Document:

Unassociated Document

    LOCKUP
      AGREEMENT

    

    This
      AGREEMENT (the “Agreement”) is made as of the 2nd day of August, 2007, by Yi Hua
      Kang (“Holder”), in connection with his ownership of shares of Ever-Glory
      International Group, Inc.,
      a
      Florida
      corporation (the “Company”).

    

    NOW,
      THEREFORE, for good and valuable consideration, the sufficiency and receipt
      of
      which consideration are hereby acknowledged, Holder agrees as
      follows:

    

    1. Background.

    

    a.
       Holder
      is
      the beneficial owner of the amount of shares of the Common Stock, $.0001 par
      value, of the Company (“Common Stock”) designated on the signature page
      hereto.

    

    b. Holder
      acknowledges that the Company has entered into or will enter into at or about
      the date hereof agreements with subscribers to the Company’s Notes, some of
      which are convertible into Common Stock (“Notes”) and Warrants (the
“Subscribers”). Holder understands that, as a condition to proceeding with the
      Offering, the Subscribers have required, and the Company has agreed to obtain
      on
      behalf of the Subscribers an agreement from the Holder to refrain from selling
      any securities of the Company from the date of the Subscription Agreement until
      one year after the Closing Date (as defined in the Subscription Agreement)
      (the
“Restriction Period”). 

    

    2. Share
      Restriction. 

    

    a. Holder
      hereby agrees that during the Restriction Period, the Holder will not sell
      or
      otherwise dispose of any shares of Common Stock or any options, warrants or
      other rights to purchase shares of Common Stock or any other security of the
      Company which Holder owns or has a right to acquire as of the date hereof,
      other
      than in connection with an offer made to all shareholders of the Company in
      connection with merger, consolidation or similar transaction involving the
      Company. Holder further agrees that the Company is authorized to and the Company
      agrees to place “stop orders” on its books to prevent any transfer of shares of
      Common Stock or other securities of the Company held by Holder in violation
      of
      this Agreement. The Company agrees not to allow to occur any transaction
      inconsistent with this Agreement.

    

    b. Any
      subsequent issuance to and/or acquisition by Holder of Common Stock or options
      or instruments convertible into Common Stock will be subject to the provisions
      of this Agreement.

    

    c. Notwithstanding
      the foregoing restrictions on transfer, the Holder may, at any time and from
      time to time during the Restriction Period, transfer the Common Stock (i) as
      bona fide gifts or transfers by will or intestacy, (ii) to any trust for the
      direct or indirect benefit of the undersigned or the immediate family of the
      Holder, provided that any such transfer shall not involve a disposition for
      value, (iii) to a partnership which is the general partner of a partnership
      of
      which the Holder is a general partner, provided, that, in the case of any gift
      or transfer described in clauses (i), (ii) or (iii), each donee or transferee
      agrees in writing to be bound by the terms and conditions contained herein
      in
      the same manner as such terms and conditions apply to the undersigned. For
      purposes hereof, “immediate family” means any relationship by blood, marriage or
      adoption, not more remote than first cousin.

    

    3. Miscellaneous.

    

    a. At
      any
      time, and from time to time, after the signing of this Agreement Holder will
      execute such additional instruments and take such action as may be reasonably
      requested by the Subscribers to carry out the intent and purposes of this
      Agreement.

     

    
      
        
        

      

      
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    b. This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. The parties
      to
      this Agreement hereby irrevocably waive any objection to jurisdiction and venue
      of any action instituted hereunder and shall not assert any defense based on
      lack of jurisdiction or venue or based upon forum
      non conveniens.
      The
      parties executing this Agreement and other agreements referred to herein or
      delivered in connection herewith agree to submit to the in personam jurisdiction
      of such courts and hereby irrevocably waive trial by jury.
      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
      Agreement or any other agreement delivered in connection herewith 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 enforceability of any other provision of any
      agreement.

    

    c. The
      restrictions on transfer described in this Agreement are in addition to and
      cumulative with any other restrictions on transfer otherwise agreed to by the
      Holder or to which the Holder is subject to by applicable law.

    

    d. This
      Agreement shall be binding upon Holder, its legal representatives, successors
      and assigns.

    

    e. This
      Agreement may be signed and delivered by facsimile and such facsimile signed
      and
      delivered shall be enforceable.

    

    f. The
      Company agrees not to take any action or allow any act to be taken which would
      be inconsistent with this Agreement.

    

    g. The
      Holder acknowledges that this Lockup Agreement is being entered into for the
      benefit of the Subscribers identified in the Subscription Agreement dated August
      2, 2007 between the Company and the Subscribers, may be enforced by the
      Subscribers and may not be amended without the consent of the Subscriber, which
      may be withheld for any reason.

    

    h. In
      the
      event that the Holder is required by an underwriter to enter into a lockup
      agreement in connection with an underwritten public offering of the Company
      (“Underwriter Lockup”), this Lockup Agreement shall be superseded by the
      Underwriter Lockup upon entry into the Underwriter Lockup, provided that the
      restrictions under such Underwriter Lockup shall not lapse prior to the end
      of
      the Restriction Period set forth in this Lockup Agreement. If the Underwriter
      Lockup lapses prior to the end of the Restriction Period, this Lockup Agreement
      shall once again be enforceable until the end of the Restriction
      Period.

    

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
      this Agreement as of the day and year first above written.

    

    HOLDER:

    

    ________________________________

    (Signature
      of Holder) 

    

    ________________________________

    (Print
      Name of Holder)

     

    ________________________________

    Number
      of
      Shares of Common Stock

     

    Beneficially
      Owned

    

    
 

    COMPANY:

    

    EVER-GLORY
      INTERNATIONAL GROUP, INC.

    

    By:______________________________

    Yi
      Hua
      Kang

    Chief
      Executive Officer

     

    
      
        
        

      

      
        3Unassociated Document

    July
      25,
      2007

     

    

    Every
      Glory International Group, Inc. 

    100
      N.
      Barranca Ave. #810

    West
      Covina, CA 91791

    Tel:
      626-839-9116

    Fax:
      626-839-9118

     

    Re: Proposed
      Purchase and Sale of Branded Retail Division

     

    Dear
      Mr.
      Kang:

     

    The
      purpose of this letter (the “Letter”) is to set forth certain nonbinding
      understandings and certain binding agreements between Ever-Glory
      International Group, Inc. (“Prospective Buyer”), and Escela V Fashion Co.,
      Ltd. (“Prospective Seller”) with respect to the possible acquisition of all of
      the assets of a business of the Prospective Seller involving a branded
      retail chain in the PRC (the “Business”).

     

    PART
      I: NONBINDING PROVISIONS.

     

    The
      following numbered paragraphs of this Letter (collectively, the “Nonbinding
      Provisions”) reflect our mutual understanding of the matters described in them,
      but each party acknowledges that the Nonbinding Provisions are not intended
      to
      create or constitute any legally binding obligation between Prospective Buyer
      and Prospective Seller, and neither Prospective Buyer nor Prospective Seller
      shall have any liability to the other party with respect to the Nonbinding
      Provisions until a fully integrated, definitive agreement (the “Definitive
      Agreement”), and other related documents, are prepared, authorized, executed and
      delivered by and between all parties. If the Definitive Agreement is not
      prepared, authorized, executed or delivered for any reason, no party to this
      Letter shall have any liability to any other party to this Letter based upon,
      arising from or relating to the Nonbinding Provisions.

     

    1.   Due
      Diligence.
      Prospective Buyer has commenced, and intends to continue, its due diligence
      investigation of the prospects, business, assets, contracts, rights, liabilities
      and obligations of the Business, including financial, marketing, employee,
      legal, regulatory and environmental matters (as applicable). 

     

    
      
        
        

      

      
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    2.  Proposed
      Form of Agreement.
      Upon
      satisfaction of the condition set forth in B(1) and (2) below, Prospective
      Buyer
      and Prospective Seller intend promptly to begin negotiating to reach a written
      Definitive Agreement, subject to the approval of each party (in their respective
      sole discretion), containing standard representations, warranties, indemnities,
      conditions and agreements by Prospective Seller. 

     

    3.  Conditions
      to Proposed Transaction.
      The
      parties do not intend to be bound to the Nonbinding Provisions or any provisions
      covering the same subject matter until the execution and delivery of the
      Definitive Agreement, which, if successfully negotiated, would provide that
      the
      proposed transaction would be subject to customary terms and conditions,
      including the following:

     

    (a)  Prospective
      Buyer’s obtaining adequate financing for the acquisition of the assets of the
      Business;

     

    (b)  Prospective
      Buyer’s completion of its due diligence review and the results of such due
      diligence being satisfactory to Prospective Buyer in Prospective Buyer’s sole
      discretion; and

     

    (c)  representations
      and warranties of the parties being true at the closing date.

     

    4.  Pre-Closing
      Covenants.
      Prior
      to Closing, the Prospective Seller will conduct the Business in the ordinary
      course consistent with past practices.

     

    5.  Other
      Proposed Terms.
      Prospective Seller would provide training and/or operational support and
      guidance for a reasonable period to be agreed by the parties. 

     

    PART
      II: BINDING PROVISIONS.

     

    Upon
      execution by Prospective Seller of this Letter, or a counterpart thereof, the
      following lettered paragraphs of this Letter (collectively, the “Binding
      Provisions”) will constitute the legally binding and enforceable agreement of
      Prospective Buyer and Prospective Seller.

     

    A.  Nonbinding
      Provisions Not Enforceable.
      The
      Nonbinding Provisions do not create or constitute any legally binding
      obligations between Prospective Buyer and Prospective Seller, and neither
      Prospective Buyer nor Prospective Seller shall have any liability to the other
      party with respect to the Nonbinding Provisions until a Definitive Agreement,
      if
      one is successfully negotiated, is executed and delivered by and between all
      parties. If the Definitive Agreement is not prepared, authorized, executed
      or
      delivered for any reason, no party to this Letter shall have any liability
      to
      any other party to this Letter based upon, arising from or relating to the
      Nonbinding Provisions. Each party acknowledges that it will not take action
      or
      refrain from taking action in reliance on any of the Nonbinding Provisions
      or
      the negotiation thereof, and that any such reliance would be at its own risk.
      No
      subsequent oral agreement or consent of the parties (including partial
      performance) shall be deemed to impose any such obligation or
      liability.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    B.  Acquisition.
      Prospective Buyer and Prospective Seller shall negotiate in good faith and
      undertake best efforts to consummate the proposed Transaction, if and when
      the
      following conditions are met: 

     

    
      	1.  	
              The
                Prospective Seller operates fourteen (14) or more stores worldwide;
                and

            

    

    

    
      	2.  	
              the
                Proposed Seller achieves annual consolidated sales (in any 12 month
                period) of USD $5 million or more. 

            

    

    

    C.  Basic
      Terms

     

    
      	1.  	
              Basic
                Transaction.
                Prospective Buyer would acquire all of the assets of the Business,
                or
                alternatively, acquire 100% equity ownership of the Prospective Seller
                (the “Transaction”). 

            

    

     

    
      	2.  	
              Purchase
                Price.
                The total purchase price for the assets of the Business shall be
                based
                upon a fairness opinion of a reputable third party valuation
                professional.

            

    

     

    D.  Definitive
      Agreement.
      Upon
      satisfaction of the conditions in paragraph B above, Prospective Buyer will
      be
      responsible for preparing the initial draft of the Definitive Agreement. Subject
      to the final sentence of Paragraph C below, Prospective Buyer and
      Prospective Seller shall negotiate in good faith to arrive at a mutually
      acceptable Definitive Agreement for approval, execution and delivery on the
      earliest reasonably practicable date thereafter. 

     

    E.  Access.
      Subject
      to the confidentiality provisions set forth below, upon reasonable notice to
      the
      Prospective Seller, the Prospective Seller shall provide to Prospective Buyer
      complete access to the facilities of the Business, books and records and shall
      cause the directors, employees, accountants and other agents and representatives
      (collectively, “Representatives”) of the Business to cooperate fully with
      Prospective Buyer and Prospective Buyer’s Representatives in connection with
      Prospective Buyer’s due diligence investigation of the Business and the
      Business’s assets, contracts, liabilities, records and other aspects of its
      operations (as described in Paragraph 4 of the Nonbinding Provisions).
      Prospective Buyer shall be under no obligation to continue with its due
      diligence investigation or negotiations regarding the Definitive Agreement
      if,
      at any time, the results of its due diligence investigation are not satisfactory
      to Prospective Buyer for any reason in its sole discretion.

     

    F.  Conduct
      of Business.
      Until
      the Definitive Agreement has been duly executed and delivered by all of the
      parties or the Binding Provisions have been terminated pursuant to
      Paragraph H below, Prospective Seller shall operate the Business in the
      ordinary course, and not engage in any extraordinary transactions without
      Prospective Buyer’s prior consent, including:

     

    
      
        
        

      

      
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    (i)  not
      disposing of any assets of the Business, except in the ordinary course of
      business; and 

     

    (ii)  not
      borrowing any funds, under existing credit lines or otherwise, except as
      reasonably necessary for the ordinary operation of the Business in a manner,
      and
      in amounts, in keeping with historical practices.

     

    G.  Disclosure.
      Except
      as and to the extent required by law, without the prior written consent of
      the
      other party, neither Prospective Buyer nor Prospective Seller shall directly
      or
      indirectly, make any public comment, statement or communication with respect
      to,
      or otherwise disclose or permit the disclosure of the existence of discussions
      regarding, a possible transaction between the parties or any of the terms,
      conditions or other aspects of the transaction proposed in this Letter until
      the
      sooner of the expiration of this Letter or entry into Definitive Agreements.
      

     

    H.  Costs.
      Each of
      Prospective Buyer and Prospective Seller shall be responsible for and bear
      all
      of its own costs and expenses (including any broker’s or finder’s fees) incurred
      in connection with the proposed transaction, including expenses of its
      Representatives, incurred at any time in connection with pursuing or
      consummating the proposed transaction.

     

    I.  Consents.
      Prospective Buyer and each Prospective Seller shall cooperate with each other
      and proceed, as promptly as is reasonably practicable, to seek to obtain all
      necessary consents and approvals from lenders, landlords and other third
      parties, and to endeavor to comply with all other legal or contractual
      requirements for or preconditions to the execution and consummation of the
      Definitive Agreement.

     

    J.  Termination.
      The
      Binding Provisions may be terminated upon written notice by any party to the
      other party if the conditions in paragraph B are not met by July 25, 2008.
      

     

    Please
      sign and date this Letter in the space provided below to confirm the mutual
      agreements set forth in the Binding Provisions and return a signed copy to
      the
      undersigned.

    

    Very
      truly yours,

    

    PROSPECTIVE
      BUYER:

    

    Ever-Glory
      International Group, Inc.

    

    

    ______________________________

    Yi
      Hua
      Kang

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Acknowledged
      and agreed as to the Binding Provisions:

     

    PROSPECTIVE
      SELLER:

    
 

    
      	
              ______________________________

            	 	Date:
              _____________________
	
              Li
                Ling 

            	 	 

    

    

    
      
        
        

      

      
        5

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