Winner Medical Group Inc.
Restricted Stock Unit Incentive Plan
-Fiscal Year 2008-2009
Effective as of October 7 (US EST), 2007 (October 8, 2007 China Time)

I. Purpose

The purposes of the Restricted Stock Unit Incentive Plan (the “Plan”) are to
advance corporate governance of Winner Medical Group Inc. (the “Company”) and
establish an incentive program for employees in order to attract, motivate and
retain management of the Company and key employees as well as to improve the
ability for the Company to achieve sustainable growth in the long run.

II. Administration

The Board of Directors of the Company shall be responsible for administering,
interpreting, revising and terminating the Plan. The Board of Directors may
delegate all or a portion of the administration of the Plan to the Compensation
Committee of the Board and/or the Chief Executive Officer of the Company, who
shall report to the Board of Directors. Except as prohibited by applicable law,
the Company may also engage a third party administrator (the “Third Party
Administrator”) to (i) issue shares of Company’s Common Stock (the “Shares”) to
Participants upon the satisfaction of the conditions contained in the Plan, and
(ii) perform other ministerial tasks related to the Plan as delegated to the
Third Party Administrator by the Board of Directors.

III. Participants

Eligible participants in the Plan include members of the Board of Directors that
are employees of the Company (each an “Inside Director”), senior management and
key employees of the Company and its controlling subsidiaries (the
“Participants”).

IV. Shares Subject to the Plan; Issuance of Stock Units and Shares

1. Shares Subject to the Plan. The maximum number of Stock Units (as defined
below) that may be awarded to Participants under the Plan is one million and two
hundred thousands (1,200,000) Stock Units in the aggregate; within which one
million (1,000,000) Stock Units shall be granted to the Participants on the date
of the date of approval of the Plan by the Board of Directors, and two hundred
thousands (200,000) Stock Units is reserved for further grant to new key
employees of the Company and to existing employees of the Company who have
significant contributions. The Shares issuable upon vesting of the Stock Units
shall be issued from the Company’s 2006 Equity Incentive Plan (the “2006 Plan”).
If any Stock Units granted pursuant to the Plan are forfeited or otherwise fail
to vest as of a particular Vesting Date (as defined below) pursuant to the terms
of the Plan, then such forfeited Stock Units will become available for future
grant under the 2006 Plan.

2. Issuance of Stock Units and Shares. The Company will issue to Participants
stock units (each a “Stock Unit”), each of which represent a contract right to
be issued, on the vesting dates defined in Section VI and subject to the vesting
requirements of Section VII, one (1) Share pursuant to restricted stock unit
awards (each a “Restricted Stock Unit Award”). The Restricted Stock Unit Awards
shall be made pursuant to the terms of this Plan and the 2006 Plan. Shares
underlying any Restricted Stock Unit Award under the Plan shall not be issued to
a Participant unless and until the vesting requirements in Clause VII are
fulfilled.  Participants will not be required to pay any purchase price for the
Stock Units or the Shares or the covered by the Restricted Stock Unit Awards.
 
 
 

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V. Grant of the Restricted Stock Units

1. Designation of Participants. The Board authorizes the Chief Executive Officer
to designate the Participants of the Plan and the number of Stock Units awarded
to each Participant pursuant to Restricted Stock Unit Awards; provided that the
Board of Directors or the Compensation Committee of the Board shall make any
determinations with respect to Restricted Stock Unit Awards granted to the Chief
Executive Officer. The aggregate number of Shares covered by a Restricted Stock
Unit Award granted to each Participant under the Plan shall not exceed 0.5% of
the Company’s total outstanding capital stock as of the date of grant of such
award, and should be subject to the terms of the 2006 Plan.

2. Execution of Restricted Stock Unit Award Consent Letter. Each Participant
shall sign a Restricted Stock Unit Award Consent Letter in the form approved by
the Board of Directors, pursuant to which the Participant acknowledges and
agrees to the terms of the Plan.

VI. Term, Effective Date, and the Vesting Dates

1. Term and Effective Date. The term of the Plan is the earlier of (a) 4 years,
commencing from the date of approval by the Board, or (b) the effective date of
termination of the 2006 Plan.

2. Vesting Dates. The first vesting date for all Restricted Stock Unit Awards
under the Plan is three years after the date of approval of the Plan by the
Board of Directors (the “First Vesting Date”). Up to fifty percent of the Stock
Units covered by a Restricted Stock Unit Award may vest and automatically become
a right to receive Shares on the First Vesting Date subject to the vesting
requirements of Section VII. The second vesting date for all Restricted Stock
Unit Awards under the Plan is four years after the date of approval of the Plan
by the Board of Directors (the “Second Vesting Date”, and collectively with the
First Vesting Date, each a “Vesting Date”). Up to fifty percent of the shares
covered by a Restricted Stock Unit Award may vest and automatically become a
right to receive Shares on the Second Vesting Date subject to the vesting
requirements of Section VII.

VII. Requirements to Vest

1. Determination of Targets. Prior to the commencement of each of fiscal years
2008 and 2009, the Board of Directors shall determine the target operating
results of the Company for each such fiscal year, including the target annual
growth rate of net income (the “Net Income Target”) and target annual growth
rate of sales revenue (the “Sales Revenue Target”), required to be met for
shares covered by the Restricted Stock Unit Awards to vest. Participants will be
provided with a summary of the Net Income Target and Sales Revenue Target for
each of fiscal years 2008 and 2009. In addition, a portion of the shares covered
by Restricted Stock Unit Awards shall be eligible to vest upon Participant’s
achievement of individual performance measurements under the Company’s
Performance Measurement Guidance and the 2008 and 2009 Fiscal Year Performance
Measurement Schemes (the “Performance Measurement Target” and collectively with
the Net Income Target and the Sales Revenue Target, the “Targets”) for each of
fiscal years 2008 and 2009.

2. Weighting of Targets. If fully met, each of the Targets shall be weighted as
follows: the Net Income Target will be weighted at 25%, the Sales Revenue Target
will be weighted 25% and the Performance Measurement Target will be weighted
50%. If a Target is not fully met, the weight of that Target for purposes of
calculating the number of vested shares under Section VII(3) below is zero.
 
 
 

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3. Calculation of Vested Stock Units at a Vesting Date. At a particular Vesting
Date, if at least one of the Net Income Target, the Sales Revenue Target or the
Performance Measurement Target , each as certified by the Board of Directors or
the Compensation Committee, is met and so long as the Participant remains
employed with the Company on such Vesting Date (except as provided in Section XI
below) a number of Stock Units subject to the Participant’s Restricted Stock
Award shall vest and automatically become a right to receive Shares on such
Vesting Date equal to (i) 50% of the total number of shares covered by the
Restricted Stock Award, multiplied by (ii) the sum of the weight of each Target
met.

VIII. Process of Restricted Stock Unit Vesting

1. Vesting or Forfeiture and Cancellation of Stock Units. As of a particular
Vesting Date, if any Stock Units have vested pursuant to the terms of Section
VII above, such vested Stock Units will automatically become a right to receive
Shares in accordance with this Section VIII.  If none of the Targets were
fulfilled as of a Vesting Date, 50% of the Stock Units covered by the Restricted
Stock Unit Award will be forfeited, cancelled and returned to the Company
without any payment due by the Company.

2. Issuance of Shares Following Vesting. The Company (or the Third Party
Administrator, if applicable) shall issue to the Participant that number of
Shares underlying vested Stock Units attributable to a particular Target as soon
as administratively feasible following the applicable Vesting Date and
certification by the Board of Directors that such Target has been achieved, and
no later than March 15 of the year following the applicable Vesting Date.

3. No Transfer Prior to Vesting. Neither a Restricted Stock Unit Award nor the
Stock Units covered by a Restricted Stock Unit Award may be transferred by a
Participant prior to vesting, except as set forth in Section XI(5). The period
of time between the date of grant of a Restricted Stock Unit Award and the date
the Stock Units either become fully vested or are forfeited pursuant to the
terms of the Plan is referred to as the “Restriction Period.” The Participant
may transfer his/her Shares issued in exchange for vested Stock Units, subject
to the terms of the 2006 Plan, any insider trading policy of the Company, any
separate agreements between the Company and the Participant that impose
restrictions on transferability, and as long as the transfer does not violate
applicable laws and regulations or written Company policies.

IX. Amendment and Termination of the Plan and Restricted Stock Unit Awards

The Board of Directors may at any time amend, suspend or terminate the Plan, and
the Board of Directors may at any time amend any aspect of a Restricted Stock
Unit Award granted under the Plan, provided that no such amendment to an
outstanding Restricted Stock Unit Award shall impair the rights of any
Participant, unless otherwise mutually agreed between the Participant and the
Company, which agreement must be in writing and signed by the Participant and
the Company.

X. Change in Control and Capital Adjustments

In the event of a Change in Control (as defined in the 2006 Plan), the treatment
of outstanding Restricted Stock Unit Awards issued under the Plan shall be
governed by the terms of the 2006 Plan. In the event that the number of
outstanding shares of the Company’s Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then the number of Stock Units reserved for issuance
under the Plan and the number of Stock Units subject to outstanding Restricted
Stock Unit Awards will be proportionately adjusted, subject to any required
action by the Board of Directors and compliance with applicable securities laws
and shall otherwise be subject to the terms of the 2006 Plan.
 
 
 

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XI. Position Change, Bad Acts, Resignation or Death of a Participant

1. Position Change. Upon a change of position of a Participant prior to either
the First Vesting Date or the Second Vesting Date, if the Participant is still a
director, senior officer or key employee of the Company or its controlling
subsidiaries, the number of unvested shares remaining and the requirements for
such vesting under Section VII above shall remain the same after the position
change of the Participant; provided, however, that the Compensation Committee
may adjust Participant’s Performance Measurement Target as necessary to conform
to the requirements of such new position ; and provided further, if the
Participant changes his/her position because of the Participant’s inability to
meet the requirements of such position and/or such Participant’s Performance
Measurement Target, the Board of Directors shall decide, in its sole discretion,
whether any or all of the unvested shares subject to the Participant’s
Restricted Stock Unit Awards shall be forfeited, cancelled and returned to the
Company effective as of the date of such determination by the Board of Directors
without any payment due by the Company to the Participant.,

2. Bad Acts. In the event that the Board of Directors determines that a
Participant has committed one or more Bad Acts (as defined below), all of the
unvested Stock Units subject to the Participant’s Restricted Stock Unit Awards
shall be forfeited, cancelled and returned to the Plan as of the date of such
determination without any payment due by the Company to the Participant. For
purposes of the Plan, a “Bad Act” shall mean any of the following: (i) the
Participant’s conviction (including any plea of guilty or nolo contendere) of
any criminal act involving fraud, dishonesty, misappropriation or moral
turpitude, or which impairs the Participant’s ability to perform his or her
duties with the Company or an Affiliate, (ii) the Participant’s theft,
dishonesty, willful misconduct, breach of duty, or falsification of any Company
or Affiliate documents or records; (iii) any material breach by the Participant
of any employment or service agreement between the Participant and the Company
or an Affiliate, which breach is not cured pursuant to the terms of such
agreement, (iv) the Participant’s material failure to abide by a Company’s or
Affiliate’s code of conduct or other policies (including without limitation,
policies relating to ethical standards, confidentiality and reasonable workplace
conduct); (v) the Participant’s repeated failure or inability to perform any
reasonable assigned duties after written notice from the Company or an
Affiliate, and a reasonable opportunity to cure, such failure or inability; or
(vi) the commission of any other act that would be grounds for termination of
the Participant for Cause (as defined in the 2006 Plan) by the Company
(regardless of whether the Participant is terminated by the Company).

3. Resignation of a Participant. Upon resignation of a Participant prior to
either the First Vesting Date or the Second Vesting Date, whether voluntarily or
involuntarily, all of the unvested Stock Units subject to the Participant’s
Restricted Stock Unit Awards shall be forfeited, cancelled and returned to the
Plan as of such Participant’s Termination Date (as defined in the 2006 Plan)
without any payment due by the Company to the Participant.

4. Retirement. Upon retirement of a Participant prior to either the First
Vesting Date or the Second Vesting Date, (a) the unvested Stock Units
attributable to the Net Income Target and the Sales Revenue Target shall remain
outstanding and eligible for vesting upon the applicable Vesting Date pursuant
to the vesting requirements described in Section VII above, and (b) the unvested
Stock Units attributable to the Performance Measurement Target shall be
forfeited, cancelled and returned to the Plan as of such Participant’s
Termination Date without any payment due by the Company to the Participant.

 
 

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5. Termination of a Participant due to Disability. If a Participant’s employment
with the Company Terminates because of the Participant’s Disability (as defined
in the 2006 Plan) prior to either the First Vesting Date or the Second Vesting
Date, if the Disability is caused by a Company work related injury, (a) the
unvested Stock Units attributable to the Net Income Target and the Sales Revenue
Target shall remain outstanding and eligible for vesting upon the applicable
Vesting Date pursuant to the vesting requirements described in Section VII
above, and (b) the unvested Stock Units attributable to the Performance
Measurement Target shall be forfeited, cancelled and returned to the Company as
of such Participant’s Termination Date without any payment due by the Company to
the Participant. If the Disability is a result of other circumstances not
involving performance of duties to the Company, the Board of Directors shall
decide, in its sole discretion, whether any or all of the unvested Stock Units
attributable to the Net Income Target and the Sales Revenue Target shall be
forfeited, cancelled and returned to the Plan as of such Participant’s
Termination Date without any payment due by the Company to the Participant.

6. Death of a Participant. If a Participant dies while performing his or her
duties for the Company prior to either the First Vesting Date or the Second
Vesting Date, his/her vested Shares and unvested Stock Units issued pursuant to
Restricted Stock Unit Awards under the Plan shall be transferred to the
Participant’s designated heir(s) by law, and (a) the unvested Stock Units
attributable to the Net Income Target and the Sales Revenue Target shall remain
outstanding and eligible for vesting pursuant to the vesting requirements
described in Section VII above, and (b) the unvested Stock Units attributable to
the Performance Measurement Target shall be forfeited, cancelled and returned to
the Plan as of such Participant’s Termination Date without any payment due by
the Company to the Participant. If the Participant dies as a result of other
circumstances not involving performance of duties to the Company, the Board of
Directors shall decide, in its sole discretion, whether any or all of the
unvested Stock Units subject to the Participant’s Restricted Stock Unit Awards
shall be forfeited, cancelled and returned to the Plan as of such Participant’s
Termination Date without any payment due by the Company to the Participant’s
designated heir(s).

XII. Other

1. No Guarantee of Employment. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate a Participant's employment or
service with the Company at any time, with or without cause. Employment with the
Company is on an at-will basis only. The Company expressly reserves the right,
which may be exercised at any time, to terminate any individual's employment
with or without cause without regard to the effect it might have upon him or her
as a Participant under the Plan.

2. No Stockholder Rights. Stock Units awarded under the Plan represent only
contract rights to receive Shares in the future upon satisfaction of the vesting
requirements described in the Plan. During the Restriction Period, Participant
shall not be entitled to any of the rights or benefits generally accorded to
stockholders, including without limitation the right to vote or receive
dividends on the Shares underlying the Stock Units. Except as provided in
Article X above, a Participant shall not receive any credit or adjustment to the
number of Shares issuable upon vesting of Stock Units in the event the Company
issues a dividend to its stockholders during the Restriction Period.
 
 
 

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3. Tax Liabilities. The Company, any Affiliate (as defined in the 2006 Plan)
which is in existence or hereafter comes into existence, or any Third Party
Administrator shall not be liable to a Participant, employee or any other
persons as to any tax consequence realized by such person due to the receipt,
vesting, exercise or settlement of any award granted hereunder or due to the
transfer of any Shares issued hereunder. The Participant is responsible for, and
by accepting an award under the Plan agrees to bear, all taxes of any nature
that are legally imposed upon the Participant in connection with an award, and
the Company does not assume, and will not be liable to any party for, any cost
or liability arising in connection with such tax liability legally imposed on
the Participant. The Company, any Affiliates or a Third Party Administrator
shall have the right to deduct from any issuance of Shares under the Plan that
would otherwise be distributed, pursuant to a Restricted Stock Unit Award to a
Participant, a portion of such Shares having a fair market value equal to the
amount of any federal, state, local or foreign income or other taxes required by
law to be withheld with respect to such issuance.

4. Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

5. Terms and Conditions; Governing Law. The Plan and all Restricted Stock Unit
Awards granted under the Plan are subject to the terms and conditions of the
2006 Plan, and shall be construed in accordance with and governed by the laws of
the State of Nevada, but without regard to its conflict of law provisions.

6. Entire Agreement; Effect of Plan on Other Arrangements. The Plan, any
resolutions of the Board of Directors adopting or administering the Plan and any
Restricted Stock Unit Award Agreement entered into in connection with the Plan
are the entire understanding between the Company and the Participant regarding
the subject matter of the Plan and supersede all prior bonus or commission
incentive plans and any written or verbal representations regarding the subject
matter of the Plan. Participation in the Plan will not convey any entitlement to
participate in this or future plans or to the same or similar bonus benefits.
Payments under the Plan are an extraordinary item of compensation that are
outside the normal or expected compensation for the purpose of calculating any
extra benefits, termination, severance, redundancy, end-of-service premiums,
bonuses, long-service awards, overtime premiums, pension or retirement benefits
or other similar payment.

Restricted Stock Unit Award Consent Letter
 
According to the Winner Medical Group Inc. Restricted Stock Unit Incentive Plan
- Fiscal Year 2008-2009 (the “Plan”), the undersigned acknowledges that the
undersigned has been designated as a participant in the Plan. Capitalized terms
not defined in this Consent Letter shall have the meaning designated in the
Plan. As participant of the Plan, the undersigned promises that,
 
1. The undersigned shall obey the terms and conditions of the Plan, the
Company’s 2006 Equity Incentive Plan as well as other regulations set by Winner
Medical Group Inc. (the “Company”) to implement the Plan. Upon execution of this
Restricted Stock Unit Award Consent Letter (this “Consent Letter”), the
undersigned acknowledges that he or she will receive _______ stock units (the
“Stock Units”), where each such Stock Unit represents a contract right to be
issued one (1) share of Common Stock of the Company (each, a “Share”) on the
vesting dates defined in Section VI of the Plan, subject to the vesting
requirements of Section VII of the Plan.
 
2. If the requirements to vest the Stock Units as set forth in the Plan are not
fulfilled, the undersigned acknowledges that the Stock Units shall not vest and
shall be forfeited, cancelled and returned to the Company without any payment
due by the Company to the undersigned, and the undersigned shall not have any
right to any Shares underlying the unvested Stock Units.
 
 
 

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3. The undersigned acknowledges that vesting of a portion of the Stock Units is
subject to the undersigned’s satisfaction of a performance measurement under the
Company’s Performance Measurement Guidance. The undersigned agrees that the
Company’s Board of Directors or Compensation Committee has the sole discretion
to determine the undersigned’s performance measurement score under the Company’s
Performance Measurement Guidance.
 
4. If the undersigned resigns from the Company, the undersigned agrees that all
of the unvested Stock Units subject to this Agreement shall be immediately
forfeited to the Company without any payment due by the Company to the
undersigned. If the undersigned changes position because of the undersigned’s
inability to meet the requirements of such position, and/or such Participant’s
Performance Measurement Target, the Board of Directors shall decide, in its sole
discretion, whether any or all of the unvested shares subject to the
undersigned’s Restricted Stock Awards shall be cancelled and returned to the
Company effective as of the date of such determination by the Board of Directors
without any payment due by the Company to the undersigned. If the Board of
Directors determines that the undersigned has committed a Bad Act (as defined in
the Plan), all of the unvested Stock Units subject to the undersigned’s
Restricted Stock Unit Awards shall be cancelled and returned to the Company as
of the date of such determination without any payment due by the Company to the
undersigned. The treatment of undersigned’s unvested Stock Units in the event of
Participant’s death, retirement or disability shall be as provided for Article
XI of the Plan.
 
5. The undersigned agrees that the undersigned is ultimately liable and
responsible for all taxes owed by the undersigned in connection with the
undersigned’s award of Stock Units or Shares under the Plan, regardless of any
action the Company takes with respect to any obligations for tax withholding
that arise in connection with the award of Stock Units or Shares under this
Agreement. The Company makes no representation and takes no obligation regarding
the treatment of any tax withholding or other tax requirements in connection
with this award of Stock Units, the issuance, vesting or settlement of the
Shares covered by this Agreement or the subsequent sale of any of the Shares
covered by this Agreement.
 
6. This Consent Letter becomes effective as of __________________, and cannot be
withdrawn.
 
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the day
and year above written.
 
 
 
By: ____________________
 
Name:
 
National ID Number:
 
Date:
 

 
 

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