Document:

Unassociated Document

    SECURITY
      AGREEMENT

     

    1. Identification.

    

    This
      Security Agreement (the "Agreement"), dated as of August 2, 2007, is entered
      into by and between Ever-Glory
      International Group, Inc.,
      a
      Florida corporation ("Parent" or “Debtor”), and Eliezer Drew, as collateral
      agent acting in the manner and to the extent described in the Collateral Agent
      Agreement defined below (the "Collateral Agent"), for the benefit of the parties
      identified on Schedule
      A
      hereto
      (collectively, the "Lenders").

    

    2. Recitals.

    

    2.1 The
      Lenders have made, are making and will be making loans to Parent (the "Loans").
      

    

    2.2 The
      Loans
      are and will be evidenced by certain promissory notes (each a “Note”) issued by
      Parent on or about the date of and after the date of this Agreement pursuant
      to
      subscription agreements (each a “Subscription Agreement”) to which Parent and
      Lenders are parties. 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
      and Subscription Agreement (collectively, the "Obligations"), Debtor, for good
      and valuable consideration, receipt of which is acknowledged, has agreed to
      grant to the Collateral Agent, for the benefit of the Lenders, a security
      interest in the Collateral (as such term is hereinafter defined), on the terms
      and conditions hereinafter set forth. Obligations include any future advances
      or
      loans made by Lenders to Debtor.

    

    2.4 The
      Lenders have appointed the 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.

    

    2.5 The
      following defined terms which are defined in the Uniform Commercial Code in
      effect in the State of New York on the date hereof are used herein as so
      defined: Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
      Instruments, Inventory and Proceeds. Other capitalized terms employed herein
      shall have the meanings attributed to them in the Subscription
      Agreement.

    

    3. Grant
      of General Security Interest in Collateral.

    

    3.1 As
      security for the Obligations of Debtor, Debtor hereby grants the Collateral
      Agent, for the benefit of the Lenders, a security interest in the
      Collateral.

    

    3.2 “Collateral”
      shall mean all of the following property of Debtor:

    

    (A) All
      now
      owned and hereafter acquired right, title and interest of Debtor in, to and
      in
      respect of all Accounts, Goods, real or personal property, all present and
      future books and records relating to the foregoing and all products and Proceeds
      of the foregoing, and as set forth below:

     

    
      
        
        

      

      
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    (i) All
      now
      owned and hereafter acquired right, title and interest of Debtor in, to and
      in
      respect of all: Accounts, interests in goods represented by Accounts, returned,
      reclaimed or repossessed goods with respect thereto and rights as an unpaid
      vendor; contract rights; Chattel Paper; investment property; General Intangibles
      (including but not limited to, tax and duty claims and refunds, registered
      and
      unregistered patents (including but not limited to the patents, patents pending
      and applications set forth on Schedule B hereto), trademarks, service marks,
      certificates, copyrights, trade names, applications for the foregoing, trade
      secrets, goodwill, processes, drawings, blueprints, customer lists, licenses,
      whether as licensor or licensee, chooses in action and other claims, and
      existing and future leasehold interests in equipment, real estate and fixtures);
      Documents; Instruments; letters of credit, bankers’ acceptances or guaranties;
      cash moneys, deposits; securities, bank accounts, deposit accounts, credits
      and
      other property now or hereafter owned or held in any capacity by Debtor, as
      well
      as agreements or property securing or relating to any of the items referred
      to
      above;

    

    (ii) Goods:
      All now
      owned and hereafter acquired right, title and interest of Debtor in, to and
      in
      respect of goods, including, but not limited to:

    

    (a) All
      Inventory, wherever located, whether now owned or hereafter acquired, of
      whatever kind, nature or description, including all raw materials,
      work-in-process, finished goods, and materials to be used or consumed in
      Debtor’s business; finished goods, timber cut or to be cut, oil, gas,
      hydrocarbons, and minerals extracted or to be extracted, and all names or marks
      affixed to or to be affixed thereto for purposes of selling same by the seller,
      manufacturer, lessor or licensor thereof and all Inventory which may be returned
      to Debtor by its customers or repossessed by Debtor and all of Debtor’s right,
      title and interest in and to the foregoing (including all of a Debtor’s rights
      as a seller of goods);

    

    (b) All
      Equipment and fixtures, wherever located, whether now owned or hereafter
      acquired, including, without limitation, all machinery, furniture and fixtures,
      and any and all additions, substitutions, replacements (including spare parts),
      and accessions thereof and thereto (including, but not limited to Debtor’s
      rights to acquire any of the foregoing, whether by exercise of a purchase option
      or otherwise);

    

    (iii) Property:
      All now
      owned and hereafter acquired right, title and interests of Debtor in, to and
      in
      respect of any other personal property in or upon which a Debtor has or may
      hereafter have a security interest, lien or right of setoff; 

    

    (iv) Books
      and Records:
      All
      present and future books and records relating to any of the above including,
      without limitation, all computer programs, printed output and computer readable
      data in the possession or control of the Debtor, any computer service bureau
      or
      other third party; and

    

    (v) Products
      and Proceeds:
      All
      products and Proceeds of the foregoing in whatever form and wherever located,
      including, without limitation, all insurance proceeds and all claims against
      third parties for loss or destruction of or damage to any of the
      foregoing.

    

    (B) All
      now
      owned and hereafter acquired right, title and interest of Debtors in, to and
      in
      respect of the following:

    

    (i) all
      security entitlements of Debtors in, and all Proceeds of any and all of the
      foregoing in each case, whether now owned or hereafter acquired by a Debtor
      and
      howsoever its interest therein may arise or appear (whether by ownership,
      security interest, lien, claim or otherwise).

     

    
      
        
        

      

      
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    3.3 The
      stock
      representing ownership of Perfect Dream Limited, a British Virgin Islands
      corporation, Goldenway Nanjing Garments Company Limited, a People’s Republic of
      China corporation, Nanjing New-Tailum Garments Company Limited, a People’s
      Republic of China corporation, is excluded from the definition of Collateral.
      

    

    3.4 The
      Collateral Agent is hereby specifically authorized, after the Maturity Date
      (defined in the Notes) accelerated or otherwise, or after the occurrence of
      an
      Event of Default (as defined herein) that is uncured after expiration of any
      applicable cure period, to transfer any Collateral into the name of the
      Collateral Agent and to take any and all action deemed advisable to the
      Collateral Agent to remove any transfer restrictions affecting the
      Collateral.

    

    4. Perfection
      of Security Interest.

    

    4.1 Debtor
      shall prepare, execute and deliver to the Collateral Agent UCC-1 Financing
      Statements. The Collateral Agent is instructed to prepare and file at Debtor’s
      cost and expense, financing statements in such jurisdictions deemed advisable
      to
      the Collateral Agent, including but not limited to the State of Florida. The
      Financing Statements are deemed to have been filed for the benefit of the
      Collateral Agent and Lenders identified on Schedule
      A
      hereto.

    

    4.2 All
      other
      certificates and instruments constituting Collateral from time to time required
      to be pledged to Collateral Agent pursuant to the terms hereof (the "Additional
      Collateral") shall be delivered to Collateral Agent promptly upon receipt
      thereof by or on behalf of Debtors. All such certificates and instruments shall
      be held by or on behalf of Collateral Agent pursuant hereto and shall be
      delivered in suitable form for transfer by delivery, or shall be accompanied
      by
      duly executed instruments of transfer or assignment or undated stock powers
      executed in blank, all in form and substance satisfactory to Collateral Agent.
      If any Collateral consists of uncertificated securities, unless the immediately
      following sentence is applicable thereto, Debtors shall cause Collateral Agent
      (or its custodian, nominee or other designee) to become the registered holder
      thereof, or cause each issuer of such securities to agree that it will comply
      with instructions originated by Collateral Agent with respect to such securities
      without further consent by Debtors. If any Collateral consists of security
      entitlements, Debtors shall transfer such security entitlements to Collateral
      Agent (or its custodian, nominee or other designee) or cause the applicable
      securities intermediary to agree that it will comply with entitlement orders
      by
      Collateral Agent without further consent by Debtors. 

     

    4.3 Within
      five (5) days after the receipt by a Debtor of any Additional Collateral, a
      Pledge Amendment, duly executed by such Debtor, in substantially the form of
      Annex I hereto (a "Pledge Amendment"), shall be delivered to Collateral Agent
      in
      respect of the Additional Collateral to be pledged pursuant to this Agreement.
      Each Debtor hereby authorizes Collateral Agent to attach each Pledge Amendment
      to this Agreement and agrees that all certificates or instruments listed on
      any
      Pledge Amendment delivered to Collateral Agent shall for all purposes hereunder
      constitute Collateral.

     

    4.4 If
      Debtor
      shall receive, by virtue of Debtor being or having been an owner of any
      Collateral, any (i) stock certificate (including, without limitation, any
      certificate representing a stock dividend or distribution in connection with
      any
      increase or reduction of capital, reclassification, merger, consolidation,
      sale
      of assets, combination of shares, stock split, spin-off or split-off),
      promissory note or other instrument, (ii) option or right, whether as an
      addition to, substitution for, or in exchange for, any Collateral, or otherwise,
      (iii) dividends payable in cash (except such dividends permitted to be retained
      by Debtor pursuant to Section 5.2 hereof) or in securities or other property
      or
      (iv) dividends or other distributions in connection with a partial or total
      liquidation or dissolution or in connection with a reduction of capital, capital
      surplus or paid-in surplus, Debtor shall receive such stock certificate,
      promissory note, instrument, option, right, payment or distribution in trust
      for
      the benefit of Collateral Agent, shall segregate it from Debtor's other property
      and shall deliver it forthwith to Collateral Agent, in the exact form received,
      with any necessary endorsement and/or appropriate stock powers duly executed
      in
      blank, to be held by Collateral Agent as Collateral and as further collateral
      security for the Obligations.

     

    
      
        
        

      

      
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    5. Distribution.

    

    5.1 So
      long
      as an Event of Default does not exist, Debtor shall be entitled to exercise
      all
      voting power pertaining to any of the Collateral, provided such exercise is
      not
      contrary to the interests of the Lenders and does not impair the
      Collateral.

    

    5.2. At
      any
      time an Event of Default exists or has occurred, all rights of Debtor, upon
      notice given by Collateral Agent, to exercise the voting power and receive
      payments, which it would otherwise be entitled to pursuant to Section 5.1,
      shall
      cease and all such rights shall thereupon become vested in Collateral Agent,
      which shall thereupon have the sole right to exercise such voting power and
      receive such payments.

    

    5.3 All
      dividends, distributions, interest and other payments which are received by
      Debtor contrary to the provisions of Section 5.2 shall be received in trust
      for
      the benefit of Collateral Agent as security and Collateral for payment of the
      Obligations shall be segregated from other funds of Debtor
      and
      shall be forthwith paid over to Collateral Agent as Collateral in the exact
      form
      received with any necessary endorsement and/or appropriate stock powers duly
      executed in blank, to be held by Collateral Agent as Collateral and as further
      collateral security for the Obligations.

    

    6. Further
      Action By Debtor; Covenants and Warranties.

    

    6.1 Except
      for as disclosed on Schedule
      6.1
      hereto,
      Collateral Agent at all times shall have a perfected security interest in the
      Collateral. Each Debtor represents that it has and will continue to have full
      title to the Collateral free from any liens, leases, encumbrances, judgments
      or
      other claims. The Collateral Agent's security interest in the Collateral
      constitutes and will continue to constitute a first, prior and indefeasible
      security interest, except as disclosed on Schedule
      6.1,
      in
      favor of Collateral Agent. Each Debtor will do all acts and things, and will
      execute and file all instruments (including, but not limited to, security
      agreements, financing statements, continuation statements, etc.) reasonably
      requested by Collateral Agent to establish, maintain and continue the perfected
      security interest of Collateral Agent in the perfected Collateral, promptly
      on
      demand, pay all costs and expenses of filing and recording and will pay all
      claims and charges that, in the opinion of Collateral Agent, exercised in good
      faith, are reasonably likely to materially prejudice, imperil or otherwise
      affect the Collateral or Collateral Agent’s or Lenders’ security interests
      therein.

    

    6.2 Except
      in
      connection with sales of Collateral in the ordinary course of business for
      fair
      value and except for Collateral which is substituted by assets of identical
      or
      greater value (with the consent of the Collateral Agent) or which is
      inconsequential in value, Debtor will not sell, transfer, assign or pledge
      those
      items of Collateral (or allow any such items to be sold, transferred, assigned
      or pledged), without the prior written consent of Collateral Agent, and provided
      the Collateral remains subject to the security interest herein described.
      Although Proceeds of Collateral are covered by this Agreement, this shall not
      be
      construed to mean that Collateral Agent consents to any sale of the Collateral,
      except as provided herein. Sales of Collateral in the ordinary course of
      business shall be free of the security interest of Lenders and Collateral Agent
      and Lenders and Collateral Agent shall promptly execute such documents
      (including without limitation releases and termination statements) as may be
      required by Debtor to evidence or effectuate the same.

     

    
      
        
        

      

      
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    6.3 Debtor
      will, at all reasonable times during regular business hours and upon reasonable
      notice, allow Collateral Agent or its representatives free and complete access
      to the Collateral and all of such Debtor's records which in any way relate
      to
      the Collateral, for such inspection and examination as Collateral Agent
      reasonably deems necessary.

    

    6.4 Debtor,
      at its sole cost and expense, will protect and defend this Security Agreement,
      all of the rights of Collateral Agent and Lenders hereunder, and the Collateral
      against the claims and demands of all other persons.

    

    6.5 Debtor
      will promptly notify Collateral Agent of any levy, distraint or other seizure
      by
      legal process or otherwise of any part of the Collateral, and of any threatened
      or filed claims or proceedings that are reasonably likely to affect or impair
      the Collateral or the security interests of the Lenders and Collateral Agent
      under this Security Agreement in any material respect.

    

    6.6 Debtor,
      at its own expense, will obtain and maintain in force insurance policies
      covering losses or damage to those items of Collateral which constitute physical
      personal property, which insurance shall be of the types customarily insured
      against by companies in the same or similar business, similarly situated, in
      such amounts (with such deductible amounts) as is customary for such companies
      under the same or similar circumstances, similarly situated. Debtor shall make
      the Collateral Agent a loss payee thereon to the extent of its interest in
      the
      Collateral. Collateral Agent is hereby irrevocably (until the Obligations are
      paid in full) appointed Debtor’s attorney-in-fact to endorse any check or draft
      that may be payable to such Debtor so that Collateral Agent may collect the
      proceeds payable for any loss under such insurance as necessary to exercise
      the
      Collateral Agent’s rights hereunder. The proceeds of such insurance, less any
      costs and expenses incurred or paid by Collateral Agent in the collection
      thereof, shall be applied either toward the cost of the repair or replacement
      of
      the items damaged or destroyed, or on account of any sums secured hereby,
      whether or not then due or payable.

    

    6.7 Collateral
      Agent, at its option and, to the extent practicable, upon prior written notice
      to the Debtor, may but without any obligation to do so, pay, perform and
      discharge any and all amounts, costs, expenses and liabilities herein agreed
      to
      be paid or performed by Debtor upon
      Debtor’s
      failure
      to do
      so. All
      amounts expended by Collateral Agent in so doing shall become part of the
      Obligations secured hereby, and shall be immediately due and payable by Debtor
      to Collateral Agent upon demand
      and
      shall
      bear interest at the lesser of 12% per annum or the highest legal amount from
      the dates of such expenditures until paid.

    

    6.8 Upon
      the
      request of Collateral Agent, Debtor will furnish to Collateral Agent within
      five
      (5) business days thereafter, or to any proposed assignee of this Security
      Agreement, a written statement in form reasonably satisfactory to Collateral
      Agent, duly acknowledged, certifying the amount of the principal and interest
      and any other sum then owing under the Obligations, whether to its knowledge
      any
      claims, offsets or defenses exist against the Obligations or against this
      Security Agreement, or any of the terms and provisions of any other agreement
      of
      Debtor securing the Obligations. In connection with any assignment by Collateral
      Agent of this Security Agreement, Debtor hereby agrees to cause the insurance
      policies required hereby to be carried by Debtor, if any, to be endorsed in
      form
      reasonably satisfactory to Collateral Agent or to such assignee, with loss
      payable clauses in favor of such assignee, and to cause such endorsements to
      be
      delivered to Collateral Agent within ten (10) calendar days after request
      therefor by Collateral Agent.

    

    6.9 Debtor
      will, at its own expense, make, execute, endorse, acknowledge, file and/or
      deliver to the Collateral Agent from time to time such vouchers, invoices,
      schedules, confirmatory assignments, conveyances, financing statements, transfer
      endorsements, powers of attorney, certificates, reports and other reasonable
      assurances or instruments and take further steps relating to the Collateral
      and
      other property or rights covered by the security interest hereby granted, as
      the
      Collateral Agent may reasonably require to perfect its security interest
      hereunder.

     

    
      
        
        

      

      
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    6.10 Debtor
      represents and warrants that it is the true and lawful exclusive owner of the
      Collateral, free and clear of any liens and encumbrances.

    

    6.11 Debtor
      hereby agrees not to divest itself of any right under the Collateral except
      as
      permitted herein absent prior written approval of the Collateral Agent, except
      to a subsidiary organized and located in the United States on prior notice
      to
      Collateral Agent provided the Collateral remains subject to the security
      interest herein described.

     

    7. Power
      of Attorney.

    

    At
      any
      time an Event of Default has occurred and continued beyond applicable cure
      periods, Debtor hereby irrevocably constitutes and appoints the Collateral
      Agent
      as the true and lawful attorney of such Debtor, with full power of substitution,
      in the place and stead of such Debtor and in the name of such Debtor or
      otherwise, at any time or times, in the discretion of the Collateral Agent,
      to
      take any action and to execute any instrument or document which the Collateral
      Agent may deem necessary or advisable to accomplish the purposes of this
      Agreement. This power of attorney is coupled with an interest and is irrevocable
      until the Obligations are satisfied.

    

    8. Performance
      By The Collateral Agent.

    

    If
      a
      Debtor fails to perform any material covenant, agreement, duty or obligation
      of
      such Debtor under this Agreement, the Collateral Agent may, after any applicable
      cure period, at any time or times in its discretion, take action to effect
      performance of such obligation. All reasonable expenses of the Collateral Agent
      incurred in connection with the foregoing authorization shall be payable by
      Debtor as provided in Paragraph 12.1 hereof. No discretionary right, remedy
      or
      power granted to the Collateral Agent under any part of this Agreement shall
      be
      deemed to impose any obligation whatsoever on the Collateral Agent with respect
      thereto, such rights, remedies and powers being solely for the protection of
      the
      Collateral Agent.

    

    9. Event
      of Default.

    

    An
      event
      of default ("Event of Default") shall be deemed to have occurred hereunder
      upon
      the occurrence of any event of default as defined and described in the Notes.
      Upon and after any Event of Default, after the applicable cure period, if any,
      any or all of the Obligations shall become immediately due and payable at the
      option of the Collateral Agent, for the benefit of the Lenders, and the
      Collateral Agent may dispose of Collateral as provided below. A default by
      Debtor of any of its material obligations pursuant to this Agreement and any
      of
      the Transaction Documents (as defined in the Subscription Agreement) shall
      be an
      Event of Default hereunder and an “Event of Default” as defined in the Notes,
      and Subscription Agreement. 

    

    10. Disposition
      of Collateral.

    

    Upon
      and
      after any Event of Default which is then continuing,

    

    10.1 The
      Collateral Agent may exercise its rights with respect to each and every
      component of the Collateral, without regard to the existence of any other
      security or source of payment for the Obligations. In addition to other rights
      and remedies provided for herein or otherwise available to it, the Collateral
      Agent shall have all of the rights and remedies of a lender on default under
      the
      Uniform Commercial Code then in effect in the State of New York.

     

    
      
        
        

      

      
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    10.2 If
      any
      notice to Debtor of the sale or other disposition of Collateral is required
      by
      then applicable law, ten (10) business days prior written notice (which Debtor
      agrees is reasonable notice within the meaning of Section 9.612(a) of the
      Uniform Commercial Code) shall be given to Debtor of the time and place of
      any
      sale of Collateral which Debtor hereby agree may be by private sale. The rights
      granted in this Section are in addition to any and all rights available to
      Collateral Agent under the Uniform Commercial Code.

    

    10.3 The
      Collateral Agent is authorized, at any such sale, if the Collateral Agent deems
      it advisable to do so, in order to comply with any applicable securities laws,
      to restrict the prospective bidders or purchasers to persons who will represent
      and agree, among other things, that they are purchasing the Collateral for
      their
      own account for investment, and not with a view to the distribution or resale
      thereof, or otherwise to restrict such sale in such other manner as the
      Collateral Agent deems advisable to ensure such compliance. Sales made subject
      to such restrictions shall be deemed to have been made in a commercially
      reasonable manner.

    

    10.4 All
      proceeds received by the Collateral Agent for the benefit of the Lenders in
      respect of any sale, collection or other enforcement or disposition of
      Collateral, shall be applied (after deduction of any amounts payable to the
      Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations
      pro
      rata among the Lenders in proportion to their interests in the Obligations.
      Upon
      payment in full of all Obligations, Debtor shall be entitled to the return
      of
      all Collateral, including cash, which has not been used or applied toward the
      payment of Obligations or used or applied to any and all costs or expenses
      of
      the Collateral Agent incurred in connection with the liquidation of the
      Collateral (unless another person is legally entitled thereto). Any assignment
      of Collateral by the Collateral Agent to Debtor shall be without representation
      or warranty of any nature whatsoever and wholly without recourse. To the extent
      allowed by law, each Lender may purchase the Collateral and pay for such
      purchase by offsetting up to such Lender’s pro rata portion of the purchase
      price with sums owed to such Lender by Debtor arising under the Obligations
      or
      any other source.

    

    11. Waiver
      of Automatic Stay.
      Debtor
      acknowledges and agrees that should a proceeding under any bankruptcy or
      insolvency law be commenced by or against Debtor, or if any of the Collateral
      should become the subject of any bankruptcy or insolvency proceeding, then
      the
      Collateral Agent should be entitled to, among other relief to which the
      Collateral Agent or Lenders may be entitled under the Note, Subscription
      Agreement and any other agreement to which the Debtor, Lenders or Collateral
      Agent 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 Collateral Agent to exercise all of
      its
      rights and remedies pursuant to the Loan Documents and/or applicable law. Debtor
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362. FURTHERMORE, Debtor 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 COLLATERAL
      AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
      APPLICABLE LAW. Debtor hereby consents to any motion for relief from stay which
      may be filed by the Collateral Agent in any bankruptcy or insolvency proceeding
      initiated by or against Debtor, and further agrees not to file any opposition
      to
      any motion for relief from stay filed by the Collateral Agent. Debtor
      represents, acknowledges and agrees that this provision is a specific and
      material aspect of this Agreement, and that the Collateral Agent would not
      agree
      to the terms of this Agreement if this waiver were not a part of this Agreement.
      Debtor further represents, acknowledges and agrees that this waiver is
      knowingly, intelligently and voluntarily made, that neither the Collateral
      Agent
      nor any person acting on behalf of the Collateral Agent has made any
      representations to induce this waiver, that Debtor has been represented (or
      has
      had the opportunity to be represented) in the signing of this Agreement and
      in
      the making of this waiver by independent legal counsel selected by Debtor and
      that Debtor has had the opportunity to discuss this waiver with counsel. Debtor
      further agrees that any bankruptcy or insolvency proceeding initiated by Debtor
      will only be brought in the Federal Court within the Southern District of New
      York.

     

    
      
        
        

      

      
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    12. Miscellaneous.

    

    12.1 Expenses.
      Debtor
      shall pay to the Collateral Agent, on demand, the amount of any and all
      reasonable expenses, including, without limitation, attorneys' fees, legal
      expenses and brokers' fees, which the Collateral Agent may incur in connection
      with (a) sale, collection or other enforcement or disposition of Collateral;
      (b)
      exercise or enforcement of any the rights, remedies or powers of the Collateral
      Agent hereunder or with respect to any or all of the Obligations upon breach;
      or
      (c) failure by Debtor to perform and observe any agreements of Debtor contained
      herein which are performed by the Collateral Agent.

    

    12.2 Waivers,
      Amendment and Remedies.
      No
      course of dealing by the Collateral Agent and no failure by the Collateral
      Agent
      to exercise, or delay by the Collateral Agent 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 Collateral Agent. No
      amendment, modification or waiver of any provision of this Agreement and no
      consent to any departure by Debtor therefrom, shall, in any event, be effective
      unless contained in a writing signed by the Collateral Agent, 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
      Collateral Agent, 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 Collateral Agent from time to time
      in
      such order as the Collateral Agent may elect.

    

    12.3 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 Debtor:	
              	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:	
                	Edgar D. Park, Esq.
                  Richardson
                    & Patel LLP

                  10900
                    Wilshire Boulevard, Suite 500

                  Los
                    Angeles, CA 90024

                  Fax:
                    (310) 208-1154

                

        

      

      
         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        
          
            	To Lenders:	
                  	To the addresses and telecopier
                    numbers set
                    forth
                    on
                      Schedule A

                  

          

        

        
           

          
            
              	To the Collateral
                      Agent:	
                    	Eliezer Drew
                      551
                        Fifth Avenue, Suite 1601

                      New
                        York, New York 10176

                      Fax:
                        (212) 697-3575

                    

            

          

          
             

            
              
                	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.

    

    12.4 Term;
      Binding Effect.
      This
      Agreement shall (a) remain in full force and effect until payment and
      satisfaction in full of all of the Obligations; (b) be binding upon Debtor,
      and
      its successors and permitted assigns; and (c) inure to the benefit of the
      Collateral Agent, for the benefit of the Lenders and their respective successors
      and assigns. 

    

    12.5 Captions.
      The
      captions of Paragraphs, Articles and Sections in this Agreement 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.

    

    12.6 Governing
      Law; Venue; Severability.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without
      regard to conflicts
      of laws principles
      that
      would result in the application of the substantive laws of another
      jurisdiction,
      except
      to the extent that the perfection of the security interest granted hereby in
      respect of any item of Collateral may be governed by the law of another
      jurisdiction. Any legal action or proceeding against a Debtor with respect
      to
      this Agreement may be brought in the courts in the State of New York or of
      the
      United
      States for the Southern District of New York, and, by execution and delivery
      of
      this Agreement, Debtor hereby irrevocably accepts for itself and in respect
      of
      its property, generally and unconditionally, the jurisdiction of the aforesaid
      courts. Each Debtor 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 Agreement 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
      Agreement, 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.

    

    12.7 Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties and supersedes all other
      agreements and understandings, oral or written, with respect to the matters
      contained herein.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    12.8 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.

    

    13. Intercreditor
      Terms.
      As
      between the Lenders, any distribution under paragraph 10.4 shall be made
      proportionately based upon the remaining principal amount (plus accrued and
      unpaid interest) to each as to the total amount then owed to the Lenders as
      a
      whole. The rights of each Lender hereunder are pari
      passu
      to the
      rights of the other Lenders hereunder. Any recovery hereunder shall be shared
      ratably among the Lenders according to the then remaining principal amount
      owed
      to each (plus accrued and unpaid interest) as to the total amount then owed
      to
      the Lenders as a whole. 

    

    14. Termination;
      Release.
      When
      the Obligations have been indefeasibly paid and performed in full or
      all
      outstanding Convertible Notes have been converted to common stock pursuant
      to
      the terms of the Convertible Notes and the Subscription Agreements,
      this
      Agreement and the security interests created hereunder shall be terminated,
      and
      the Collateral Agent, at the request and sole expense of the Debtor, will
      execute and deliver to the Debtor the proper instruments (including UCC
      termination statements) terminating the Security Agreement and such security
      interests, and duly assign, transfer and deliver to the Debtor, without
      recourse, representation or warranty of any kind whatsoever, the Collateral,
      including, without limitation, any Additional Collateral, as may be in the
      possession of the Collateral Agent.

    

    15. Collateral
      Agent.

    

    15.1 Collateral
      Agent Powers.
      The
      powers conferred on the Collateral Agent hereunder are solely to protect its
      interest (on behalf of the Lenders) in the Collateral and shall not impose
      any
      duty on it to exercise any such powers.

    

    15.2 Reasonable
      Care.
      The
      Collateral Agent is required to exercise reasonable care in the custody and
      preservation of any Collateral in its possession; provided, however, that the
      Collateral Agent shall be deemed to have exercised reasonable care in the
      custody and preservation of any of the Collateral if it takes such action for
      that purposes as any owner thereof reasonably requests in writing at times
      other
      than upon the occurrence and during the continuance of any Event of Default,
      but
      failure of the Collateral Agent, to comply with any such request at any time
      shall not in itself be deemed a failure to exercise reasonable
      care.

     

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the
      undersigned have executed and delivered this Security Agreement, as of the
      date
      first written above.

     

    
      	
              "DEBTOR"

              EVER-GLORY INTERNATIONAL GROUP, INC.

              a Florida corporation

               

              _____________________________________

              
                Yi
                  Hua Kang

                Chief
                  Executive Officer

              

            	 	
              "THE COLLATERAL AGENT"

               

               

               

              _____________________________________

            

    

     

     

    APPROVED
      BY “LENDERS”:

    
       

      
        	
                CHESTNUT RIDGE PARTNERS L.P.

                 

                ____________________________

                By:

                Its:

              	 	
                ALPHA CAPITAL ANSTALT

                 

                ____________________________

                By:

                Its:

              

      

      
         

        
          	
                  WHALEHAVEN CAPITAL FUND LIMITED 

                   

                  ____________________________

                  By:

                  Its:

                	 	
                  RONALD C. PASTERNAK

                   

                  ____________________________

                  By:

                  Its:

                

        

        
          
             

            
              	
                      JONATHAN BLAUSTEIN

                       

                      ____________________________

                      By:

                      Its:

                    	 	
                      ELLIE KATZ

                       

                      ____________________________

                      By:

                      Its:

                    

            

             

          

        

      

    

    

    This
      Security Agreement may be signed by facsimile signature
      and

    delivered
      by confirmed facsimile transmission.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A TO SECURITY AGREEMENT

     

    
      	
              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

            	 

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B TO SECURITY AGREEMENT

    

    PATENTS,
      PATENTS PENDING, APPLICATIONS

     

     

    None.
      

     

     

    SCHEDULE
      6.1 TO SECURITY AGREEMENT

     

     

    None.
      

     

    
      
        
        

      

      
        13Unassociated Document

    STOCK
      PLEDGE AGREEMENT

     

    STOCK
      PLEDGE AGREEMENT
      (this
“Agreement”),
      dated
      August 2, 2007 by and between Kang Yi Hua (“Pledgor”);
      the
      Lenders identified on Schedule A hereto (collectively, “Pledgee”);
      and
      the Collateral Agent;

     

    WITNESSETH:

     

    WHEREAS,
      the
      Pledgee will lend up to $2,000,000 to Ever-Glory International Group, Inc.,
      a
      Florida corporation (“Borrower”),
      with
      such loan to be evidenced by one or more promissory notes (“Note”);
      and

     

    WHEREAS,
      Pledgor
      is the President, Chief Executive Officer and Chairman of Borrower, and it
      is to
      his benefit and advantage that the loans be made and the Notes be issued;
      and

     

    WHEREAS,
      in
      order
      to induce Pledgee to make the loan and accept the Note, the Pledgor has agreed
      to secure all of the Borrower’s obligations under the Notes with the grant to
      the Collateral Agent of a first priority security interest in 3,897 shares
      of
      Series A Preferred Stock (convertible into 30,000,000 shares of common stock)
      of
      the Borrower which is owned of record and beneficially controlled by the
      Pledgor.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants herein contained, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereby agree as follows:

     

    1.  Definitions.

     

    The
      following terms shall have the following meanings wherever used in this
      Agreement: 

     

     “Collateral
      Agent”
shall
      mean the person appointed pursuant to the Collateral Agent
      Agreement.

     

    “Collateral
      Agent Agreement”
shall
      mean the agreement dated at or about the date of this Agreement, entered into
      by
      the parties hereto, Borrower and the Collateral Agent pursuant to which the
      Collateral Agent was appointed to act on behalf of the Pledgees.

     

    “Event
      of Default”
shall
      have the meaning given thereto in the Notes.

     

    “Obligations”
shall
      mean all principal and interest and other payments which may be due and payable
      under the Notes, whether upon stated maturity, by acceleration, or otherwise,
      outstanding at any time and under this Agreement, and any other payment
      obligation of the Borrower to the Pledgee pursuant to the “Transaction
      Documents” as defined in the “Subscription Agreement” pursuant to which the
      Notes are being issued.

     

    “Pledged
      Stock”
shall
      mean in the aggregate, 3,897 shares of Series A Preferred Stock of the
      Borrower.

     

    “Satisfaction
      Date”
shall
      mean that date on which all of the Obligations have been paid or otherwise
      satisfied in full.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.  Pledge
      of the Pledged Stock/Additional Deposits.

     

    (a)  As
      security for the due and timely payment and performance of all of the
      Obligations, the Pledgor pledges to the Pledgees, and grants to the Pledgees
      a
      first priority lien and security interest in, all of the Pledged Stock (as
      same
      are constituted from time to time), together with all cash dividends, stock
      dividends, interest, profits, premiums, redemptions, warrants, subscription
      rights, options, substitutions, exchanges and other distributions now or
      hereafter made on the Pledged Stock and all cash and non-cash proceeds thereof,
      until the Satisfaction Date. The Pledged Stock and all property at any time
      pledged to the Pledgee hereunder or in which the Pledgee is granted a security
      interest (whether described herein or not) and all income therefrom and proceeds
      thereof are herein included in the definition of Pledged Stock.

     

    (b)  In
      furtherance of the pledge hereunder, the Pledgor is, concurrently herewith,
      delivering to the Collateral Agent, the certificates representing all of the
      Pledged Stock, each of which now remains in the name of the Pledgor and
      accompanied by appropriate undated stock powers duly endorsed in blank by the
      Pledgor bearing “medallion” signature guarantees.

     

    (c) If,
      while
      this Agreement is in effect, the Pledgor becomes entitled to receive or receives
      any stock certificate (including, without limitation, any certificate
      representing a stock dividend or a distribution in connection with any
      reclassification, increase or reduction of capital or issued in connection
      with
      any reorganization), option or rights whether as an addition to, in substitution
      of, or in exchange for, any Pledged Stock or otherwise, the Pledgor agrees
      to
      accept the same as agent for the Collateral Agent, to hold the same in trust
      on
      behalf of and for the benefit of the Pledgee, and to deliver the same forthwith
      to the Collateral Agent in the exact form received, with the endorsement of
      the
      Pledgor when necessary and/or appropriate undated “medallion” stock or other
      powers duly executed in blank, to be held by the Collateral Agent, subject
      to
      the terms hereof, as additional collateral security for the Obligations. Any
      sums paid on or in respect of the Pledged Stock on the liquidation or
      dissolution of the Borrower shall be paid over to the Collateral Agent, to
      be
      held by the Collateral Agent, subject to the terms and conditions hereof, as
      additional collateral security for the Obligations.

    

    3.  Retention
      of the Pledged Stock.

     

    (a)  Except
      as
      otherwise provided herein, the Collateral Agent shall have no obligation with
      respect to the Pledged Stock, except to use reasonable care in the custody
      and
      preservation thereof, to the extent required by law.

     

    (b)  The
      Collateral Agent shall hold the Pledged Stock in the form in which same are
      delivered herewith, unless and until there shall occur an Event of
      Default.

     

    4.  Rights
      of the Pledgor.
      Throughout the term of this Agreement, so long as no Event of Default is uncured
      and continuing, the Pledgor shall have the right to vote the Pledged Stock
      in
      all matters presented to the stockholders of the Borrower for vote thereon,
      except in a manner inconsistent with the terms of this Agreement or detrimental
      to the interests of the Pledgee. 

     

    5.  Event
      of Default; Power of Attorney.

     

    (a)  Upon
      the
      occurrence and during the continuance of any Event of Default beyond the
      applicable cure period, the Collateral Agent shall have the right to: (i)
      exercise all voting and corporate rights of, and all rights of conversion,
      exchange, subscription or any other rights, privileges or options pertaining
      to,
      any Pledged Stock as if the Pledgee were the absolute owner thereof, including
      (without limitation) the right to exchange, at its discretion, any and all
      of
      the Pledged Stock upon the merger, consolidation, reorganization,
      recapitalization or other readjustment of the Pledgor or upon the exercise
      by
      the Pledgor or the Collateral Agent of any right, privilege or option pertaining
      to any of the Pledged Stock and, in connection therewith, to deposit and deliver
      any and all of the Pledged Stock with any committee, depository, transfer agent,
      registrar or other designated agency on such terms and conditions as the Pledgee
      may determine, all without liability except to account for property actually
      received by it; (ii) apply any funds or other property received in respect
      of
      the Pledged Stock to the Obligations, and receive in its own name any and all
      further distributions which may be paid in respect of the Pledged Stock, all
      of
      which shall, upon receipt by the Collateral Agent, be applied to the
      Obligations; (iii) transfer all or any portion of the Pledged Stock (as
      determined by the Pledgee in its discretion) on the books of the Borrower to
      and
      in the name of the Collateral Agent or such other person or persons as the
      Collateral Agent may designate; (iv) effect any sale, transfer or disposition
      of
      all or any portion of the Pledged Stock and in furtherance thereof, take
      possession of and endorse any and all checks, drafts, bills of exchange, money
      orders or other documents and instruments received on account of the Pledged
      Stock; (v) collect, sue for and give acquittance for any money due on account
      of
      any of the foregoing; and (vi) take any and all other action contemplated by
      this Agreement, or as otherwise permitted by law, or as the Pledgee may
      reasonably deem necessary or appropriate, in order to accomplish the purposes
      of
      this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)  In
      furtherance of the foregoing powers of the Collateral Agent, the Pledgor hereby
      authorizes and appoints the Collateral Agent, with full powers of substitution,
      as the true and lawful attorney-in-fact of the Pledgor, in his name, place
      and
      stead, to take any and all such action as the Collateral Agent, in its sole
      discretion, may deem necessary or appropriate in furtherance of the exercise
      of
      the aforesaid powers specifically set forth in this Agreement. Such power of
      attorney shall be coupled with an interest, and shall be irrevocable until
      the
      Satisfaction Date. Without limitation of the foregoing, such power of attorney
      shall not in any manner be affected or impaired by reason of any act of the
      Pledgor or by operation of law. Nothing herein contained, however, shall be
      deemed to require or impose any duty upon the Collateral Agent to exercise
      any
      of the rights or powers granted herein.

     

    (c)  The
      foregoing rights and powers granted to the Collateral Agent, and the foregoing
      power of attorney, shall be fully binding upon any person who may acquire any
      beneficial interest in any of the Pledged Stock or any other property held
      or
      received by the Collateral Agent hereunder.

     

    6.  Foreclosure;
      Sale of Pledged Stock.

     

    (a) Without
      limitation of paragraph 5 above, in the event that the Collateral Agent shall
      make any sale or other disposition of any or all of the Pledged Stock pursuant
      to the terms of this Agreement, the Collateral Agent may also:

     

    (i) offer
      and
      sell all or any portion of the Pledged Stock publicly through a registered
      broker-dealer, or by means of a private placement restricting the offer or
      sale
      to a limited number of prospective purchasers who meet such suitability
      standards as the Collateral Agent and its counsel may deem appropriate, and
      who
      may be required to represent that they are purchasing Pledged Stock for
      investment and not with a view to distribution;

     

    (ii) sell
      any
      or all of the Pledged Stock upon credit or for future delivery, without being
      in
      any way liable for failure of the purchaser to pay for the subject Pledged
      Stock; and

     

    (iii) 
      receive
      and collect the net proceeds of any sale or other disposition of any Pledged
      Stock, and apply same in such order and to such of the Obligations (including
      the customary costs and expenses of the sale or disposition of the Pledged
      Stock) as the Collateral Agent may, in its absolute discretion, deem
      appropriate.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b) Upon
      any
      sale of any of the Pledged Stock in accordance with this Agreement, the
      Collateral Agent shall have the right to assign, transfer and deliver the
      subject Pledged Stock to the purchaser(s) thereof, and each such purchaser
      shall
      be entitled to hold such Pledged Stock absolutely free from any right or claim
      of the Pledgor and/or any other person claiming any beneficial interest in
      the
      Pledged Stock, including any equity of redemption (which right and all other
      such rights are hereby waived by the Pledgor to the fullest extent permitted
      by
      law).

     

    (c) Following
      the occurrence and during the existence of an Event of Default that has
      continued beyond that applicable cure period, Pledgor and Borrower will
      cooperate and provide such certificate, resolutions, representations, legal
      opinions and all other matters necessary to facilitate a transfer or sale of
      any
      part of the Pledged Stock pursuant to Rule 144. Pledgor and Borrower are unaware
      of any impediment to the resale of the Pledged Stock in reliance on Rule 144
      by
      the Pledgee upon an Event of Default. Pledgor and Borrower will not take any
      action that would impede or limit the Collateral Agent’s ability to sell all the
      Pledged Stock upon an Event of Default, pursuant to Rule 144. For so long as
      any
      Pledged Stock is subject to this Agreement, the Pledgor will not sell any
      security of Borrower which sale would or could be aggregated with sales by
      the
      Collateral Agent or Pledgee pursuant to Rule 144. Borrower shall issue
      instructions to its transfer agent to comply with the foregoing sentence.
      Borrower will not permit the transfer of any security of Borrower if such
      transfer would or could aggregate for purposes of Rule 144 with sales of the
      Pledged Stock by the Pledgor or any sales of the Pledged Stock. Pledgor
      represents and warrants that he has not sold any security of Borrower during
      the
      ninety (90) days prior to the date of this Agreement. Borrower acknowledges
      that
      upon transfer of the Pledged Stock to the Collateral Agent or other transferee,
      the Collateral Agent’s holding period under subsections (d) and (k) of Rule 144
      may be “tacked” with the Pledgor’s holding period. Pledgor and Borrower further
      represent that the Notes were issued in a bona fide
      loan
      transaction. Schedule A hereto sets forth the holding periods of the components
      of the Pledged Stock as calculated pursuant to Rule 144.

     

    (d) Nothing
      herein contained shall be deemed to require the Collateral Agent to effect
      any
      sale or disposition of any Pledged Stock at any time, or to consummate any
      proposed public or private sale at the time and place at which same was
      initially called. It is the intention of the parties hereto that the Collateral
      Agent shall, subject to any further conditions imposed by this Agreement, at
      all
      times following the occurrence of an Event of Default, have the right to use
      or
      deal with the Pledged Stock as if the Collateral Agent were the outright owner
      thereof, and to exercise any and all rights and remedies, as a secured party
      in
      possession of collateral or otherwise, under any and all provisions of
      law.

    

    (e) The
      Collateral Agent may take action and exercise rights in connection with any
      portion of the Pledged Stock regardless of the existence of any other security
      for the Obligations.

    

    7.  Covenants,
      Representations and Warranties.

     

    In
      connection with the transactions contemplated by this Agreement, and knowing
      that the Pledgee and Collateral Agent are and shall be relying hereon, the
      Pledgor hereby covenants, represents and warrants that:

     

    (a) the
      Pledged Stock has been and will be duly and validly issued, is and will be
      fully
      paid and non-assessable, and is and will be owned by the Pledgor free and clear
      of any and all restrictions, pledges, liens, encumbrances or other security
      interests of any kind, save and except for the pledge to the Collateral Agent
      pursuant to this Agreement; 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) there
      are
      and will be no options, warrants or other rights in respect of the sale,
      transfer or other disposition of any of the Pledged Stock by the Pledgor, and
      the Pledgor has the absolute right to pledge the Pledged Stock hereunder without
      the necessity of any consent of any Person; 

    

    (c) neither
      the execution or delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby, nor the compliance with or performance of
      this
      Agreement by the Pledgor, conflicts with or will result in the breach or
      violation of or a default under the terms, conditions or provisions of (i)
      any
      mortgage, security agreement, indenture, evidence of indebtedness, loan or
      financing agreement, or other agreement or instrument to which the Pledgor
      is a
      party or by which the Pledgor is bound, or (ii) any provision of law, any order
      of any court or administrative agency, or any rule or regulation applicable
      to
      the Pledgor;

     

    (d) this
      Agreement has been duly executed and delivered by the Pledgor, and constitutes
      the legal, valid and binding obligation of the Pledgor, enforceable against
      the
      Pledgor in accordance with its terms;

     

    (e) there
      are
      no actions, suits or proceedings pending or threatened against or affecting
      the
      Pledgor that involve or relate to the Pledged Stock; and

     

    (f) upon
      execution and performance of this Agreement by Pledgor, the Pledgee shall have
      the senior security interest in the Pledged Stock.

    

    8. UCC
      Filings.
      Pledgor
      hereby grants to Collateral Agent the right and authority to file UCC Financing
      Statements in Florida and any other jurisdiction in the sole discretion of
      Pledgee to memorialize the security interest herein granted.

    

    9. Return
      of the Pledged Stock.
      

    

    (a) So
      long
      as an Event of Default has not occured, at such time as (i) all amounts payable
      on the Notes and pursuant to the Transaction Documents have been reduced to
      $1,000,000 or less; and (ii) the average daily closing price of the Pledged
      Stock as reported by Bloomberg LP for the principal market, for the 30 trading
      days prior to the Request Date is higher than $0.29, then the Pledgor may
      request of the Collateral Agent and the Pledgee that the Collateral Agent return
      to Pledgor and irrevocably release from collateral, 1,948 shares of Series
      A
      Preferred Stock (or the proportionate shares resulting from the conversion
      thereof). The day on which the Pledgor makes such request is the Request
      Date.
      Upon
      confirmation by the Pledgee to the Collateral Agent that the above two
      conditions have been met, Collateral Agent will then return the collateral
      to be
      released pursuant to this Section 9(a) to the Pledgor.

     

    (b)
       To
      the
      extent that the Collateral Agent shall not previously have taken, acquired,
      sold, transferred, disposed of or otherwise realized value on the Pledged Stock
      in accordance with this Agreement, on the date on which the Obligations have
      been indefeasibly discharged (by payment in cash or conversion of Notes to
      common stock, as applicable) (the “Satisfaction Date”), any remaining security
      interest in the Pledged Stock shall automatically terminate, cease to exist
      and
      be released, and the Collateral Agent shall forthwith return any remaining
      Pledged Stock and irrevocably release such shares from collateral. 

    

    10. Expenses
      of the Pledgee.
      All
      expenses incurred by the Collateral Agent (including but not limited to
      reasonable attorneys’ fees) in connection with any actual or attempted sale or
      other disposition of Pledged Stock hereunder shall be reimbursed to the
      Collateral Agent by the Pledgor and Borrower (jointly and severally) on demand,
      or, at the Pledgee’s option, such expenses may be added to the Obligations and
      shall be payable on demand.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    11. Further
      Assurances.
      From
      time to time hereafter, each party shall take any and all such further action,
      and shall execute and deliver any and all such further documents and/or
      instruments, as any other party may request in order to accomplish the purposes
      of and fulfill the parties’ obligations under this Agreement, in order to enable
      the Collateral Agent to exercise any of its rights hereunder, and/or in order
      to
      secure more fully the Collateral Agent’s interest in the Pledged
      Stock.

    

    12.
       Termination.
      This
      Agreement shall terminate on the Satisfaction Date, except that the parties’
obligations under Section 9 shall survive until performed. 

    

    13. Miscellaneous.

    

    (a) All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      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 (a) 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)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: 

     

    
      	To Pledgor:	
            	Mr. Kang Yi Hua
              c/o
                Ever-Glory International Group, Inc., 

              100
                N. Barranca Ave # 810 

              West
                Covina, CA 91791, 

              Attn:
                Edward Kang 

              Fax:
                (626)839-9118

            

    

    
       

      
        	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 Pledgees:	
                	
                  To
                    the addresses and fax numbers set forth 
                    on
                      Schedule A 

                  

                

        

        
           

          
            	To the Collateral
                    Agent:	
                  	Eliezer Drew 
                    551
                      Fifth Avenue, Suite 1601

                    New
                      York, NY 10176

                    Fax
                      (212) 697-3575

                  

          

          
             

            
              
                
                

              

              
                6

                
                  

                

              

              
                
                

              

            

             

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

                      New
                        York, New York 10176

                      Fax:
                        (212) 697-3575

                    

            

             

          

        

      

    

    (b) If
      any
      notice to Pledgor of the sale or other disposition of Pledged Stock is required
      by then applicable law, five (5) business days prior written notice (which
      Pledgor agrees is reasonable notice within the meaning of Section 9-504(3)
      of
      the Uniform Commercial Code) to Pledgor of the time and place of any sale of
      Pledged Stock which Pledgor agrees may be by private sale. The rights granted
      in
      this Section are in addition to any and all rights available to Pledgee under
      the Uniform Commercial Code.

    

    (c) The
      laws
      of the State of New York including but not limited to Article 9 of the Uniform
      Commercial Code as in effect from time to time, shall govern the construction
      and enforcement of this Agreement and the rights and remedies of the parties
      hereto. The parties hereby consent to the exclusive jurisdiction of all courts
      sitting in the State and County of New York, in connection with any action
      or
      proceeding under or relating to this Agreement, and waive trial by jury in
      any
      such action or proceeding.

     

    (d) This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective heirs, executors, administrators, personal
      representatives, successors and permitted assigns. The Pledgor shall not,
      however, assign any of its or his rights or obligations hereunder without the
      prior written consent of the Pledgee, and the Pledgee and Collateral Agent
      shall
      not assign its rights hereunder without simultaneously assigning thier
      obligations hereunder to the subject assignee. Except as otherwise referred
      to
      herein, this Agreement, and the documents executed and delivered pursuant
      hereto, constitute the entire agreement between the parties relating to the
      specific subject matter hereof.

     

    (e) Neither
      any course of dealing between the Pledgor and the Collateral Agent and/or
      Pledgee nor any failure to exercise, or any delay in exercising, on the part
      of
      the Collateral Agent and/or Pledgee, any right, power or privilege hereunder
      shall operate as a waiver thereof; nor shall any single or partial exercise
      of
      any right, power or privilege operate as a waiver of any other exercise of
      such
      right, power or privilege or any other right, power or privilege.

     

    (f) The
      Collateral Agent and Pledgee’s rights and remedies, whether hereunder or
      pursuant to any other agreements or by law or in equity, shall be cumulative
      and
      may be exercised singly or concurrently.

     

    (g) No
      change, amendment, modification, waiver, assignment of rights or obligations,
      cancellation or discharge hereof, or of any part hereof, shall be valid unless
      the Pledgee shall have consented thereto in writing.

     

    (h) The
      captions and paragraph headings in this Agreement are for convenience of
      reference only, and shall not in any way define, limit or describe the
      construction, terms or provisions of this Agreement.

     

    (i) If
      any
      provision of this Agreement is held invalid or unenforceable, either in its
      entirety or by virtue of its scope or application to given circumstances, such
      provision shall thereupon be deemed modified only to the extent necessary to
      render same valid, or not applicable to given circumstances, or excised from
      this Agreement, as the situation may require, and this Agreement shall be
      construed and enforced as if such provision had been included herein as so
      modified in scope or application, or had not been included herein, as the case
      may be.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (j) All
      of
      the rights granted to the Pledge hereunder will be exercised by the Collateral
      Agent on behalf of Pledgee, pursuant to the Collateral Agent
      Agreement.

     

    (k) 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.

     

     

    [Remainder
      of Page Left Blank Intentionally]

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Stock Pledge Agreement on and as of the date
      first set forth above.

     

    PLEDGOR:

    

    

    ______________________________________

    Yi
      Hua
      Kang

    

     

    PLEDGEE:

     

    
      	
              CHESTNUT RIDGE PARTNERS L.P.

               

              
                ____________________________

                By:

                Its:

              

            	 	
              ALPHA CAPITAL ANSTALT

               

              
                ____________________________

                By:  

                Its:

              

            

    

    
       

      
        	
                WHALEHAVEN CAPITAL FUND LIMITED

                
                  ____________________________

                  By:

                  Its:

                

              	 	
                RONALD C. PASTERNAK

                 

                
                  ____________________________

                  By:  

                  Its:

                

              

      

      
         

        
          	
                  JONATHAN BLAUSTEIN

                   

                  
                    ____________________________

                    By:

                    Its:

                  

                	 	
                  ELLIE KATZ

                   

                  
                    ____________________________

                    By:  

                    Its:

                  

                

        

        
          
             

            
              	
                      COLLATERAL AGENT:

                       

                      
                        ____________________________

                      

                    	 	
                       

                    

            

          

        

      

    

    

    

    ACKNOWLEDGEMENT:

    

    Ever-Glory
      International Group, Inc. acknowledge
      and agrees to be bound by the terms of Section 5(d) of this Stock Pledge
      Agreement and will not take or allow any action contrary to the terms of this
      Stock Pledge Agreement that would impair the value of the Pledged Stock or
      Pledgees’ interests therein.

     

    
      	 	 	 
	 	
              EVER-GLORY
                INTERNATIONAL GROUP, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Guo
              Yan
	 	Chief
              Financial Officer

    

    
       

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A

    

    
      	
              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

            	 

    

    

    
      
        
        

      

      
        10

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