Winner
Medical Group Inc.

    Restricted
Stock Unit Incentive Plan

    -Fiscal
Year 2011-13

    -To
Core Management in Shenzhen PurCotton Technology Co. Ltd.

    Effective
as October 6, 2010

     

    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 senior management and key employees of the
Company’s wholly-owned subsidiary Shenzhen PurCotton Technology Co.,
Ltd.

     

    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 five hundred thousands (500,000)
Stock Units in the aggregate; within which three hundred thousands (300,000)
Stock Units shall be granted to the Participants on October 6, 2010 (the “Date
of Approval”), 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 made 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”), of which the Plan is a subplan. 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 covered by
the Restricted Stock Unit Awards.

     

    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. The aggregate number
of Shares covered by a Restricted Stock Unit Award granted to each Participant
under the Plan shall not exceed 1% 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 two
years after the Date of Approval of the Plan by the Board of Directors (the
“First Vesting Date”). Up to one third 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 three years after the Date of Approval of the Plan by the Board of Directors
(the “Second Vesting Date”). Up to one third 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. The third 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 “Third Vesting Date”, and collectively with the First Vesting Date and
Second Vesting Date, each a “Vesting Date”). Up to one third of the shares
covered by a Restricted Stock Unit Award may vest and automatically become a
right to receive Shares on the Third 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 2011, 2012 and
2013, the CEO of the Company shall determine the target operating results of
Shenzhen PurCotton Technology Co., Ltd. for each such fiscal year, including the
target net income for that fiscal year (the “Net Income Target”) and target
sales revenue for that fiscal year (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 2011, 2012 and 2013. 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
2011, 2012 and 2013 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 2011, 2012 and
2013.

     

    2. Weighting of Targets.
The CEO of the Company shall determine the fixed weight of each of the Targets
for each participant. If a Target is fully met, the weight of that Target for
the purpose of calculating the number of vested shares under Section VII (3)
below is the fixed weight of that Target. If a Target is not met, but the actual
number is in the range of at least 50% of that Target, the weight of that Target
for the purposes of calculating the number of vested shares under Section VII(3)
below is equal to the fixed weight multiplied by the actual performance number
divided by the Target number. If a Target is not fully met and the actual number
is less than 50% of the Target, the weight of that Target for purposes of
calculating the number of vested shares under Section VII (3) below is
zero.

     

    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 CEO of the Company) is at least at the 50%
level, 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) one
third 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, 33.3% 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.

     

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

     

    1. Position Change. Upon
a change of position of a Participant prior to a 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 a 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 from the Company after having reached the relevant required age for
retirment under the local laws of the place of employment (“Retirement”) of a
Participant prior to a 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.

     

    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 a 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 a 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.

     

    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 2011-2013 (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. To the
extent that 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.

     

    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: