Unassociated Document


    THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
      COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
      FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    
      	Principal Amount: $________.00	 	Issue Date: July ___,
              2007


    

     

    CONVERTIBLE
      NOTE

    


    FOR
      VALUE
      RECEIVED, EVER-GLORY INTERNATIONAL GROUP, INC., a Florida corporation
      (hereinafter called "Borrower"), hereby promises to pay to
      ____________________________ (the "Holder"), without demand, the sum of _______
      Dollars ($_______), with simple and unpaid interest thereon, on July ___, 2009
      (the "Maturity Date"), if not paid sooner.

    


    This
      Note
      has been entered into pursuant to the terms of a Subscription Agreement between
      the Borrower, the Holder and certain other subscribers of the Borrower’s
      convertible notes, dated of even date herewith (the “Subscription Agreement”),
      and shall be governed by the terms of such Subscription Agreement. Unless
      otherwise separately defined herein, all capitalized terms used in this Note
      shall have the same meaning as is set forth in the Subscription Agreement.
      The
      following terms shall apply to this Note:

    


    ARTICLE
      I

    


    GENERAL
      PROVISIONS

    


    1.1 Payment
      Grace Period.
      The
      Borrower shall have a twelve (12) business day grace period to pay any monetary
      amounts due under this Note, after which grace period and during the pendency
      of
      an Event of Default (as defined in Article III) a default interest rate of
      twelve percent (12%) per annum shall apply to the amounts owed
      hereunder.

    


    1.2.  Interest
      Rate.
      Interest payable on this Note shall accrue at the annual rate of six percent
      (6%). Accrued interest will be payable in arrears on September 28, 2007, on
      the
      last business day of each calendar quarter thereafter and on the Maturity Date,
      whether by acceleration or otherwise. Interest will be payable in cash or
      Provided an Event of Default or an event which with the passage of time or
      giving of notice could become and Event of Default has not occurred, at the
      election of the Borrower, by the Borrower’s delivery of registered shares of
      Common Stock (“Interest Shares”) valued at 110% of the volume weighted average
      price as reported by Bloomberg L.P. for the ten (10) trading days preceding
      such
      interest payment date.

    


    1.3. Conversion
      Privileges.
      The
      conversion rights of the Holder as set forth in Article II of this Note shall
      remain in full force and effect immediately from the date hereof and until
      the
      Note is paid in full regardless of the occurrence of an Event of Default. The
      principal amount of the Note and the remaining accrued but unpaid interest
      shall
      be payable in full on the Maturity Date, unless previously paid or converted
      into Common Stock in accordance with Article II hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.4. Application
      of Payments.
      Payments received by Holder from Borrower shall be applied first to outstanding
      liquidated and other damages, then to accrued but unpaid interest and then
      to
      principal. 

    


    1.5 Optional
      Redemption by Borrower.
      At
      any
      time after the date of issuance of this Note, the Borrower may deliver a notice
      to the Holder (an “Optional Redemption Notice” and the date such notice is
      deemed delivered hereunder, the “Optional Redemption Notice Date”) of its
      irrevocable election to redeem, without penalty, all of the then outstanding
      principal amount of this Note for cash in an amount equal to 125% of the then
      outstanding principal and accrued unpaid interest hereunder (“Optional
      Redemption Amount”), on the 30th
      Trading
      Day following the Optional Redemption Notice Date (such date, the “Optional
      Redemption Date” and such redemption, the “Optional Redemption”). The Optional
      Redemption Amount may not be paid prior to the Optional Redemption Date. The
      Optional Redemption Amount shall payable in full on the Optional Redemption
      Date. The Borrower covenants and agrees that it will honor all Notices of
      Conversion tendered from the time of delivery of the Optional Redemption Notice
      through the date all amounts owing thereon are due and paid in full. Should
      the
      Borrower elect to exercise it rights under the Optional Redemption, commencing
      on the Optional Redemption Notice Date, the conversion limitations set forth
      in
      Section 2.4 of this Note shall increase so that the
      Holder is permitted to be the beneficial owner of up to 9.99% of the
      issued and outstanding shares of Common Stock of the Borrower. 

    


    ARTICLE
      II

    


    CONVERSION
      RIGHTS

    


    The
      Holder shall have the right to convert the entire principal amount under this
      Note and the accrued but unpaid interest thereon into shares of the Borrower's
      Common Stock as set forth below.

    


    2.1. Voluntary
      Conversion into the Borrower's Common Stock.

    


    (a) The
      Holder shall have the right from and after the Issue Date of the issuance of
      this Note and then at any time until this Note is fully paid, to convert any
      outstanding and unpaid principal portion of this Note, at the election of the
      Holder (the date of giving of such notice of conversion being a "Conversion
      Date") into fully paid and nonassessable shares of Common Stock as such stock
      exists on the date of issuance of this Note, or any shares of capital stock
      of
      Borrower into which such Common Stock shall hereafter be changed or
      reclassified, at the conversion price as defined in Section 2.1(b) hereof (the
      "Conversion Price"), determined as provided herein. Upon delivery to the
      Borrower of a completed Notice of Conversion, a form of which is annexed hereto,
      Borrower shall issue and deliver to the Holder within three (3) business days
      after the Conversion Date (such third day being the “Delivery Date”) that number
      of shares of Common Stock for the portion of the Note converted in accordance
      with the foregoing. The number of shares of Common Stock to be issued upon
      each
      conversion of this Note shall be determined by dividing that portion of the
      principal of the Note to be converted, by the Conversion Price.

    


    (b)  Subject
      to adjustment as provided for in Section 2.1(c) hereof, the Conversion Price
      per
      share of Common Stock shall be $0.22 (“Conversion Price”).

    


    (c) 
      The
      Conversion Price and the number and kind of shares or other securities to be
      issued upon conversion of this Note, shall be subject to adjustment from time
      to
      time upon the happening of certain events while this conversion right remains
      outstanding, as follows:

    


    A. Merger,
      Sale of Assets, etc.
      If the
      Borrower at any time shall consolidate with or merge into or sell or convey
      all
      or substantially all its assets to any other corporation, this Note, as to
      the
      unpaid principal portion thereof and accrued interest thereon, shall thereafter
      be deemed to evidence the right to purchase such number and kind of shares
      or
      other securities and property as would have been issuable or distributable
      on
      account of such consolidation, merger, sale or conveyance, upon or with respect
      to the securities subject to the conversion or purchase right immediately prior
      to such consolidation, merger, sale or conveyance. The foregoing provision
      shall
      similarly apply to successive transactions of a similar nature by any such
      successor or purchaser. Without limiting the generality of the foregoing, the
      anti-dilution provisions of this Section shall apply to such securities of
      such
      successor or purchaser or surviving entity of the surviving corporation after
      any such consolidation, merger, sale or conveyance.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    B. Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes
      of the Borrower’s capital stock that may be issued or outstanding, this Note, as
      to the unpaid principal amount thereof and accrued interest thereon, shall
      thereafter be deemed to evidence the right to purchase an adjusted number of
      such securities and kind of securities as would have been issuable as the result
      of such change with respect to the shares of Common Stock subject to the
      conversion of this Note immediately prior to such reclassification or other
      change.

    


    C. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      in shares of Common Stock, the Conversion Price shall be proportionately reduced
      in case of subdivision of shares or stock dividend or proportionately increased
      in the case of combination of shares, in each such case by the ratio which
      the
      total number of shares of Common Stock outstanding immediately after such event
      bears to the total number of shares of Common Stock outstanding immediately
      prior to such event.

     

    D. Share
      Issuance.
      So long
      as this Note is outstanding, if the Borrower shall issue or agree to issue
      any
      shares of Common Stock other than with respect to any Excepted Issuances for
      a
      price per share less than the Conversion Price in effect at the time of such
      issue, then, and thereafter successively upon each such issue, the Conversion
      Price shall be reduced to such other lower issue price. For the purposes of
      this
      adjustment, the issuance of any security carrying the right to convert such
      security into shares of Common Stock or of any warrant, right or option to
      purchase Common Stock shall result in an adjustment to the Conversion Price
      upon
      the issuance of the above-described security and again upon the issuance of
      shares of Common Stock upon exercise of such conversion or purchase rights
      if
      such issuance is at a price lower than the then applicable Conversion Price.
      The
      reduction of the Conversion Price described in this paragraph is in addition
      to
      other rights of the Holder described in this Note and the Subscription
      Agreement.

    


    (d) Whenever
      the Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower
      shall promptly provide notice to the Holder setting forth the Conversion Price
      after such adjustment and setting forth a statement of the facts requiring
      such
      adjustment.

    


    (e) The
      Borrower will reserve from its authorized and unissued shares of Common Stock,
      the number of shares of Common Stock during the time periods and in the amounts
      described in the Subscription Agreement. The Borrower represents that upon
      issuance, such shares of Common Stock will be duly and validly issued, fully
      paid and non-assessable. The Borrower agrees that its issuance of this Note
      shall constitute full authority to its officers, agents, and transfer agents
      who
      are charged with the duty of executing and issuing stock certificates to execute
      and issue the necessary certificates for shares of the Borrower’s Common Stock
      upon the conversion of this Note.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.2 No
      Fractional Shares.
      No
      fractional shares of Common Stock shall be issued upon conversion of this Note,
      but an adjustment in cash will be made, in respect of any fraction of a share
      (which will be valued based on the Conversion Price) which would otherwise
      be
      issuable upon the surrender of this Note for conversion and a check in the
      amount of the value of such fractional share shall be delivered to the Holder.
      

    


    2.3 Method
      of Conversion.
      This
      Note may be converted by the Holder in whole or in part as described in Section
      2.1(a) hereof and the Subscription Agreement. Upon partial conversion of this
      Note, a new Note containing the same date and provisions of this Note shall,
      at
      the request of the Holder, be issued by the Borrower to the Holder for the
      principal balance of this Note and interest which shall not have been converted
      or paid.

    


    2.4 Maximum
      Conversion.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Note in connection with that number of shares of Common Stock which would be
      in
      excess of the sum of (i) the number of shares of Common Stock beneficially
      owned
      by the Holder and its affiliates on a Conversion Date, and (ii) the number
      of
      shares of Common Stock issuable upon the conversion of the Note with respect
      to
      which the determination of this provision is being made on a Conversion Date,
      which would result in beneficial ownership by the Holder and its affiliates
      of
      more than 4.99% of the issued and outstanding shares of Common Stock of the
      Borrower on such Conversion Date. For the purposes of the provision to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      2.4 will limit any conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of the amount of the Note which is convertible shall be the
      responsibility and obligation of the Holder. The
      Holder may increase the permitted beneficial ownership amount up to 9.99% upon
      and effective after 61 days prior written notice to the Borrower.
      The
      Holder may allocate which of the equity of the Borrower deemed beneficially
      owned by the Holder shall be included in the 4.99% amount described above and
      which shall be allocated to the excess above 4.99%.

    


    ARTICLE
      III

    


    EVENT
      OF DEFAULT

    


    The
      occurrence of any of the following events of default ("Event of Default") shall,
      at the option of the Holder hereof, make all sums of principal and accrued
      interest then remaining unpaid hereon and all other amounts payable hereunder
      immediately due and payable, upon demand, without presentment or grace period,
      all of which hereby are expressly waived, except as set forth
      below:

    


    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay any installment of interest or other sum due under this
      Note when due and such failure continues for a period of twelve (12) business
      days after the due date. The twelve (12) day period described in this Section
      3.1 is the same twelve (12) business day period described in Section 1.1
      hereof.

    


    3.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other material term or condition
      of
      the Subscription Agreement or any other material term or condition of this
      Note
      in any material respect and such breach continues for a period of twelve (12)
      business days 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in any
      Transaction Document, or in any agreement, statement or certificate given in
      writing pursuant hereto or in connection herewith or therewith shall be false
      or
      misleading in any material respect as of the date made and as of the Closing
      Date.

    


    3.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business; or such a receiver or trustee shall otherwise
      be appointed without the consent of the Borrower if such receiver or trustee
      is
      not dismissed within forty-five (45) days of appointment.

    


    3.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      the Borrower or any of its property or other assets for more than $100,000,
      and
      shall remain unpaid, unvacated, unbonded or unstayed for a period of forty-five
      (45) days.

    


    3.6 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower and if instituted against Borrower are
      not
      dismissed within forty-five (45) days of initiation.

    


    3.7 Delisting.
      Failure
      of the Borrower’s Common Stock to be listed for trading or quotation on a
      Principal Market, and such failure continues for more than 10 consecutive
      trading days.

    


    3.8 Non-Payment.
      A
      default by the Borrower under any one or more obligations in an aggregate
      monetary amount in excess of $100,000 for more than thirty (30) days after
      the
      due date, unless the Borrower is contesting the validity of such obligation
      in
      good faith and has segregated cash funds equal to not less than one-half of
      the
      disputed amount.

    


    3.9 Stop
      Trade.
      An SEC
      or judicial stop trade order or Principal Market trading suspension with respect
      to the Borrower’s Common Stock that lasts for ten (10) or more consecutive
      trading days.

    


    3.10 Failure
      to Deliver Common Stock or Replacement Note.
      The
      Borrower's failure to deliver Common Stock to the Holder pursuant to and in
      the
      form required by this Note and Sections 7 and 11 of the Subscription Agreement,
      or, if required, a replacement Convertible Note more than ten (10) business
      days
      after the required delivery date of such Common Stock or replacement Convertible
      Note.

    


    3.11 Non-Registration
      Event.
      The
      occurrence of a Non-Registration Event as described in Section 11.4 of the
      Subscription Agreement.

    


    3.12 Reservation
      Default.
      The
      failure by the Borrower to have reserved for issuance upon conversion of the
      Note the number of shares of Common Stock as required in the Subscription
      Agreement, which condition continues uncured for 10 business days.

    


    ARTICLE
      IV

    


    SECURITY
      INTEREST

    


    4. Security
      Interest/Waiver of Automatic Stay.
      This
      Note is secured by a security interest granted to the Holder pursuant to a
      Security Agreement, as delivered by Borrower to Holder. The Borrower
      acknowledges and agrees that should a proceeding under any bankruptcy or
      insolvency law be commenced by or against the Borrower, or if any of the
      Collateral (as defined in the Security Agreement) should become the subject
      of
      any bankruptcy or insolvency proceeding, then the Holder should be entitled
      to,
      among other relief to which the Holder may be entitled under the Transaction
      Documents and any other agreement to which the Borrower and Holder are parties
      (collectively, "Loan Documents") and/or applicable law, an order from the court
      granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section
      362 to permit the Holder to exercise all of its rights and remedies pursuant
      to
      the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE
      BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE,
      THE
      BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362
      NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
      (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
      CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE
      ANY
      OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.
      The
      Borrower hereby consents to any motion for relief from stay that may be filed
      by
      the Holder in any bankruptcy or insolvency proceeding initiated by or against
      the Borrower and, further, agrees not to file any opposition to any motion
      for
      relief from stay filed by the Holder. The Borrower represents, acknowledges
      and
      agrees that this provision is a specific and material aspect of the Loan
      Documents, and that the Holder would not agree to the terms of the Loan
      Documents if this waiver were not a part of this Note. The Borrower further
      represents, acknowledges and agrees that this waiver is knowingly, intelligently
      and voluntarily made, that neither the Holder nor any person acting on behalf
      of
      the Holder has made any representations to induce this waiver, that the Borrower
      has been represented (or has had the opportunity to he represented) in the
      signing of this Note and the Loan Documents and in the making of this waiver
      by
      independent legal counsel selected by the Borrower and that the Borrower has
      discussed this waiver with counsel.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V

    


    MISCELLANEOUS

    


    5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    


    5.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (a) personally served, (b) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (c)
      delivered by a reputable overnight courier service with charges prepaid, or
      (d)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective upon hand delivery or delivery by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received),
      (ii) on the first business day following the date deposited with an overnight
      courier service with charges prepaid, or (iii) on the third business day
      following the date of mailing pursuant to subpart (b) above, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: 

     

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


    

    
       

      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
       

      
        	With a copy by fax to:	 	
                Edgar D. Park, Esq. 

                
                  Richardson
                    & Patel LLP

                  10900
                    Wilshire Boulevard, Suite 500

                  Los
                    Angeles, CA 90024

                  Fax:
                    (310) 208-1154

                

              


      

      
        
           

          
            	To Holder:	 	
                    To the addresses and fax numbers set forth

                      on
                        the signature pages hereto

                    

                  


          

          
            
              
                 

                
                  	With a copy
                          by fax to:	 	
                          Grushko & Mittman, P.C. 
                            551
                              Fifth Avenue, Suite 1601

                            New
                              York, New York 10176

                            Fax:
                              (212) 697-3575

                          

                        


                

                 

              

            

          

        

      

    

    5.3 Amendment
      Provision.
      The
      term "Note" and all reference thereto, as used throughout this instrument,
      shall
      mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented.

    


    5.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns. This
      Note shall not be divided by the Holder except in increments of not less than
      $25,000 in principal amount and, in any event, the Holder shall immediately
      provide the Borrower written notice of an assignment of any of the rights under
      this Note.

    


    5.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys'
      fees.

    


    5.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York. Any action brought by either party against the other concerning
      the
      transactions contemplated by this Agreement shall be brought only in the state
      or Federal courts located in the State and County of New York. Both parties
      and
      the individual signing this Agreement on behalf of the Borrower agree to submit
      to the jurisdiction of such courts. The prevailing party shall be entitled
      to
      recover from the other party its reasonable attorney's fees and costs.
In
      the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or unenforceability of any other provision of this Note. Nothing contained
      herein shall be deemed or operate to preclude the Holder from bringing suit
      or
      taking other legal action against the Borrower in any other jurisdiction to
      collect on the Borrower's obligations to Holder, to realize on any collateral
      or
      any other security for such obligations, or to enforce a judgment or other
      decision in favor of the Holder. This
      Note shall be deemed an unconditional obligation of Borrower for the payment
      of
      money and, without limitation to any other remedies of Holder, may be enforced
      against Borrower by summary proceeding pursuant to New York Civil Procedure
      Law
      and Rules Section 3213 or any similar rule or statute in the jurisdiction where
      enforcement is sought. For purposes of such rule or statute, any other document
      or agreement to which Holder and Borrower are parties or which Borrower
      delivered to Holder, which may be convenient or necessary to determine Holder’s
      rights hereunder or Borrower’s obligations to Holder are deemed a part of this
      Note, whether or not such other document or agreement was delivered together
      herewith or was executed apart from this Note.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    5.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum rate permitted by
      applicable law. In the event that the rate of interest required to be paid
      or
      other charges hereunder exceed the maximum rate permitted by applicable law,
      any
      payments in excess of such maximum rate shall be credited against amounts owed
      by the Borrower to the Holder and thus refunded to the Borrower.

    


    5.8 Shareholder
      Status.
      The
      Holder shall not have rights as a shareholder of the Borrower with respect
      to
      unconverted portions of this Note. However, the Holder will have all the rights
      of a shareholder of the Borrower with respect to the shares of Common Stock
      to
      be received by Holder after delivery by the Holder of a Conversion Notice to
      the
      Borrower.

    


    


    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the ____ day of July, 2007.

    
      	 	 	 
	 	EVER-GLORY INTERNATIONAL GROUP,
              INC.
	 
 	 
 	 
 
	Date: 	By:  	 
	 	
              
                

              

              Name:
                

              Title:

            




     

    WITNESS:

    


    


    


    ______________________________________

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    


    NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Registered Holder in order to convert the Note)

    


    


    The
      undersigned hereby elects to convert the principal amount of the Convertible
      Note (the “Note”) issued by Every-Glory International Group, Inc. on June ___,
      2007 and the accrued but unpaid interest thereon into shares of Common Stock
      of
      Every-Glory International Group, Inc. (the "Borrower") according to the
      conditions set forth in such Note, as of the date written below.

     

    


    Date
      of
      Conversion:____________________________________________________________________

    


    


    Conversion
      Price:______________________________________________________________________

    


    


    Shares
      To
      Be
      Delivered:_________________________________________________________________

    


    


    Signature:____________________________________________________________________________

    


    


    Print
      Name:__________________________________________________________________________

    


    


    Address:_____________________________________________________________________________

    


    ____________________________________________________________________________

    


    
      
        
        

      

      
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