60       0.35       0.06       7.15       6.79  
Second Quarter     7.45       6.90       0.90       0.24       8.10       7.11  
Third Quarter     7.79       7.36       0.97       0.34       8.54       7.50  
Fourth Quarter (through December 22)     9.00       7.60       3.80       1.00       12.54       8.00  

Holders of Chardan 2008 ordinary shares, warrants and units should obtain current market quotations for their securities. The market price of these securities could vary at any time before the transactions contemplated by the Acquisition Proposal are completed.

Chardan 2008 anticipates that its securities will continue to be quoted on the NASDAQ Capital Markets post acquisition. There can be no assurance that a trading market will develop for these securities.

Holders of Chardan 2008.

As of December 22, 2009, there were of record 19 holders of ordinary shares, twelve of warrants, and one of units. Chardan 2008 believes the number of beneficial holders of each of these securities is significantly greater than the number of record holders.

Dividends.

Chardan 2008 has not paid any dividends on its ordinary shares to date and does not intend to pay dividends prior to the completion of a business combination.

Post Acquisition

The payment of dividends by the combined company in the future will be contingent upon revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the acquisition. The payment of any dividends subsequent to that time will be within the discretion of the Board of Directors serving at that time. It is the present intention of the Board of Directors to retain all earnings, if any, for use in business operations and, accordingly, it does not anticipate declaring any dividends in the foreseeable future. Loans or credit facilities may also limit the combined company’s ability to pay dividends after the completion of the acquisition. The Stern Note prohibits DAL from making distributions to its members without the consent of DJS. In addition, 90% of DAL’s Designated Free Cash Flow is required to be used to pay the Stern Note. Until the Stern Note is paid in full, DAL will not be able to make distributions to Chardan 2008 and because Chardan 2008’s sole source of cash is DAL, during that period Chardan 2008 will not have cash available to pay dividends. Whether Chardan 2008 will pay dividends once the Stern Note is fully repaid will be determined by the board of directors at that time.

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THE CHARDAN 2008 EXTRAORDINARY GENERAL MEETING

Chardan 2008 is furnishing this proxy statement to its shareholders as part of the solicitation of proxies by the Board of Directors for use at the extraordinary general meeting in connection with the proposed acquisition of a majority interest in DAL Group, LLC (“DAL”). This document provides you with the information you need to know to be able to vote or instruct your vote to be cast at the extraordinary general meeting.

Date, Time and Place.  Chardan 2008 will hold the extraordinary general meeting at 10:00 am, local time, on January 11, 2010, at the offices of Chardan 2008’s counsel, Loeb & Loeb LLP, 345 Park Ave., New York, NY 10154 to vote on the proposals specified below.

Purpose.  At the extraordinary general meeting, holders of Chardan 2008 ordinary shares will be asked to:

approve the transactions contemplated by the Acquisition Agreement for the acquisition of a controlling interest in DAL which will, upon the closing of the transactions contemplated by the Acquisition Agreement, provide, through its operating subsidiaries, non-legal residential mortgage foreclosure processing services consisting of processing documentation in support of foreclosure actions, performing title searches and assisting lenders in the liquidation of foreclosed properties, primarily in the State of Florida (the “Acquisition Proposal”);
elect seven (7) directors to the Board of Directors of Chardan 2008, each to serve until his or her term has expired and until his or her successor is duly elected and qualified (the “Election of Directors”);
adopt the Chardan 2008 China Acquisition Corp. 2009 Equity Incentive Plan, (the “Equity Incentive Plan,”) which reserves 1,570,000 Chardan 2008 ordinary shares for issuance to the directors, employees and consultants of Chardan 2008 and its subsidiaries (the “Incentive Plan Proposal”);
amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association to change the name of Chardan 2008 to “DJSP Enterprises, Inc.” (the “Name Change Proposal”);
amend and restate Chardan 2008’s Amended and Restated Memorandum and Articles of Association to give effect to the transactions contemplated in the Acquisition Agreement (the “Amendment Proposal”); and
approve of any adjournment or postponement of the extraordinary general meeting for the purpose of soliciting additional proxies (the “Adjournment Proposal”).

The Acquisition Proposal, the Election of Directors, the Incentive Plan Proposal, the Name Change Proposal, the Amendment Proposal and the Adjournment Proposal are referred to collectively as the “Proposals” and individually as a “Proposal.”

After careful consideration of all relevant factors, Chardan 2008’s Board of Directors has determined that these Proposals are fair to and in the best interests of Chardan 2008 and its shareholders, and has recommended that you vote or give instruction to vote “FOR” adoption of each of them and “FOR” the election of each nominee. The Board of Directors has also determined that the fair market value of its interest in DAL is at least 80% of Chardan 2008’s net assets, which is necessary to satisfy the provisions of its Amended and Restated Memorandum and Articles of Association enabling it to consummate the transactions contemplated by the Acquisition Proposal.

The extraordinary general meeting has been called only to consider approval of the Acquisition Proposal, the Election of Directors, the Incentive Plan Proposal, the Name Change Proposal, the Amendment Proposal and the Adjournment Proposal. Under BVI law and Chardan 2008’s Articles of Association, no other business, general notice of which has not been given, may be transacted at the extraordinary general meeting.

Record Date; Who is Entitled to Vote.  The “record date” for the extraordinary general meeting is December 23, 2009. Record holders of Chardan 2008 ordinary shares at the close of business on the record date are entitled to vote or have their votes cast at the Meeting. On the record date, there were 9,166,666 outstanding Chardan 2008 ordinary shares, of which 6,875,000 shares were sold to the public in Chardan

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2008’s initial public offering. Each ordinary share is entitled to one vote per proposal at the extraordinary general meeting. Chardan 2008’s warrants do not have voting rights.

Pursuant to letter agreements with Chardan 2008, Chardan 2008’s initial shareholders have agreed to vote the 2,291,666 ordinary shares owned by them prior to Chardan 2008’s initial public offering in accordance with the majority of the votes cast by holders of shares sold in Chardan 2008’s initial public offering. The initial shareholders have agreed not to demand redemption rights with respect to any ordinary shares owned by them, directly or indirectly, whether included in their initial shares or purchased by them in Chardan 2008’s initial public offering or in the aftermarket (nor will they seek appraisal rights with respect to such shares if appraisal rights would be available to them).

Vote Required.  Under Chardan 2008’s Amended and Restated Memorandum and Articles of Association, approval of the transactions contemplated by the Acquisition Agreement requires the affirmative vote of the holders of a majority of the outstanding ordinary shares. Approval of the Amendment Proposal and the Name Change Proposal will require the affirmative vote of the holders of a majority of the outstanding ordinary shares cast by the shareholders at the Meeting, provided that there is a quorum. Approval of the Incentive Plan Proposal, the election of each director nominee and the Adjournment Proposal will require the affirmative vote of the holders of a majority of the outstanding ordinary shares cast by the shareholders at the Meeting, provided that there is a quorum.

Chardan 2008 will not be authorized to complete the transactions contemplated by the Acquisition Agreement if holders of 2,406,250 or more shares of Chardan 2008’s ordinary shares sold in its initial public offering (public shareholders owning 35% or more of the shares sold in the initial public offering) vote against the acquisition and demand that Chardan 2008 redeem their shares for a pro rata portion of the trust account. In addition, the Amendment Proposal, the Name Change Proposal, the Incentive Plan Proposal, and the Election of Directors will not be effected, even if approved by shareholders in such manner, unless the Acquisition Proposal is also approved and holders of less than 35% of the ordinary shares sold in Chardan 2008’s initial public offering vote against the Acquisition Proposal and exercise their redemption rights. The Acquisition Proposal will not be given effect unless the Amendment Proposal and the Election of Directors are approved.

Abstaining from voting or not voting on the Acquisition Proposal (including broker non-votes), either in person or by proxy or voting instruction, will have the same effect as a vote against such proposal since the vote to approve the Acquisition Proposal requires the affirmative vote of holders of a majority of Chardan 2008’s outstanding ordinary shares. Abstaining from voting or not voting on the proposals to amend the Name Change Proposal, the Amendment Proposal, the Election of Directors, the Adjournment Proposal and the Incentive Plan Proposal (including broker non-votes) either in person or by proxy or voting instruction, will have no effect on the vote to approve each such proposal or the election of directors since the vote to approve each of these proposals requires the affirmative vote of the holders of a majority of the outstanding ordinary shares cast by the shareholders at the extraordinary general meeting, provided that there is a quorum. An abstention will not count toward the 35% “against and redeeming” vote that would result in the acquisition’s abandonment, and you would be unable to exercise any redemption rights upon approval of the acquisition. If the Acquisition Proposal is not approved, Chardan 2008’s Board of Directors will not go forward with the acquisition of DAL, the amendments to Chardan 2008’s Amended and Restated Memorandum and Articles of Association, adoption of the Equity Incentive Plan or Election of Directors. To demand redemption, you must vote against the acquisition and elect to redeem your shares.

Voting your Shares.  Each ordinary share that you own in your name entitles you to one vote per Proposal. Your proxy card shows the number of shares you own.

There are two ways to vote your shares at the extraordinary general meeting:

By signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose names are listed on the proxy card, will vote your shares as you instruct on the card. If you sign and return the proxy card, but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Chardan 2008 Board of Directors “FOR” approval of each proposal.

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You can attend the Meeting and vote in person. Chardan 2008 will give you a ballot when you arrive. If your shares are held in the name of your broker, bank or another nominee, however, you must get a legal proxy from the broker, bank or other nominee. That is the only way Chardan 2008 can be sure that the broker, bank or nominee has not already voted your shares.

Redemption Rights.  Any holder of shares that were purchased in Chardan 2008’s initial public offering who votes against the Acquisition Proposal may, at the same time, demand that Chardan 2008 redeem his or her shares into a pro rata portion of the funds available for redemption in the trust account. If so demanded and the transactions contemplated by the Acquisition Proposal are consummated, Chardan 2008 will redeem the shares. If the holders of 35% or more of the Public Shares vote against the Acquisition Proposal and demand redemption of their shares, Chardan 2008 will not have authority to consummate the transactions contemplated by the Acquisition Proposal. You will be entitled to receive this cash only if you continue to hold your shares through the closing of the transactions contemplated by the Acquisition Proposal and tender your share certificate(s) per the instructions included on the proxy card. In connection with tendering your shares for conversion, you must elect either to physically tender your share certificates to the Company's transfer agent prior to the special meeting or to deliver your shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined based on the manner in which you hold your shares. The requirement for physical or electronic delivery prior to the special meeting ensures that a converting holder’s election to convert is irrevocable once the proposal is approved. Upon redemption of your shares, you will no longer own them. You must follow the instructions on the proxy card and send your share certificate(s) with your proxy card in order to exercise your redemption rights.

Our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate or other person with whom such public shareholder is acting in concert or as a “group” (within the meaning of Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from seeking redemption rights with respect to an aggregate of more than 10% of the ordinary shares sold in Chardan 2008’s public offering (but only with respect to the amount over 10% of the ordinary shares sold in the public offering). A “group” will be deemed to exist if public shareholders: (i) file a Schedule 13D or 13G indicating the presence of a group, or (ii) acknowledge to us that they are acting, or intend to act, as a group. Such public shareholders would still be entitled to vote against the Acquisition Proposal with respect to all ordinary shares owned, whether directly or indirectly through one or more affiliates.

The closing price of Chardan 2008’s ordinary shares on December 22, 2009 was $8.85. At the time of the consummation of the acquisition, Chardan 2008 anticipates that the amount in trust will be approximately $54,300,000. A public shareholder that elects to exercise redemption rights would be entitled to receive approximately $7.89 per share.

Questions About Voting.  If you have any questions about how to vote or direct a vote in respect of your Chardan 2008 ordinary shares, you may write or call Chardan 2008’s proxy solicitor: Advantage Proxy, 24925 13th Place South, Des Moines, Washington 98198, 206-870-8565, Attention: Karen Smith. You may also want to consult your financial and other advisors about the vote.

Revoking your Proxy and Changing your Vote.  If you give a proxy, you may revoke it or change your voting instructions at any time before it is exercised by:

Sending another proxy card with a later date;
Notifying Chardan 2008 China Acquisition Corp., No. 2206, A Zone Chaowai, SOHO No. 6B Chaowai Street, Chaoyang District, Beijing 100021, China, Attention: Gong Li, in writing before the extraordinary general meeting that you have revoked your proxy; or
Attending the extraordinary general meeting, revoking your proxy and voting in person.

If your shares are held in “street name,” consult your broker for instructions on how to revoke your proxy or change your vote.

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Broker Non-Votes.  If your broker holds your shares in its name and you do not give the broker voting instructions, regulatory rules prohibit your broker from voting your shares on the Acquisition Proposal, the Incentive Plan Proposal, the Name Change Proposal, and the Amendment Proposal. This is known as a “broker non-vote.”

Solicitation Costs.  Chardan 2008 is soliciting proxies on behalf of the Chardan 2008 Board of Directors. Chardan 2008 has hired Advantage Proxy, a proxy solicitation firm, to assist it in soliciting proxies for a fee of approximately $15,000 plus reasonable expenses. This solicitation is being made by mail, but also may be made in person or by telephone or other electronic means. Chardan 2008 and its respective directors, officers, employees and consultants may also solicit proxies in person or by mail, telephone or other electronic means. In addition, the members of DAL, officers and directors may solicit proxies in person or by mail, telephone or other electronic means on Chardan 2008’s behalf. These persons will not be paid for doing this.

Chardan 2008 will ask banks, brokers and other institutions, nominees and fiduciaries to forward its proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Chardan 2008 will reimburse them for their reasonable expenses.

Share Ownership.  Information concerning the holdings of certain Chardan 2008 shareholders is set forth above in the Summary and below under “Beneficial Ownership of Securities.”

Actions that May Be Taken to Secure Approval of Chardan 2008’s Shareholders.  Chardan 2008 has retained Advantage Proxy to assist it with soliciting proxies. Neither Chardan 2008 nor its consultants or affiliates have offered any shareholder any form of consideration for any shareholder’s promise to approve the proposed acquisition.

In order to ensure that that the Acquisition Proposal is approved, Chardan 2008 and Stern and their respective affiliates may enter into transactions to purchase ordinary shares of Chardan 2008 from shareholders who have indicated their intention to vote against the acquisition and seek conversion of their shares. In addition, Chardan 2008, and Stern and their respective affiliates may also purchase warrants from warrantholders. Transactions of such nature would only be entered into and effected at a time when the purchasers of such securities or any of their affiliates are not aware of any material nonpublic information regarding Chardan 2008, the Target Business or the Acquisition Proposal. No transactions have been entered into as of the date of these proxy materials, but such transactions may include:

Purchases by Chardan 2008, Stern or their respective affiliates of shares or warrants of Chardan 2008;
Agreements with third parties to purchase shares or warrants of Chardan 2008 that may then be resold to Chardan 2008 after the consummation of the transactions contemplated by the Acquisition Agreement using funds that were previously in the trust account;
Agreements with third parties pursuant to which Chardan 2008, Stern or their respective affiliates would borrow funds to make purchases of ordinary shares or warrants of Chardan 2008. The combined company would repay such borrowings using funds that were previously in the trust account; and
The granting of securities to third party purchasers of ordinary shares or warrants of Chardan 2008 as an inducement for such third parties to purchase such securities.

In the event that it appeared that the Acquisition Proposal would not be approved at the Meeting of Chardan 2008’s shareholders, such meeting could be adjourned (assuming that the Adjournment Proposal was approved by the shareholders and such adjournment was not past February 11, 2011, the date on which Chardan 2008’s corporate existence terminates unless it consummates a business combination) to enter into arrangements similar to the foregoing.

In the event that any purchases of Chardan 2008’s ordinary shares or warrants are made by Chardan 2008, Stern or affiliates of either of them after the mailing of this proxy statement to shareholders but prior to the extraordinary general meeting, Chardan 2008 will file a Current Report on Form 6-K relating to such purchases within four business days of such purchases or otherwise prior to the Meeting.

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Chardan 2008 will file a Current Report on Form 6-K with respect to any arrangements entered into by Chardan 2008, Stern or their respective affiliates which is intended to increase the likelihood that the arrangement and related proposals are approved by Chardan 2008’s shareholders. Any Chardan 2008 shares purchased by Chardan 2008 will not be considered outstanding for purposes of the Meeting and will therefore not be permitted to vote at the meeting. In the event that public shares are purchased by Chardan 2008, such shares would no longer be deemed to be outstanding for purposes of determining the vote required for the approval of any of the Proposals presented at the extraordinary general meeting. Therefore, this would reduce (i) the number of public shares outstanding and entitled to vote on each matter and (ii) the number of shares required to be voted in favor of each proposal. Conversely, if Chardan 2008’s directors and officers purchased such shares, those shares would still be considered to be outstanding and could be voted in favor of such proposals, reducing the number of shares required to be voted in favor of such proposals by a number of shares equal to those purchased. Neither Chardan 2008 nor its officers or directors purchasing shares would affect the number of shares that could be redeemed by Chardan 2008 with the acquisition still being permitted to be consummated.

Chardan 2008’s initial shareholders have agreed to vote the 2,291,666 ordinary shares of Chardan 2008 (which includes 2,291,666 shares owned by its current officers and directors) owned by them prior to Chardan 2008’s initial public offering in accordance with the majority of the votes cast by holders of shares sold in Chardan 2008’s initial public offering. The initial shareholders are not under any obligation to Chardan 2008 with respect to voting any shares acquired by them in Chardan 2008’s initial public offering or in the aftermarket, and accordingly may vote any such shares in favor of the proposed acquisition (as they have indicated they intend to do). This would have the effect of reducing the number of other public shareholders of Chardan 2008 that would have to vote in favor of the Acquisition Proposal for it to be approved. The initial shareholders have agreed not to demand redemption rights with respect to any ordinary shares owned by them, directly or indirectly, whether included in their initial shares or purchased by them in Chardan 2008’s initial public offering or in the aftermarket (nor will they seek appraisal rights with respect to such shares if appraisal rights would be available to them).

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PROPOSAL TO ACQUIRE DAL

General

On December 10, 2009, the Master Acquisition Agreement (“Acquisition Agreement”) was entered into by and among Chardan 2008, DAL Group, LLC, a limited liability company organized under the laws of the State of Delaware (“DAL”), David J. Stern (“Stern”), the Law Offices of David J. Stern, P.A., a professional association licensed to practice law in the State of Florida (“DJS”), Professional Title and Abstract Company of Florida, Inc., a corporation organized under the laws of the State of Florida (“PTA”), Default Servicing, Inc., a corporation organized under the laws of the State of Florida (“DSI”), together with Stern, DJS and PTA are collectively referred to herein as the “Stern Contributors”), FlatWorld DAL LLC, a limited liability company organized under the laws of the State of Delaware (“FlatWorld”), Fortuna Capital Partners LP, a limited partnership organized under the laws of the State of Delaware (“Fortuna” and collectively with FlatWorld, the “Existing Members”), Raj K. Gupta (“Gupta”), Jeffrey A. Valenty (“Valenty”), DJS Processing, LLC, a limited liability company organized under the laws of the State of Delaware (“DJS LLC”), Professional Title and Abstract Company of Florida, LLC, a limited liability company organized under the laws of the State of Delaware (“PTA LLC”), and Default Servicing, LLC, a limited liability company organized under the laws of Delaware (“DSI LLC”). The Acquisition Agreement sets forth the framework pursuant to which (i) PTA and DSI will contribute all of their assets and certain of their liabilities to PTA LLC and DSI LLC, respectively, and DJS will contribute assets and certain liabilities relating to the non-legal processing portion of its operations to DJS LLC, (ii) the membership interests of DJS LLC, PTA LLC and DSI LLC will be transferred to DAL, (iii) the membership interests of DAL will be acquired by Chardan 2008 and the Stern Contributors and (iv) the Consideration will be paid.

Acquisition of Target Business and Structure of DAL

Upon the closing of the transactions contemplated by the Acquisition Proposal, Chardan 2008 will acquire a majority membership interest in DAL. The amount of the exact percentage ownership interest of Chardan 2008 in DAL is subject to downward adjustment to the extent any Public Shares are redeemed in exchange for a pro rata portion of the trust account. Assuming there are no redemptions of its Public Shares or assuming that there are a maximum number of permitted redemptions (i.e., 2,406,250 shares), Chardan 2008 will acquire 10,899,676 DAL Common Units or 8,493,426 DAL Common Units of DAL, which will represent 71.40%% or 65.42%, respectively, of the outstanding DAL membership units on a common unit equivalent basis. The Stern Contributors and the Existing Members collectively will own the remaining 29.05% or 34.58%, respectively, of DAL on a common unit equivalent basis. Upon the closing, Chardan 2008 will change its name to DJSP Enterprises, Inc.

Acquisition Consideration

In exchange for its membership interest in DAL, Chardan 2008 will make an initial payment of approximately $64,550,000 to DAL, reduced by an amount equal to the funds paid to Chardan 2008’s shareholders who exercise their redemption rights or dissenter’s rights, to acquire its initial majority membership interest in DAL.

In consideration of DAL’s acquisition of the membership interests in DJS LLC, PTA LLC and DSI LLC from DJS, PTA and DSI, respectively, DAL will make an initial cash payment of approximately $58,310,000 (the “Initial Cash”), issue the Stern Note in a principal amount that will range from a low of $52,659,000 to a high of $54,000,000 (the “Stern Note”) and make Post-Closing Cash payments totaling $35,000,000 and the issuance of DAL membership interests as described in the section titled “DAL’s Rights and Obligations to the Stern Contributors under the Acquisition Agreement.” Chardan 2008 will sell 1,500,000 of its ordinary shares in a private placement concurrently with the closing of the acquisition, generating gross proceeds of $10,500,000. See “Summary of Material Terms of the Acquisition Proposal”.

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Additional Agreements

Services Agreement.  Upon closing of the transactions contemplated by the Acquisition Proposal, the sole customer of DJS LLC will be DJS. To ensure that DJS LLC will have an ongoing revenue stream, it will enter into a long-term Services Agreement with DJS, the initial term being twenty-five years. Under the terms of the services agreement, DJS is obligated to utilize DJS LLC to perform substantially all of the processing services required by DJS in the course of its legal representation, to the extent that DJS LLC offers those services. Payment for the services will be based upon an agreed upon fee schedule. DJS LLC will also advance the filing fees to be paid in connection with legal actions commenced by DJS, for which DJS LLC will be reimbursed by DJS when it is reimbursed by its clients.

The Services Agreement also provides that DJS LLC will make monthly payments to DJS that are designed to ensure that DJS will have an EBITDA of $2 million for each of the first four twelve-month periods following the closing of the transactions contemplated by the Acquisition Proposal. The amount of these payments will vary, depending on DJS’ EBITDA (positive or negative) for a given year. The amount of DJS’s EBITDA will be reduced by expenditures in excess of certain agreed upon levels designed to ensure cost control. There are also limits on the amount of certain items, such as compensation paid to Stern, promotional expenses and travel and entertainment expenses, that can be deducted in calculating the EBITDA of DJS.

LLC Contribution Agreements.  In order to effect the structure agreed upon by the parties to the Acquisition Agreement, each of DJS, PTA and DSI will contribute certain of its assets and liabilities to a newly-formed limited liability company, DJS LLC, PTA LLC and DSI, LLC respectively. DJS, PTA and DSI each, in turn, will contribute its ownership interest in its respective newly formed limited liability companies to DAL in exchange for ownership interests in DAL. Those contributions will be made pursuant to a series of contribution agreements that set forth the terms and conditions of the contribution and the issuance of the DAL membership interests in return.

Share Escrow Agreement.  In the Acquisition Agreement, the Stern Contributors have agreed to indemnify Chardan 2008 against, among other things, the breach of any representations and warranties made to Chardan 2008 in the Acquisition Agreement. See sections titled “Indemnification of Chardan 2008 by the Stern Contributors.” In order to secure any payment obligations that may arise under such indemnification obligations, the parties have entered into an escrow agreement, pursuant to which a portion of the DAL membership interests consideration to be issued to the Stern Contributors will be held in escrow for a period of 18 months following closing of the acquisition. The escrowed securities will be retained in escrow beyond the 18-month period to the extent necessary to satisfy any claims made against the escrow prior to expiration of the 18-month period but not resolved by that date.

Tax Indemnification Agreements.  The structure of the acquisition is designed to provide FlatWorld and the Stern Contributors with certain tax benefits. As a result of the adopted structure, Chardan 2008, may, under certain circumstances, incur adverse tax consequences. In consideration for Chardan’s willingness to utilize the structure described elsewhere in these proxy materials, DAL, the Stern Contributors, FlatWorld, Gupta and Valenty have agreed to indemnify and protect Chardan against certain adverse tax consequences, should they occur under three separate tax indemnification agreements (collectively, the “Tax Indemnification Agreements”). The agreements pertain only to specified circumstances and are subject to a limit of $8,500,000 in the case of the Stern Contributors, and $1,750,000 in the case of FlatWorld, Gupta and Valenty.

Registration Rights Agreement.  Under the terms of the various agreements governing the acquisition, the Stern Contributors and FlatWorld have the right to convert their DAL Common Units (including those issued upon the conversion of the DAL Series B Preferred Units) and the DAL Series A Preferred Units into corresponding securities of Chardan 2008 at any time after the first anniversary of the closing of the acquisition. Chardan 2008 has agreed to register the ordinary shares of Chardan 2008 that are issuable upon the conversion of the DAL Common Units and DAL Series A Preferred Units on the earlier of the first anniversary date of the Rights Agreement or the date the DAL Common Units and DAL Series A Preferred Units are first exchangeable for Chardan 2008 ordinary shares. In addition, the holders of those securities may demand that Chardan 2008 file up to two registration statements registering their ordinary shares for resale. The Rights

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Agreement also contains other customary provisions for such types of agreements, including piggy-back registration rights, underwriter’s cutback provisions and short-form registration of ordinary shares for resale.

Voting Agreement.  As of closing of the transactions contemplated by the Acquisition Proposal, the Stern Contributors, FlatWorld, Chardan 2008 and certain designated shareholders of Chardan 2008 (the “Principals”) have entered into a voting agreement. Under the terms of the voting agreement, the parties other than Chardan 2008 will agree to vote all of the Chardan 2008 shares held by them in favor of four nominees to the Chardan 2008 board of directors designated by Stern (each a “Stern Designee”), two nominees designated by the Principals (each a “Principal Designee”) and Juan V. Ruiz (the “DAL Nominee”). Chardan 2008 agrees that, to the extent permissible under applicable rules of the Nasdaq Stock Market LLC, it will nominate the designees of the various parties described in the foregoing sentence. If the number of nominees that Chardan 2008 can designate under the Nasdaq rules is less than all seven, then Chardan 2008 shall nominate directors as follows: (i) if Chardan 2008 can only nominate two or fewer nominees, Chardan 2008 will nominate Stern Nominees for these positions, (ii) if Chardan 2008 can only nominate three nominees, Chardan 2008 will nominate two Stern Nominees and one Principal Nominee, or (iii) if Chardan 2008 can only nominate four, five or six nominees, Chardan 2008 will nominate one Principal Nominee, the DAL Nominee and the remainder Stern Nominees. The term of the voting agreement is five years from the closing of the transactions contemplated by the Acquisition Proposal, or shorter in certain other events, including: a liquidation (as defined by Chardan 2008’s Memorandum and Articles of Association); the occurrence of a merger or similar transaction in which Chardan 2008 is not the surviving entity; after the Post-Closing Cash (as defined elsewhere in this proxy statement) has been paid in full, termination of Stern’s employment by Chardan 2008 and all of its affiliates or the termination of the Services Agreement between DJS and the DJS LLC or any agreement succeeding it.

Consulting Agreements.

The Chardan Capital Agreements.  DAL will pay to Chardan Capital, LLC, (“Chardan Capital”) an affiliate of Zhang Li, Chardan 2008’s current chairman, a consulting payment of $2 million post closing (the “Chardan Capital Fee”). The fee is being paid in consideration of the work performed by Chardan Capital, LLC to support Chardan 2008 in identifying and evaluating prospective targets for a business combination with Chardan 2008 and, after the Target Business had been chosen, in negotiating and documenting the terms on which DAL would be acquired. The principal source of the funds to pay the Chardan Capital Fee will be approximately 5% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit. If the Chardan Capital Fee is not paid in full by the six month anniversary of the closing, Chardan Capital LLC is also entitled to receive approximately 5% of DAL’s Designated Free Cash Flow until the Chardan Capital Fee is paid in full. If the Post-Closing Cash is paid in full prior to the time that the Chardan Capital Fee is paid in full, then Chardan Capital LLC will be entitled to received 50% of the proceeds from Chardan 2008’s required exercise of the DAL Warrants not used to satisfy the Stern Note or the lenders pursuant to the terms of the DAL Line of Credit and 50% of the Designated Free Cash Flow until the Chardan Capital Fee is paid in full. In addition, DAL and Chardan Capital LLC will enter into a management services agreement, effective as of January 1, 2011, which will call for Chardan Capial LLC to provide certain management services to DAL in exchange for a $40,000 monthly fee.

Additionally, Chardan Capital Markets, LLC, of which Mr. Propper is Chief Executive Officer, will act as placement agent for the Private Placement that will close in conjunction with the acquisition. Chardan Capital Markets, LLC is expected to receive a placement fee of $500,000 in connection with that financing, of which $250,000 will be deferred and paid pursuant to the Chardan Capital Markets Note. The terms of the Chardan Capital Markets Note provide for a 5% interest rate and amortizing payments which will begin to be paid on the first business day of each calendar month following the date that the Stern Note is paid in full. The amortizing payments will be equal to the remaining unpaid principal balance of the Chardan Capital Markets Note divided by 12. The maturity date of the Chardan Capital Markets Note is the earlier of the one year anniversary of the payment in full of the Stern Note or 24 months after the closing of the transactions contemplated by the Acquisition Proposal.

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DAL will also enter into a management Services Agreement with Chardan Capital, LLC, effective as of January 1, 2011, pursuant to which Chardan Capital, LLC will provide various management services to DAL in exchange for a monthly fee of $40,000 (the “Chardan Services Agreement”).

The FlatWorld Advisory Services Agreement.  At or after the closing of the transactions contemplated by the Acquisition Proposal, DAL and FlatWorld will also enter into an agreement to provide ongoing consulting services to DAL (the “FlatWorld Services Agreement”) beginning in the second year after the closing of the acquisition (the “Management Services Term”). FlatWorld will be paid a monthly amount of $111,111.11 during the Management Services Term. In addition, DAL will pay FlatWorld a 2% acquisition fee based on the total enterprise value of any acquisition made by DAL post-closing for which FlatWorld has acted as financial intermediary.

Facilities Sharing Agreement.  Following the closing of the Acquisition, DJS LLC will have become the lessee of the premises used for its operations located at 900 S. Pine Island Rd., Plantation, Florida. DJS and DJS LLC, will have entered into an agreement pursuant to which DJS will be entitled to occupy a portion of those premises for conducting its operations, in exchange for which DJS will pay rent to DJS LLC. In addition, the facilities sharing agreement establishes the terms on which DJS will be entitled to utilize certain office equipment located at the premises and on which DJS LLC will furnish certain back-office services to DJS.

Amended and Restated Limited Liability Company Agreement of DAL Group, LLC

Concurrently with the closing of the transactions contemplated by the Acquisition Proposal, each of DAL, Chardan 2008, DJS, PTA, DSI, FlatWorld and Fortuna (collectively, the “Members”) will execute the Amended and Restated Limited Liability Company Agreement of DAL Group, LLC (the “LLC Agreement”).

Types of Interests.  Three types of membership interests will be available to be issued to the Members on the closing of the acquisition, DAL Common Units, DAL Series A Preferred Units and DAL Series B Preferred Units. At any time after the one year anniversary of the closing date, holders of DAL Series A Preferred Units and DAL Common Units will have the right to exchange all or a portion of DAL Common Units and DAL Series A Preferred Units held by such holder in exchange for Chardan 2008’s ordinary shares and Series A Preferred Shares, respectively, subject to an acceleration of such exchange date for the Existing Members under limited circumstances. At Chardan 2008’s request, and if approved unanimously by the members of Chardan 2008’s board of directors nominated by certain principals of Chardan 2008, if any are entitled to serve on the Chardan 2008 board of directors, and Kerry Propper, so long as he owns any of Chardan 2008’s outstanding voting shares, and with the consent of the members of DAL, other than Chardan 2008, holding more than 50% of the outstanding interests in DAL, on a common unit equivalent basis, a party seeking to exchange his or her DAL Common Units or DAL Series A Preferred Units may receive cash in lieu of Chardan 2008 ordinary shares or Series A Preferred Shares at their fair market value.

Transferability.  Except as otherwise provided in the LLC Agreement, a Member may transfer all or a portion of his or its membership interests in DAL to an affiliate (as defined in the definition of “Permitted Transferee” in the LLC Agreement) or to another Member, except that Chardan 2008 may only transfer its membership interest with the written approval of the members of the board of managers not nominated by the Stern Contributors or the members, other than Chardan 2008, holding more than 50% of the DAL membership interests, which approval may be withheld in their sole discretion. Until the first anniversary of the LLC Agreement, the Members may not pledge their DAL membership interest or enter into any hedging transactions with respect to the DAL membership interests that could involve a transfer of membership interests in DAL. Additionally, no member is permitted to transfer any DAL membership interest and neither DAL nor any Member is permitted to enter into any financial instrument or contract the value of which is determined in whole or part by reference to DAL and which would be treated as “an interest in a partnership” for purposes of Treasury Relation Section 1.7704-1(a)(2), if the effect of such transfer or such financial instrument or contract would be to cause or create a material risk of causing (a) DAL to be classified as a publicly traded partnership within the meaning of Internal Revenue Code Section 7704 or (b) DAL to terminate for federal income tax purposes. Additionally, unless consented to in writing by the Stern Contributors and the board of managers of DAL, in their sole discretion, no Member is permitted to transfer a membership interest or an interest therein if such transfer would cause DAL not to satisfy one or more of the safe harbor provisions of

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Treasury Regulations Section 1.7704-1, relating to publicly traded partnerships. In certain other circumstances, such as if DAL has 100 or more members or if the board of managers of DAL reasonably believes that a transfer may cause DAL to terminate for federal income tax purposes, DAL may also require opinions of counsel prior to determining whether to consent to a transfer of membership interests of DAL.

Governance.  The business and affairs of DAL will be governed by a board of managers that will consist of five managers. Stern, Raj Gupta, Mark Harmon, Matthew Kayton and Jerry Hutter will comprise the initial board of managers. Managers may only be removed for certain reasons enumerated in the LLC Agreement and will hold office until removal or until their resignation or death. Vacancies will be filled by such manager’s alternative manager as set forth in the LLC Agreement. For so long as the Stern Contributors beneficially own DAL membership interests comprising of at least five percent of the outstanding DAL membership interests, the Stern Contributors shall have the right to appoint one manager to the board of managers. For so long as FlatWorld beneficially owns DAL membership interests comprising of at least five percent of the outstanding DAL membership interests, FlatWorld shall have the right to appoint one manager to the board of managers.

During any period when the Stern Contributors, FlatWorld and their transferees beneficially own DAL membership interests comprising at least ten percent of the DAL outstanding membership interest, there are certain actions enumerated in the LLC Agreement that the board of managers cannot take without the prior written consent of the Stern Contributors and FlatWorld including but not limited to taking any actions in contravention of the LLC Agreement or entering into, amending or waiving any contract with a member of DAL or its affiliate with any party that its not at arm’s length.

During any period when Chardan 2008 beneficially owns any DAL membership interests comprising more than fifty percent of the outstanding DAL membership interests, there are certain actions enumerated in the LLC Agreement that the board of managers cannot take without Chardan 2008’s prior written consent, including but not limited to taking any actions in contravention of the LLC Agreement or entering into, amending or waiving any contract with a member of DAL or its affiliate with any party that its not at arm’s length.

At any time when a Stern Contributor beneficially owns any membership interest in DAL, the board of managers on behalf of DAL shall not, directly or indirectly, sell, transfer or dispose of any of the membership interests of DJS LLC, PTA LLC or DSI LLC, without the consent of the Stern Contributors.

Chardan 2008 Covenants.  Commencing on the date of the LLC Agreement, Chardan 2008 is prohibited from taking certain actions specified in the LLC Agreement, which include, but are not limited to, issuing any shares or other convertible securities unless such securities are Chardan 2008 securities convertible into or exchangeable for Chardan 2008 ordinary shares without the prior consent of members of the board of managers not nominated by the Stern Contributors or the Members, other than Chardan 2008, holding more than 50% of the DAL membership interests. Additionally, there are certain actions set forth in the LLC Agreement that Chardan 2008 must take, such as calling the Chardan 2008 public warrants at the earliest permitted time. Finally, Chardan 2008 has agreed to, among other things, devote all of its time and business efforts to promoting the Target Business and the interests of DAL.

Capital Contributions.  No Members are required to make any capital contributions to DAL unless the Members unanimously approve such additional capital contributions; provided, however, that Chardan 2008 is required to contribute to DAL the net proceeds (including, without limitation, cash, securities, assets or other property) received from (i) any private placement, public offering or other sale or distribution after the closing of the acquisition of Chardan 2008 ordinary shares or securities convertible into or exchangeable or exercisable for Chardan 2008 ordinary shares (a “Chardan Convertible Security”), or the exercise, conversion or exchange of a Chardan Convertible Security, including Chardan 2008 ordinary shares or Chardan Convertible Securities issued in a merger or other business combination or (ii) the sale of property, incurrence of indebtedness, recapitalization or refinancing, or from any other capital raising transaction not covered by (i). Additionally, no Member is entitled to be repaid any portion any capital contribution made or to withdraw any portion of any capital contribution made except as specifically provided in the LLC Agreement.

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Amending the LLC Agreement.  All amendments to the LLC Agreement must be approved by the Members holding a majority of the outstanding DAL membership interests and a majority of the outstanding DAL Series A Preferred Units. Notwithstanding the foregoing, any amendment that adversely affects the rights of holders of DAL Series B Preferred Units will not be effective until approved by Members holding a majority of the outstanding DAL Series B Preferred Units and any amendment that disproportionally disadvantages one Member relative to another Member of the same series will not be effective without the approval of such disadvantaged Member. Additionally, certain provisions specified in the LLC Agreement cannot be amended without the approval of the Stern Contributors, the Existing Members and Chardan 2008.

Preferred Units and Escrow

The DAL Series A Preferred Units will be convertible into DAL Common Units at the option of the holder on a 1-for-1 basis. They will vote with the DAL Common Units on an as converted basis, have a $15.00 per Unit Interest non-participating liquidation preference and participate pro rata with the DAL Common Units in all non-liquidating distributions.

The DAL Series B Preferred Units will be issued in 5 subclasses (Series B-1 through Series B-5). The Stern Contributors will hold 596,666 shares of each of Series B-1 and Series B-2, and 646,667 shares each of Series B-3, Series B-4 and Series B-5. The Existing Members will hold 153,334 shares of each of Series B-1 and Series B-2 and 153,333 shares of each of Series B-3, Series B-4 and Series B-5. Each subclass of the DAL Series B Preferred Units will be convertible into DAL Common Units if the Chardan 2008 share price achieves certain price targets for 10 out of any 30 consecutive trading days, as reflected below:

 
Series B Subclass   Price Target
B-1   $ 10.00  
B-2   $ 12.50  
B-3   $ 15.00  
B-4   $ 17.50  
B-5   $ 20.00  

In the event that there is a change in control of Chardan 2008 or DAL, if any subclass of Series B Preferred has not previously converted, it will convert upon closing of such a transaction if the per share consideration received by Chardan 2008 ordinary shareholders in the transaction equals or exceeds the price target for that subclass.

Any DAL Series B Preferred Units that have not converted within five (5) years of the closing of the acquisition will no longer carry the right to convert, and each Series B Preferred Unit not then converted may be repurchased by DAL for $0.001 per unit.

The Stern Note

The Stern Contributors have agreed to take the Stern Note from DAL in a principal amount ranging from a low of $52,659,000 to a maximum of $54,000,0000. The principal terms of the Stern Note include the following:

The principal amount of approximately $52,659,000 (subject to adjustment to a maximum amount of $54,000,000 depending on the amount of the shortfall in Initial Cash);
Interest of 3.0% per annum, payable monthly; with a default rate equal to the lesser of (a) the current interest plus 10% or (b) the highest lawful rate;
A maturity date that is 36 months after the closing of the acquisition;
All assets of DAL and its subsidiaries will secure repayment of the Stern Note, the security interest to be junior to the DAL Line of Credit.
Payment in the amount of 90% of its free positive cash flow (equal to EBITDA, plus accrued taxes, less debt service, cash taxes, capital expenditures and net changes in working capital) (“Designated

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Free Cash Flow”) will be made monthly. In addition, all proceeds from the exercise of the DAL Warrants by Chardan 2008 will be used to repay the Stern Note, with any proceeds not required for that purpose to be used to pay the Post-Closing Cash;
Customary events of default including, without limitation, breaches of covenants or representations, material adverse change or any merger or other change in control transaction; and
Customary affirmative and negative covenants including, without limitation, liens, restricted payments, sales of assets and business combination transactions.

In the event that holders of more than approximately 2.50% of Chardan 2008’s Public Shares both vote against the Acquisition Proposal and elect to exercise their redemption rights, there may not be enough cash available to consummate the acquisition under the current terms unless the parties waive the requirement that the Stern Note not exceed the principal amount of $54,000,000.

Warrant Sale Agreement.  In order to make available to DAL a greater amount of cash to satisfy its obligations pursuant to the Stern Note and to pay the Post-Closing Cash, certain holders of the Chardan 2008 warrants issued in a private placement prior to Chardan 2008’s initial public offering (the “Private Placement Warrants”) have agreed to modify the terms of those warrants pursuant to the Warrant Sale Agreement. Specifically, the Private Placement Warrants have a “cashless exercise” provision, which allow the holder to exercise the warrants without paying cash by exchanging them for a reduced number of Chardan 2008 ordinary shares. Those holders of the Private Placement Warrants will agree either to exercise their warrants for cash or to sell the warrants to a third party on the condition that the third party will exercise them for cash. It is a condition to the closing that owners of at least ninety percent (90%) of the owners of the Private Placement Warrants shall have executed and delivered the Warrant Sale Agreement.

The obligation to sell or exercise the Private Placement Warrants under the agreement arises on the later of six months following the closing of the acquisition or upon the effectiveness of the resale registration statement covering the Private Placement Warrants and the shares underlying them. In addition, the obligation to sell or exercise the warrants exists only if the closing price of Chardan 2008 ordinary shares is $9.00 or higher on a trading day. There is also a daily volume commitment that is equal to the greater of 50,000 warrants or 10% of the average daily trading volume of Chardan 2008 ordinary shares on any trading day on which the $9.00 threshold is satisfied.

In consideration of the agreement of the holders of the Private Placement Warrants to forgo their cashless exercise rights, Chardan 2008 will issue to them, in the aggregate, 233,010 additional Chardan 2008 ordinary shares, provided that all of the Private Placement Warrants are exercised for cash or sold pursuant to the Warrant Sale Agreement.

Representations and Warranties

In the Acquisition Agreement, DJS, PTA, DSI and Stern make certain representations and warranties relating to, among other things: (a) capital structure; (b) proper organization; (c) authorization, execution, delivery and enforceability of the Acquisition Agreement and other transaction documents; (d) absence of conflicts; (e) required consents and approvals; (f) taxes and audits; (g) financial information; (h) absence of certain changes or events; (i) title to assets and properties; (j) material contracts; (k) ownership of intellectual property; (l) employment and labor matters; (m) compliance with laws; (n) environmental matters; (o) insurance; and (p) brokers.

DAL and the Existing Members have made representations and warranties relating to, among other things: (a) formation; (b) authorization, (c) consents; (d) brokers; (e) conflicts; (f) organization; and (g) taxes.

In the Acquisition Agreement, Chardan 2008 makes certain representations and warranties relating to, among other things: (a) formation, organization, authorization, and capitalization; (b) absence of conflicts; (c) legal proceedings; (d) consents; (e) financial information; (f) taxes, (g) absence of certain events, (h) affiliates (i) contracts, (j) litigation and compliance with laws, (k) banks, (l) trust account status, (m) SEC reporting, (n) business practices, (o) complete disclosure, and (p) brokers.

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Tax Indemnification Agreements.  The structure of the Acquisition is designed to provide the Stern Contributors and FlatWorld with certain tax benefits. As a result of the adopted structure, under certain circumstances Chardan 2008 may incur adverse tax consequences. In consideration for Chardan 2008’s willingness to utilize the structure described elsewhere in these proxy materials, the parties who will receive tax benefits from the structure have agreed to indemnify and protect Chardan against certain adverse tax consequences, should they occur under three separate tax indemnification agreements (collectively, the “Tax Indemnification Agreements”). The agreements pertain only to specified circumstances and are subject to a limit of $8,500,000 in the case of the Stern Participants, and $1,750,000 in the case of FlatWorld, Gupta and Valenty.

Master Agreement and Contribution and Membership Interest Purchase Agreement Provisions

Indemnification

DJS, PTA, DSI and Stern, jointly and severally, agree to indemnify each of Chardan 2008, DAL, and their respective partners, officers, directors, employees, affiliates, agents, successors and assigns, from and against (a) all liabilities, subject to the limitations set forth in the Acquisition Agreement, based on or attributable to the failure of any representation or warranty of DJS, PTA, DSI, DJS LLC, PTA LLC, DSI LLC or Stern or breach of a covenant or other agreement of DJS, PTA, DSI, DJS LLC, PTA LLC, DSI LLC or Stern; (b) all liabilities attributable to or resulting from or related to a liability not assumed by DAL; or (c) all liabilities for taxes assessed or due for a period prior to the closing of the transactions contemplated by the Acquisition Agreement.

FlatWorld, Gupta and Valenty, (in the case of Gupta and Valenty, severally, but not jointly), agree to indemnify each of Chardan 2008, DAL, DJS, PTA, DSI and each of their respective officers, directors, employees, affiliates, agents, successors and assigns, from and against (a) all liabilities, subject to the limitation set forth in the Acquisition Agreement, based on or attributable to the failure of any representation or warranty of any Existing Member, Gupta or Valenty, (b) all liabilities, subject to the limitations set forth in the Acquisition Agreement, based on or attributable to a breach of a covenant or other agreement of DAL (prior to closing), an Existing Member, Gupta or Valenty, and (c) all liabilities of DAL for any pre-closing period, subject to the limitation set forth in the Acquisition Agreement, to the extent not related to the transactions contemplated by the Acquisition Agreement.

Chardan 2008 agrees to indemnify each of David J. Stern, DJS, PTA and DSI and each of their respective officers, directors, employees, affiliates, agents, successors and assigns, from and against all liabilities, subject to the limitation set forth in the Acquisition Agreement, based on or attributable to the failure of any representation or warranty of Chardan 2008 or a breach of a covenant or other agreement of Chardan 2008.

DAL, DJS LLC, PTA LLC and DSI LLC agree to indemnify and hold harmless each of DJS, PTA and DSI and each of their respective officers, directors, employees, affiliates, agents, successors and assigns, from and against, all liabilities attributable to or resulting from a breach of any covenant or other agreement on the part of any of DJS LLC, PTA LLC or DSI LLC under the contribution agreements.

Indemnification Limitations

DJS, PTA, DSI and David J. Stern will not have any liability to Chardan 2008 or DAL or their respective partners, officers, directors, employees, affiliates, agents, successors and assigns until the aggregate amount of all of such parties indemnifiable liabilities exceed $500,000 up to a cap of $15,000,000, subject to certain exceptions.

Chardan 2008, DAL, DJS LLC, PTA LLC and DSI LLC shall not have any liability to DJS, PTA, DSI or Stern or their respective partners, officers, directors, employees, affiliates, agents, successors and assigns, until the aggregate amount of all of such parties indemnifiable liabilities exceed $250,000 up to a cap of $5,000,000, in the case of Chardan 2008, subject to certain exceptions.

The Existing Members, Gupta and Valenty shall not have any liability to Chardan 2008, DAL, DJS, PTA, and DSI and each of their respective officers, directors, employees, affiliates, agents, successors and assigns, until the aggregate amount of all idemnifiable liabilities of Chardan 2008, DAL, DJS, PTA, and DSI and each of their respective officers, directors, employees, affiliates, agents, successors and assigns exceed $50,000 up

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to a cap of the lesser of (a) 55% of the after-tax cash proceeds received by FlatWorld and its affiliates as a result of the transactions contemplated by the Acquisition Agreement and (b) $1,500,000, subject to certain exceptions. Furthermore, with respect to Gupta and Valenty, any liability for indemnification shall be several and not joint and shall be shared pro rata in the ratio of 60% from Gupta and 40% from Valenty.

Closing Conditions

Conditions to obligations of DAL:  The following conditions must be satisfied, or waived by DAL, prior to closing: (a) no proceedings or orders prohibiting the transactions shall be pending or entered; (b) the representations and warranties of DJS, PTA, DSI, DJS LLC, PTA LLC, DSI LLC and Stern shall be true, correct and complete in all material respects; (c) each of DJS, PTA, DSI, DJS LLC, PTA LLC, DSI LLC and Stern shall be in compliance with their obligations under the Acquisition Agreement and the other transaction documents; (d) DAL shall have received closing certificates from each of DJS, PTA and DSI; (e) DAL shall have received an officer’s certificate from each of DJS, PTA, and DSI; (f) DAL shall have received a good standing certificate from each of DJS, PTA, DSI, DJS LLC, PTA LLC and DSI LLC; (g) no material adverse change shall have occurred; (h) after giving effect to the transactions contemplated by the Acquisition Agreement, none of DJS LLC, PTA LLC or DSI LLC shall have any indebtedness except as set forth on a schedule; (i) all required consents shall have been obtained; (j) DAL shall have received UCC-3 termination statements from parties specified in the Acquisition Agreement or a schedule thereto; (k) DAL shall have received an executed FIRPTA Certificate from each of DJS, PTA, DSI, DJS LLC, PTA LLC and DSI LLC; (l) Each of DJS, PTA, DSI, DJS LLC, PTA LLC and DSI LLC shall have executed releases; (m) Stern shall have executed an employment agreements; (n) the LLC Agreement shall have been executed by all parties signatory thereto; (o) DAL shall have received financing for the transactions contemplated by the Acquisition Agreement; (p) DAL shall have received certificates evidencing that each of DJS LLC, PTA LLC and DSI LLC have insurance with respect to the Target Business that meets certain criteria; (q) DAL shall have received an assignment of the lease agreements; (r) the contribution agreements with respect to DJS LLC, PTA LLC and DSI LLC shall have been executed; (s) the Services Agreement shall have been executed by all parties signatory thereto; (t) DSI and PTA shall have executed documents changing their names; (u) each of DJS, PTA and DSI and the escrow agent shall have executed the escrow agreement; (v) the facilities sharing agreement shall have been executed by all parties signatory thereto; (w) DAL shall have received such other instruments of conveyance and assignment as it deems reasonably necessary; (x) DAL’s aggregate cash on hand on the closing date shall equal or exceed $400,000; (y) the FlatWorld Services Agreement shall have been executed by all parties signatory thereto; (z) the Chardan Services Agreement shall have been executed by all parties signatory thereto; and (aa) all other documents not specifically contemplated above but contemplated by the Acquisition Agreement, shall be executed by all parties signatory thereto.

Conditions to obligations of DJS, PTA and DSI:  The following conditions must be satisfied, or waived by DJS, PTA or DSI as applicable, prior to the closing: (a) the representations and warranties of DAL and Chardan 2008 shall be true, correct and complete in all material respects; (b) DAL and Chardan 2008 shall be in compliance with their obligations under the Acquisition Agreement and the other transaction documents; (c) DJS, PTA, and DSI shall have received an officer’s certificate from DAL and Chardan 2008; (d) DAL shall have paid, in the aggregate, the Initial Cash to DJS, PTA and DSI; (e) the Existing Members, the principals and Chardan 2008 shall have executed the voting agreement; (f) Chardan 2008’s shareholders shall have approved the Acquisition Proposal by December 31, 2009; (g) evidence or confirmation from Chardan 2008’s agent of the filing with the required governmental entities in the British Virgin Islands of the transactions contemplated by the Acquisition Agreement shall have been received; (h) no proceedings or orders prohibiting the transactions shall be pending or entered; (i) each of DAL and Chardan 2008 shall have delivered a good standing certificate; (j) no material adverse change shall have occurred; (k) all required consents shall have been obtained; (l) Stern shall have executed an employment agreement; (m) the LLC Agreement shall have been executed by all parties signatory thereto; (n) DAL shall have received financing for the transactions contemplated by the Acquisition Agreement; (o) the Services Agreement shall have been executed by all parties signatory thereto; (p) the facilities sharing agreement shall have been executed by all parties signatory thereto; (q) DJS, PTA and DSI shall have received such other instruments of conveyance and assignment as each deems reasonably necessary; (r) Chardan and the owners of at least ninety percent (90%) of the owners of the of the Private Placement Warrants shall have executed and delivered the Warrant Sale Agreement; (s)

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DAL shall have delivered the Stern Note, in a principal amount not in excess of $54,000,000, and the documents related thereto, to the Stern Contributors; and (t) all other documents not specifically contemplated above but contemplated by the Acquisition Agreement, shall be executed by all parties signatory thereto.

Conditions to Obligations of Chardan 2008.

The following conditions must be satisfied or waived by Chardan 2008 prior to the closing: (a) Chardan 2008’s public shareholders have not exercised their redemption rights with respect to more than 35% of Chardan 2008 ordinary shares owned by them, (b) Chardan 2008’s shareholders shall have approved the Acquisition Proposal and shall have approved the Election of Directors; (c) all of DAL’s conditions set forth above shall have been satisfied or separately waived by Chardan 2008.

Restrictive Covenants

As part of the transactions contemplated by the Acquisition Agreement, each of DJS, PTA, DSI and Stern have agreed, for a period ending on the fifth anniversary thereof (the “Restrictive Period”), not to induce, encourage or solicit any employee, contractor or agent of any of Chardan 2008, DAL, DJS LLC and their affiliates to leave the employ or sever their relationship with Chardan 2008, DAL, DJS LLC or their affiliates and will not, directly or indirectly, employ or be interested in any business that employs any person who was an employee or agent of any of Chardan 2008, DAL, DJS LLC or their affiliates at ay time during the six months preceding the first solicitation or hiring of such person. Each of DJS, PTA, DSI and Stern have also agreed during the Restrictive Period, not to directly or indirectly, own any interest in, manage or in any other manner engage in any business in the United States that is competitive with the services provided by the Target Business. During the Restrictive Period, each of DJS, PTA, DSI and Stern have also agreed not to solicit, or otherwise induce any customer or supplier of any of Chardan 2008, DAL, DJS LLC and their affiliates to terminate or otherwise adversely modify its relationship with such entities. Stern has also agreed to be subject to these limitations, for a period ending on the later of (i) the term of Stern’s employment with all of Chardan 2008, DAL, DJS LLC and their affiliates or (ii) two years after the termination of Stern’s employment with all of Chardan 2008, DAL, DJS LLC and their affiliates for any reason if no longer than the Restrictive Period. In no event shall the restrictive covenants prohibit DJS or Stern from practicing law.

Termination

The Acquisition Agreement may be terminated for any of the following reasons: (a) by mutual consent of DAL, Chardan 2008 and DJS, PTA and DSI; (b) by Chardan 2008 if any representation or warranty of any of DJS, PTA, DSI, Stern, DAL, an Existing Member, Gupta or Valenty is untrue and such untruth causes a material adverse effect and it is not curable by December 31, 2009; (c) by DJS, PTA, DSI if any representation or warranty of DAL, an Existing Member, Gupta, Valenty or Chardan 2008 is untrue and such untruth causes a material adverse effect and it is not curable by December 31, 2009; (d) by Chardan if any obligation, term or condition to be performed by any of DJS, PTA, DSI, an Existing Member, Gupta or Valenty under the Acquisition Agreement or the Contribution Agreement had not been performed and such failure results in a breach of a transaction document; (e) by DJS, PTA or DSI if any obligation, term or condition to be performed by any of DAL, an Existing Member, Gupta, Valenty or Chardan 2008 under the Acquisition Agreement or the Contribution Agreement had not been performed and such failure to perform results in a breach of a transaction document; (f) by Chardan 2008, DJS, PTA or DSI if the transactions contemplated by the Acquisition Agreement are prohibited by a permanent injunction or other final, non-appealable court order; (g) by Chardan 2008 if it is not in material breach with respect to its obligations under the Acquisition Agreement or the Contribution Agreement or by DJS, PTA or DSI if they are not in material breach of their obligations under the Acquisition Agreement or the Contribution Agreement, if closing has not occurred by December 31, 2009; (h) by DJS, PTA or DSI if Chardan 2008 has not received shareholder approval for the Acquisition Proposal; the Amendment Proposal and the Election of Directors by December 31, 2009 or if Chardan 2008’s public shareholders have exercised their redemption rights with respect to more than 35% of the issued and outstanding Chardan 2008 ordinary shares owned by them; and (i) by Chardan 2008, DJS, PTA or DSI if the requisite number of Chardan 2008 shareholders have not approved the Acquisition Proposal.

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Background

Chardan 2008 initially intended to acquire a business that had its principal operations in the People’s Republic of China (the “PRC”). Relying upon the many relationships that Chardan 2008’s Chairman, Li Zhang, has developed during more than 20 years of conducting business activities involving Chinese companies, and the relationships of Chardan 2008’s CEO, whose firm, Chardan Capital Markets, LLC, had done several financings of Chinese companies, the management of Chardan 2008 identified numerous potential targets. Mr. Zhang, Mr. Propper and their associates had also already completed successful transactions involving blank check companies and Chinese targets.

The criteria used in identifying potential targets were that the business needed to have a demonstrated history of profitability with potential for significant growth, as well as having a use for the capital that a business combination with Chardan 2008 would provide. A strong management team suitable for a company whose shares would be publicly traded in the U.S. and involvement in a sector that would offer a relatively high price-earnings ratio were also highly desirable attributes.

Chardan 2008 management held preliminary discussions with close to twenty potential targets, which were involved in a wide range of businesses. These discussions began in the first month after Chardan 2008’s initial public offering in August 2008. The majority of those discussions did not progress beyond the preliminary stage, the unsuccessful candidates having been screened out on the basis of one or more of the criteria listed in the prior paragraph. Discussions went beyond the preliminary stage with three of the PRC-based candidates, which included an onshore and offshore oil rig manufacturer, a coal mining and distribution company and a heavy equipment manufacturing company.

In the course of the discussions with the PRC candidates, the global financial crisis took hold of the major credit markets. The effects of the financial crisis on the various potential targets under consideration was difficult to gauge. However, as the crisis continued, Chardan 2008’s management determined that a business combination with a Chinese company might be viewed by the financial community as risky, which was a significant adverse factor in management’s view under those market conditions, where risk was highly undesirable and liquidity was at a premium. In response, Chardan 2008’s management began to consider the acquisition of a non-Chinese company, while continuing to evaluate Chinese opportunities.

Description of Significant Events with Target

On or around January 31, 2009, Ramnarain J. Jaigobind of Rodman & Renshaw, LLC informed Kerry Propper, the chief executive officer of Chardan 2008, that the Target Business was seeking to engage in a business combination with a public company. Mr. Jaigobind was an acquaintance of Mr. Propper, and they had previously worked together on other transactions. Based on initial conversations, Mr. Propper was interested in exploring a potential transaction with the Target Business. Accordingly, Mr. Jaigobind put Mr. Propper in touch with FlatWorld Capital, LLC (“FlatWorld Capital”), which had entered into a letter of intent dated July 16, 2008, which was subsequently revised and extended on October 28, 2009 (the “October 2008 LOI”) to engage in a business combination involving the Target Business in October 2008. Such letter of intent was subsequently contributed to FlatWorld Capital’s shell acquisition company, FlatWorld Ingenium Consulting Acquisition LLC (name changed to DJSP Acquisition LLC on May 13, 2009).

Following these preliminary discussions, FlatWorld Capital and Chardan 2008 entered into a non-disclosure agreement on February 3, 2009 pursuant to which Chardan 2008 agreed to treat information obtained from FlatWorld Capital and the Target Business as confidential and to pursue a business combination with the Target Business together with an affiliate of FlatWorld Capital. On February 6, 2009, Jeffrey Valenty and others from FlatWorld Capital met with Mr. Propper and Priyanka Mahajan of Chardan Capital Markets, LLC. In this meeting, FlatWorld Capital presented the opportunity for a business combination and also shared FlatWorld Capital’s investment memoranda and due diligence materials from the Target Business. Because of mutual interest in pursuing a transaction, FlatWorld Capital and Chardan 2008 continued discussions, including numerous e-mail exchanges and conference calls on March 16 and 20, 2009, on the business and operations of the Target Business and the optimal structure for completing a business combination.

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On April 1, 2009, Mr. Valenty and others from FlatWorld Capital, met with Mr. Propper and Ms. Mahajan to discuss further diligence on the Target Business and to finalize a proposal to be made to David J. Stern, the sole owner of the Target Business, and his financial advisor, P&M Corporate Finance (“PMCF”).

On April 3, 2009, teams from Chardan 2008 and FlatWorld Capital met with Mr. Stern and his representatives to discuss a business combination between Chardan 2008 and the Target Business. Mr. Stern, Mr. Propper, Richard Propper of Chardan Capital, LLC, Mr. Valenty, Bryan Hughes of PMCF and Mr. Jaigobind attended this meeting. During the meeting the parties reached an understanding in principal on a business combination with the Target Business. Subject to further diligence, the parties also tentatively agreed to adopt a holding company structure similar to structures used by public real estate investment trusts, commonly referred to as “umbrella partnership REITs” or “UPREITs.” This transaction structure was ultimately agreed upon by the parties and is reflected in the definitive documents. FlatWorld Capital effectively contributed the October 2008 LOI to DAL, which at that time was a wholly-owned affiliate of FlatWorld Capital and currently is owned indirectly by the principals of FlatWorld Capital, effective May 1, 2009. The Stern Contributors will contribute the Target Business to DAL in connection with the closing.

Beginning in May 22, 2009, Chardan 2008 worked with its, FlatWorld’s and Mr. Stern’s counsel on alternative deal structures to the “UPREIT” structure, in order to avoid the creation of a minority interest in DAL. After several discussions with counsel, such other structures were not agreed upon.

The consideration agreed upon with respect to the business combination was generally $135 million in cash (of which $35 million would be deferred until post-Closing), 2.6 million DAL Common Units, 1.67 million DAL Series A Preferred Units and 3.9 million DAL Series B Preferred Units, which generally would have as their only rights the automatic conversion into ordinary shares of Chardan 2008 in the event Chardan 2008’s share price achieved certain targets within five years of the Closing. DAL was expected to borrow approximately $50 million of the $100 closing cash payment.

On April 30, 2009, Chardan 2008 forwarded the first draft of its proposed revisions to the October 2008 LOI to PMCF and DAL for review. DAL, Mr. Stern, the Stern Contributors and their advisors negotiated this revised non-binding letter of intent for a business combination between DAL and the Target Business over the next several weeks, including numerous email exchanges and conference calls on April 16, May 1 and 21, and June 2, 2009. In parallel, DAL, Chardan 2008, Mr. Stern, the Stern Contributors and their advisors negotiated a separate nonbinding letter of intent pursuant to which Chardan 2008 would agree to acquire an equity interest in DAL once it had completed a business combination with the Target Business.

On June 8, 2009, Richard Propper, an advisor to Chardan 2008, met with Mr. Stern at his offices in Plantation, Florida to finalize a revised letter of intent for DAL’s acquisition of the Target Business and Chardan 2008’s investment in DAL. The parties executed an amended and restated letter of intent and a corresponding letter agreement with DJS and Chardan effective June 9, 2009.

On June 12, 2009, Chardan 2008 circulated working group contact information, and an “all hands” conference call took place on June 18, 2009 to discuss the logistics of completing the various tasks that were needed to effect the business combination, including due diligence information exchanges and reviews, legal documentation preparation and the draft of a proxy statement needed for the Chardan 2008 shareholder meeting and vote on approval of the Acquisition Proposal. Thereafter, the parties and their advisors carried out their respective tasks and negotiated the terms, until the parties were in a position to execute binding definitive agreements.

In addition, Chardan 2008 retained PMCF to raise the permanent debt financing that would be needed for DAL to pay the Stern Contributors a portion of the cash consideration they are to receive in connection with the Closing. Chardan Capital also separately sought short-term bridge financing in order to permit the closing to be completed sooner than in the case of the use of permanent debt financing. Attempts to negotiate acceptable terms with several potential lenders proved more difficult than anticipated. In order to complete the Acquisition Proposal, the parties agreed that the Stern Contributors would increase the amount of the cash consideration to be deferred. In exchange for that agreement, the cash consideration payable to the Stern

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Contributors has been increased to $145,969,080, of which approximately $87 million would be deferred and the number of DAL Common Units to be issued to the Stern Contributors and Existing Members was increased to 2.7 million.

On December 10, 2009, Chardan 2008’s Board of Directors approved the definitive agreements governing the business combination, and on December 10, 2009, the parties entered into the agreements governing the business combination, as noted above.

Board Consideration and Approval

At a meeting of Chardan 2008’s Board of Directors on December 10, 2009, the Board of Directors discussed all aspects of the proposed business combination with the Target Business as reflected in the definitive agreements negotiated between the parties.

Detailed discussions were held on the prospects of the Target Business. The Board of Directors concluded that the Target Business had considerable potential upside that, rather than being put in doubt by the ongoing international economic difficulties, would actually benefit from them, due to the nature of its business. Chardan 2008’s Board of Directors then determined that the historical financial performance and forecast of the Target Business’s future performance merited the valuation that had been negotiated. At the close of the meeting, the Acquisition Proposal was approved by the Board of Directors on December 10, 2009.

While no one factor determined the final agreed upon consideration to be paid in the acquisition, during the course of the meeting Chardan 2008’s Board of Directors reviewed various industry and financial data, including certain valuation analyses and metrics compiled by Chardan 2008 and Ladenburg Thalman (as described below), in order to make its determination that the consideration to be paid was reasonable and that the acquisition was in the best interests of Chardan 2008’s shareholders. Chardan 2008’s Board of Directors also reviewed and considered certain analyses provided by management and by Ladenburg Thalman in order to determine that the acquisition consideration is fair from a financial point of view to Chardan 2008’s shareholders. Chardan 2008’s officers and consultants had conducted a due diligence review of the Target Business that included an industry analysis, a description of the Target Business’ existing business model, inspections of the Target Business’ premises, review of corporate records and files, in-depth meetings with management, a valuation analysis and financial projections in order to enable the Board of Directors to reach its conclusion regarding the reasonableness of the terms of the acquisition from the standpoint of Chardan 2008’s shareholders.

Chardan 2008’s Reasons for the Acquisition and Its Recommendation.

In the course of its evaluation of the Target Business, the Board of Directors examined certain comparable companies (i.e., those that are also engaged in providing mortgage foreclosure processing services). It also scrutinized in detail the bases for the financial projections for the Target Business, including the macroeconomic factors that have driven foreclosure levels to historic highs throughout the United States, including in the Target Business’ principal market of Florida, and it considered the views of economists and others regarding the likelihood that those levels would remain at those high levels through at least 2012 and perhaps well beyond that. In addition, the Board of Directors assessed the potential of the Target Business to expand geographically, whether organically or by acquisition, and its ability to expand its service lines (e.g., into commercial foreclosures or marine and auto repossession activities) or to provide processing services to mortgage lenders in connection with the origination of mortgage loans, which would typically begin to increase as the foreclosure market began to cool. On the basis of those factors and others, the Board of Directors concluded that the near, intermediate and long term prospects for the Target Business were favorable, and that the benefit to Chardan 2008 shareholders in completing the acquisition, in the form of a share price meaningfully greater than the liquidation value of the trust account, would likely be significant.

Interest of Chardan 2008’s Management in the Acquisition.

When you consider the recommendation of Chardan 2008’s Board of Directors that you vote in favor of the Acquisition Proposal, you should keep in mind that Chardan 2008’s officers and directors have interests in the Acquisition Proposal that are different from, or in addition to, yours. These interests include the following:

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If the acquisition does not occur, and Chardan 2008 does not complete any other acquisition and is subsequently required to liquidate, the shares and warrants owned by Chardan 2008’s directors will be worthless because the shares will no longer have any value and the directors are not entitled to liquidation distributions from Chardan 2008.
In connection with Chardan 2008’s initial public offering, certain insiders, Kerry S. Propper and Xiaosong Zhong agreed to indemnify Chardan 2008 for debts and obligations to potential target businesses or other persons for services rendered or contracted for or products sold to Chardan 2008, but only to the extent necessary to ensure that certain liabilities do not reduce funds in the trust account. If the closing occurs, these persons will not have to perform such obligations. If the Closing does not occur, however, they could potentially be liable for any claims against the trust account by vendors who did not sign waivers. As of December 23, 2009, Chardan 2008 believes that there is no risk of these officers’ being required to provide indemnification, since all persons who have had contractual obligations with Chardan 2008 have either been paid in full (or will be paid in accordance with Chardan 2008’s past practices) or waived their ability to sue Chardan 2008’s trust account.
All rights of Chardan 2008’s officers and directors to be indemnified by Chardan 2008, and of Chardan 2008’s directors to be exculpated from monetary liability with respect to prior acts or omissions, will continue after the closing pursuant to provisions in Chardan 2008’s Amended and Restated Memorandum and Articles of Association. However, if the Acquisition Proposal is not approved and Chardan 2008 subsequently liquidates, its ability to perform its obligations under those provisions will be substantially impaired, since it will cease to exist. If the closing ultimately occurs, Chardan 2008’s ability to perform such obligations will be substantially enhanced.
In addition, Chardan 2008’s chairman, Zhang Li, is a principal of Chardan Capital, LLC. Under the terms of the acquisition, Chardan Capital, LLC is to receive a consulting payment of $2 million, for services provided in connection with the evaluation of the Target Business and in negotiating and documenting the acquisition and related transactions. The timing of the payment of the consulting fee is discussed in the section titled “DAL Obligations to Chardan Capital, LLC under the Acquisition Agreement.” In addition, commencing in January 2011, Chardan Capital, LLC will perform management consulting services for DAL in exchange for a monthly payment of $40,000. If the acquisition were not consummated, these benefits to Chardan Capital, LLC, and thus to Mr. Zhang, would not be realized.
Also, Chardan Capital Markets, LLC, of which Kerry Propper, Chardan 2008’s CEO, is a principal, will act as placement agent for the Private Placement that will close in conjunction with the acquisition. Chardan Capital Markets, LLC is expected to receive a placement fee of $500,000 in connection with that financing, from which Mr. Propper would benefit, of which $250,000 will be deferred and paid pursuant to a promissory note made by DAL in favor of Chardan Capital Markets, LLC (the “Chardan Capital Markets Note”). The terms of the Chardan Capital Markets Note provide for a 5% interest rate and amortizing payments which will begin to be paid on the first business day of each calendar month following the date that the Stern Note is paid in full. The amortizing payments will be equal to the remaining unpaid principal balance of the Chardan Capital Markets Note divided by 12. The maturity date of the Chardan Capital Markets Note is the earlier of the one year anniversary of the payment in full of the Stern Note or the second anniversary of the closing of the transactions contemplated by the Acquisition Proposal. If the acquisition of the Target Business does not occur, Mr. Propper and his firm would lose that benefit.

Satisfaction of 80% Test.

It is a requirement that any business acquired by Chardan 2008 have a fair market value equal to at least 80% of Chardan 2008’s net assets at the time of acquisition, which assets shall include the amount in the trust account. Based on the financial analysis of the Target Business generally used to approve the transaction, Chardan 2008’s Board of Directors determined that this requirement was met and exceeded.

Based on the financial analysis conducted by Landenburg Thalman that the Target Business had an enterprise value of more than $300 million, and that Chardan 2008 would acquire more than a 65% initial

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ownership of the company, the Board of Directors concluded that Chardan would be acquiring a portion of the Target Business with a fair market value in excess of 80% of Chardan’s net assets.

Fairness Opinion

Ladenburg made a presentation to the board of directors on December 10, 2009 and subsequently delivered its written opinion to the board of directors. The opinion stated that, as of December 10, 2009, based upon and subject to the assumptions made, matters considered, procedures followed and limitations on Ladenburg’s review as set forth in the opinion, (i) the consideration to be paid by Chardan 2008 is fair to Chardan 2008, and (ii) the fair market value of DAL is at least equal to 80% of Chardan 2008’s cash held in trust. The financial terms and other terms of the transaction was determined pursuant to negotiations between Chardan 2008, DAL, the Stern Contributors and each of their respective advisors and not pursuant to any recommendation from Ladenburg.

The full text of Ladenburg’s written opinion dated as of December 10, 2009, which sets forth the assumptions made, matters considered, procedures followed, and limitations on the review undertaken by Ladenburg in rendering its opinion, is attached as Appendix A to this proxy statement and is incorporated herein by reference. Ladenburg’s opinion is not intended to be, and does not constitute, a recommendation to Chardan 2008’s shareholders as to how such shareholders should vote or act with respect to the Acquisition Proposal any other matter relating thereto. The summary of the Ladenburg opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Chardan 2008 shareholders are urged to read the opinion carefully and in its entirety.

Ladenburg’s opinion is for the use and benefit of Chardan’s 2008 Board of Directors in connection with its consideration of the Acquisition Proposal. Ladenburg’s opinion may not be used by any other person or for any other purpose without Ladenburg’s prior written consent. Ladenburg’s opinion should not be construed as creating any fiduciary duty on its part to any party.

Ladenburg was not requested to opine as to, and its opinion does not in any manner address, the relative merits of the Acquisition Proposal as compared to any alternative business strategy that might exist for Chardan 2008, whether we should complete the acquisition, and other alternatives to the Acquisition Proposal that might exist for Chardan 2008. Ladenburg does not express any opinion as to the underlying valuation or future performance of Chardan 2008 or DAL or any party to the transaction agreements, or the price at which Chardan 2008’s or DAL’s or any part to the transaction agreement’s securities might trade at any time in the future.

Ladenburg’s analysis and opinion are necessarily based upon market, economic and other conditions, as they existed on, and could be evaluated as of, December 10, 2009. Accordingly, although subsequent developments may affect its opinion, Ladenburg assumed no obligation to update, review or reaffirm its opinion to Chardan 2008 or any other person.

In arriving at its opinion, Ladenburg took into account an assessment of general economic, market and financial conditions, as well as its experience in connection with similar transactions and securities valuations generally. In so doing, among other things, Ladenburg:

Reviewed an execution draft of the Master Agreement dated as of December 10, 2009
Reviewed a draft of the DAL Membership Agreement dated December 8, 2009.
Reviewed publicly available financial information and other data with respect to Chardan that they deemed relevant, including its Prospectus filed pursuant to Rule 424(b)(4) on August 12, 2008, Annual Report on Form 20-F for the year ended December 31, 2008, and Report on Form 6-K filed August 14, 2009.
Reviewed non-public information and other data with respect to DAL, including the Target Business’ audited compiled financial statements for the three years ended December 31, 2008, unaudited internal financial statements for the quarter ended September 30, 2009, financial projections for the four year period ending December 31, 2012 (the “Projections”), and other internal financial information and management reports.

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Reviewed and analyzed the Acquisition Proposal’s pro forma impact on Chardan 2008’s outstanding securities and shareholder ownership.
Considered the historical financial results and present financial condition of Chardan 2008, DAL and the Target Business.
Reviewed certain publicly available information concerning the trading of, and the trading market for, Chardan 2008’s ordinary shares and units.
Reviewed and analyzed the indicated value range of the Consideration.
Reviewed and analyzed DAL’s projected unlevered free cash flows derived from the Projections and prepared a discounted cash flow analysis.
Reviewed and analyzed certain financial characteristics of publicly-traded companies that were deemed to have characteristics comparable to DAL.
Reviewed and analyzed certain financial characteristics of target companies in transactions where such target company was deemed to have characteristics comparable to that of DAL.
Reviewed and compared the net asset value of Chardan 2008 to the indicated value range of DAL.
Reviewed and discussed with Chardan 2008’s and DAL’s management and other Chardan 2008 and DAL representatives certain financial and operating information furnished by them, including financial analyses and the Projections with respect to Chardan 2008’s and DAL’s business and operations.
Performed such other analyses and examinations as were deemed appropriate.

In arriving at its opinion, with Chardan 2008’s consent, Ladenburg relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial and other information that was supplied or otherwise made available to Ladenburg and Ladenburg further relied upon the assurances of Chardan 2008 and DAL management that they were not aware of any facts or circumstances that would make any such information inaccurate or misleading. With respect to the financial information and the Projections reviewed, Ladenburg assumed that such information was reasonably prepared on a basis reflecting the best currently available estimates and judgments, and that such information provided a reasonable basis upon which it could make its analysis and form an opinion. The Projections were solely used in connection with the rendering of Ladenburg's fairness opinion. Chardan 2008 shareholders should not place reliance upon such Projections, as they are not necessarily an indication of what our revenues and profit margins will be in the future. The Projections were prepared by DAL’s management and are not to be interpreted as projections of future performance (or “guidance”) by Chardan 2008 and DAL. Ladenburg did not evaluate the solvency or fair value of Chardan 2008, DAL, or any other parties to the transaction documents, under any applicable foreign, state or federal laws relating to bankruptcy, insolvency or similar matters. Ladenburg did not physically inspect the properties and facilities of Chardan 2008, DAL, or any other parties to the transaction documents, and did not make or obtain any evaluations or appraisals of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of Chardan 2008, DAL, or any other parties to the transaction documents. Ladenburg did not attempt to confirm whether Chardan 2008, DAL, or any other parties to the transaction documents have good title to their respective assets.

Ladenburg assumed that the transactions contemplated by the Acquisition Proposal will be consummated in a manner that complies in all respects with applicable foreign, federal, state and local laws, rules and regulations. Ladenburg assumed, with Chardan 2008’s consent, that the final executed forms of the transaction agreements do not differ in any material respect from the drafts Ladenburg reviewed and that the acquisition will be consummated on the terms set forth in the transaction agreements, without further amendments thereto, and without waiver by Chardan 2008 of conditions to any of its obligations thereunder or in the alternative that any such amendments or waivers thereto will not be detrimental to the Chardan 2008 or its shareholders in any material respect.

In connection with rendering its opinion, Ladenburg performed certain financial, comparative and other analyses as summarized below. Each of the analyses conducted by Ladenburg was carried out to provide a different perspective on the acquisition, and to enhance the total mix of information available. Ladenburg did

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not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support its opinion. Further, the summary of Ladenburg’s analyses described below is not a complete description of the analyses underlying Ladenburg’s opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Ladenburg made qualitative judgments as to the relevance of each analysis and factors that it considered. Also, Ladenburg may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described above should not be taken to be Ladenburg’s view of the value of the assets of Chardan 2008, DAL, or any other parties to the transaction documents. The estimates contained in Ladenburg’s analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. Also, analyses relating to the value of businesses or assets neither purport to be appraisals nor do they necessarily reflect the prices at which businesses or assets may actually be sold. Accordingly, Ladenburg’s analyses and estimates are inherently subject to substantial uncertainty. Ladenburg believes that its analyses must be considered as a whole and that selecting portions of its analyses or the factors it considered, without considering all analyses and factors collectively, could create a misleading or incomplete view of the process underlying the analyses performed by Ladenburg in connection with the preparation of its opinion.

The summaries of the financial reviews and analyses include information presented in tabular format. To fully understand Ladenburg’s financial reviews and analyses, you must read the tables together with the accompanying text of each summary. The tables alone do not constitute a complete description of the financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses Ladenburg performed.

The analyses performed were prepared solely as part of Ladenburg’s analysis of the fairness of the consideration to be paid by our shareholders in the transaction to Chardan 2008’s shareholders from a financial point of view, and were provided to the Chardan 2008 Board of Directors in connection with the delivery of Ladenburg’s opinion. Ladenburg’s opinion was just one of the several factors the Chardan 2008 Board of Directors took into account in making its determination to approve the transaction, including those described elsewhere in this proxy statement.

Share Performance Review

Ladenburg reviewed the daily closing market price and trading volume of Chardan’s 2008’s ordinary shares from December 4, 2008 to December 4, 2009. Ladenburg noted that our common stock traded between $6.25 and $7.82 over the period, with a mean stock price of $7.25.

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Consideration Analysis

Ladenburg reviewed the consideration to be paid by Chardan 2008 for its membership interest in DAL in the following table:

   
Type   Indicated Value   Comments
Cash   $45.5m – $64.5m   Includes cash held in Trust and net cash raised from private placement, less transaction expenses. Range will depend on the number of public shareholders that vote against the Transaction
2,700,000 DAL Common Units   $21.3m   Convertible into shares of Chardan on a one-for-one basis and utilizing the estimated liquidation value per public shareholder of $7.90 per share.
1,666,667 DAL Series A
Preferred Units
  $13.2m
3,900,000 DAL Series B
Preferred Units
  $0m – $30.8m   Contingent on achieving certain future share price targets. Convertible into shares of Chardan on an one-for-one basis and utilizing the estimated liquidation value per public shareholder of $7.90 per share.
Total consideration   $80.0m – $129.8m     

Ladenburg noted that the minimum and maximum indicated consideration range implies Chardan 2008 owning approximately 82.0% and 73.0% of DAL on a fully diluted basis, respectively. Ladenburg notes that Chardan 2008 would own approximately 66.0% of DAL on a primary basis (excluding the dilution of existing warrants) assuming maximum redemption, and no contingent consideration.

Valuation Overview

Ladenburg generated an indicated valuation range for DAL based on a discounted cash flow analysis, a comparable company analysis and a comparable transaction analysis each as more fully discussed below. Ladenburg weighted the three approaches equally and arrived at an indicated enterprise value range of approximately $328.7 million to approximately $389.3 million. Estimated post-closing net debt of approximately $100.8 million (including the seller note and warrant note) was then deducted from the enterprise value range to derive a range of equity values of approximately $227.9 million to approximately $288.5 million. Ladenburg then multiplied this equity value range by the percentage of DAL acquired based on the minimum and maximum range of 82.0% and 73.0%, respectively, to get an indicated value range of Chardan 2008’s equity interest in DAL of between approximately $187.0 million and $210.6 million. Ladenburg noted that the consideration range to be paid is below the indicated value range of Chardan 2008’s equity interest in DAL.

Discounted Cash Flow Analysis

A discounted cash flow analysis estimates value based upon a company’s projected future free cash flow discounted at a rate reflecting risks inherent in its business and capital structure. Unlevered free cash flow represents the amount of cash generated and available for principal, interest and dividend payments after providing for ongoing business operations.

While the discounted cash flow analysis is the most scientific of the methodologies used, it is dependent on projections and is further dependent on numerous industry-specific and macroeconomic factors.

Ladenburg utilized the Projections, which forecast continued improvements in revenue and EBITDA out to 2012. For purposes of Ladenburg’s analyses, “EBITDA” means earnings before interest, taxes, depreciation and amortization.

To arrive at a present value, Ladenburg utilized two sets of discount rates that would be applied to the interim period cash flows, and the terminal year cash flows. The discount rate applied to the interim period cash flows ranged from 20.0% to 22.0%. This was based on an estimated weighted average cost of capital of

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21.0% (based on an estimated weighted average cost of debt of 5.4% and 24.3% estimated cost of equity) over the interim period. The discount rate applied to the terminal period cash flows ranged from 32.5% to 34.5%. This was based on an estimated weighted average cost of capital of 33.6% (based on an estimated weighted average cost of debt of 8.0% and 34.5% estimated cost of equity).

The cost of equity calculation for both sets of discount rates was derived utilizing the Ibbotson build up method utilizing appropriate equity risk, industry risk and size premiums and a company specific risk factor, reflecting the risks associated with achieving the Projections, and in particular the additional risk of being able to sustain revenue and EBITDA post 2012 due to the heavy dependence on foreclosure processing services.

Utilizing long term perpetual growth rates of between 2.5% and 3.5% for the terminal value calculation, Ladenburg calculated a range of indicated enterprise values of approximately $325.4 million to approximately $375.8 million.

Comparable Company Analysis

A selected comparable company analysis reviews the trading multiples of publicly traded companies that are similar to DAL with respect to business and revenue model, operating sector, size and target customer base.

Ladenburg identified two companies that it deemed comparable to DAL with respect to their industry sector and operating model; Lendor Processing Services and Dolan Media Company. Both of these companies are much larger than DAL.

Multiples utilizing enterprise value were used in the analyses. For comparison purposes, all operating profits including EBITDA were normalized to exclude unusual and extraordinary expenses and income. Ladenburg generated the following multiples worth noting with respect to the comparable companies:

       
Enterprise Value Multiple of   Mean   Median   High   Low
LTM EBITDA     7.2x       7.2x       8.4x       6.1x  
2009 EBITDA     7.2x       7.2x       8.3x       6.0x  
2010 EBITDA     6.4x       6.4x       7.6x       5.2x  

Ladenburg selected an appropriate multiple range for DAL by examining the range indicated by the comparable companies and taking into account certain company-specific factors. Ladenburg selected multiples just below that of Dolan Media Company who is DAL’s closest comparable given its revenue mix, but with a more diversified revenue stream, and much larger than DAL.

Based on the above factors, Ladenburg applied the following multiples to DAL’s respective statistics:

LTM EBITDA multiples of 5.0x to 6.0x
2009 EBITDA multiples of 5.0x to 6.0x
2010 EBITDA multiples of 4.0x to 5.0x

and calculated a range of indicated enterprise values for DAL by weighting the above indications equally to derive an indicated enterprise value range of approximately $322.8 million to approximately $392.8 million.

None of the comparable companies have characteristics identical to DAL. An analysis of publicly traded comparable companies is not mathematical; rather it involves complex consideration and judgments concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the public trading of the comparable companies.

Comparable Transaction Analysis

A comparable transaction analysis involves a review of merger, acquisition and asset purchase transactions involving target companies that are in related industries to DAL. The comparable transaction analysis generally provides the widest range of values due to the varying importance of an acquisition to a buyer (i.e., a strategic buyer willing to pay more than a financial buyer) in addition to the potential differences in the transaction process (i.e., competitiveness among potential buyers).

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Information typically is not disclosed for transactions involving a private seller, even when the buyer is a public company, unless the acquisition is deemed to be “material” for the acquirer. As a result, the selected comparable transaction analysis is limited to transactions involving the acquisition of a public company, or substantially all of its assets, or the acquisition of a large private company, or substantially all of its assets, by a public company.

Ladenburg located five transactions announced since November 2007 involving target companies providing mortgage default processing services, real estate title and closing services and for which detailed financial information was available.

 
Target   Acquirer
James E. Albertelli (Mortgage Processing/Title Services)   Dolan Media Company
National Default Exchange   American Processing Co, LLC
Clayton Holdings, LLC   Greenfield Partners, LLC
TransUnion Settlement Solutions   Macdonald Dettwiler & Associates
American Processing Company   Dolan Media Company

Based on the information disclosed with respect to the targets in each of the comparable transactions, Ladenburg calculated and compared the enterprise values as a multiple of LTM EBITDA.

Ladenburg noted the following with respect to the multiples generated:

       
Multiple of Enterprise Value to   Mean   Median   High   Low
LTM EBITDA     9.0x       6.5x       17.8x       5.8x  

Ladenburg selected LTM EBITDA multiples for DAL between 5.5 times and 6.5 times which were below the median of the comparable transactions multiples due to the risk related to its high revenue concentration based on the State of Florida and the foreclosure and mortgage default processing market and the ability to maintain revenues in the future.

Based on the above factors, Ladenburg calculated a range of indicated enterprise values for DAL of between approximately $337.9 million to approximately $399.5 million.

None of the target companies in the comparable transactions have characteristics identical to DAL. Accordingly, an analysis of comparable business combinations is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the target companies in the comparable transactions and other factors that could affect the respective acquisition values.

80% Test

Chardan 2008’s initial business combination must be with a target business whose fair market value is at least equal to 80% of Chardan 2008’s net assets at the time of such acquisition.

Ladenburg reviewed Chardan 2008’s net cash held in trust as of June 30, 2009 and compared that to DAL’s indicated range of enterprise value, equity value and Chardan 2008’s interest in DAL’s equity value. Ladenburg noted that the fair market value of all three measures of value exceeds 80% of Chardan 2008’s net asset value.

Conclusion

Based on the information and analyses set forth above, Ladenburg delivered its written opinion to Chardan 2008’s Board of Directors, which stated that, as of December 10, 2009, based upon and subject to the assumptions made, matters considered, procedures followed and limitations on its review as set forth in the opinion, (i) consideration be paid by Chardan 2008 is fair from a financial point of view to Chardan 2008, and (ii) the fair market value of DAL is at least equal to 80% of Chardan 2008’s net assets.

As part of its investment banking business, Ladenburg regularly is engaged in the evaluation of businesses and their securities in connection with mergers, acquisitions, corporate restructurings, negotiated underwritings, private placements and for other purposes. We determined to use the services of Ladenburg

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because it is a recognized investment banking firm that has substantial experience in similar matters. Ladenburg has received a fee in connection with the preparation and issuance of its opinion and will be reimbursed for its reasonable expenses, including attorneys’ fees. Also, we have agreed to indemnify Ladenburg and related persons and entities for certain liabilities that may relate to, or arise out of, its engagement. Further, Ladenburg has not previously provided, nor are there any pending agreements to provide, any other services to Chardan 2008, DAL or any other party that may be involved in the transaction.

In the ordinary course of business, Ladenburg, certain of Ladenburg’s affiliates, as well as investment funds in which Ladenburg or its affiliates may have financial interests, may acquire, hold or sell long or short positions, or trade or otherwise effect transactions in debt, equity, and other securities and financial instruments (including bank loans and other obligations) of, or investments in, Chardan 2008, DAL, or any other party that may be involved in the transaction and their respective affiliates.

Under Ladenburg’s policies and procedures, its fairness committee did not approve or issue this opinion and was not required to do so. Further, Ladenburg’s opinion does not express an opinion about the fairness of the amount or nature of the compensation, if any, to any of Chardan 2008’s officers, directors or employees, or class of such persons, relative to the compensation to Chardan 2008’s or DAL’s shareholders.

Conclusion of Chardan 2008’s Board of Directors.

After careful consideration of all relevant factors, Chardan 2008’s Board of Directors determined that the Acquisition Proposal is fair to, and in the best interests of, Chardan 2008 and its shareholders. The Board of Directors has approved and declared the proposal advisable and recommends that you vote or give instructions to vote “FOR” the approval of the Proposal Acquisition.

The foregoing discussion of the information and factors considered by the Chardan 2008 Board is not meant to be exhaustive, but includes the material information and factors considered by it.

Certain U.S. Federal Income Tax Consequences of the Acquisition

For a discussion of certain U.S. federal income tax consequences of the Initial Contribution and of owning ordinary shares and warrants in Chardan 2008 after the acquisition, see “Material United States Federal Income Tax Considerations,” below.

This Acquisition will Be Accounted for as a Reverse Merger.

Management determined that the weight of the factors favored treating the Target Business as the accounting acquirer. As a result, the historical financing statements of Chardan 2008 will be those of the Target Business. In determining the accounting treatment for this transaction, we considered, among other things, the guidance in the Business Combinations Topic of the FASB Accounting Standards Codification (ASC) to identify the accounting acquirer.

Three of the five factors in the Business Combinations Topic of the ASC favor treating the Target Business as the accounting acquirer:

The management of the Target Business will be the senior management of Chardan 2008 and the Target Business following the closing of the acquisition.
The Stern Contributors will have designated the majority (4 out of 7) directors of Chardan 2008 if the acquisition closes.
The Stern Contributors will potentially have a significant ownership interest in Chardan 2008 (approximately 20% and perhaps higher) should they exchange their DAL ownership interests for corresponding Chardan 2008 equity interests, which would represent the largest single block of Chardan 2008 ownership interests.

A fourth factor, that Chardan 2008 will own 71% of DAL (which ownes 100% of the Target Business), favors treating Chardan 2008 as the accounting acquirer. However, management believes that the weight of the last factor is diminished by the fact that the senior management of the Target Business will control the management and Board of Directors of Chardan 2008 and thus control DAL on behalf of Chardan 2008.

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The last factor for consideration in the Business Combination Topic of the ASC is the terms of the exchange of equity interests, which favors neither Chardan 2008 nor the Target Business as the accounting acquirer. While it is usually the case in a reverse acquisition that the legal acquirer exchanges its stock for stock of the legal acquiree, in this case Chardan 2008 is acquiring its interest in DAL in exchange principally for cash. However, all of the equity interests in DAL to be held by someone other than Chardan 2008 (Stern Contributors and Existing Members) as a result of the transaction are all exchangeable for Chardan 2008 equity interests commencing a year after the transaction closes. The value of those interests represents a significant part of the consideration being received by Existing Members and the Stern Contributors, which was considered to render this factor neutral in the determination. It is unclear at this point as to which entity (Target Business or Chardan 2008) is paying a premium over fair value for their respective interests in the other entity.

Although management determined that the weight of the factors favored treating the Target Business as the accounting acquirer, there is no bright line test in the Business Combination Topic of the ASC, and such a determination necessarily involved the exercise of judgment in a complex area of accounting in connection with a structure that is, in some respects, atypical. As a result, it is possible that reasonable people could reach a different conclusion from that of Chardan 2008’s management on this accounting treatment.

Should this accounting treatment be challenged by regulators at some future time, it is possible that Chardan 2008 would be required to adopt a different accounting treatment. Should that occur, it could result in a restatement of Chardan 2008’s financial statements. For example, if it were determined that either DAL or Chardan 2008 is the accounting acquirer, Chardan 2008 would have to record the acquired assets and liabilities of the Target Business at fair value. This could result in increased future amortization and depreciation charges for certain assets with fair values in excess of their carrying values at the acquisition date, which would reduce the profits of Chardan 2008 as reported in its financial statements.

Regulatory Matters

The Acquisition Proposal is not subject to any federal or state regulatory requirement or approval, other than as required under Hart-Scott-Rodino Act (“HSR Act”). In this connection, the parties will submit the information regarding the acquisition for review by the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice pursuant to the HSR prior to the closing of the acquisition and the acquisition will not close until prior to the expiration or waiver of the required waiting period under the Hart-Scott-Rodino Act.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

General

The following is a summary of the material U.S. federal income tax consequences of the Initial Contribution to Chardan 2008 and to holders of Chardan 2008 ordinary shares and warrants, sometimes referred to collectively as Chardan 2008 securities, and of owning and disposing of Chardan 2008 securities after the acquisition. Because the components of a unit are separable at the option of the holder, the holder of a unit should be treated, for U.S. federal income tax purposes, as the owner of the underlying ordinary share and warrant components of the unit, as the case may be. As a result, the discussion below of the U.S. federal income tax consequences with respect to actual holders of ordinary shares and warrants should also apply to the holder of a unit (as the deemed owner of the underlying ordinary share and warrant components of the unit). The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of Chardan 2008 securities that is for U.S. federal income tax purposes:

an individual citizen or resident of the United States;
a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a beneficial owner of Chardan 2008 securities is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a “Non-U.S. Holder” for purposes of this discussion. The material U.S. federal income tax consequences applicable to Non-U.S. Holders is described below under the heading “Non-U.S. Holders.”

This summary is based on the Internal Revenue Code of 1986, as amended, or the “Code,” its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to Chardan 2008 or to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers only holders that own Chardan 2008 securities as capital assets within the meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:

financial institutions or financial services entities;
broker-dealers;
taxpayers who have elected mark-to-market accounting;
tax-exempt entities;
governments or agencies or instrumentalities thereof;
insurance companies;
regulated investment companies;
real estate investment trusts;
certain expatriates or former long-term residents of the United States;
persons that actually or constructively own 5% or more of Chardan 2008’s voting shares;

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persons that acquired Chardan 2008 securities pursuant to an exercise of employee stock options, in connection with employee stock incentive plans or otherwise as compensation;
persons that hold Chardan 2008 securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or
persons whose functional currency is not the U.S. dollar.

This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws. This discussion assumes that any distributions made (or deemed made) by Chardan 2008 on its ordinary shares and any consideration received by a holder in consideration for the sale or other disposition of Chardan 2008 securities will be in United States dollars. Additionally, the discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold Chardan 2008 securities through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of Chardan 2008 securities, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. In addition, this discussion does not address the U.S. federal income tax treatment to holders of Chardan 2008 securities that may bring a successful claim for recission or damages in respect of the purchase of their securities.

Chardan 2008 has not sought, and will not seek, a ruling from the Internal Revenue Service or IRS or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.

BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO CHARDAN 2008 OR TO ANY PARTICULAR HOLDER OF CHARDAN 2008 SECURITIES MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH HOLDER OF CHARDAN 2008 SECURITIES IS URGED TO CONSULT WITH HIS, HER OR ITS TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE INITIAL CONTRIBUTION AND THE OWNERSHIP AND DISPOSITION OF CHARDAN 2008 SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS.

Tax Consequences of the Initial Contribution

Neither Chardan 2008 nor any holder of Chardan 2008 securities should recognize any gain or loss as a result of the Initial Contribution for U.S. federal income tax purposes.

Tax Consequences to U.S. Holders of Ordinary Shares and Warrants

Taxation of Distributions Paid on Ordinary Shares

Subject to the passive foreign investment company, or “PFIC,” rules discussed below, a U.S. Holder will be required to include in gross income as ordinary income the amount of any dividend paid on the ordinary shares of Chardan 2008. A distribution on such ordinary shares will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. Distributions in excess of such earnings and profits will be applied against and reduce the U.S. Holder’s basis in its ordinary shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares.

With respect to non-corporate U.S. Holders for taxable years beginning before January 1, 2011, dividends may be taxed at the lower applicable long-term capital gains rate (see “— Taxation on the Disposition of Ordinary Shares and Warrants” below) provided that (1) the ordinary shares of Chardan 2008 are readily tradable on an established securities market in the United States, (2) Chardan 2008 is not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain

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holding period requirements are met. It is not entirely clear, however, whether a U.S. Holder’s holding period for its ordinary shares in Chardan 2008 would be suspended for purposes of clause (3) above for the period that such holder had a right to have such ordinary shares redeemed for cash by Chardan 2008. In addition, under published IRS authority, shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently include NASDAQ. Although the ordinary shares of Chardan 2008 are currently listed and traded on NASDAQ, U.S. Holders nevertheless should consult their own tax advisors regarding the availability of the lower rate for any dividends paid with respect to the ordinary shares of Chardan 2008.

Taxation on the Disposition of Ordinary Shares and Warrants

Upon a sale or other taxable disposition of the ordinary shares or warrants of Chardan 2008 (which, in general, should include a redemption of ordinary shares pursuant to the exercise by a U.S. Holder of its redemption rights or the receipt of cash by a U.S. Holder pursuant to the exercise of appraisal rights), and subject to the PFIC rules discussed below, a U.S. Holder should recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the ordinary shares or warrants. See “— Exercise or Lapse of a Warrant” below for a discussion regarding a U.S. Holder’s basis in the ordinary shares acquired pursuant to the exercise of a warrant.

Capital gains recognized by U.S. Holders generally are subject to U.S. federal income tax at the same rate as ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum rate of 15% for taxable years beginning before January 1, 2011 (and 20% thereafter). Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding period for the ordinary shares or warrants exceeds one year. The deductibility of capital losses is subject to various limitations.

Exercise or Lapse of a Warrant

Subject to the discussion of the PFIC rules below, a U.S. Holder generally will not recognize gain or loss upon the exercise for cash of a warrant to acquire ordinary shares in Chardan 2008. Ordinary shares acquired pursuant to the exercise of a warrant for cash generally will have a tax basis equal to the U.S. Holder’s tax basis in the warrant, increased by the amount paid to exercise the warrant. The holding period of such ordinary shares generally would begin on the day after the date of exercise of the warrant. If the terms of a warrant provide for an adjustment to the number of shares of ordinary shares for which the warrant may be exercised or to the exercise price of the warrant, such adjustment may, under certain circumstances, result in a constructive distribution that could be taxable to the U.S. Holder of the warrants. Conversely, the absence of an appropriate adjustment similarly may result in a constructive distribution that could be taxable to the U.S. Holders of the ordinary shares. See “— Taxation of Distributions Paid on Ordinary Shares,” above. If a warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.

Passive Foreign Investment Company Rules

A foreign corporation will be a PFIC if at least 75% of its gross income in a taxable year of the foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

Based on the expected composition of the assets and income of Chardan 2008 and DAL after the acquisition, Chardan 2008 does not anticipate that it will be treated as a PFIC following the acquisition. The actual PFIC status of Chardan 2008 for its current taxable year or any subsequent taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurance with respect to the status of Chardan 2008 as a PFIC for its current taxable year or any future taxable year.

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If Chardan 2008 is determined to be a PFIC and a U.S. Holder did not make either a timely qualified electing fund, or QEF, election for Chardan 2008’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares, or a mark-to-market election, as described below, such holder generally will be subject to special rules with respect to:

any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares or warrants; and
any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares of Chardan 2008 during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the ordinary shares).

Under these rules:

the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares or warrants;
the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day of the first taxable year of Chardan 2008 in which Chardan 2008 is a PFIC will be taxed as ordinary income;
the amount allocated to other taxable years of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

In general, a U.S. Holder may avoid the PFIC tax consequences described above in respect to the ordinary shares of Chardan 2008 by making a timely QEF election to include in income its pro rata share of Chardan 2008’s net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which Chardan 2008’s taxable year ends. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.

A U.S. Holder may not make a QEF election with respect to its warrants. As a result, if a U.S. Holder sells or otherwise disposes of a warrant to purchase the ordinary shares of Chardan 2008 (other than upon exercise of a warrant), any gain recognized generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if Chardan 2008 were a PFIC at any time during the period the U.S. Holder held the warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly acquired ordinary shares in Chardan 2008 (or has previously made a QEF election with respect to its ordinary shares in Chardan 2008), the QEF election will apply to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed to have a holding period for the purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in the ordinary shares acquired upon the exercise of the warrants for purposes of the PFIC rules.

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The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign Investment Company or QEF), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS.

In order to comply with the requirements of a QEF election, a U.S. Holder must receive certain information from us. Upon request from a U.S. Holder, Chardan 2008 will endeavor to provide to the U.S. Holder, no later than 90 days after the request, such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that Chardan 2008 will have timely knowledge of its status as a PFIC in the future or of the required information to be provided.

If a U.S. Holder has elected the application of the QEF rules to its ordinary shares in Chardan 2008, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for Chardan 2008’s first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant to a purging election), any gain recognized on the appreciation of such shares should be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of the QEF’s earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income should not be taxable as a dividend to those U.S. Holders who made a QEF election. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.

Although a determination as to Chardan 2008’s PFIC status will be made annually, an initial determination that Chardan 2008 is a PFIC generally will apply for subsequent years to a U.S. Holder who held the ordinary shares or warrants of Chardan 2008 while it was a PFIC, whether or not Chardan 2008 met the test for PFIC status in those years. A U.S. Holder who makes the QEF election discussed above for Chardan 2008’s first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) ordinary shares in Chardan 2008, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of Chardan 2008 that ends within or with a taxable year of the U.S. Holder and in which Chardan 2008 is not a PFIC. On the other hand, if the QEF election is not effective for each of the taxable years of Chardan 2008 in which Chardan 2008 is a PFIC and during which the U.S. Holder holds (or is deemed to hold) ordinary shares in Chardan 2008, the PFIC rules discussed above will continue to apply to such shares unless the U.S. Holder makes a purging election and pays the tax and interest charge with respect to the gain inherent in such shares attributable to the pre-QEF election period.

Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock (as described below), the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) ordinary shares in Chardan 2008 and for which Chardan 2008 is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants.

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The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including NASDAQ, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Although the ordinary shares of Chardan 2008 currently trade on NASDAQ, U.S. Holders nevertheless should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the ordinary shares of Chardan 2008 under their particular circumstances.

If Chardan 2008 is a PFIC and, at any time, has a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if Chardan 2008 receives a distribution from, or disposes of all or part of its interest in, the lower-tier PFIC. Upon request, Chardan 2008 will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. However, there is no assurance that Chardan 2008 will have timely knowledge of the status of any such lower-tier PFIC or of the required information to be provided. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.

If a U.S. Holder owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, such holder may have to file an IRS Form 8621 (whether or not a QEF or mark-to-market election is made).

The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of ordinary shares and warrants in Chardan 2008 should consult their own tax advisors concerning the application of the PFIC rules to such ordinary shares and warrants under their particular circumstances.

Tax Consequences to Non-U.S. Holders of Ordinary Shares and Warrants

Dividends paid to a Non-U.S. Holder in respect to its ordinary shares in Chardan 2008 generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of ordinary shares or warrants in Chardan 2008 unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from United States sources generally is subject to tax at a 30% rate or a lower applicable tax treaty rate).

Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to tax in the same manner as for a U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

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Backup Withholding and Information Reporting

In general, information reporting for U.S. federal income tax purposes will apply to distributions made on the ordinary shares of Chardan 2008 within the United States to a non-corporate U.S. Holder and to the proceeds from sales and other dispositions of ordinary shares or warrants of Chardan 2008 by a non-corporate U.S. Holder to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.

In addition, backup withholding of United States federal income tax, currently at a rate of 28%, generally will apply to dividends paid on the ordinary shares of Chardan 2008 to a non-corporate U.S. Holder and the proceeds from sales and other dispositions of shares or warrants of Chardan 2008 by a non-corporate U.S. Holder, in each case who:

fails to provide an accurate taxpayer identification number;
is notified by the IRS that backup withholding is required; or
in certain circumstances, fails to comply with applicable certification requirements.

A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS.

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PROPOSAL TO ELECT DIRECTORS

Seven (7) director nominees are seeking to be elected at the extraordinary general meeting, to hold office until the expiration of their term and until their successors are elected and qualified. Management expects that each of the nominees will be available for election, but if any of them is not a candidate at the time the election occurs, it is intended that such proxy will be voted for the election of another nominee to be designated by the Board of Directors to fill any such vacancy.

Information About Director Nominees

Mr. David J. Stern — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Kumar Gursahaney — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Nicholas Adler — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Juan V. Ruiz — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Mark P. Harmon — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Matthew S. Kayton — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

Mr. Jerry Hutter — see biographical information set forth under “Directors, Management and Key Employees Following the Acquisition.”

The Board of Directors will be divided into four classes — Class A through Class D. Classes A, C and D will each have two directors, and Class B will have a single director. The table below sets forth which nominee is nominated to which class and the initial terms of the four classes. Each term after the initial term will be for four years.

 
Class A Directors
(initial term of one (1) year and subsequent terms of four (4) years)
  Mr. Kumar Gursahaney
Nicholas Adler
Class B Director
(initial term of two (2) years and subsequent terms of four (4) years)
  Mark P. Harmon
Class C Directors
(initial term of three (3) years and subsequent term of four (4) years)
  Juan V. Ruiz
Matthew S. Kayton
Class D Directors
(initial and subsequent term of four (4) years)
  David J. Stern
Jerry Hutter

If the Acquisition Proposal is not approved, this proposal will not be given effect, even if approved. In addition, appointment of the candidates to the Board of Directors is contingent on consummation of the Acquisition Proposal, and if the Acquisition Proposal is not ultimately consummated, the candidates will not be appointed to the Chardan 2008 Board of Directors.

Conclusion of Chardan 2008’s Board of Directors.  After careful consideration of all relevant factors, Chardan 2008’s Board of Directors unanimously recommends that you vote “FOR” the election of each of the nominated directors

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PROPOSAL TO APPROVE THE EQUITY INCENTIVE PLAN

Background

The Chardan 2008 China Acquisition Corp. 2009 Equity Incentive Plan (referred to below as the “Equity Incentive Plan”) has been approved by Chardan 2008’s Board of Directors and will take effect upon Closing, provided that the Acquisition Proposal and the Incentive Plan Proposal are approved by the shareholders at the extraordinary general meeting.

Under the terms of the Equity Incentive Plan, up to 1,570,000 Chardan 2008 ordinary shares are reserved for issuance in accordance with its terms (provided, however, that dividend equivalent rights are payable solely in cash, and performance awards, restricted share units and incentive awards may be settled in cash and to the extent they are settled in cash do not reduce the number of shares that may be granted under the Equity Incentive Plan, and share appreciation rights only reduce the number of shares available for grant under the Equity Incentive Plan by the number of shares actually received by the grantee). Chardan 2008 currently anticipates that, shortly after the closing of the transactions contemplated by the Acquisition Proposal, it will grant a number of awards which have not yet been determined to its directors and employees and consultants of DAL and its subsidiaries, including persons who are also employees of DJS. The purpose of the Equity Incentive Plan is to assist Chardan 2008 in attracting, retaining and providing incentives to its employees, directors and consultants, and/or the employees, directors and consultants of its subsidiaries including employees of DJS, whose past, present and/or potential future contributions to Chardan 2008 have been, are or will be important to the success of Chardan 2008 and to align the interests of such persons with Chardan 2008’s shareholders. It is also designed to motivate employees and to significantly contribute toward growth and profitability, to provide incentives to Chardan 2008’s directors, employees and consultants who, by their position, ability and diligence are able to make important contributions to Chardan 2008’s growth and profitability. The various types of incentive awards that may be issued under the Equity Incentive Plan will enable Chardan 2008 to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of its business.

All directors, employees and consultants of the post-transaction company will be eligible to be granted awards under the Equity Incentive Plan. All awards will be subject to the approval of the Compensation Committee of Chardan 2008’s Board of Directors (the “Compensation Committee”).

The discussion in this proxy statement of the Equity Incentive Plan is subject to, and is qualified in its entirety by reference to, the Equity Incentive Plan. The full text of the Equity Incentive Plan is attached hereto as Annex E which is incorporated by reference herein.

Description of the Equity Incentive Plan

A summary of the principal features of the Equity Incentive Plan is provided below, but is subject to and qualified in its entirety by reference to the full text of the Equity Incentive Plan, a copy of which is attached to this proxy statement as Annex E.

Shares Subject to the Equity Incentive Plan

As noted above, Chardan 2008 has reserved an aggregate of up to 1,570,000 ordinary shares to be awarded under the Equity Incentive Plan, any number of which may be subject to the grant of incentive share options. If an award is exercised or withheld to satisfy tax liabilities through tendering of shares or withholding of shares by Chardan 2008, Chardan 2008 will count only the number of shares issued net of the shares tendered or withheld. If any shares awarded under the Equity Incentive Plan are forfeited, cancelled, expire or otherwise terminate, the underlying Chardan 2008 ordinary shares become available again for new awards under the Equity Incentive Plan. To prevent dilution or enlargement of the rights of participants under the Equity Incentive Plan, appropriate adjustments will be made by the Compensation Committee if any change is made to Chardan 2008’s outstanding ordinary shares by reason of any merger, reorganization, consolidation, recapitalization, dividend or distribution, share split, reverse share split, spin-off or similar transaction or other change in corporate structure affecting Chardan 2008’s ordinary shares or their value.

Chardan 2008 does not currently have any outstanding options or any intention, agreement or obligation to issue any share awards other than under the Equity Incentive Plan.

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Equity Incentive Plan Participants

All employees, directors and consultants of Chardan 2008 or any of its subsidiaries who are selected by the Compensation Committee in its sole discretion from time to time are eligible to participate in the Equity Incentive Plan. The Compensation Committee may condition the grant of an award to an individual under the Equity Incentive Plan by requiring that the individual become an employee, director or consultant of Chardan 2008 or any of its subsidiaries; provided, however, that the award is deemed granted as of the date the individual becomes an employee, director or consultant of Chardan 2008 or any of its subsidiaries.

Administration

The Equity Incentive Plan will be administered by the Compensation Committee or any other committee or sub-committee of the Board, as designated by the Board from time to time (the “Committee”). The Committee has the power to, among other things, select participants, make awards under the Equity Incentive Plan, and determine the terms of awards (subject to the terms of the Equity Incentive Plan). The Committee also has broad power to, among other things, interpret the terms of the Equity Incentive Plan and to establish rules and regulations for the administration of the Equity Incentive Plan. In the case of awards designated as awards under Section 162(m) of the Code, the Committee’s power to take certain actions is limited by Section 162(m).

Types of Plan Awards and Limits

The Committee may grant share options, share appreciation rights, restricted shares, restricted share units, performance awards, incentive awards and director share purchase rights under the Equity Incentive Plan. The Equity Incentive Plan limits grants to any one participant in any one fiscal year of Chardan 2008 to 300,000 Chardan 2008 ordinary shares in connection with awards which are share options or share appreciation rights, 300,000 Chardan 2008 ordinary shares in connection with awards which are restricted shares or restricted share units, 300,000 Chardan 2008 ordinary shares in connection with awards which are performance awards and 300,000 Chardan 2008 ordinary shares in connection with awards which are incentive awards. The Equity Incentive Plan further limits the dollar value payable to any one participant in any one fiscal year of Chardan 2008 in connection with restricted share units, performance awards or incentive awards valued in property other than Chardan 2008 ordinary shares to the lesser of $1 million or three times the participant’s base salary for that fiscal year.

Share Options

The Committee may grant incentive share options and nonqualified share options. Terms of the grant will be set forth in a written agreement. No share option may be exercised after the tenth anniversary of the date on which the share option was granted. The per share exercise price under any share option granted must not be less than the fair market value of a Chardan 2008 ordinary share on the grant date. Payment of the exercise price upon exercise of a share option may be made in cash, personal check, bank draft, money order or by delivery of Chardan 2008 ordinary shares, pursuant to a broker assisted cashless exercise, or delivery of other consideration approved by the Committee with a fair market value equal to the exercise price, by other means determined by the Committee. A payment method involving delivery or withholding of Chardan 2008 ordinary shares may not be used if it would violate applicable law or would result in adverse accounting consequences for Chardan 2008.

Share options constituting incentive share options may be granted only to employees. The aggregate market value, determined on the grant date, of the Chardan 2008 ordinary shares with respect to which incentive share options may first become exercisable for a participant during a calendar year may not exceed $100,000.00. In addition, in the event that the recipient of an incentive share option is a more than 10% shareholder of Chardan 2008 or any of its subsidiaries, the per share exercise price may not be less than 110% of the fair market value of a Chardan 2008 ordinary share on the grant date, and may not be exercised more than five years after the grant date.

The Committee and the Board cannot cancel outstanding share options or share appreciation rights, grant new awards as substitutes under the Equity Incentive Plan or amend outstanding share options or share appreciation rights to lower the per share exercise price below the fair market value of a Chardan 2008 ordinary share on the original grant date without approval by Chardan 2008’s shareholders.

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Share Appreciation Rights

The Committee may grant share appreciation rights pursuant to such terms and conditions as the Committee determines. The terms of each grant will be evidenced by a written agreement. A share appreciation right may be granted on a stand-alone basis or as a tandem share appreciation right. No share appreciation right may be granted with a term of more than ten years from the grant date. The per share exercise price under a share appreciation right may not be less than the fair market value of a Chardan 2008 ordinary share on the grant date, and the per share exercise price under a tandem share appreciation right will be the exercise price under the related share option. Upon exercise of a share appreciation right, the participant will have the right to receive an amount equal to the excess of the aggregate fair market value of the shares on the exercise date over their aggregate fair market value on the grant date, in each case for the number of Chardan 2008 ordinary shares for which the share appreciation right is being exercised. Payments will be made to the participant in Chardan 2008 ordinary shares as specified in the grant agreement. If it is determined that the share appreciation right is not subject to Code Section 457A, payments may be made in cash or partly in shares or cash (as determined by the Committee in accordance with any applicable terms of the grant agreement).

Restricted Shares and Units

The Committee may grant restricted shares and restricted share units pursuant to such terms and conditions as the Committee determines. The terms of each grant will be evidenced by a written agreement. The restricted shares and restricted share units will be subject to restrictions on transferability and alienation, forfeiture provisions and other restrictions as the Committee may impose. The Committee may require payment of consideration for restricted shares, which may be payable in cash, Chardan 2008 ordinary shares or other property. Recipients of restricted shares will have the same voting rights as other Chardan 2008 shareholders, and, in the Committee’s discretion, may or may not have the same dividend rights. Recipients of restricted share units may receive dividend equivalent rights in the Committee’s discretion. Restricted share units are payable in Chardan 2008 ordinary shares or cash as of the vesting date.

Performance Awards

The Committee may grant performance awards pursuant to such terms and conditions as the Committee determines. Performance awards consist of the right to receive cash, Chardan 2008 ordinary shares or other property. The terms of performance awards will be evidenced in a written agreement that specifies the performance goals, the period over which the goals are to be attained, the payment schedule if the goals are attained and other terms as the Committee determines. The Committee, in its discretion, may waive all or part of the conditions, goals and restrictions applicable to the receipt of full or partial payment of a performance award that has not been granted with the intention of constituting “performance-based compensation” for the purposes of Code Section 162(m). In the case of performance shares, the participant will have the right to receive legended certificates of Chardan 2008 ordinary shares subject to restrictions on transferability. A participant will be entitled to vote the Chardan 2008 ordinary shares subject to a performance share award prior to satisfaction of the performance goals, and any dividends received will be reinvested in additional performance shares, to be subject to the same performance goals and restrictions.

Incentive Awards

The Committee may grant incentive awards pursuant to such terms and conditions as the Committee determines, which will be set forth in a written agreement. The determination for granting incentive awards may be based on criteria determined by the committee, including the attainment of performance levels of Chardan 2008 and/or its subsidiaries as established by the Committee. Incentive awards will be paid in cash, Chardan 2008 ordinary shares or other property and will equal a percentage of the participant’s base salary for the fiscal year, a fixed dollar amount or some other formula, as determined by the Committee.

Code Section 162(m) Performance Measure Awards

The Committee may designate that any award in the form of restricted shares, restricted share units, performance shares, performance units or incentive awards be granted with the intention of constituting “performance-based compensation” for the purposes of Code Section 162(m). As a result, such grants will be subject to certain additional requirements intended to satisfy the exemption for performance-based compensation under Code Section 162(m). The performance criteria will be one or more of the following objective

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performance goals, either individually, alternatively or in any combination, applied to either Chardan 2008 as a whole or to a subsidiary, either individually, alternatively, or in any combination, and measured over a designated performance period, in each case as specified by the Committee in the award: earnings (as measured by net income, operating income, operating income before interest, EBIT, EBITA, EBITDA, pre-tax income, or cash earnings, or earnings as adjusted by excluding one or more components of earnings, included each of the above on a per share and/or segment basis); revenues/net revenues; return on net sales (as measured by net income, operating income, operating income before interest, EBIT, EBITA, EBITDA, pre-tax income, operating cash flow or cash earnings as a percentage of net sales); revenue growth; cash flow; operating cash flow; free cash flow; discounted cash flow; working capital; market capitalization; cash return on investment; return on capital; return on cost of capital; shareholder value; return on equity; total shareholder return; return on investment; economic value added; return on assets/net assets; share trading multiples (as measured vs. investment, net income, operating income, operating income before interest, EBIT, EBITA, EBITDA, pre-tax income, cash earnings or operating cash flow); share price; attainment of strategic or operational initiatives.

Director Share Purchase Rights

A director of Chardan 2008 or any of its subsidiaries may elect in advance to purchase Chardan 2008 ordinary shares using all or a portion of his or her cash fees received for service as a director for which the director has not yet received payment (including, but not limited to, quarterly retainer and board/committee meeting fees). The purchase price for such Chardan 2008 ordinary shares will equal 100% of the fair market value of the shares to be purchased, determined as of the applicable March 1, June 1, September 1 or December 1. By December 15th of each year, directors electing to receive Chardan 2008 ordinary shares will receive certificates of Chardan 2008 ordinary shares earned during the year.

Termination of Employment or Services

Share Options and Share Appreciation Rights

Unless otherwise provided in a grant agreement, if a participant terminates employment or services with Chardan 2008 and its subsidiaries for any reason prior to the date that a share option or share appreciation right becomes vested, the participant’s right to exercise the share option or share appreciation right terminates and all rights cease unless otherwise provided in the agreement. If a share option or share appreciation right becomes vested prior to the termination of the employment or services for any reason other than death or disability, the participant has the right to exercise the share option or share appreciation right to the extent it was exercisable upon termination within the exercise period specified in the share option or share appreciation right agreement. If termination is due to the participant’s death or disability, subject to any limitations in the grant agreement, an outstanding share option or share appreciation right may be exercised within the exercise period specified in the share option or share appreciation right agreement. The Committee may, in its discretion, accelerate the participant’s right to exercise a share option or extend the term of a share option, subject to Code Section 409A and any other applicable limitations.

Restricted Shares and Restricted Share Units

If a participant terminates employment or services with Chardan 2008 and its subsidiaries for any reason, the participant’s restricted shares are generally forfeited to Chardan 2008 (subject to a refund by Chardan 2008 of any purchase price paid by the participant). The Committee, however, may provide in the participant’s agreement, in its sole discretion, that restricted shares or restricted share units will not be forfeited upon termination of employment or services (subject to Code Section 409A and, if applicable, Code Section 457A). The Committee also may waive any restrictions in its discretion except for restrictions in connection with an award intended to constitute “performance-based compensation” for purposes of Code Section 162(m); however, the Committee may, for purposes of these awards, deem restrictions and performance goals satisfied if a participant terminates employment or services due to death or disability.

Performance Awards

Performance awards expire and are forfeited upon a participant’s termination of employment or services with Chardan 2008 and its subsidiaries for any reason. The Committee, however, may, in its discretion, provide in the award agreement or otherwise that the award will not be forfeited upon termination of employment

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or services or waive any conditions or restrictions for such awards (subject to Code Section 409A and, if applicable, Code Section 457A). The Committee may not waive any restrictions or conditions on Code Section 162(m) awards, but it may deem restrictions and conditions satisfied in the event a participant terminates employment or services due to death or disability.

Incentive Awards

Incentive awards expire and are forfeited upon a participant's termination of employment or services with Chardan 2008 and its subsidiaries for any reason. The Committee, however, may, in its discretion, provide in the award agreement or otherwise for the continuation of the award after the participant's termination of employment or services or waive or change all or part of the conditions, goals and restrictions applicable to such awards (subject to Code Section 409A and, if applicable, Code Section 457A). The Committee may not waive any performance goals under or restrictions on Code Section 162(m) awards, but it may deem attainment of performance goals and termination of the applicability of restrictions in the event a participant terminates employment or services due to death or disability.

Director Share Purchase Rights

If a director of Chardan 2008 or any of its subsidiaries ceases to remain on the board for any reason, the director (or executor, administrator or legal representative, if applicable) will receive share certificates for all cash director fees earned prior to the director’s departure from the board for which the director elected to receive ordinary shares but had not yet received a share certificate by the earliest to occur of the next following May 1, June 1, September 1 or December 1.

Limitations on Transfer of Awards

Except as otherwise provided in the award agreement, no award under the Equity Incentive Plan may be transferable other than by will or the laws of descent and distribution. Share options and share appreciation rights may only be exercised by the participant during his or her lifetime. However, a participant may assign or transfer an award, other than an incentive share option, with the consent of the Committee. To the extent applicable, all Chardan 2008 ordinary shares subject to an award will contain a legend restricting the transferability of the shares pursuant to the terms of the Equity Incentive Plan, which can be removed once the restrictions have terminated, lapsed or been satisfied.

Termination and Amendment

No new awards may be granted under the Equity Incentive Plan on or after ten years after the Equity Incentive Plan is approved by the Board. The Board may terminate the Equity Incentive Plan or the granting of any awards under the Equity Incentive Plan, or amend the Equity Incentive Plan, at any time and the Committee may amend the terms of outstanding awards (subject to Code Section 162(m) and applicable law), but the approval of Chardan 2008’s ordinary shareholders will be required for any amendment that materially increases benefits under the Equity Incentive Plan, increases the number of Chardan 2008 ordinary shares available for awards under the Equity Incentive Plan (except pursuant to the adjustment provisions of the Equity Incentive Plan), changes the eligibility provisions of the Equity Incentive Plan, or permits the repricing of share options or share appreciation rights. An amendment to the Equity Incentive Plan or to a participant’s outstanding award agreement will not, without the consent of the participant, adversely affect the participant’s outstanding awards except to qualify the awards for exemption under Code Sections 409A and/or 457A (if applicable) or as provided in an applicable grant agreement.

Change in Control

Awards under the Equity Incentive Plan are generally subject to special provisions upon the occurrence of a change in control transaction of the kind described in the Equity Incentive Plan. Under the Equity Incentive Plan, the Committee may provide in an award agreement or otherwise that upon a change in control (as defined in the Equity Incentive Plan) any or all of the following may occur (i) outstanding share options and/or share appreciation rights immediately become fully vested and exercisable; (ii) any remaining restriction period on any restricted shares or restricted share units immediately lapse and the shares become freely transferable; (iii) all performance goals are deemed to have been satisfied under all performance awards and the awards become immediately payable; (iv) all performance measures are deemed to have been satisfied for

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any outstanding incentive awards, which immediately become payable; (v) a director’s share purchase right will be paid in full in Chardan 2008 ordinary shares for services through the date of the consummation of the transaction; and/or (vi) awards may be treated in any other way as determined by the Committee. The Committee also may determine that upon a change in control, any outstanding share option or share appreciation right will be cancelled in exchange for a payment in cash, Chardan 2008 shares or other property for each vested share subject to a share option or share appreciation right in an amount equal to the fair market value of the consideration to be paid per Chardan 2008 ordinary share in the change of control transaction over the exercise price per share. The Committee also may, in its discretion, provide in an award agreement or otherwise that if, in the event of a change in control, the successor company assumes an award made under the Equity Incentive Plan or substitutes an equivalent entitlement therefor, then each such outstanding award will not be so accelerated.

New Plan Benefits

All awards under the Equity Incentive Plan are approved by the Committee, in its discretion. Therefore, it is not possible at this time to determine the awards that will be made to any particular employee, officer, director or consultant under the Equity Incentive Plan in the future. No awards have been made under the Equity Incentive Plan to date.

United States Federal Income Tax Consequences

The following discussion is a summary of the U.S. federal income tax consequences under current tax law to Chardan 2008, its subsidiaries and to individual participants in the Equity Incentive Plan who are individual citizens or residents of the United States relating to awards under the Equity Incentive Plan and any subsequent sale of Chardan 2008 ordinary shares acquired under the Equity Incentive Plan. The tax effect of awards may vary depending upon the particular circumstances, and the income tax laws and regulations change frequently. The following discussion does not purport to cover all of the special rules that may apply, including special rules relating to limitations on the ability of Chardan 2008 to deduct certain compensation for federal income tax purposes, special rules relating to deferred compensation, golden parachutes, participants subject to Section 16(b) of the Exchange Act and the exercise of a share option with previously-acquired shares. In addition, this summary does not address the state or local income or other tax consequences inherent in the acquisition, ownership, vesting, exercise, termination or disposition of an award under the Equity Incentive Plan or Chardan 2008 ordinary shares issued pursuant thereto.

Nonqualified Share Options.  There will be no federal income tax consequences to a participant or to Chardan 2008 upon the grant of a nonqualified share option. When the participant exercises a nonqualified share option, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the option shares on the date of exercise over the share option exercise price paid, and Chardan 2008 or its applicable subsidiary will be entitled to a corresponding federal income tax deduction, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code. Any gain a participant realizes when the participant later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the participant held the shares.

Incentive Share Options.  There will be no federal income tax consequences to a participant or to Chardan 2008 or any of its subsidiaries upon the grant of an incentive share option. If the participant holds the option shares for the required holding period of at least two years after the date the incentive share option was granted and one year after exercise of the incentive share option, the difference between the exercise price and the amount realized upon sale or disposition of the option shares will be long-term capital gain or loss, and none of Chardan 2008 nor any of its subsidiaries will be entitled to a federal income tax deduction. If the participant disposes of the option shares in a sale, exchange, or other disqualifying disposition before the required holding period ends, the participant will recognize taxable ordinary income in an amount equal to the difference between the share option exercise price and the lesser of the fair market value of the shares on the date of exercise or the disposition price, and Chardan 2008 or its applicable subsidiary will be entitled to a federal income tax deduction equal to such amount, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code. Any amount received by the participant in excess of the fair market value on the exercise date will be taxed to the participant as capital gain, and none of Chardan 2008 nor any of its subsidiaries will be entitled to a corresponding federal income tax deduction. While the exercise of an incentive share option does not result in current taxable income, the excess of the fair market value of the option

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shares at the time of exercise over the option exercise price will be a tax preference item for purposes of the federal alternative minimum tax. In addition, the participant’s basis in such shares is increased by such excess for purposes of computing the gain or loss on the disposition of the shares for alternative minimum tax purposes. If a participant is required to pay alternative minimum tax, the amount of such tax which is attributable to deferral preferences (including any incentive share option adjustment) generally may be allowed as a credit against the participant’s regular tax liability (and, in certain cases, may be refunded to the participant) in subsequent years.

Share Appreciation Rights.  The participant will not recognize income, and none of Chardan 2008 nor any of its subsidiaries will be entitled to a federal income tax deduction, at the time a share appreciation right is granted. When the participant exercises the share appreciation right, the cash or fair market value of any shares received will be taxable to the participant as ordinary income, and Chardan 2008 or its applicable subsidiary will be entitled to a federal income tax deduction equal to such amount, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code.

Restricted Share Awards.  Unless a participant makes an election to accelerate recognition of income to the grant date as described below, the participant will not recognize income, and none of Chardan 2008 nor any of its subsidiaries will be entitled to an income tax deduction, at the time a restricted share award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the shares as of that date, less any amount paid for the shares, and Chardan 2008 or its applicable subsidiary will be entitled to a corresponding federal income tax deduction, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code. If the participant files an election under Section 83(b) of the Internal Revenue Code within 30 days after the grant date, the participant will recognize ordinary income as of the grant date equal to the fair market value of the shares as of that date, less any amount paid by the participant for the shares, and Chardan 2008 or its applicable subsidiary will be allowed a corresponding tax deduction at that time, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code. Any future appreciation in the shares will be taxable to the participant at capital gains rates. However, if the shares are later forfeited, such participant will not be able to recover the tax previously paid pursuant to the Section 83(b) election.

Restricted Share Unit Awards, Performance Share Awards, and Performance Share Unit Awards.  A participant will not recognize income, and none of Chardan 2008 nor any of its subsidiaries will be entitled to a federal income tax deduction, at the time a restricted share unit award, performance share award, or performance share unit award is granted. When a participant receives payment under a restricted share unit award, performance share award, or performance share unit award, the amount of cash received and/or the fair market value of any shares received will be ordinary income to the participant, and Chardan 2008 or its applicable subsidiary will be entitled to a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code.

Code Section 409A and Code Section 457A.  Sections 409A and, if applicable, 457A of the Internal Revenue Code have implications that may affect certain awards under the Equity Incentive Plan. Some or all of the following penalties may apply to awards under the Equity Incentive Plan if the terms of such awards are not exempt from or do not comply with the requirements of Section 409A or, if applicable, 457A: (i) appreciation is includible in the participant’s gross income for tax purposes once the awards are no longer subject to a “substantial risk of forfeiture” (e.g., upon vesting), (ii) the participant is required to pay interest at the tax underpayment rate plus one percentage point commencing on the date an award subject to Section 409A or, if applicable, Section 457A is no longer subject to a substantial risk of forfeiture, and (iii) the participant incurs a 20% penalty tax on the amount required to be included in income. The Equity Incentive Plan and the awards granted thereunder are intended to be exempt from or conform with the applicable requirements of Sections 409A and 457A.

Conclusion of Chardan 2008’s Board of Directors.

After careful consideration of all relevant factors, Chardan 2008’s Board of Directors has determined that the proposal to adopt the Equity Incentive Plan is in the best interests of Chardan 2008 and its shareholders. Chardan 2008’s Board of Directors has approved and declared advisable the proposal and recommends that you vote or give instructions to vote “FOR” the proposal.

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PROPOSAL TO AMEND CHARDAN 2008’s AMENDED AND RESTATED MEMORANDUM AND
ARTICLES OF ASSOCIATION TO CHANGE ITS CORPORATE NAME

Chardan 2008 proposes to amend its Memorandum and Articles of Association to change its corporate name from “Chardan 2008 Acquisition Corp.” to “DJSP Enterprises, Inc.” upon closing in order to reflect Chardan 2008’s acquisition of the Target Business. If the Acquisition Proposal is not approved, the name change amendment will not be presented at the meeting. In addition, if the Closing does not occur, Chardan 2008’s Board of Directors will not effect the name change.

In the judgment of Chardan 2008’s Board of Directors, if the Closing occurs, the change of Chardan 2008’s corporate name is desirable to reflect the fact that Chardan 2008 would then be an operating business. A copy of the Amended and Restated Memorandum and Articles of Association as it would be filed to change Chardan 2008’s name (pursuant to this proposal) is attached to this proxy statement as Annex B.

Shareholders will not be required to exchange outstanding share certificates for new share certificates if the amendment changing the Company’s name is adopted.

Conclusion of Chardan 2008’s Board of Directors.

After careful consideration of all relevant factors, Chardan 2008’s Board of Directors determined that the proposal to amend Chardan 2008’s Memorandum and Articles of Association to change Chardan 2008’s name to “DJSP Enterprises, Inc.” is in the best interests of Chardan 2008 and its shareholders. The Board of Directors has approved and declared the proposal advisable and recommends that you vote or give instructions to vote “FOR” the approval of the Name Change Proposal.

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PROPOSAL TO AMEND CHARDAN 2008’s AMENDED AND RESTATED MEMORANDUM AND
ARTICLES OF ASSOCIATION TO REMOVE RESTRICTIVE PROVISIONS

Chardan 2008 proposes to amend its Amended and Restated Memorandum and Articles of Association to eliminate certain provisions that will become extraneous if the transactions contemplated by the Acquisition Proposal are consummated and to make these governing corporate documents more consistent with those of US domestic companies whose shares trade publicly in the United States. The proposed changes include the following (which do not include a discussion of non-substantive revisions or the correction of typographical errors):

Changes to the Memorandum of Association

Clauses 1.2 and 1.3.  Gives the board of directors or the members (shareholders) the authority to change the company’s name and designates any such change of name as an amendment to the Memorandum, requiring that the amendment procedures be followed.

Clause 2.2.  Limits the liability of each member is limited to the subscription amount from time to time unpaid on that member’s shares any liability expressly provided for in the Memorandum or Articles and the liability to repay any distribution to the extent required by section 58(1) of the BVI Business Companies Act. Pursuant to section 58(1) of the Act, a distribution made to a member at a time when the company did not, immediately after the distribution, satisfy the solvency test may be recovered by the company from the member unless: (a) the member received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test; (b) the member has altered his position in reliance on the validity of the distribution; and (c) it would be unfair to require repayment in full or at all.

Clauses 4.2 and 4.3.  Confers on the directors the right to change the company’s registered agent and provides a procedure for effecting such change without the cooperation of the existing agent.

Clause 5.3.  Enumerates specific powers of Chardan 2008. These include the authority to grant options over unissued or treasury shares, issue securities convertible into shares, issue debt obligations and options, warrants and right to acquire debt obligations, guarantee liabilities of their parties and to protect the assets of Chardan 2008 for the benefit of, among others, Chardan 2008 itself, its creditors and its members.

Clause 6.1.2.  Designates 1,666,667 of Chardan 2008’s preferred shares as Series A Preferred Shares.

Clause 7.  Modifies the rights conferred to shareholders holding ordinary shares to include a right to an equal share in the distribution of the surplus assets of Chardan 2008, subject to the liquidation preference afforded to the holders of Series A Preferred Shares, and adds the rights of the holders of Series A Preferred Shares, including the right to vote on an as converted basis, the right to convert to ordinary shares, the right to a $15.00 per Series A Preferred Share nonparticipating liquidation preference, the right to share in dividends on an as converted basis and the right to share on an as converted basis in any non-liquidating distribution of the company’s surplus assets. Section 7.3 also establishes the requirement of the consent of 75% of the issued and outstanding shares of any class, other than ordinary shares, in order to effect any change in the rights of such class, other than ordinary shares.

Clause 9.  Specifies the procedures that must be followed to amend the Memorandum of Articles of Association of Chardan 2008.

Clause 10.  Specifies certain actions that may be taken only with the affirmative majority vote of the Series A Preferred Shares, including the following:

Issuance of any shares or securities of Chardan 2008 not convertible into Ordinary Shares not issued for compensatory purposes;
Issuance of any Series A Preferred Shares or securities convertible into or exchangeable for Series A Preferred Shares;
Authorizing, issuing or entering into any agreement providing for (i) the issuance (contingent or otherwise) of any equity securities in Chardan 2008 (or any securities convertible into or exchangeable or exercisable for any equity securities in Chardan 2008) with preferences and class rights senior to or on parity with the Series A Preferred Shares;

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Authorizing or approving any amendment to Chardan 2008’s issued and outstanding warrants;
Authorizing the grant or award of incentive shares in Chardan 2008;
Selling, transferring or disposing of the whole or any part of any of Chardan 2008’s membership interest in DAL;
Establishing any subsidiary of Chardan 2008 or taking of certain actions with respect to any subsidiary;
Changing the number of directors, the classes of directors, the terms of office of directors or the manner of nominating or appointing directors;
Issuing of any equity securities in Chardan 2008 at below market price; and
Amending Clause 10 or 11 (Company Covenants) of the Memorandum.

Clause 11.1  This restricts the business of Chardan 2008 to, among other things, promoting the business and interests of DAL, holding DAL Common Units (and securities convertible into or exercisable for DAL Common Units) and enforcing the rights attendant to those units, maintaining Chardan 2008’s status as a public reporting company, administering Chardan 2008’s rights, duties, liabilities and obligations arising in connection with securities that Chardan 2008 may issue, engaging in financing activities to support its operations and complying with applicable laws.

Clause 11.2.  Requires Chardan 2008 to call its outstanding warrants at the earliest time permitted under the warrants, to exercise the DAL warrants held by Chardan 2008 upon the exercise by Chardan 2008 warrant holders of their warrants and distribute to shareholders any distribution received from DAL after payment of taxes and provision for operating expenses.

Changes to the Articles of Association

Article 1.  Eliminates definitions related to Chardan 2008’s status as a blank check company.

Article 2.2.  Article deleted to conform to the amendments made to the Memorandum regarding the Series A Preferred Shares and matters that may be taken only with the affirmative majority vote of the Series A Preferred Shares.

Article 7.  Modified the procedures for meetings of members, including those relating to lack or loss of a quorum, the manner of designating the chairman of the meeting, affording any independent director the right to have a poll taken with respect to the vote on any matter before the meeting and eliminating the right of the chairman to cast a deciding vote in the event of a tie.

Article 8.  Eliminates a provision that related to member consents prior to the occurrence of Chardan 2008’s initial public offering and eliminated the right of the chairman to require a notarized proxy in order for votes to be counted.

Article 10.  Changes the number of directors of Chardan 2008 to seven and establishes the four classes of directors and specifies the initial and subsequent terms for each class, eliminates the right of a director to appoint an alternate director in his place and eliminates the right of the directors to remove one of their number from the board.

Article 11.  Eliminates the right of a corporation to serve as an officer of the company and language that related to the authority of the members to direct the activities of the directors.

Article 12.  Eliminates the right of a corporation to serve as a director of Chardan 2008.

Article 13.  Eliminates the chairman’s right to cast the deciding vote in case of a tie vote at a meeting of the directors, changes the notice provisions for directors’ meetings from three days to 24 hours and defines a quorum of the board as a majority of the members rather than a third.

Article 18.  Strikes the provisions regarding the audit of Chardan 2008’s books of account for the reason that such provisions are superseded by rules and regulations of the United States Securities and Exchange Commission and Nasdaq, with which Chardan 2008 is otherwise obligated to comply.

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Article 19.  Revises the provisions regarding the manner of giving notices to members, and it provides that notice periods shall be counted from the date that the notice is sent, not received.

Article 23.  Eliminates the Business Combination Articles, which have no application to the business if the Acquisition Proposal is completed.

In the judgment of Chardan 2008’s Board of Directors, if the transactions contemplated by the Acquisition Proposal are consummated, the Amendment Proposal is desirable to remove certain provisions that would no longer be applicable to an operating company and which provide the former management of Chardan 2008 some ability to influence significant corporate events of the Company. A copy of the Second Amended and Restated Memorandum and Articles of Association as it would be filed if the proposal to amend Chardan 2008’s Amended and Restated Memorandum and Articles of Association and to change Chardan 2008’s name (pursuant to the immediately preceding proposal) is attached to this proxy statement as Annex B.

Conclusion of Chardan 2008’s Board of Directors.  After careful consideration of all relevant factors, Chardan 2008’s Board of Directors determined that the Amendment Proposal is in the best interests of Chardan 2008 and its shareholders. The Board of Directors has approved and declared the proposal advisable and recommends that you vote or give instructions to vote “FOR” the approval of the Amendment Proposal described above.

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PROPOSAL TO ADJOURN OR POSTPONE THE EXTRAORDINARY GENERAL MEETING FOR
THE PURPOSE OF SOLICITING ADDITIONAL PROXIES

This proposal allows Chardan 2008’s Board of Directors to submit a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the extraordinary general meeting to approve the proposed acquisition.

If this proposal is not approved by Chardan 2008’s shareholders, its Board of Directors may not be able to adjourn the extraordinary general meeting to a later date in the event there are not sufficient votes at the time of the extraordinary general meeting to approve the proposed acquisition.

Conclusion of Chardan 2008’s Board of Directors.  After careful consideration of all relevant factors, Chardan 2008’s Board of Directors determined that the proposal to allow adjournment or postponement of the extraordinary general meeting for the purpose of soliciting additional proxies is in the best interests of Chardan 2008 and its shareholders. The Board of Directors has approved and declared the proposal advisable and recommends that you vote or give instructions to vote “FOR” the proposal.

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INFORMATION ABOUT DAL LLC

Chardan 2008 China Acquisition Corp. (“Chardan 2008”) is proposing to enter into a business combination, in which it will acquire a controlling interest in DAL Group, LLC (“DAL” or the “Company”). If Chardan 2008’s shareholders approve the Acquisition Proposal, at the time the acquisition closes, DAL will acquire three businesses, DJS LLC, DSI LLC and PTA LLC (collectively, the “Target Companies”), each of which is engaged in providing non-legal services supporting residential real estate foreclosure, other related legal actions and lender owned real estate (“REO”) services (collectively, the “Target Business”). Each of the Target Companies is a newly formed entity which will acquire its business and operations immediately prior to the closing of the acquisition. At such time, DJS LLC will acquire all of the non-legal service business and operations of the Law Offices of David J. Stern, P.A. (“DJS”), DSI LLC will acquire all of the business and operations of Default Servicing, Inc. (“DSI”) and PTA LLC will acquire all of the business and operations of Professional Title and Abstract Company of Florida, Inc. (“PTA”). DJS, DSI and PTA are referred to as the “Stern Contributors.”

DJS provides its clients legal services and related non-legal support in connection with residential foreclosures, bankruptcy, complex litigation, evictions and the sale of REO properties by foreclosing lenders. DJS was founded by David J. Stern (“Stern”) in 1994. Stern is the sole owner of DJS. Immediately prior to the closing of the acquisition, the legal and non-legal portions of DJS’ business will be split; the non-legal portion will be contributed to DJS LLC and the legal portion will remain with DJS. At the time of the closing, most of the work expected to be performed by DJS LLC after the closing will originate in connection with legal matters handled by DJS. Accordingly, contemporaneously with the closing, DJS and DJS LLC will enter into a long term Services Agreement pursuant to which DJS will engage DJS LLC to provide substantially all non-legal support required for the legal matters handled by DJS. For example, when DJS receives legal referrals from its clients, it will use DJS LLC to, among other things, prepare drafts of pleadings and documentation for such clients. At the time of closing, DJS will be DJS LLC’s sole customer. DJS LLC will have its principal office at 900 Pine Island Dr., Suite 400, Plantation, Florida 33324.

PTA’s role is to support the business of DJS by providing necessary services to proceed with the legal actions. Stern founded PTA in 1994 and remains its sole owner. Currently, PTA performs title searches and examinations related to legal services provided by DJS and also assists in the location of defendants in foreclosure proceedings to enable service of legal process (collectively, the “PTA Tasks”). After the closing of the transactions contemplated by the Acquisition Proposal, PTA LLC will assist DJS LLC with the PTA Tasks to the extent required as a result of the work that DJS LLC receives from DJS. PTA LLC will have its principal office at 900 Pine Island Dr., Suite 400, Plantation, Florida 33324.

Stern founded DSI in 2003 and remains its sole owner. Currently, DSI provides REO related services, including property inspection, valuation, broker assignments and closings of purchases for a national client (collectively, the “DSI Tasks”). After the closing of the transactions contemplated by the Acquisition Proposal, DSI LLC will continue to provide the DSI Tasks directly to its client. DSI will have its principal office at 5111 Commerce Crossing Dr., Suite 210, Louisville, Kentucky 40029.

Large-scale foreclosure processing services require both a large skilled staff and a substantial investment in the information technology (“IT”) systems needed to manage the large volume of data involved in tracking each of the cases. Currently, DJS receives over 6,000 new foreclosure files each month on average, with each taking about ten to twelve months to complete. As a result, there is a need to track and manage activity in approximately 100,000 distinct legal proceedings at a time. The scale and complexity of the foreclosure process, as described below, makes the IT solutions difficult and expensive to develop, requiring both considerable investment and substantive knowledge. Adding to the complexity is the fact that each county’s courts have “local” rules of procedure that need to be complied with. The differences between counties and judges present a special challenge to achieving a quick and efficient resolution of a foreclosure action. DJS has made significant investments in technology, processes and staff in order to meet the requirements for foreclosure actions throughout Florida. These investments will be transferred to the Target Companies at the closing. This efficient process provides benefits to both the defaulting borrowers, who ultimately bear the costs, as they have fewer expenses to bear, and the foreclosing lender, by allowing them to retain a higher level of liquidity while processing the large volume of defaulted loans.

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The Target Business rapidly expanded over the past four years, increasing collective revenues from $40.4 million in 2006 to $199.2 million in 2008, while increasing net income for the same two periods from $8.6 million to $42.9 million. A majority of the growth has been fueled by the increase in the number of mortgage foreclosures taking place in the Target Business’ principal market of Florida. It is the Stern Contributors’ success in handling the rapid growth that has enabled it to expand with the market. Through extensive investment in its leading-edge IT, development of scalable proprietary processes as a centralized facility, and hiring and training of the staff needed to conduct operations at a large scale, the Target Business is positioned to maintain a competitive advantage in an industry generally populated by smaller firms.

The Target Business’ IT systems allow it to interact efficiently with clients and reduce processing time while minimizing human error in handling the over 6,000 new files that it currently receives for processing on average in a month.

In addition, the Stern Contributors’ processing facility in Florida is supported by a scalable, low-cost operation in Manila, Philippines that provides data entry and document preparation support. The Stern Contributors have successfully adapted its processing operations from an average of 1,300 foreclosure files per month in 2006 to 6,200 per month for the first half of 2009 while improving adjusted earnings before interest, taxes, depreciation and amortization, excluding non-recurring or one time expenses, from 27% to 29% of revenue in each period, respectively. See section titled “Adjusted EBITDA” located in Section titled “DAL Management Discussion and Analysis of Financial Condition and Results of Operations of Target Business.”

Corporate Development and History

DJS LLC (“DJS LLC”)

DJS LLC was formed in Delaware on September 15, 2009 for the specific purpose of receiving the contribution of the assets used in providing non-legal services from DJS. Immediately prior to the closing of the acquisition, DJS will contribute the assets used in providing non-legal services to DJS LLC, which is owned by DJS. DJS will, in turn, contribute and sell the membership interests in DJS LLC to DAL in exchange for membership interests in DAL, among other consideration.

DJS LLC will have a long-term exclusive Services Agreement with DJS under which it will have the right to perform all non-legal services required to process foreclosure files and perform ancillary services. Pursuant to a facilities sharing agreement, DJS LLC will furnish corporate and back-office services to DJS, such as finance, accounting, IT and other administrative functions. A substantial portion of the individuals currently working for the Target Business will be employed by DJS LLC after the closing. DJS LLC will be the exclusive processing firm for all business undertaken by DJS, and DJS will be precluded from pursuing any material business not requiring the use of DJS LLC’s processing capabilities. However, DJS LLC will not be restricted from pursuing business with other law firms, whether in Florida or other jurisdictions.

The information regarding the operations of DJS LLC presented in these materials relate to periods during which those services were being performed or provided by DJS.

Professional Title and Abstract Company of Florida, LLC (“PTA LLC”)

PTA LLC was formed in Delaware on September 15, 2009 for the specific purpose of receiving the contribution of PTA’s assets. Immediately prior to the closing of the acquisition, PTA will contribute its assets to PTA LLC, which is owned by PTA. PTA will, in turn, contribute and sell the membership interests in PTA LLC to DAL in exchange for membership interests in DAL, among other consideration.

Default Servicing, LLC. (“DSI LLC”)

DSI LLC was formed in Delaware on September 15, 2009 for the specific purpose of receiving the contribution of DSI’s assets. Immediately prior to the closing of the acquisition, DSI will contribute its assets to DSI LLC, which is owned by DSI. DSI will, in turn, contribute and sell the membership interests in DSI LLC to DAL in exchange for membership interests in DAL, among other consideration.

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DAL

DAL is owned 99.9% by FlatWorld DAL LLC (“FlatWorld DAL”) and 0.1% by Fortuna Capital Partners LP (“Fortuna”). FlatWorld DAL is owned by Nagina Engineering Investment Corp. and Fortuna. Immediately following the closing of the acquisition, Fortuna will transfer its membership interest to FlatWorld DAL. DAL was formed on March 20, 2007. Prior to May 1, 2009, DAL did not conduct any operations. On May 1, 2009, DAL acquired a letter of intent, which was previously entered into by FlatWorld Capital LLC and David J. Stern (“Stern”). See section titled “Description of Significant Events with Target.” Thereafter, such letter of intent was renegotiated on behalf of DAL and on June 9, 2009 DAL entered into an amended and restated letter of intent and a corresponding letter agreement with DJS and Chardan, respectively. The transaction documents which will effect the acquisition have been negotiated on behalf of DAL, and on December 10, 2009 DAL entered into the Acquisition Agreement. As part of the consummation of the acquisition, DAL will acquire the membership interests of DJS LLC, DSI LLC and PTA LLC. DAL will conduct, through such operating subsidiaries, the operations relating to the Target Business after the consummation of the Acquisition.

After the closing, its principal offices will be located at 900 Pine Island Dr., Suite 400, Plantation, Florida 33324.

Business Strategy

Overview

The business strategy for the Target Business in the short and medium term is to furnish cost-efficient processing services for mortgage lenders and servicers who must manage the unprecedented volumes of foreclosures that are expected to continue in Florida. The Target Business’ timely and cost-efficient processing capabilities allow mortgage lenders to preserve capital and liquidity while reducing the cost and economic loss associated with residential mortgage foreclosures.

Growth Strategy

Substantially all of the Target Business revenues are generated from its services in Florida. The growth strategy for the Target Business includes broadening its geographic markets and its services offering, as well as seeking a larger share of its current markets of Florida and Puerto Rico. The Target Company’s management believes that four areas provide opportunity for continued growth of its business:

continuing increases in mortgage foreclosure and bankruptcies due to the rapid decline in home values, high unemployment rates and the reset of adjustable rate mortgages to higher rates;
increasing market share in its current markets of Florida and Puerto Rico;
geographic expansion beyond those two markets; and
the extension of its services to build counter-cyclical business in mortgage origination; mortgage servicing processing, other consumer lending processing and other legal process outsourcing services.

In the long-term, the DAL's strategy is to position the Target Business as a non-cyclical mortgage processing company with a low-cost, highly scalable delivery platform and predictable, diversified revenue streams. In the future, the Target Business plans to build counter-cyclical business lines through organic growth and selective acquisitions, although it has not initiated discussions with any such acquisition candidates to date.

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Foreclosure Services

Overview

Foreclosure is the process through which the lender repossesses the mortgaged property when a borrower defaults on his or her mortgage. The foreclosure process is complete once a lender has acquired title to a property through a foreclosure auction or sale or a third party purchases the foreclosed property. If the property reverts to the lender, it may require REO closing services thereafter. The Target Business’ primary business involves non-legal services related to mortgage foreclosures on residential properties. In the United States, foreclosure processes generally follow one of two general models: judicial or non-judicial, with variations on a state-by-state basis within each of these groups. As described more fully below, judicial states tend to be more protective of the borrower’s rights, which results in a more complicated, costly and time-consuming process. Florida and Puerto Rico, where all of the Target Business’ current business takes place, are both judicial jurisdictions. Having developed the specialized IT, processes and trained employees required to support operations in the more complicated judicial states of Florida and Puerto Rico, the Target Business both benefits from the barriers to entry to its existing markets inherent in the cost and time to develop such specialized systems. It also has the ability to apply its current systems and processes to less complicated non-judicial markets.

Foreclosures in Judicial States

As noted, Florida is a “judicial” foreclosure state. “Judicial” means that each foreclosure results in the entry of final judgment by a judge in a court of law and a sale set thereafter by the clerk of the court.

In non-judicial states, foreclosure occurs through a relatively simple process that typically involves giving notice to the debtor by mailing a default letter. If the debtor does not cure the default, a Notice of Sale will then be delivered to the debtor, posted publicly, recorded at the county recorder’s office and published locally. After waiting the legally required amount of time, the foreclosing lender can then auction the property publicly without judicial involvement. Auctions of foreclosed property in non-judicial states generally require settlement in cash at the time of the sale. Procedures vary state to state, with some not even requiring direct owner notification.

The judicial jurisdictions in which the Target Business operates involve a significantly higher level of processing activities, and therefore produce higher per case revenues for the Target Business. Foreclosures in a judicial state can be handled on a small scale on a case-by-case basis; but the inefficiencies inherent in these small scale operations can increase the cost of the process, which are often eventually born by the borrower if the loan is modified or the property sold, as well as slow the process down, which negatively affects the foreclosing lender. In addition, lenders and servicers begin incurring costs as soon as a borrower stops making timely mortgage payments. Many of these are time-dependent costs continue to grow as long as the loan is delinquent, in foreclosure, or in the REO sale process. These costs include lost principal and interest payments (including in some cases continuing to fund the monthly payments required to be made by servicers to mortgage investors on securitized loan pools), tax and insurance payments, maintaining any vacant properties, and the costs of collection efforts. Additionally, there are several one-time transaction costs that occur once foreclosure has been initiated, including legal costs for handling the foreclosure and administrative fees such as court filing fees, service of process fees and publishing fees. For those lenders or servicers who have a large number of loans in default, the cumulative cost of inefficiency can be immense.

Florida

Florida, the Target Business’ principal market, is a judicial state. Under Florida law, the actual prosecution of a foreclosure action in court must be done by a lawyer. The Target Business’ operations do not include the law firm operations of DJS as unauthorized practice of law regulations prohibit non-law firm entities from owning or operating a firm practicing law. However, a substantial portion of the processing services that support DJS’ actions can be done by non-lawyers. These non-legal processing services are the Target Business’ principal business.

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In Florida, an average foreclosure case takes over twelve months from the time the lender refers it to a law firm to the court’s confirmation of the sale. Although reliable statistics are difficult to find, anecdotal evidence suggests that the rapid growth in foreclosure volumes statewide has increased the average process time meaningfully, as backlogs force courts to delay hearings

The Target Business is directly involved in every step of the foreclosure process, from the initial referral of the case to the law firm to the final conveyance of the property to the lender as a result of the foreclosure and to the ultimate purchaser from the foreclosing lender, providing the non-legal processing services required by the law firm.

Florida Process Overview

The following discussion provides further detail on each of the steps involved in the Florida foreclosure process.

Referral.  A foreclosure action begins when a lender or servicer servicing a mortgage in default determines that there are no viable loss mitigation alternatives, leaving the lender with foreclosure as the only alternative. The law firms receiving these referrals from lenders and servicers are the customers and potential customers of the Target Business. To date, nearly all of the Target Business’ work has been done for DJS. The Target Business intends to market its services more broadly, both within Florida and to law firms in other markets, allowing law firms to benefit from the Target Business’ efficient processing operations and economies of scale.
Instituting the Action.  Once a law firm receives a referral of a foreclosure action from a lender, it obtains a title search. The title search identifies the necessary defendants (which can include not just the homeowner/mortgagor, but also second mortgagees, lienors, etc., whose interests may also be affected by the foreclosure action). The title search also reveals any title defects. While a law firm may do this on its own, it is more efficiently performed by a third-party service provider, such as the Target Business.

The law firm representing the lender uses the title search to draft and file the complaint. A lis pendens is recorded in the public records and it puts all third parties that may have an interest in the property on notice of the pending foreclosure action. The Target Business updates its title search so that any parties that may have recorded claims in the period after the initial title search was conducted can be included in an amended complaint as defendants.

Service of the Summons & Complaint.  After the filing of the complaint and lis pendens, the law firm delivers a copy of the complaint for service, as it is not permitted to serve process itself. Service of process of Florida residents may be accomplished by personal service or by substituted service. If attempts at service fail, service may be made by publication. Effective service by publication (constructive service) must be supported by an affidavit of due diligence and inquiry regarding the initial attempts to serve. Proceeding based on constructive service of process may require that the plaintiff petition the court to appoint an attorney ad litem to protect the interest of the non-appearing defendants.
Entry of Judgment/Summary Judgment.  The defendants (depending on whether the defendant is an entity or an individual) have a fixed number of days to appear and file an answer or other responsive pleading to the complaint/amended complaint. If any defendant does not do so timely, the plaintiff’s lawyer will file a motion for entry of a default. If all defendants fail to appear and respond, the plaintiff may move for a final default judgment on the basis of affidavits from the plaintiff.

If any defendant files a responsive pleading, the next step is usually a motion for summary judgment, asserting that there are no material factual issues or valid defenses to a foreclosure action. Most mortgage foreclosure actions that reach this stage are resolved with this motion, thereby avoiding a trial and the attendant costs.

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Sale.  Most often, the mortgagee/plaintiff in a foreclosure action obtains repayment of the debt, wholly or partially, by selling the foreclosed property. Following entry of final judgment, a notice of sale is prepared and published once a week for two consecutive weeks in a newspaper of general circulation in the city where the property is situated prior to the sale. This is intended to make prospective purchasers aware of the impending sale. Unless otherwise ordered by the court, the sale must be set for a date no sooner than twenty days and no later than thirty-five days after the entry of the final judgment. The clerk of the court conducts the sale.
Right of Redemption.  Until the time that a sale is final, any defendant has the right to redeem its interest in the foreclosed property. That means it can agree to pay the mortgagee the amount owed to it and become the legal owner. This might occur if a second mortgagee believes that the value of the property is greater than the amount of the first mortgage if marketed other than through a foreclosure sale. The right of redemption expires on the later of the filing of the certificate of sale by the clerk of the court or the time specified in the judgment.
Certificates of Title, Conveyances & Final Title.  The clerk of the court will issue a certificate of title upon the expiration of the objection period. A final title search is ordered and policy issued where appropriate, and all final title evidence is forwarded to the client and the homeowner’s insurance carrier.
Deficiency Judgments.  If the proceeds from the sale are insufficient to satisfy the entire amount due the plaintiff, it may seek a deficiency judgment for the shortfall. The ability to pursue a deficiency may be preserved in the foreclosure complaint. A motion for deficiency judgment may be filed after sale, when the deficiency is established, or a suit may be filed based on the obligations arising under the promissory note related to the mortgage.
Eviction.  The final judgment of foreclosure directs the clerk of the court to issue a writ of possession. If, after issuance of the certificate of title, the property remains occupied, the writ is delivered to the sheriff for execution. The timing and manner of execution of the writ of possession varies from county to county. More and more courts are requiring a motion, order and established hearing date before issuing a writ.

Case Volume

Since late 2005, lenders have experienced historically high mortgage delinquency rates. As a result, DJS’ foreclosure case volume grew by 57% in 2008 to 70,328 foreclosure files from 44,733 in 2007, which itself represented a growth of 192% from 15,332 foreclosure files in 2006. This growth trend has continued to date, with DJS having received 37,727 foreclosure file referrals in Florida during the first six months of 2009, or more than 6,200 per month.

Direct Source Program

Historically, the majority of lenders relied on “aggregator” firms, which received large numbers of foreclosure files and directed them to select law firms to be processed. Recently, due to the need to cut costs and the increasing number of case files that need to be processed, lenders are shifting to a model in which they specify the firms to be used in their foreclosure actions. Called the “direct source” program, this is an initiative where certain major mortgage lenders and servicers utilize the best service vendors in the foreclosure process and refer certain file volumes directly to them, bypassing the aggregator firms and their associated “packaging” fees. As a result, in addition to reduced costs for the lender, ancillary services often sent to other firms (e.g., title searches or disposition of the REO) are now handled by the same firm involved in the foreclosure file, resulting in higher revenues per case file.

Although the Target Business does not participate in the direct source program, the law firms for whom it is processing files will be more likely to receive direct source relationships as a result of the quality of the Target Business’ work, which will indirectly benefit DAL. Through DJS, the Target Business will have direct source designations from certain vendors, representing approximately 33% of its total referral volume, demonstrating the confidence of these lenders in DJS and the Target Business to perform their tasks well and efficiently.

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Fees

Each of the services involved in processing a foreclosure, both legal and non-legal, is generally ascribed a fixed value that is set forth in the retention agreement between the law firm and the client. These fees generally follow the guidelines set by the government sponsored entities (“GSEs”) such as the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”).

Historically, these fees have been increased from time to time, and management expects that this practice will continue, though it has no way of knowing how often or by how much the fees will be increased. The Services Agreement between DJS LLC and DJS will entitle DJS LLC to receive payment of fees for the services that it performs for DJS. Under the Services Agreement, DJS LLC would be able to increase its fees periodically as a result of increases in its costs or changes in the services it provides. DJS LLC generally will receive its fee within a reasonable amount of time after the law firm is paid by its client.

Variations on the Process

While most foreclosures proceed from complaint to judgment, loss mitigation and reinstatement occur in some cases. Loss mitigation includes short sales, loan modifications, forbearance plans and deeds-in-lieu of foreclosure, also known generally as “work-outs.” In sum, reinstatement reverses obligations due under any acceleration clause and returns the debtor to the original payment schedule. The Target Business is entitled to receive additional fees for assisting its law firm client with these supplemental services.

Puerto Rico

The foreclosure processes in Puerto Rico, the Target Business’ second largest market at present representing approximately 1% of DJS’ foreclosure referral volume, is also a judicial process, jurisdiction. Compared to Florida its foreclosure processes are more complex and more lengthy. The complex and lengthy process in Puerto Rico in addition to its geographic location, are expected to discourage entry by new market participants.

Process Overview

The following discussion describes the various actions taken during the foreclosure process in Puerto Rico, contrasting it, where appropriate, with Florida’s.

Title Search.  As with Florida, in Puerto Rico the starting point of a foreclosure action is a title search to determine the potential defendants in the action, including the current owner and other lienors.
The Complaint.  The complaint must be filed in the Superior Court in Puerto Rico having jurisdiction over the property. Several documents must be affixed to the complaint, including a copy of the mortgage note, status of the debt and a brief property registry certification.
Service of the Complaint.  The plaintiff has six months from filing the complaint to serve the summons and complaint on the mortgagor. Service of the complaint must be made directly to the mortgagor. The mortgagor then has 20 days to answer the complaint. If the server cannot locate the mortgagor, or it is determined after utilizing reasonable sources of information on the mortgagor’s whereabouts (mayor’s office, police headquarters, post office, etc.) that the mortgagor does not reside in Puerto Rico, then the server must execute a sworn statement requesting a court order authorizing service by publication. The mortgagor has 30 days to answer the complaint after the date of publication.
Answering the Complaint.  If the mortgagor answers the complaint, the case proceeds through the courts in any of various ways, depending on the nature of the answer and defenses alleged, if any. If the mortgagor fails to answer the complaint, the plaintiff may move for a default judgment.
Entry of Judgment By Default.  Ordinarily, the court will issue the default judgment without a hearing if the mortgagor failed to appear or answer.

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Execution on the Judgment.  Thirty days after the date of the judgment, the plaintiff must file a motion requesting an order for execution. In response, the court will issue a writ of execution, which gives the marshal of the court the authority to sell the property to the highest bidder at public auction.
Sale.  Three public sales are held at different dates. A notice of each sale must be published at least once a week in at least one newspaper for a period of two weeks. The highest bidder from among all three public sales is awarded the property.

Fees

DJS began generating income from foreclosures in Puerto Rico in early 2006. In most cases, law firms in Puerto Rico receive a referral of a foreclosure action through DJS from lenders and servicers for which it handles foreclosures in Florida. Although it is not licensed to practice law in Puerto Rico, DJS oversees the activities of the law firms to which it has referred the foreclosure cases. The Target Business provides title services to local counsel in Puerto Rico. The Target Business generates fees for these files through a packaging fee received from the local firm for monitoring the file for the lender.

Going forward, one or more of the Target Companies is expected to provide most of the coordination and monitoring services on the Puerto Rico files referred by DJS, as well as title searches and abstracts, which will entitle it to a fee on each file for its services.

Case Volume

In Puerto Rico, DJS received 652 foreclosure referrals during 2008, all from the same client. The Puerto Rico market represents a solid growth opportunity, as DJS has received numerous inquiries from potential clients to handle their foreclosure activities, but to date no additional clients have been secured.

Title Services

Title Exam & Abstract

Almost every foreclosure referral to DJS requires a title exam and abstract (a written history of all deeds, liens and encumbrances affecting a specific property) in order to identify the defendants to be included in the complaint. A title exam will also discover any defects in title or claims against or other burdens on the property. A title exam will answer many questions, such as the existence of:

Judgments against the owners;