SECURITIES ESCROW
AGREEMENT
  This
SECURITIES ESCROW AGREEMENT (this “Agreement”), dated as
of October 29, 2010, is entered into by and among China Dredging Group Co.,
Ltd., a British Virgin Islands company (the “Company”), each of
the Purchasers whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”), Chardan
Capital Markets, LLC (the “Purchaser
Representative”), Mars Harvest Co. Ltd., a British Virgin Islands company
(the “Principal
Shareholder”), and Loeb & Loeb LLP (the “Escrow
Agent”).  Capitalized terms used but not defined herein shall
have the meanings set forth in the Purchase Agreement (as defined
below).
 
 WITNESSETH:
 
 WHEREAS,
the Company intends to consummate a private placement transaction with certain
accredited investors, non U.S. persons and/or qualified institutional buyers
(the “Purchasers”), whereby
the Company will issue shares of the Company’s class A convertible preferred
shares, no par value per share (the “Preferred Shares”),
initially convertible into one (1) share of the Company’s ordinary shares, no
par value per share (the “Common Shares”),
subject to adjustment (the “Financing
Transaction”);
 
 WHEREAS,
concurrently with the consummation of the Financing Transaction, the Company
intends to consummate a merger with Chardan Acquisition Corp. with the Company
being the surviving entity of the merger (the “Merger”);
 
 WHEREAS,
in connection with the Financing Transaction, the Company entered into a
securities purchase agreement, dated as of the date hereof (the “Purchase Agreement”),
by and among the Company and the Purchasers, and certain other agreements,
documents, instruments and certificates necessary to carry out the purposes
thereof (collectively, the “Transaction
Documents”);
 
 WHEREAS,
as an inducement to the Purchasers to enter into the Purchase Agreement, the
Principal Shareholder has agreed to place share certificates (“Certificates”)
representing 15,000,000 of the Company’s ordinary shares (the “Escrow Shares”) into
escrow for the benefit of the Purchasers in the event the Company fails to
achieve certain financial performance targets for each of the 12-month periods
ending December 31, 2010 and December 31, 2011;
 
 WHEREAS,
the Purchasers to the Purchase Agreement have appointed a Purchaser
Representative pursuant to the terms thereof to act on their behalf in
connection with this Agreement; and
 
 WHEREAS,
the Company and the Purchaser Representative have requested that the Escrow
Agent hold the Escrow Shares on the terms and conditions set forth in this
Agreement and the Escrow Agent has agreed to act as escrow agent pursuant to the
terms and conditions of this Agreement.
  
 
 NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
 
 ARTICLE
I
 
 TERMS
OF THE ESCROW
 
 1.1.          Appointment of Escrow
Agent.  The parties hereby agree to appoint Loeb & Loeb,
LLP, as escrow agent (the “Escrow Agent”), to
act in accordance with the terms and conditions set forth in this Agreement, and
Escrow Agent hereby accepts such appointment and agrees to act in accordance
with such terms and conditions.
 
 1.2           Establishment of Escrow
Account.  Upon the execution of this Agreement, the Principal
Shareholder shall deliver to the Escrow Agent one or more Certificates
representing the Escrow Shares, along with a share transfer form executed in
blank or in other form and substance acceptable for transfer.  The
Escrow Agent shall hold the Escrow Shares in an escrow account (the “Escrow
Account”) and distribute the same as contemplated by this
Agreement.
 
 1.3           Distribution of the Escrow
Shares.  Within five (5) business days of the receipt in the
applicable year of the certified copy from the Company’s auditor of the 2010
Audited Financial Statements and the 2011 Audited Financial Statements, and a
calculation from the Company of the pro rata and aggregate number of the Escrow
Shares to be distributed to the Purchasers Escrow Agent shall send to the
Company’s transfer agent one or more Certificates covering such aggregate number
of the Escrow Shares required to be distributed to the Purchasers pursuant to
the terms of the Purchase Agreement.
 
 1.4           Termination of
Escrow.  Within five (5) business days following the earliest
of (i) the distribution of all of the Escrow Shares to the Purchasers, (ii) the
receipt by the Escrow Agent from the Company of a certification that the
Adjusted Net Income equals or exceeds $87,171,308 or (iii)  the event
that Escrow Shares were distributed to the Purchasers, the receipt from the
transfer agent of any share certificate reflecting the remaining Escrow Shares
after such distribution  to the Purchasers , the Escrow Agent will
transfer all undistributed Escrow Shares back to the Principal Shareholder and
close the Escrow Account established in section 1.2 above.
  
 
 ARTICLE
II
 
 REPRESENTATIONS
OF THE PRINCIPAL SHAREHOLDER
 
 2.1           Representations and
Warranties.  The Principal Shareholder hereby represents and
warrants to the Purchasers and the Purchaser Representative as
follows:
 
 (i) The
Principal Shareholder is the record and beneficial owner of the Escrow Shares
placed into the Escrow Account and owns the Escrow Shares, free and clear of all
pledges, liens, claims and encumbrances, except encumbrances created by this
Agreement.  There are no restrictions on the ability of the Principal
Shareholder to transfer the Escrow Shares, or applicable foreign, federal and
state securities laws.
 
 (ii) The
performance of this Agreement and compliance with the provisions hereof will not
violate any provision of any law applicable to the Principal Shareholder and
will not conflict with or result in any material breach of any of the terms,
conditions or provisions of, or constitute a default under the terms of the
certificate of incorporation or by-laws of the Principal Shareholder, or any
indenture, mortgage, deed of trust or other agreement or instrument binding upon
the Principal Shareholder or affecting the Escrow Shares or result in the
creation or imposition of any lien, charge or encumbrance upon, any of the
properties or assets of the Principal Shareholder, the creation of which would
have a material adverse effect on the business and operations of the Principal
Shareholder.  No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Principal
Shareholder, other than those already obtained. Upon the transfer of the Escrow
Shares to the Purchasers pursuant to this Agreement,  the Purchasers
will be the record and beneficial owners of all of such shares and have good and
valid title to all of such shares, free and clear of all
encumbrances.
 
 ARTICLE
III
 
 ESCROW
AGENT
 
 3.1.       The
Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, the Principal Shareholder, the
Purchaser Representative and the Escrow Agent.
 
 3.2.       The
Escrow Agent shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by the Escrow Agent
to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall not be personally liable for any act the Escrow
Agent may do or omit to do hereunder as the Escrow Agent while acting in good
faith and in the absence of gross negligence, fraud or willful misconduct, and
any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow
Agent’s attorneys-at-law shall be conclusive evidence of such good faith, in the
absence of gross negligence, fraud or willful misconduct.
  
  3.3.       The
Escrow Agent is hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case the Escrow Agent obeys or complies with any such order, judgment or decree,
the Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
 
 3.4.       The
Escrow Agent shall not be liable in any respect on account of the identity,
authorization or rights of the parties executing or delivering or purporting to
execute or deliver any documents or papers deposited or called for thereunder in
the absence of gross negligence, fraud or willful misconduct.
 
 3.5.       The
Escrow Agent shall be entitled to employ such legal counsel and other experts as
the Escrow Agent may deem necessary to properly advise the Escrow Agent in
connection with the Escrow Agent’s duties hereunder, may rely upon the advice of
such counsel, and may pay such counsel reasonable compensation therefor which
shall be paid by the Escrow Agent.  The Escrow Agent has acted as
legal counsel for the Company. The Company and the Purchasers consent to the
Escrow Agent in such capacity as legal counsel for the Company and waive any
claim that such representation represents a conflict of interest on the part of
the Escrow Agent. The Company and the Purchasers understand that the Escrow
Agent is relying explicitly on the foregoing provision in entering into this
Escrow Agreement.
 
 3.6.       The
Escrow Agent’s responsibilities as escrow agent hereunder shall terminate if the
Escrow Agent shall resign by giving written notice to the Company and the
Purchasers. In the event of any such resignation, the Purchasers and the Company
shall appoint a successor Escrow Agent and the Escrow Agent shall deliver to
such successor Escrow Agent any escrow funds and other documents held by the
Escrow Agent.
 
 3.7.       If
the Escrow Agent reasonably requires other or further instruments connection
with this Escrow Agreement or obligations in respect hereto, the necessary
parties hereto shall use its best efforts to join in furnishing such
instruments.
  
  3.8.       It
is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the documents or the Escrow
Shares held by the Escrow Agent hereunder, the Escrow Agent is authorized and
directed in the Escrow Agent’s sole discretion (1) to retain in the Escrow
Agent’s possession without liability to anyone all or any part of said documents
or the Escrow Shares until such disputes shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree or
judgment or a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings or (2) to deliver
the Escrow Shares and any other property and documents held by the Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the City of New York, Borough of Manhattan, in
accordance with the applicable procedure therefore.
 
 3.9.       Each
of the Company and the Principal Shareholder hereby agrees to indemnify and hold
harmless the Escrow Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses in any
way arising from or relating to the duties or performance of the Escrow Agent
hereunder or the transactions contemplated hereby other than any such claim,
liability, cost or expense to the extent the same shall have been determined by
final, unappealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence, fraud or willful misconduct of the Escrow
Agent.
 
 ARTICLE
IV
 
 MISCELLANEOUS
 
 4.1.       Waiver  No
waiver of, or any breach of any covenant or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof, or of any other
covenant or provision herein contained. No extension of time for performance of
any obligation or act shall be deemed an extension of the time for performance
of any other obligation or act.
 
 4.2.       Notices.  All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, two (2) business
days after being mailed, (iii) if delivered by overnight courier (with all
charges having been prepaid), on the business day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing), or (iv)
if delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this Section 4.2), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
second business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable.
  
  
 If to
Escrow
Agent:            Loeb
& Loeb LLP
 345 Park
Avenue
 New York,
NY 10154
 Attention:
Mitchell S. Nussbaum
 Tel
No.:212-407-4000
 Fax No.:
212-407-4990
 
 If to the
Company or the Principal Shareholder:
 
 China
Dredging Group Co., Ltd.
 Floor 18,
Tower A, Zhongshan Building,
 No. 154,
Hudong Road, Gulou District,
 Fuzhou
City, Fujian Province, PRC
 Attention::
Zhuo Xinrong
 Tel.
No.:
 Fax
No.:
 
 With a
copy to (which shall not constitute notice):
 Loeb
& Loeb LLP
 345 Park
Avenue
 New York,
NY 10154
 Attention:
Mitchell S. Nussbaum, Esq.
 Tel. No.:
(212) 407-4000
 Fax No.:
(212) 407-4990
 
 If to the
Purchaser Representative:
 
 GNH
Partners, LLC, Two Greenwich Plaza, Greenwich, CT 06830
 Attention:  Guibao
Liu
 Tel:  (203)
742-3600
 Fax:
 
 With a
copy to (which shall not constitute notice):
 
 [   ]
 
 Attention:
 Tel:
  
  or to
such other address and to the attention of such other person as any of the above
may have furnished to the other parties in writing and delivered in accordance
with the provisions set forth above.
 
 4.3.       Successors and
Assigns.  This Escrow Agreement shall be binding upon and shall
inure to the benefit of the permitted successors and permitted assigns of the
parties hereto.
 
 4.4.       Entire Agreement;
Amendment. This Agreement contains the entire understanding and agreement
of the parties relating to the subject matter hereof and supersedes all prior
and/or contemporaneous understandings and agreements of any kind and nature
(whether written or oral) among the parties with respect to such subject matter.
This Escrow Agreement may not be modified, changed, supplemented, amended or
terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the parties to be charged or by its agent duly authorized
in writing or as otherwise expressly permitted
herein.  Notwithstanding anything to the contrary in this Agreement,
none of the provisions of Article I hereof or this Section 4.4 may be modified,
changed, supplemented, amended or terminated, nor may any such provision be
waived, without the prior written consent of the holders of a majority in
interest of the Preferred Shares purchased in the Financing Transaction as of
the date of such modification, change, supplement, amendment, termination or
waiver.
 
 4.5.       Headings. The section
headings contained in this Agreement are inserted for reference purposes only
and shall not affect in any way the meaning, construction or interpretation of
this Agreement. Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate. References to the
singular shall include the plural and vice versa.
 
 4.6.       Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Agreement shall
not be interpreted or construed with any presumption against the party causing
this Agreement to be drafted.
  
  IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this ___
day of October 2010.
  CHINA
DREDGING GROUP CO., LTD.
 
 By:Name:
      Zhuo XinrongTitle:
      Chief Executive Officer
  PURCHASER
REPRESENTATIVE:
 
 By:Name:Title:
      Authorized Signatory
 
 ESCROW
AGENT:
 
 Loeb
& Loeb LLP
 
 By:Name:
      Mitchell S. NussbaumTitle:
      Partner
 
 PRINCIPAL
SHAREHOLDER:
 
 MARS
HARVEST CO. LTD.
 
 By:Name:
      Zhuo XinrongTitle:
      Sole Director
  
 
 IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this ___
day of October 2010.
 
 PURCHASERS:
 
 (Entity
      Name)By:Its:
 
 (Signature
Page for Purchasers that are Entities)
  
  IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this ___
day of October 2010.
 
 Name:
 
 (Signature
Page for Purchasers who are Individuals)