Exhibit 4c(iv)





                              SMITH & NEPHEW PLC






                      ---------------------------------


                          THE SMITH & NEPHEW 2001 UK
                          APPROVED SHARE OPTION PLAN


                      ---------------------------------


                         Inland Revenue Ref No X21778



                        This is a copy of the rules of
             The Smith & Nephew 2001 UK Approved Share Option Plan
          as produced to the Annual General Meeting of the Company on
         4th April 2001 and amended by the Directors from time to time













                                                                        [LOGO]



<PAGE>

                                     INDEX
                                     -----

Rule                                                                Page


1.   This Plan                                                             1
2.   Grant of Options                                                      8
3.   Exercise Price                                                       10
4.   Relationship with Contract of Employment                             10
5.   Non-Transferability of Options                                       11
6.   Performance Targets                                                  11
7.   Overall Limits on the Granting of Options                            13
8.   Statutory Limit on the Grant of Options                              14
9.   Exercise of Options                                                  15
10.  Manner of Exercise of Options                                        18
11.  Demerger                                                             20
12.  Statutory Reconstruction of the Company                              20
13.  Winding-up of the Company                                            20
14.  Voluntary Arrangement                                                21
15.  Administration Order                                                 21
16.  Change in Control                                                    21
17.  Variation of Share Capital                                           24
18.  Alteration of the Plan                                               26
19.  Service of Documents                                                 27
20.  Miscellaneous                                                        27
21.  Jurisdiction                                                         28
22.  Data Protection                                                      29
23.  Third Party Rights                                                   29
Option Certificate                                                        30
Form of Acceptance of Grant                                               31
Notice of Exercise of Option                                              32



<PAGE>

                                   RULES OF
             THE SMITH & NEPHEW 2001 UK APPROVED SHARE OPTION PLAN

1.    THIS PLAN


1.1   This Plan is an employees' share scheme approved by ordinary resolution
      of the shareholders of the Company and established by resolution of the
      directors of the Company on 4 April 2001, and was approved by the Inland
      Revenue pursuant to s185 and Schedule 9 of the Taxes Act on 10 April
      2001.

1.2   In this Plan the following words and expressions shall have the meanings
      given below and words and expressions not otherwise defined shall have
      the same meanings as in section 187 of the Taxes Act and Schedule 9:

      "Announcement"                    the preliminary announcement to the
                                        London Stock Exchange of the annual or
                                        half yearly results of the Company for
                                        a year

      "the Approval Date"               the date on which the Company receives
                                        notice that this Scheme has been
                                        approved by the Inland Revenue pursuant
                                        to Schedule 9

      "Associated Company"              subject to rule 8.3, any company which,
                                        in relation to the Company, is an
                                        associated company as that term is
                                        defined in section 416 of the Taxes
                                        Act except that, for the purposes of
                                        this Plan, subsection (1) of that
                                        section shall have effect with the
                                        omission of the words "or at any time
                                        within one year previously"

      "the Auditors"                    the auditors for the time being of the
                                        Company or in the event of there being
                                        joint auditors, such one of them as
                                        the Committee may decide

      "Close Company"                   has the same meaning as in Chapter I of
                                        Part XI of the Taxes Act SAVE THAT in
                                        determining



                                      1
<PAGE>

                                        whether a company is a close company
                                        for the purposes of this Scheme,
                                        sections 414(1)(a) and 415 of that Act
                                        shall be disregarded

      "the Committee"                   the Remuneration Committee of the
                                        Directors, or such other committee
                                        comprising a majority of non-executive
                                        directors of the Company to which the
                                        Directors delegate responsibility for
                                        the operation of this Plan or
                                        following a change of control of the
                                        Company, those persons who comprised
                                        the Remuneration Committee or such
                                        other committee of the Directors
                                        immediately before such change of
                                        control

      "the Company"                     Smith & Nephew plc (registered in
                                        England no. 324357)

      "control"                         has the meaning given in section 840
                                        of the Taxes Act

      "Daily Official List"             the Daily Official List of the London
                                        Stock Exchange

      "the Date of Grant"               in relation to any Option, means the
                                        date on which that Option is granted
                                        in accordance with rule 2.8

      "Dealing Day"                     a day on which the London Stock
                                        Exchange is open for business

      "the Directors"                   the board of directors of the Company
                                        or a duly authorised committee of the
                                        directors

      "Eligible Employee"               (a) an employee of a Participating
                                            Company who is a director of any
                                            Participating Company and required
                                            under his contract



                                      2
<PAGE>

                                            of employment to work for not less
                                            than 25 hours per week (excluding
                                            meal breaks) disregarding holiday
                                            entitlement; or

                                        (b) any other employee of a
                                            Participating Company

      "other Employees' Share Scheme"   (a) the Smith & Nephew 1985 Share
                                            Option Scheme;

                                        (b) the Smith & Nephew 1990
                                            International Executive Share
                                            Option Scheme;

                                        (c) the Smith & Nephew Employee Share
                                            Option Scheme;

                                        (d) the Smith & Nephew 1991 Overseas
                                            Employee Share Option Plan; and

                                        (e) any other employee share option or
                                            share incentive scheme (except
                                            this Plan) established by the
                                            Company under which shares may be
                                            issued by the Company

      "the Exercise Price"              the price per Share payable upon the
                                        exercise of an Option (as determined
                                        in accordance with rule 3)

      "Good Reason"                     means, in relation to an Optionholder
                                        ceasing to hold office or employment
                                        within the Group, ceasing to do so by
                                        reason of:

                                        (a) injury, ill-health or disability
                                            (evidenced to the satisfaction of
                                            the Committee); or

                                        (b) dismissal by reason of redundancy



                                      3
<PAGE>

                                            (within the meaning of the
                                            Employment Rights Act 1996); or

                                        (c) retirement on or after reaching
                                            the age of 65 or the age at which
                                            the Optionholder is anticipated
                                            to retire in accordance with the
                                            terms of his contract of
                                            employment; or

                                        (d) the fact that the office or
                                            employment by virtue of which he
                                            is eligible to participate in this
                                            Plan relates to a business or part
                                            of a business which is transferred
                                            to a person who is neither an
                                            Associated Company nor a member of
                                            the Group; or

                                        (e) the fact that the company with
                                            which he holds the office or
                                            employment by virtue of which he
                                            is eligible to participate in this
                                            Plan is no longer a member of
                                            the Group or an Associated Company

      "the Grantor"                     in relation to an Option, the
                                        Company or such other person as
                                        intends to grant or has granted that
                                        Option

      "the Group"                       the Company and any company
                                        which is for the time being a
                                        Subsidiary

      "Jointly-owned Company"           a company (and any subsidiary as
                                        defined in section 736 of the
                                        Companies Act 1985 of such a company)
                                        of which the whole of the issued
                                        ordinary share capital is jointly
                                        owned by a member of the Group and
                                        another person (not being a member of
                                        the Group) but which is not a
                                        Subsidiary and is not under the
                                        control of such



                                      4
<PAGE>

                                        other company

      "the London Stock Exchange"       London Stock Exchange plc

      "Market Value"                    in relation to any Share in respect of
                                        which an Option is to be, or has been,
                                        granted means the average of the
                                        middle market quotations of a Share as
                                        derived from the Daily Official List
                                        for the 3 consecutive Dealing Days
                                        last preceding the Date of Grant

      "Material Interest"               has the meaning given in section 187(3)
                                        of the Taxes Act

      "the Model Code"                  the code adopted by the Company which
                                        contains provisions similar in purpose
                                        and effect to the provisions of the
                                        Model Code for Securities Transactions
                                        by Directors of Listed Companies
                                        issued by the UK Listing Authority
                                        from time to time

      "a New Joiner Option"             the first Option granted to an
                                        individual after he first becomes an
                                        Eligible Employee

      "Option"                          a right to acquire Shares granted in
                                        accordance with and subject to the
                                        rules of this Plan which has not
                                        lapsed and ceased to be exercisable

      "Option Certificate"              a certificate issued pursuant to rule
                                        2.8 evidencing the grant of an Option

      "Optionholder"                    a person who has been granted an
                                        Option or, if that person has died and
                                        where the context requires, his
                                        Personal Representatives

      "Option Shares"                   the Shares over which an Option
                                        subsists



                                      5
<PAGE>

      "Ordinary Share Capital"          the issued ordinary share capital of
                                        the Company other than fixed-rate
                                        preference shares

      "Participating Company"           a member of the Group to which the
                                        Directors have resolved that this Plan
                                        shall extend for the time being

      "Performance Option"              an Option the exercise of which is
                                        normally subject to the attainment of
                                        a Performance Target

      "Performance Period"              in relation to an Option, the period
                                        over which performance is to be judged
                                        for the purpose of determining
                                        whether, or to what extent, a
                                        Performance Target is met or, in the
                                        case of an Option which is not a
                                        Performance Option, the period of 3
                                        years beginning with the Date of Grant
                                        or such other period as the Grantor
                                        shall specify at the time of grant of
                                        the Option

      "Performance Target"              the condition or conditions imposed on
                                        the exercise of an Option pursuant to
                                        rule 6 as varied from time to time

      "Personal Representatives"        in relation to an Optionholder, the
                                        legal personal representatives of the
                                        Optionholder (being either the
                                        executors of his will to whom a valid
                                        grant of probate has been made or, if
                                        he dies intestate, the duly appointed
                                        administrator(s) of his estate) who
                                        have produced to the Company evidence
                                        of their appointment as such

      "this Plan"                       The Smith & Nephew 2001 UK Approved
                                        Share Option Plan as set out in these
                                        rules and amended from time to time
                                        pursuant to rule 18



                                      6
<PAGE>

      "Schedule 9"                      Schedule 9 to the Taxes Act

      "Shares"                          fully-paid ordinary shares in the
                                        capital of the Company which satisfy
                                        the requirements of paragraphs 10-14
                                        (inclusive) of Schedule 9

      "Subscription Option"             a right to subscribe for Shares granted
                                        in accordance with and subject to the
                                        rules of this Plan

      "Subsidiary"                      any company which is for the time
                                        being a subsidiary (as defined in
                                        section 736 of the Companies Act 1985)
                                        of the Company and under the control
                                        of the Company

      "the Taxes Act"                   the Income and Corporation Taxes Act
                                        1988

      "UK Listing Authority"            the Financial Services Authority in
                                        its capacity as the competent
                                        authority for the purposes of Part IV
                                        of the Financial Services Act 1986

      "year"                            a financial year of the Company

1.3   For the purposes of this Plan, unless the context otherwise requires:

      (a)  references to an Option vesting or being or becoming vested in
           respect of any number or proportion of the Shares over which it
           subsists are to be read as references to the Option becoming
           capable of being exercised either immediately or, subject to the
           Optionholder continuing to hold office or employment within the
           Group (or with any Associated Company), at some future time in
           respect of such Shares;

      (b)  references to Shares in respect of which an Option subsists at any
           time are to be read and construed as references to the Shares over
           which the Option is then held (and in respect of which it has not
           then lapsed and ceased to be exercisable);



                                      7
<PAGE>

      (c)  any reference to any enactment includes a reference to that
           enactment as from time to time modified extended or re-enacted;

      (d)  words denoting the masculine gender shall include the feminine;

      (e)  words denoting the singular shall include the plural and vice
           versa; and

      (f)  references to rules, schedules and appendices are to the rules,
           schedules and appendices of this Plan and no account should be
           taken of the rule headings which have been inserted for ease of
           reference only.

2.    GRANT OF OPTIONS


      Eligibility

2.1   Subject to the following provisions of this rule 2, the Committee shall
      have an absolute discretion as to the selection of persons to whom
      Options may be granted.

2.2   An Option may only be granted to an Eligible Employee.

2.3   An Option shall not be granted to any individual at any time when he
      has, or has within the preceding 12 months had, a Material Interest in a
      Close Company being either the Company or a company which has control of
      the Company or is a member of a consortium which owns the Company.

      Time of grant

2.4   An Option may only be granted:

      (a)  during the period ending 42 days after the Approval Date, and
           thereafter

      (b)  during the period of 42 days beginning with the fourth Dealing Day
           following an Announcement; or

      (c)  within a period of 28 days immediately after the person to whom it
           is granted first becomes an Eligible Employee; or



                                      8
<PAGE>

      (d)  at any other time but only if, in the opinion of the Committee, the
           circumstances are exceptional.

2.5   If the Grantor is restricted by statute, order or regulation (including
      any regulation, order or requirement imposed on the Company by the
      London Stock Exchange or any other regulatory authority) from granting
      an Option within any period as mentioned in rule 2.4, the Grantor may,
      subject to rule 2.6, grant an Option at any time during the period of 42
      days (or, in the circumstances referred to in rule 2.4(c), 28 days)
      beginning with the date on which all such restrictions are removed.

2.6   An Option may not be granted at any time if to do so would be a breach
      of the Model Code.

2.7   No Option may be granted after 4 April 2011.

      Manner of grant

2.8   An Option shall be granted by the Grantor executing as a deed and
      issuing to the Optionholder an Option Certificate which specifies:

      (a)  the Date of Grant;

      (b)  the number of Option Shares;

      (c)  the Exercise Price;

      (d)  the Performance Target (if any) imposed pursuant to rule 6 or any
           other condition imposed under rule 2.10;

      (e)  the last date on which the Option may be exercised by reason of
           rule 9.1

      and  is otherwise in such form as the Grantor may from time to time
           specify.

2.9   Unless the Grantor otherwise determines in relation to the grant of
      Options on any occasion, any person to whom an Option is granted must
      confirm his acceptance of such grant by executing as a deed and
      delivering to the Grantor a duly completed form of acceptance in such
      form as the Grantor may from time to time specify and if no such form of
      acceptance is received by the Grantor within the period of 30 days after
      the Date of Grant (or such later



                                      9
<PAGE>

      time as the Grantor may notify to the Optionholder at the Date of Grant)
      the Option shall thereupon lapse and cease to be exercisable.

2.10  The Directors may specify that the exercise of any Option shall be
      subject to such other objective conditions (in addition to any
      Performance Target) as may be specified in the Option Certificate at the
      time of grant.

2.11  An Option shall not be granted by any person other than the Company
      without the prior approval of the Directors.

2.12  An Option shall not be granted to a director of the Company without the
      prior approval of the Committee.

3.    EXERCISE PRICE

3.1   Subject to rule 3.2 and any adjustment being made pursuant to rule 17,
      the Exercise Price of an Option shall be determined by the Committee
      (with the prior consent of the Grantor, if appropriate) but shall be not
      less than Market Value.

3.2   The Exercise Price of a Subscription Option shall not (except as
      mentioned in sub-paragraph (c)(iii) of rule 17.1) in any event be less
      than the nominal value of a Share.

4.    RELATIONSHIP WITH CONTRACT OF EMPLOYMENT

4.1   The grant of an Option does not form part of the Optionholder's
      entitlement to remuneration or benefits pursuant to his contract of
      employment nor does the existence of a contract of employment between
      any person and the Company or any present or past Subsidiary or
      Associated Company, give such person any right or entitlement to have an
      Option granted to him in respect of any number of Shares or any
      expectation that an Option might be granted to him whether subject to
      any conditions or at all.

4.2   The rights and obligations of an Optionholder under the terms of his
      contract of employment with the Company or any present or past
      Subsidiary or Associated Company shall not be affected by the grant of
      an Option or his participation in this Plan.

4.3   The rights granted to an Optionholder upon the grant of an Option shall
      not afford the Optionholder any rights or additional rights to
      compensation or damages in consequence of



                                      10
<PAGE>

      the loss or termination of his office or employment with the Company or
      any present or past Subsidiary or Associated Company for any reason
      whatsoever (whether or not such termination is ultimately held to be
      wrongful or unfair).

4.4   An Optionholder shall not be entitled to any compensation or damages for
      any loss or potential loss which he may suffer by reason of being unable
      to exercise an Option in consequence of the loss or termination of his
      office or employment with the Company or any present or past Subsidiary
      or Associated Company for any reason whatsoever (whether or not
      termination is ultimately held to be wrongful or unfair).

5.    NON-TRANSFERABILITY OF OPTIONS

5.1   During his lifetime only the individual to whom an Option is granted may
      exercise that Option.

5.2   An Option shall immediately lapse and cease to be exercisable if:

      (a)  it is transferred or assigned (other than to the Personal
           Representatives of the Optionholder), mortgaged, charged or
           otherwise disposed of by the Optionholder; or

      (b)  the Optionholder is adjudged bankrupt or an interim order is made
           because he intends to propose a voluntary arrangement to his
           creditors under the Insolvency Act 1986; or

      (c)  the Optionholder makes or proposes a voluntary arrangement under
           the Insolvency Act 1986, or any other scheme or arrangement in
           relation to his debts, with his creditors or any section of them;
           or

      (d)  the Optionholder is otherwise deprived (except on death) of the
           legal or beneficial ownership of the Option by operation of law or
           doing or omitting to do anything which causes him to be so
           deprived.

6.    PERFORMANCE TARGETS

6.1   Except in the case of a New Joiner Option, an Option which is not a
      Performance Option may only be granted if the Directors are satisfied
      that individual performance targets set in relation to the year
      preceding the Date of Grant have been met or exceeded.




                                      11
<PAGE>

6.2   When an Option is granted, the Grantor may determine and specify in the
      Option Certificate that the exercise of such Option shall be conditional
      upon the attainment of such one or more targets relating to the
      performance of the Company and, if the Committee so determines, upon the
      performance of a Subsidiary and/or division and/or the Optionholder
      measured over such period and against such objective criteria as may be
      determined by the Committee PROVIDED THAT, subject to rules 6.4 and 6.5
      the question of whether an Option can or cannot be exercised on any
      occasion shall not be determined or determinable at the discretion of
      any person.

6.3   Any such Performance Target may provide that the Option shall become
      vested in respect of a given number or proportion of the Shares over
      which it subsists according to whether, and the extent to which, any
      given Performance Target is met or exceeded.

6.4   After an Option has been granted the Committee may (with the consent of
      the Grantor, where appropriate), in appropriate circumstances, amend the
      Performance Target PROVIDED THAT no such amendment shall be made unless
      an event has occurred or events have occurred in consequence of which
      the Committee reasonably considers that the terms of the existing
      Performance Target should be so amended for the purpose of ensuring that
      either the objective criteria against which the performance of the
      Company and/or any Subsidiary or division and/or the Optionholder will
      then be measured will be a fairer measure of such performance or that
      any amended Performance Target will afford a more effective incentive to
      the Optionholder and will be no more difficult to satisfy than was the
      original Performance Target when first set.

6.5   After an Option has been granted the Committee (with the consent of the
      Grantor, where appropriate) may, in appropriate circumstances, waive in
      whole or in part any requirement that a Performance Target be met as a
      condition of exercise of such Option PROVIDED THAT no such waiver shall
      be made unless an event or events have occurred in consequence of which
      the Committee reasonably considers that the terms of the existing
      Performance Target no longer afford an effective incentive to the
      Optionholder.

6.6   The Directors shall, within the period of 60 days beginning with either
      the end of the Performance Period or, if later, the Announcement for the
      last year of the Performance Period, notify the Grantor, if it is not
      the Company, and the Optionholder of the number or proportion of the
      Option Shares (if any) in respect of which the Option lapses and ceases
      to be exercisable in consequence of a Performance Target not being met.



                                      12
<PAGE>

6.7   If, in consequence of a Performance Target being met, an Option becomes
      vested in respect of some but not all of the Shares over which it is
      held, it shall thereupon lapse and cease to be exercisable in respect of
      the balance of the Option Shares.

6.8   A Performance Target imposed pursuant to this rule 6 shall not apply in
      relation to the exercise of a right to acquire shares granted (as
      mentioned in rule 16.4) in consequence of a change of control of the
      Company.

6.9   The number of Shares in respect of which an Option shall become vested
      on any occasion shall be rounded to the nearest whole number.

7.    OVERALL LIMITS ON THE GRANTING OF OPTIONS

      10% in 10 years for all plans

7.1   The number of Shares in respect of which Subscription Options may be
      granted in any year, when added to:

      (a)  the number of Shares in respect of which Subscription Options have
           previously been granted (and which, if not exercised, have not
           ceased to be exercisable); and

      (b)  the number of Shares issued or in respect of which rights to
           subscribe for Shares have previously been granted (and which have
           neither been exercised, nor have ceased to be exercisable) pursuant
           to any other Employees' Share Scheme

      in that year and the preceding nine years shall not exceed 10 per cent of
      the Ordinary Share Capital.





      5% in 10 years for executive plans

7.2   The number of Shares in respect of which Subscription Options may be
      granted in any year, when added to:

      (a)  the number of Shares in respect of which Subscription Options have
           previously been granted (and which, if not exercised, have not
           ceased to be exercisable); and




                                      13
<PAGE>

      (b)  the number of Shares issued or in respect of which rights to
           subscribe for Shares have previously been granted (and which have
           neither been exercised, nor have ceased to be exercisable) pursuant
           to any other executive share option or incentive plan

      in that year and the preceding nine years shall not exceed 5 per cent of
      the Ordinary Share Capital.

8.    STATUTORY LIMIT ON THE GRANT OF OPTIONS

      Statutory limitation

8.1   The number of Shares in respect of which an Option is granted to an
      Eligible Employee shall be limited, and such Option shall take effect so
      that the aggregate Market Value of Shares which may be acquired upon the
      exercise of that Option, when added to:

      (a)  the aggregate Market Value of Shares in respect of which Options
           have previously been granted (and have not then been exercised nor
           ceased to be exercisable); and

      (b)  the aggregate Market Value of Shares in respect of which rights to
           acquire such Shares have been obtained by that Eligible Employee
           under any other share option scheme approved under Schedule 9 (not
           being a savings-related share option scheme) which has been
           established by the Company or by any company which, in relation to
           the Company, is an Associated Company (and have not then been
           exercised nor ceased to be exercisable)

      shall not exceed or further exceed Pound Sterling 30,000 or such other
      limit as may from time to time be specified in the legislation governing
      Inland Revenue approved share option schemes.

8.2   For the purposes of this rule 8 the market value of Shares in respect of
      which other rights to acquire Shares have been granted shall have the
      same meaning as in Part VIII of the Taxation of Chargeable Gains Act
      1992 and shall be calculated as at the time such other rights were
      granted.

8.3   For the purposes of rule 8.1 "Associated Company" shall have the meaning
      given in section 416 of the Taxes Act.




                                      14
<PAGE>

9.    EXERCISE OF OPTIONS

9.1   Notwithstanding any other provision of this Plan, an Option shall not in
      any event be exercisable on or after the tenth anniversary of the Date
      of Grant or such earlier date as the Grantor may specify when the Option
      is granted.

9.2   Save as otherwise provided in the following provisions of this rule 9
      and rules 11 and 16, a Performance Option may only be exercised after
      the Directors have given notice to the Optionholder as mentioned in rule
      6.6.

9.3   Except as otherwise provided in the following provisions of this rule 9
      and rule 16, an Option may not be exercised at any time unless the
      Optionholder then holds office or employment with a member of the Group
      or an Associated Company or a Jointly-owned Company.

9.4   An Option shall not be exercised at any time when the Optionholder has
      or has within the preceding 12 months had, a Material Interest in a
      Close Company being either the Company or a company which has control of
      the Company or is a member of a consortium which owns the Company.

9.5   Save as otherwise provided in rule 6 and in the following provisions of
      this rule 9 and rules 11 to 16, an Option may be exercised only in
      respect of such proportions of the Option Shares and at such times as
      the Grantor shall determine and specify in the Option Certificate.

9.6   An Option may not be exercised on any occasion if such exercise would
      not be in compliance with the Model Code.

      Injury, ill-health, disability, redundancy, retirement etc.

9.7   If an Optionholder ceases to hold office or employment within the Group
      for a Good Reason then, subject to rule 9.10, an Option granted to him
      may, within the period of 6 months beginning with the date of such
      cessation, be exercised in respect of:

      (i)    Shares in respect of which the Option was vested immediately
             before the Optionholder so ceased to hold office or employment
             within the Group (or if, in the case of a Performance Option, the
             Optionholder so ceases after the end of the Performance Period
             but before the date on which the Optionholder is notified as



                                      15
<PAGE>

             mentioned in rule 6.6, such of the Option Shares in respect of
             which the Option becomes vested when such notification is given);
             and

      (ii)   if the Optionholder so ceased to hold office or employment within
             the Group before the end of the Performance Period, a proportion
             (corresponding to such proportion of the Performance Period as
             fell before the date of such cessation) of such of the Option
             Shares (if any) in respect of which the Option is then deemed to
             be vested as mentioned in rule 9.13; and

      (iii)  if, in the exercise of their discretion, the Directors (with the
             consent of the Grantor, where appropriate) so determine, such
             additional number or additional proportion of the Option Shares
             as may be notified to the Optionholder

      and the Option shall lapse and cease to be exercisable at the end of that
      period of 6 months.

      Leaving for other reasons

9.8   If an Optionholder gives or receives notice to terminate his office or
      employment with any member of the Group or any Associated Company or
      ceases to hold office or employment within the Group or any Associated
      Company for any reason other than those set out in rules 9.7 or 9.9
      then, subject to rules 9.10 and 16, an Option granted to him may only be
      exercised (if at all) in relation to such proportion of the Option
      Shares, and (subject to rule 9.1) within such period, as the Committee
      shall (with the consent of the Grantor, if appropriate) determine and
      notify to the Optionholder and shall otherwise lapse and cease to be
      exercisable SAVE THAT:

      (a)  unless such determinations have been made by the Committee within
           the period of three months beginning with the date on which the
           Optionholder so ceases (or, if earlier, gives or is given notice of
           such cessation) then such Option may not be exercised and shall be
           deemed to have lapsed and ceased to be exercisable as from the date
           of such cessation or, if earlier, the date on which notice of such
           termination was given or received; and

      (b)  in relation to a Performance Option, unless the Committee is of the
           opinion that the Performance Target is then likely to be met in
           full, such proportion of the Option



                                      16
<PAGE>

           Shares shall not exceed such proportion of the Performance Period
           as fell before the date of such cessation.

      Death in service

9.9   If an Optionholder dies in service an Option granted to him may be
      exercised by his Personal Representatives within the period of 12 months
      beginning with the date of his death in respect of all of the Option
      Shares and the Option shall lapse and cease to be exercisable at the end
      of that period of 12 months.

      Death after leaving

9.10  If, after ceasing to hold office or employment within the Group, an
      Optionholder dies before his Option has lapsed and ceased to be
      exercisable, his Personal Representatives may, within the period of 12
      months beginning with the date of death, exercise such Option in respect
      of such of the Option Shares over which it could have been exercised
      immediately before the Optionholder died and shall lapse and cease to be
      exercisable at the end of that period.

9.11  For the purposes of this rule 9 an Optionholder shall not be treated as
      having ceased to hold office or employment within the Group unless and
      until he no longer holds any office or employment with any member of the
      Group or with any Associated Company or any Jointly-owned Company.

9.12  A female Eligible Employee whose office or employment has been
      terminated in circumstances such that, pursuant to the Employment Rights
      Act 1996 she has a right to return to work, shall be deemed for the
      purposes of this rule 9 as not having ceased to hold office or
      employment within the Group or with any Associated Company until such
      time as she is no longer capable, pursuant to that Act, of exercising a
      right to return to work and shall be deemed not to have ceased to hold
      such office or employment if she exercises that right.

9.13  For the purposes of rule 9.7, an Option shall be deemed to be vested
      only if and to the extent that the Committee is of the opinion that the
      performance of the Company, judged as at the time when the Optionholder
      ceased to hold office or employment within the Group, is such that the
      Performance Target is likely to be met to a particular extent so that a
      given percentage of the Option Shares would be likely to become vested,
      and accordingly the



                                      17
<PAGE>

      Option may only be exercised in respect of the said proportion of such
      percentage of the Option Shares.

10.   MANNER OF EXERCISE OF OPTIONS

10.1  An Option shall be exercised only by the Optionholder serving a written
      notice upon the Grantor which:

      (a)  specifies the number of Shares in respect of which that Option is
           exercised which in any event shall not:

           (i)    exceed the number of Shares in respect of which that Option
                  subsists and which have not been specified for this purpose
                  in a prior notice served by the Optionholder in accordance
                  with this rule 10; nor

           (ii)   be less than 1000 Shares or, if less, the number of Shares
                  over which the Option subsists and has vested; and

      (b)  is accompanied by payment of an amount equal to the product of the
           number of Shares specified in the notice and the Exercise Price;
           and

      (c)  unless the Committee (or the Grantor, as appropriate) otherwise
           permits, is accompanied by the Option Certificate in respect of
           that Option

      and is otherwise in such form as the Committee (with the agreement of the
      Grantor, where appropriate) may from time to time determine.

10.2  Within the period of 30 days beginning with the date on which the
      Company receives a notice of exercise which complies with rule 10.1, the
      Company (if it is the Grantor) shall allot transfer or procure the
      transfer, or the Grantor (if it is not the Company) shall transfer or
      procure the transfer to the Optionholder of such number of Shares as is
      specified in the notice.

10.3  If the Grantor is restricted from issuing, transferring or procuring the
      transfer of Shares upon the exercise of an Option by reason of any
      statutory, regulatory or other legal provision or rule or the Model Code
      or any other requirement or guidance issued by the London Stock Exchange
      or on behalf of institutional investors in the Company or any other body
      and



                                      18
<PAGE>

      which relates to dealings in Shares by directors or employees or any
      member of the Group, the Grantor shall not be obliged to issue, transfer
      or procure the transfer of Shares in consequence of such exercise until
      all such restrictions are lifted and shall do so within the period of 30
      days thereafter.

10.4  Subject to rule 10.5, as soon as reasonably practicable after allotting
      or procuring the transfer of any Shares pursuant to rule 10.2, the
      Grantor shall procure:

      (a)  the issue to the Optionholder of a definitive share certificate or
           such acknowledgement of shareholding as is prescribed from time to
           time in respect of the Shares so allotted or transferred; and

      (b)  where Shares are to be allotted and if on that date Shares of the
           same class are listed on the Daily Official List, that any Shares
           so allotted are admitted to the Daily Official List; and

      (c)  if the Option remains partially unexercised, that either the
           relevant Option Certificate is amended so as to indicate the number
           of Shares in respect of which the Option subsists, or that the
           Optionholder is issued with a new Option Certificate which contains
           all the information which would have been contained in such amended
           Option Certificate.

10.5  Some or all of the Shares acquired upon the exercise of an Option may,
      if the Optionholder so requests, be issued or transferred to a nominee
      of the Optionholder provided that beneficial ownership of such Shares
      shall be vested in the Optionholder.

10.6  The allotment or transfer of any Shares under this Scheme shall be
      subject to the Memorandum and Articles of Association of the Company and
      to any necessary consents of any governmental or other authorities
      (whether in the United Kingdom or otherwise) under any enactments or
      regulations from time to time in force and it shall be the
      responsibility of the Optionholder to comply with any requirements to be
      fulfilled in order to obtain or obviate the necessity of any such
      consent.

10.7  All Shares allotted or transferred under this Scheme shall rank equally
      in all respects with the Shares for the time being in issue save as
      regards any rights attaching to such Shares by reference to a record
      date prior to the date of such allotment or transfer.



                                      19
<PAGE>

11.   DEMERGER

      If notice is given to shareholders of the Company of a proposed demerger
      of the Company or of any Subsidiary, Options which are not capable of
      immediate exercise may then be exercised (notwithstanding that any
      Performance Period has not then ended) over such number or proportion of
      the Option Shares as the Committee (with the consent of the Grantor, if
      it is not the Company) may acting fairly, reasonably and objectively
      then determine and notify to Optionholders and within such period as the
      Committee may specify in such notice to Optionholders SAVE THAT no such
      notice to Optionholders shall be given unless the Auditors have
      confirmed in writing to the Grantor that (disregarding any Performance
      Target subject to which any Option is then exercisable) the interests of
      Optionholders would or might be substantially prejudiced if before the
      proposed demerger has effect Optionholders could not exercise their
      Options and be registered as the holders of the Shares thereupon
      acquired.

12.   STATUTORY RECONSTRUCTION OF THE COMPANY

12.1  If the court sanctions a compromise or arrangement proposed for the
      purposes of or in connection with a scheme for the reconstruction of the
      Company or its amalgamation pursuant to section 425 of the Companies Act
      1985 an Option may within the period commencing on the date on which the
      court sanctions the compromise or arrangement and ending with the date
      upon which it becomes effective be exercised (notwithstanding that any
      Performance Period has not then ended) over such number or proportion of
      the Option Shares as the Committee (with the consent of the Grantor, if
      it is not the Company) may then determine and notify to the Optionholder
      and to the extent that the Option remains unexercised when the
      compromise or arrangement becomes effective, the Option shall lapse.

12.2  In making any such determination as is mentioned in rule 12.1 the
      Committee shall act fairly and reasonably and shall apply the same
      criteria to the holders of all Options granted on the same occasion.

13.   WINDING-UP OF THE COMPANY

13.1  If notice is given to holders of Shares of a resolution for the
      voluntary winding-up of the Company, an Option may, notwithstanding that
      any Performance Period has not then ended, be exercised in respect of
      all the Option Shares at any time before the



                                      20
<PAGE>

      commencement of the winding-up or within such other period as the Grantor
      notifies to the Optionholder.

13.2  An Option shall immediately lapse and cease to be exercisable upon the
      commencement of a winding-up of the Company.

14.   VOLUNTARY ARRANGEMENT

      If a proposal is made to the Company and to its creditors for a
      voluntary arrangement under Part I of the Insolvency Act 1986, an Option
      may (notwithstanding that any Performance Period has not then ended) be
      exercised in respect of all of the Option Shares at any time not later
      than 14 days before the date of the meeting summoned in accordance with
      section 3 of the Insolvency Act 1986 and the Option shall thereafter
      lapse and cease to be exercisable.

15.   ADMINISTRATION ORDER

      If an administration order is made in relation to the Company under Part
      II of the Insolvency Act 1986, an Option may (notwithstanding that any
      Performance Period has not then ended) be exercised in respect of all of
      the Option Shares within the period of 28 days after the administration
      order is made and the Option shall lapse and cease to be exercisable at
      the end of that period.

16.   CHANGE IN CONTROL

16.1  If, as a result of either:

      (a)  a general offer to acquire the whole of the Ordinary Share Capital
           which is made on a condition such that if it is satisfied the
           person making the offer will have control of the Company; or

      (b)  a general offer to acquire all the shares in the Company of the
           same class as the Shares

      the Company shall come under the control of another person or persons,
      the Optionholder shall, whether or not he subsequently or in consequence
      of the change in control ceases to hold office or employment within the
      Group for any reason, be entitled to exercise his Option



                                      21
<PAGE>

      notwithstanding that any Performance Period has not then ended in
      respect of all of the Option Shares over which the Option subsists
      within the period of six months of the date when the person making the
      offer has obtained control of the Company and any condition subject to
      which the offer is made has been satisfied and to the extent that the
      Option is not exercised it shall, subject to rules 16.2 and 16.4, lapse
      and cease to be exercisable at the end of that period.

16.2  If, before an option has lapsed and ceased to be exercisable, any person
      becomes entitled or bound to acquire shares in the Company under
      sections 428-430F (inclusive) of the Companies Act 1985, the
      optionholder shall be entitled to exercise his option notwithstanding
      that any Performance Period has not then ended in respect of all of the
      Option Shares over which the Option subsists at any time when that
      person remains so entitled or bound and, to the extent that the Option
      is not exercised, it shall, subject to clause 16.4, lapse and cease to
      be exercisable.

16.3  For the purposes of the preceding provisions of this rule 16 a person
      shall be deemed to have control of the Company if he and others acting
      in concert with him have together obtained control of it.

16.4  If any company (in this rule referred to as "the acquiring company"):

      (a)  obtains control of the Company as mentioned in rule 16.1; or

      (b)  obtains control of the Company in pursuance of a compromise or
           arrangement sanctioned by the court under section 425 of the
           Companies Act 1985; or

      (c)  becomes bound or entitled to acquire shares under sections 428 to
           430F (inclusive) of the Companies Act 1985

      an Optionholder may, at any time within the appropriate period as
      defined in rule 16.5, by agreement with the acquiring company and
      notwithstanding that any Performance Target subject to which an Option
      is then exercisable is not then satisfied, release his rights under his
      Option in consideration of the grant to him of rights to acquire shares
      in the acquiring company or any other company falling within
      sub-paragraphs (b) or (c) of paragraph 10 of Schedule 9 (read and
      construed as if references in those provisions to the company were
      references to the acquiring company) PROVIDED THAT:



                                      22
<PAGE>

               (i)    such rights will be exercisable only in accordance with
                      the provisions of this Scheme as it had effect
                      immediately before the release of the rights referred to
                      above (read and construed as mentioned in rule 16.6);
                      and

               (ii)   the shares to which the new rights relate satisfy the
                      provisions of paragraphs 10 to 14 (inclusive) of
                      Schedule 9; and

               (iii)  the total market value, immediately before such release,
                      of the Shares in respect of which the Option then
                      subsists is equal to the total market value, immediately
                      after such grant, of the shares in respect of which the
                      new rights are granted to the Optionholder; and

               (iv)   the total amount payable by the Optionholder for the
                      acquisition of shares upon exercise of the new rights is
                      equal to the total amount that would have been payable
                      for the acquisition of Shares upon exercise of the
                      Option.

16.5  In rule 16.4 "the appropriate period" means:

      (a)  in a case falling within rule 16.4(a), the period of six months
           beginning with the time when the person making the offer has
           obtained control of the Company and any condition or conditions
           subject to which the offer is made has or have been satisfied or
           waived;

      (b)  in a case falling within rule 16.4(b), the period of six months
           beginning with the time when the court sanctions the compromise or
           arrangement; and

      (c)  in a case falling within rule 16.4(c), the period during which the
           acquiring company remains bound or entitled as mentioned in that
           paragraph.

16.6  For the purposes mentioned in rule 16.4(c)(i) the provisions of this
      Scheme shall be read and construed as if:

      (a)  references to "the Company" in rules 1, 2, 4, 9, 10, 11, 16, 17, 19
           and 20 were references to the company in respect of whose shares
           the new rights are granted;




                                      23
<PAGE>

      (b)  references to "Shares" in rules 1, 9, 10, 11, 16, 17, 18 and 20
           were references to such shares;

      (c)  references to "Option" in rules 1, 2, 4, 5, 9, 10, 11, 16, 17, 18
           and 20 were references to such rights;

      (d)  references to "Optionholder" in rules 1, 4, 5, 9, 10, 11, 16, 17,
           18 and 19 were references to the persons to whom such rights are
           granted;

      (e)  references to "Ordinary Share Capital" in rules 1, 16, 17 and 18
           were references to the ordinary share capital (other than fixed
           rate preference shares) of such company;

      (f)  references to "the Exercise Price" in rules 1, 10 and 17 were
           references to the price per share payable upon the exercise of such
           new rights

16.7  Rights granted pursuant to rule 16.4 shall be regarded for the purposes
      of section 185 to the Taxes Act and Schedule 9 and for the purposes of
      the subsequent application of the provisions of this Scheme as having
      been granted on the Date of Grant of the corresponding rights as
      mentioned in rule 16.4.

16.8  If, in consequence of the Company coming under the control of an
      Acquiring Company shares in respect of which an Option has been granted
      cease to satisfy the requirements of paragraphs 10 - 14 of Schedule 9,
      the Company may apply in writing to the Inland Revenue for Inland
      Revenue approval of this Scheme for the purposes of section 185 and
      Schedule 9 of the Taxes Act to be withdrawn and, in that event, these
      Rules shall be read and construed as if in the definition of Shares the
      words "which satisfy the requirements of paragraphs 10 - 14 (inclusive)
      of Schedule 9" were omitted.

17.   VARIATION OF SHARE CAPITAL

17.1  In the event of any alteration of the Ordinary Share Capital by way of
      capitalisation or rights issue, sub-division, consolidation or reduction
      or any other variation in the share capital of the Company the Committee
      may make such adjustment as it considers appropriate:

      (a)  to the aggregate number or amount of Shares subject to any Option;
           and



                                      24
<PAGE>

      (b)  to the Exercise Price payable for each Share under any such Option;
           and/or

      (c)  if an Option has been exercised but no Shares have been allotted or
           transferred in accordance with rule 10.2, to the number of Shares
           which may be so allotted or transferred and the Exercise Price
           payable for each such Share

      PROVIDED THAT

               (i)    no such adjustment is made unless the Board of Inland
                      Revenue have given their prior written consent to the
                      adjustment; and

               (ii)   except in the case of a sub-division, consolidation or a
                      capitalisation issue, any such adjustment is confirmed
                      in writing by the Auditors to be in their opinion fair
                      and reasonable; and

               (iii)  except insofar as the Directors (on behalf of the
                      Company) agree to capitalise the Company's reserves and
                      apply the same at the time of exercise in paying up the
                      difference between the Exercise Price and the nominal
                      value of the Shares, the Exercise Price in relation to
                      any Subscription Option shall not be reduced below the
                      nominal value of a Share; and

               (iv)   the number of Shares as so adjusted has been rounded
                      down to the nearest whole number and the Exercise Price
                      has been rounded up to the nearest whole penny; and

               (v)    if the Grantor is not the Company, no such adjustment
                      shall be made without the consent of the Grantor.

17.2  As soon as reasonably practicable after making any adjustment pursuant
      to rule 17.1, the Directors shall (on behalf of the Grantor) give notice
      in writing thereof to every Optionholder affected thereby and shall at
      the written request of any such Optionholder and upon the surrender of
      any Option Certificates which he holds deliver or procure the delivery
      to him of revised Option Certificates in respect of his Options.



                                      25
<PAGE>

18.   ALTERATION OF THE PLAN

18.1  Prior to the Approval Date the Directors may make any alteration or
      addition to this Plan including such amendments as may be necessary to
      take account of any comments of the UK Listing Authority and to ensure
      that this Plan complies with the conditions for approval of this Plan by
      the Board of Inland Revenue as set out in Schedule 9.

18.2  The Directors may at any time after the Approval Date alter or add to
      any of the provisions of this Plan in any respect PROVIDED THAT:

      (a)  if it is intended that this Plan shall continue to be approved by
           the Board of Inland Revenue, no alteration or addition to any
           provision of this Plan shall take effect until the Board of Inland
           Revenue have confirmed that the approved status of this Plan will
           not be affected; and

      (b)  no alteration or addition to this Plan which would cause this Plan
           to cease to be approved by the Board of Inland Revenue shall have
           effect unless and until notice in writing of the proposed
           alteration or addition has been given to the Inland Revenue and
           such approval has first been withdrawn; and

      (c)  no such alteration or addition shall be made to the advantage of
           existing or new Optionholders to the provisions relating to
           eligibility to participate, the overall limitations on the issue of
           new Shares, the basis for determining Optionholders' rights to
           acquire Shares and the adjustment of such rights in the event of
           variation of the Ordinary Share Capital or this rule 18 without the
           prior approval by ordinary resolution of the shareholders of the
           Company SAVE THAT the provisions of this rule 18.2(c) shall not
           apply to the extent that such alteration or addition is in the
           opinion of the Directors a minor amendment which is necessary or
           appropriate:

           (i)    to benefit the administration of this Plan; or

           (ii)   to take account of any change in legislation; or

           (iii)  to maintain Inland Revenue approval of this Scheme or obtain
                  or maintain favourable tax, exchange control or regulatory
                  treatment for existing or new Optionholders, the Company,
                  any Subsidiary or any Associated Company; and



                                      26
<PAGE>

           (d)     if in relation to any Options the Grantor is not the
                   Company, no alteration or addition shall be made to the
                   terms of such Options without the approval of the Grantor.

18.3  As soon as reasonably practicable after making any such alteration or
      addition the Directors shall (on behalf of the Grantor) give notice in
      writing thereof to every Optionholder (if any) affected thereby.

19.   SERVICE OF DOCUMENTS

19.1  Except as otherwise provided in this Plan, any notice or document to be
      given to any individual in accordance or in connection with this Scheme
      shall be duly given:

      (a)  if he holds office or employment within the Group, by delivering it
           to him at his place of work; or

      (b)  if it is posted in a pre-paid envelope to his address last known to
           the Company and if so sent it shall be deemed to have been given on
           the date of posting.

19.2  Any notice or document so sent to an Optionholder shall be deemed to
      have been duly given notwithstanding that such Optionholder is then
      deceased (and whether or not the Company has notice of his death) except
      where his Personal Representatives have established their title to the
      satisfaction of the Company and supplied to the Directors (on behalf of
      the Grantor) an address to which documents are to be sent.

19.3  Any notice in writing or document to be submitted or given to the
      Committee, the Directors, the Grantor or any member of the Group in
      accordance or in connection with this Plan may be delivered, sent by
      post or facsimile transmission but shall not in any event be duly given
      unless it is actually received by the secretary of the Company or such
      other individual as may from time to time be nominated by the Grantor
      for the purposes of this Plan and whose name and address is notified to
      Optionholders.

20.   MISCELLANEOUS

20.1  The Company shall at all times keep available sufficient authorised but
      unissued Shares to satisfy the exercise in full of all the Subscription
      Options for the time being remaining capable of being exercised.



                                      27
<PAGE>

20.2  No Option to purchase existing Shares shall be granted by any person
      unless that person beneficially owns such Shares at the Date of Grant or
      the Directors are satisfied that sufficient Shares will be made
      available to satisfy the exercise in full of all Options granted or to
      be granted by that person.

20.3  The Company may issue Shares, and grant rights to acquire Shares, to the
      trustees of any trust established for the benefit of persons who include
      employees within the Group for the purpose of enabling such trustees, in
      the exercise of their powers (i) to grant Options and (ii) to transfer
      or procure the issue or transfer of Shares upon the exercise of Options
      granted by such trustees PROVIDED THAT any Shares issued or in respect
      of which such rights are granted by the Company (and, if not exercised,
      do not lapse) shall count in applying the overall limitation on the
      issue of Shares imposed by rule 7.

20.4  The decision of the Committee in any dispute or question affecting any
      Eligible Employee or Optionholder or any member or former member of the
      Group or Associated Company under this Plan shall be final and
      conclusive subject, whenever required under the provisions of this Plan,
      to the concurrence of the Auditors.

20.5  The Directors may from time to time make and vary such regulations not
      inconsistent with the rules of this Plan and establish such procedures
      for the administration and implementation of this Plan as they think fit
      and in the event of any question, dispute or disagreement as to the
      interpretation of this Plan or of any such regulations or procedures or
      as to any question or right arising from or related to this Plan, the
      decision of the Committee shall (except as regards any matter required
      to be determined by the Auditors hereunder) be final and binding upon
      all persons.

20.6  In any matter in which they are required to act hereunder, the Auditors
      shall be deemed to be acting as experts and not as arbitrators and the
      Arbitration Act of 1996 shall not apply hereto.

20.7  The costs of the administration and implementation of this Plan shall be
      borne by the Company.

21.   JURISDICTION

21.1  This Plan shall be governed by and construed in all respects in
      accordance with English law.



                                      28
<PAGE>

21.2  The Company, the Grantor, Eligible Employees and Optionholders shall
      submit to the exclusive jurisdiction of the English courts as regards
      any claim legal action or proceedings arising out of this Plan and will
      waive any objection to such proceedings taking place in the English
      courts on the grounds of venue or on the grounds that such proceedings
      have been brought in an inconvenient forum.

22.   DATA PROTECTION

      In accepting the grant of an Option an Optionholder shall agree and
      consent:

      (a)  to the collection, use, processing and transfer by the Group of
           certain personal information about the Optionholder, including the
           Optionholder's name, home address and telephone number, date of
           birth, other employee information, details of all Options granted
           to the Optionholder, and of Shares issued or transferred to the
           Optionholder pursuant to this Plan ("Data"); and

      (b)  any members of the Group transferring Data amongst themselves and
           to any Grantor (if it is not the Company) for the purposes of
           implementing, administering and managing the Plan; and

      (c)  to the use of such Data by any such person for such purposes; and

      (d)  to the transfer to and retention of such Data by third parties in
           connection with such purposes.

23.   THIRD PARTY RIGHTS

      Except as otherwise expressly stated to the contrary, neither this Plan
      nor the grant of any Option nor the U.K. Contracts (Rights of Third
      Parties) Act 1999 shall have the effect of giving any third party any
      rights under this Plan and that Act shall not apply to this Plan or to
      the terms of any Option granted under it.



                                      29
<PAGE>

                                                        [Option Certificate]

             THE SMITH & NEPHEW 2001 UK APPROVED SHARE OPTION PLAN

                              OPTION CERTIFICATE

Name of Optionholder:        ..........................
Address of Optionholder:     ..........................
                             ..........................
                             ..........................
Date of Grant:               ..........................
Number of Shares:            ..........................
Exercise Price:              ..........................

SMITH & NEPHEW PLC/.................................* HEREBY GRANTS to the
Optionholder named above an Option to [subscribe for/acquire]** the above
number of Shares in the Company at the above Exercise Price.

This Option is exercisable subject to and in accordance with the rules of The
Smith & Nephew 2001 UK Approved Share Option Plan as they are amended from
time to time. [Exercise of the Option is subject to the Performance Target set
out in the Appendix to this Option Certificate.] This Option may not normally
be exercised before [the third anniversary of the Date of Grant/the
Optionholder has been notified that the Performance Target has been met].**

This Option will lapse and cease to be exercisable unless the Optionholder
executes and returns to the Company Secretary so as to be received no later
than [          ] the enclosed Form of Acceptance of this Option.

In accordance with rule 9.1, this Option may not in any event be exercised
later than the day immediately preceding the tenth/...***anniversary of the
Date of Grant as shown above.

This Option is not transferable but may be capable of exercise by your
personal representatives in the event of your death.

EXECUTED as a deed by                        )
SMITH & NEPHEW PLC acting by:-               )

......................................        Director

......................................        Director/Secretary


Date:

*        Insert relevant Grantor
**       Delete as appropriate
***      Insert appropriate anniversary



                                      30
<PAGE>

                          FORM OF ACCEPTANCE OF GRANT

I HEREBY AGREE to accept the grant of an Option over ....... Shares on
............................. (date) and agree and undertake to be bound by the
terms and conditions set out in the rules of The Smith & Nephew 2001 UK
Approved Share Option Plan and the conditions(s) of exercise set out in the
Appendix to the Option Certificate.

SIGNED and delivered AS A DEED by            )
..................................            )    ............................
in the presence of:-                         )    (Optionholder signature)


Witness signature: .....................................
Witness Name (print) ...................................
Address:     ...........................................
             ...........................................
             ...........................................
Occupation:  ...........................................

Date         ...........................................

THIS FORM MUST BE RECEIVED BY THE GRANTOR OF THE OPTION BY
............................ OTHERWISE THE OPTION WILL BE DEEMED TO HAVE
LAPSED.

Notes:

Although the Date of Grant of the Option is as specified in the Option
Certificate, the grant is conditional upon your agreement to be bound by the
rules of the Scheme. If you do not return the form of acceptance within the
deadline specified above, the Option will be treated as void in all respects.



                                      31
<PAGE>

                 [Notice of Exercise to be attached to the Option Certificate]

             THE SMITH & NEPHEW 2001 UK APPROVED SHARE OPTION PLAN
                         NOTICE OF EXERCISE OF OPTION


To:    The Company Secretary, Smith & Nephew plc...............................
       ........................................................................

I hereby exercise the Option referred to overleaf in respect of all/.....* of
the shares over which the Option subsists, and request the allotment or
transfer to me of those shares in accordance with the Rules of the Scheme and
the Memorandum and Articles of Association of the Company.

I enclose a cheque made payable to Smith & Nephew plc/
...........................................** in the sum of
(Pound Sterling)........... being the aggregate Exercise Price of such shares.

Name (block letters)                     Signature
...................................       .....................................
Address
...................................       Date.................................
..................................
..................................

NOTES:-

1.    This form must be accompanied by payment of the Exercise Price for the
      shares in respect of which the Option is exercised.

2.    The Option may not be exercised in respect of less than 1,000 shares or
      (if less) all of the shares over which the Option subsists.

3.    Where the Option is exercised by personal representatives, an office
      copy of the Probate or Letters of Administration should accompany the
      form.

4.    The Scheme has been approved by the Inland Revenue in accordance with
      section 185 and Schedule 9 of the Income and Corporation Taxes Act 1988.
      There is no charge to income tax on the receipt of a right to acquire
      shares under such a scheme. Under current tax rules, no charge to tax
      will arise on the exercise of the Options if it is exercised:-

      (a)  in accordance with the rules of the Scheme (as amended from time to
           time with the consent of the Inland Revenue) at a time when the
           Scheme is approved by the Inland Revenue; and

      (b)  more than three years after the date of grant or, if earlier, upon
           the death of the Optionholder but not later than the day
           immediately preceding the tenth anniversary of the date of grant;
           and

      (c)  (except when exercised upon the death of the Optionholder) not less
           than three years after the exercise, in whole or in part, of any
           option (whether under this Scheme or any other scheme, other than a
           savings-related share option scheme, approved under



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<PAGE>

           Schedule 9 of the Income and Corporation Taxes Act 1988) in
           circumstances where the Optionholder qualifies for such favourable
           tax treatment.

      Further, provided an Option is exercised within these statutory time
      limits, no charge to income tax will arise on any subsequent growth in
      value of the shares acquired.

      If the Option is not so exercised, then under current tax rules, income
      tax will normally then be charged on the amount of the difference
      between the total exercise price paid and the market value of the shares
      acquired at that time.

5.    IMPORTANT. Neither the Company nor the Grantor undertake to advise you
      on the tax consequences of exercising your Option. If you are unsure of
      the tax liabilities which may arise, you should take appropriate
      professional advice before exercising your Option.

6.    An Optionholder, whether or not a director of any company, shall not be
      entitled to exercise an Option at any time when to do so would
      contravene the provisions of the Model Code governing share dealings by
      directors and employees.



*        Delete/insert number as appropriate
**       Delete/insert payee as appropriate



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