GUARANTY

1. Identification.

This Guaranty (the "Guaranty"), dated as of August 2, 2007, is entered into by
Perfect Dream Limited, a British Virgin Islands corporation, Goldenway Nanjing
Garments Company Limited, a People’s Republic of China corporation, Nanjing
New-Taliun Garments Company Limited, a People’s Republic of China corporation,
(each a “Guarantor”), for the benefit of the parties identified on Schedule A
hereto (each a “Lender” and collectively, the "Lenders").

2. Recitals.

2.1 Guarantor is a direct or indirect subsidiary of Ever-Glory International
Group, Inc., a Florida corporation (“Parent”). The Lenders have made, are making
and will be making loans to Parent (the "Loans"). Guarantor will obtain
substantial benefit from the proceeds of the Loans.

2.2 The Loans are and will be evidenced by certain promissory Notes
(collectively, “Note” or “Notes") issued by Parent on, about or after the date
of this Guaranty pursuant to subscription agreements dated at or about the date
hereof (“Subscription Agreements”). The Notes are further identified on Schedule
A hereto and were and will be executed by Parent as “Borrower” or “Debtor” for
the benefit of each Lender as the “Holder” or “Lender” thereof.

2.3 In consideration of the Loans made and to be made by Lenders to Parent and
for other good and valuable consideration, and as security for the performance
by Parent of its obligations under the Notes and as security for the repayment
of the Loans and all other sums due from Debtor to Lenders arising under the
Notes, Subscription Agreements and any other agreement between or among them
relating to the foregoing (collectively, the "Obligations"), Guarantor, for good
and valuable consideration, receipt of which is acknowledged, has agreed to
enter into this Guaranty. Obligations include all future advances by Lenders to
Parent made by Lenders pursuant to the Subscription Agreement.

2.4 The Lenders have appointed Eliezer Drew as Collateral Agent pursuant to that
certain Collateral Agent Agreement dated at or about the date of this Agreement
(“Collateral Agent Agreement”), among the Lenders and Collateral Agent.

3. Guaranty.

3.1 Guaranty. Guarantor hereby unconditionally and irrevocably guarantees,
jointly and severally with any other Guarantor, the punctual payment,
performance and observance when due, whether at stated maturity, by acceleration
or otherwise, of all of the Obligations now or hereafter existing, whether for
principal, interest (including, without limitation, all interest that accrues
after the commencement of any insolvency, bankruptcy or reorganization of
Parent, whether or not constituting an allowed claim in such proceeding), fees,
expense reimbursements, liquidated damages, indemnifications or otherwise (such
obligations, to the extent not paid by Parent being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable costs, fees and expenses
(including reasonable counsel fees and expenses) incurred by Collateral Agent
and the Lenders in enforcing any rights under the guaranty set forth herein.
Without limiting the generality of the foregoing, Guarantor’s liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by Parent to Collateral Agent and the Lenders, but for the fact
that they are unenforceable or not allowable due to the existence of an
insolvency, bankruptcy or reorganization involving Parent.
 
 
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3.2 Guaranty Absolute. Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Notes, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Collateral Agent or the Lenders
with respect thereto. The obligations of Guarantor under this Guaranty are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against Guarantor to enforce such obligations,
irrespective of whether any action is brought against Parent or any other
Guarantor or whether Parent or any other Guarantor is joined in any such action
or actions. The liability of Guarantor under this Guaranty constitutes a primary
obligation, and not a contract of surety, and to the extent permitted by law,
shall be irrevocable, absolute and unconditional irrespective of, and Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
 
(a) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations, or any other amendment or waiver
of or any consent to departure from the Notes, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to Parent or otherwise;
 
(b) any taking, exchange, release, subordination or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;

(c) any change, restructuring or termination of the corporate, limited liability
company or partnership structure or existence of Parent.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by Collateral Agent, the Lenders or any other
entity upon the insolvency, bankruptcy or reorganization of the Parent or
otherwise (and whether as a result of any demand, settlement, litigation or
otherwise), all as though such payment had not been made.
 
3.3 Waiver. Guarantor hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that Collateral Agent or the Lenders or exhaust any
right or take any action against any Borrower or any other person or entity or
any Collateral. Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and that the waiver
set forth in this Section 3.3 is knowingly made in contemplation of such
benefits. Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
 
3.4 Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and
shall (a) remain in full force and effect until the later of the indefeasible
cash payment in full (or conversion of Notes to common stock) of the Guaranteed
Obligations and all other amounts payable under this Guaranty, the Subscription
Agreements and Notes, (b) be binding upon Guarantor, its successors and assigns
and (c) inure to the benefit of and be enforceable by the Lenders and their
successors, pledgees, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under this Guaranty (including,
without limitation, all or any portion of its Notes owing to it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Collateral Agent or Lender herein or
otherwise.
 
3.5 Subrogation. No Guarantor will exercise any rights that it may now or
hereafter acquire against the Collateral Agent or any Lender or other Guarantor
(if any) that arise from the existence, payment, performance or enforcement of
such Guarantor’s obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the right
to take or receive from the Collateral Agent or any Lender or other Guarantor
(if any), directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security solely on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been indefeasibly paid in full in cash or
converted to common stock, as applicable.
 
 
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3.6 Maximum Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability with respect to the Obligations shall be limited
to an amount not to exceed the amounts due on the Notes.
 
4. Miscellaneous.
 
4.1 Expenses. Guarantor shall pay to the Lenders, on demand, the amount of any
and all reasonable expenses, including, without limitation, attorneys' fees,
legal expenses and brokers' fees, which the Lenders may incur in connection with
exercise or enforcement of any the rights, remedies or powers of the Lenders
hereunder or with respect to any or all of the Obligations.

4.2 Waivers, Amendment and Remedies. No course of dealing by the Lenders and no
failure by the Lenders to exercise, or delay by the Lender in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof, and no
single or partial exercise thereof shall preclude any other or further exercise
thereof or the exercise of any other right, remedy or power of the Lenders. No
amendment, modification or waiver of any provision of this Guaranty and no
consent to any departure by Guarantor therefrom, shall, in any event, be
effective unless contained in a writing signed by the Majority in Interest (as
such term is defined in the Collateral Agent Agreement) or the Lender or Lenders
against whom such amendment, modification or waiver is sought, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. The rights, remedies and powers of the
Lenders, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by the Lenders from time to time in such order as the
Lenders may elect.

4.3 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be personally delivered or deemed delivered the first
business day after being faxed (provided that a copy is delivered by first class
mail) to the party to receive the same at its address set forth below or to such
other address as either party shall hereafter give to the other by notice duly
made under this Section:
 

To Parent:   Ever-Glory International Group, Inc.,
100 N. Barranca Ave # 810
West Covina, CA 91791,
Attn: Edward Kang
telecopier: (626)839-9118

 

With a copy by fax to:   Attn: Edgar D. Park, Esq.
Richardson & Patel LLP
10900 Wilshire Boulevard, Suite 500
Los Angeles, CA 90024
Fax: (310) 208-1154

 

To Lenders:   To the addresses and fax numbers set
forth on the signature pages hereto.

 
 
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To Collateral Agent:    
Eliezer Drew
551 Fifth Avenue, Suite 1601
New York, New York 10176
Fax: (212) 697-357

 
If to Parent, Guarantor, Lender or
Collateral Agent, with a copy by fax to:

 

   
Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
Fax: (212) 697-3575

 
Any party may change its address by written notice in accordance with this
paragraph.

4.4 Term; Binding Effect. This Guaranty shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Obligations; (b) be
binding upon Guarantor and its successors and permitted assigns; and (c) inure
to the benefit of the Lenders and their respective successors and assigns. All
the rights and benefits granted by Guarantor to the Collateral Agent and Lenders
hereunder and other agreements and documents delivered in connection therewith
are deemed granted to both the Collateral Agent and Lenders. Upon the payment in
full of the Obligations, (i) this Guaranty shall terminate and (ii) the Lenders
will, upon Guarantor's request and at Guarantor's expense, execute and deliver
to Guarantor such documents as Guarantor shall reasonably request to evidence
such termination, all without any representation, warranty or recourse
whatsoever.

4.5 Captions. The captions of Paragraphs, Articles and Sections in this Guaranty
have been included for convenience of reference only, and shall not define or
limit the provisions hereof and have no legal or other significance whatsoever.

4.6 Governing Law; Venue; Severability. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts or choice of law. Any legal action or proceeding against
Guarantor with respect to this Guaranty may be brought in the courts of the
State of New York or of the United States for the Southern District of New York,
located in the County of New York, and, by execution and delivery of this
Guaranty, Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection which they may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. If any provision of this
Guaranty, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.

4.7 Satisfaction of Obligations. For all purposes of this Guaranty, the payment
in full of the Obligations shall be conclusively deemed to have occurred when
either the Obligations have been indefeasibly paid in cash or all outstanding
Notes have been converted to common stock pursuant to the terms of the Notes and
the Subscription Agreements.
 
 
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4.8 Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile signature and delivered by facsimile transmission.

[THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty,
as of the date first written above.
 

“GUARANTOR”   “GUARANTOR” Perfect Dream Limited   Goldenway Nanjing Garments
Company Limited a British Virgin Islands corporation   a People’s Republic of
China corporation,       By: _____________________________________    By:
__________________________________ Its: _____________________________________   
Its: ___________________________________

 

“GUARANTOR”    
Nanjing New-Talium Garments Company Limited 
a People’s Republic of China corporation,
          By: _____________________________________    By:
__________________________________ Its: _____________________________________   
Its: ___________________________________

APPROVED BY “LENDERS”:

 

CHESTNUT RIDGE PARTNERS L.P.   ALPHA CAPITAL ANSTALT      
____________________________   ____________________________
By:
Its:
 
By:
Its:

 

WHALEHAVEN CAPITAL FUND LIMITED   RONALD C. PASTERNAK      
____________________________   ____________________________
By:
Its:
 
By:
Its:

 

JONATHAN BLAUSTEIN   ELLIE KATZ       ____________________________  
____________________________
By:
Its:
 
By:
Its:

 
 
 
This Guaranty Agreement may be signed by facsimile signature and
delivered by confirmed facsimile transmission.
 
 
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SCHEDULE A TO GUARANTY
 
Lender
 
Note Principle
 
Warrants
 
Chestnut Ridge Partners L.P.
50 Tice Blvd.
Woodcliff Lake , N. J. 07677
Attn: Kenneth Holz CFO
Fax: (201) 802-9450
 
$
1,300,000
 
5,909,091
 
Alpha Capital Anstalt
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 011-42-32323196
 
$
250,000
   
1,136,364
 
Whalehaven Capital Fund Limited
c/o FWS Capital Ltd.
3rd Floor, 14 Par-Laville Road
Hamilton, Bermuda HM08
Fax: (441) 295-5262
 
$
250,000
   
1,136,364
 
Ronald C. Pasternak
325 Howard Ave.
Fairlawn , New Jersey 07410
Fax: (201) 791-3848
 
$
100,000
   
454,545
 
Jonathan Blaustein
544 Asbury Street
New Milford , NJ 07646
Fax: (928) 438-4763
 
$
50,000
   
227,273
 
Ellie Katz
191 Walnut St
Englewood, NJ 07631
Fax: (201)568-6234
 
$
50,000
   
227,273
 

 
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