Unassociated Document


    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    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. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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: