Document:

Exhibit 4c(v)

                              SMITH & NEPHEW PLC

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                          THE SMITH & NEPHEW 2001 UK
                         UNAPPROVED SHARE OPTION PLAN

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                        Inland Revenue Ref No [         ]

                        This is a copy of the rules of
            The Smith & Nephew 2001 UK Unapproved Share Option Plan
           as produced to the Annual General Meeting of the Company
                               on 4th April 2001
                        and initialled by the Chairman
                    for the purposes of identification only

                      ...................................
                                   Chairman

                                      1
<PAGE>
                                    INDEX
                                    ------

Clause                                                                     Page

1.      This Plan                                                            3

2.      Grant of Options                                                     8

3.      Exercise Price                                                      10

4.      Optionholder to Bear Cost of Employer's NICs on Option Gains        10

5.      Relationship with Contract of Employment                            10

6.      Non-Transferability of Options                                      11

7.      Performance Targets                                                 11

8.      Overall Limits on the Granting of Options                           12

9.      Individual Limits on the Granting of Options                        13

10.     Exercise of Options                                                 13

11.     Manner of Exercise of Options                                       15

12.     Demerger                                                            17

13.     Statutory Reconstruction of the Company                             18

14.     Winding-up of the Company                                           18

15.     Voluntary Arrangement                                               18

16.     Administration Order                                                18

17.     Change of Control                                                   18

18.     Variation of Share Capital                                          19

19.     Alteration of the Plan                                              20

20.     Service of Documents                                                20

21.     Miscellaneous                                                       21

22.     Jurisdiction                                                        22

23.     Data Protection                                                     22

24.     Third Party Rights                                                  22

                                      2
<PAGE>

                                   RULES OF
            THE SMITH & NEPHEW 2001 UK UNAPPROVED 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.

1.2      In this Plan the following words and expressions shall have the
         meanings given below:
<TABLE>
<CAPTION>
         <S>                                      <C>
         "Acquiring Company"                      a company which has acquired control of the
                                                  Company

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

         "Associated Company"                     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

         "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

                                                3
<PAGE>

         "the Date of Grant"                      in relation to any Option, means the date on
                                                  which that Option is granted in accordance with
                                                  rule 2.7

         "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"                      an employee of any member of the Group

         "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

         "Exchange of Options"                     means the grant to the Optionholder, in
                                                   consideration of the release of his Option ("the
                                                   Old Option") of rights to acquire shares in an
                                                   Acquiring Company or a company which has
                                                   control of an Acquiring Company or either is,
                                                   or has control of, a company which is a member
                                                   of a consortium owning either an Acquiring
                                                   Company or a company having control of an
                                                   Acquiring Company, being rights which are:

                                                  (a)    in the opinion of the Directors,
                                                         substantially equivalent in value to the
                                                         Old Option (disregarding any
                                                         Performance Target); and

                                                  (b)    on terms approved by the Directors

         "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,

                                                4
<PAGE>

                                                  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 (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

         "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
                                                  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
                                                  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

                                                5
<PAGE>

         "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

         "NICs"                                   UK National Insurance contributions

         "N.I. Regulations"                       the laws, regulations and practices currently in
                                                  force relating to liability for, and the collection of,
                                                  NICs

         "non-UK Option"                          an Option granted to an Eligible Employee who,
                                                  at the Date of Grant, is not chargeable in the
                                                  UK to tax on his earnings from the Group under
                                                  Case I of Schedule E

         "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 2.7
                                                  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

         "Optionholder's Employer"                such member of the Group as is the
                                                  Optionholder's employer or, if he has ceased to
                                                  be employed within the Group, was his employer
                                                  or such other member of the Group, or other
                                                  person as, under the PAYE Regulations or, as
                                                  the case may be, the N.I. Regulations, or any
                                                  other statutory or regulatory enactment
                                                  (whether in the United Kingdom or otherwise) is
                                                  obliged to account for any Option Tax Liability

         "Option Gain"                            in respect of an Option, the amount of any gain
                                                  realised upon the exercise, assignment or
                                                  release of the Option, being a gain that is
                                                  treated as remuneration derived from the
                                                  Optionholder's employment by virtue of section
                                                  4(4)(a) of the Social Security Contributions and
                                                  Benefits Act 1992

         "Option Shares"                          the Shares over which an Option subsists

                                                6
<PAGE>

         "Option Tax Liability"                   in relation to an Optionholder, any liability of the
                                                  Optionholder's Employer to account to the Inland
                                                  Revenue or other tax authority for any amount
                                                  of, or representing, income tax or NICs (which
                                                  shall, to the extent provided for in rule 4
                                                  include secondary Class 1 NICs) or any other tax
                                                  charge levy or other sum (whether under the laws
                                                  of the United Kingdom or otherwise) which may
                                                  arise on the part of the Optionholder upon the
                                                  grant, vesting, exercise, assignment or release
                                                  of the Option or the acquisition of Shares under
                                                  this Plan

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

         "the PAYE Regulations"                   the regulations made under section 203 of the Taxes Act

         "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"                     a condition or conditions imposed on the
                                                  exercise of an Option pursuant to rule 7

         "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 Unapproved
                                                  Share Option Plan as set out in these rules and
                                                  amended from time to time

         "Salary"                                 in relation to any person at a given time, the
                                                  gross rate of basic annual salary (excluding any
                                                  bonus, company pension contributions, and any
                                                  other perquisites and benefits-in-kind) payable
                                                  to that person at that time by members of the
                                                  Group

                                                7
<PAGE>

         "Shares"                                 fully-paid ordinary shares in the capital of the
                                                  Company (or in the event of a reorganisation or
                                                  reconstruction of the Company, shares
                                                  representing such ordinary shares)

         "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

         "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.
</TABLE>

1.1      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 being immediately exercisable (subject always to the
                   provisions of rule 11) 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);

            (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 Directors
         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.

                                      8
<PAGE>

2.3      Subject to rule 2.4, an Option may only be granted:

         (a)   during the period of 42 days after this Plan is approved by
               shareholders of the Company in general meeting; or

         (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

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

2.4      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 2.3(a)-(d), the Grantor may grant an Option at any time during
         the period of 42 days (or, in the circumstances referred to in rule
         2.3(c), 28 days) beginning with the date on which all such
         restrictions are removed.

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

2.6      No Option may be granted after 4 April 2011.

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

         (a)   whether the Option is a Conditional Option or a Performance
               Option;

         (b)   the Date of Grant;

         (c)   the number of Option Shares;

         (d)   the Exercise Price;

         (e)   any Performance Target imposed pursuant to rule 7 or any other
               condition imposed under rule 2.9.

         (f)   that it is a term of the Option that the Optionholder agrees to
               indemnify the Grantor and the Optionholder's Employer in respect
               of any Option Tax Liability

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

2.8      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 duly completed forms of acceptance and
         election in such form as the Grantor may from time to time specify
         and if no such form of acceptance and election is received by the
         Grantor within 30 days after the Date of Grant (or such other time as
         the Grantor may notify to the Optionholder at the Date of Grant) the
         Option shall thereupon lapse and cease to be exercisable.

                                      9
<PAGE>

2.9      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.

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

2.11     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
         18, the Exercise Price 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 (ii) of rule 18.1) in any event be less
         than the nominal value of a Share.

4.       Optionholder to Bear Cost of Employer's NICs on Option Gains

4.1      In accepting the grant of an Option, the Optionholder shall indemnify
         the Grantor and the Optionholder's Employer against any liability of
         any such person to account for any Option Tax Liability.

4.2      In accepting the grant of an Option the Optionholder shall, if
         required by the Grantor, agree and undertake with the Company, and
         with any other company which is a 'secondary contributor' in respect
         of secondary Class I NICs payable in respect of any Option Gain ("the
         Secondary Contributor") that:

         (a)    the Secondary Contributor may recover from the Optionholder
                (in such manner as the Company may determine and notify to
                the Optionholder at any time before the Option is first
                exercised) the whole or any part of any secondary Class I
                NICs payable in respect of any such Option Gain; and

         (b)    the Optionholder shall join with the Secondary Contributor
                in making an election (in such terms and such form as may be
                approved by the Inland Revenue) for the transfer of the
                whole, or such part as the Company may determine, of any
                liability of the Secondary Contributor to secondary Class I
                NICs on any such Option Gain to be transferred to the
                Optionholder.

5.       Relationship with Contract of Employment

5.1      The grant of an Option shall 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.

5.2      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.

                                      10
<PAGE>

5.3      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 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).

5.4      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 such termination is ultimately held to be
         wrongful or unfair).

6.       Non-Transferability of Options

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

6.2      An Option shall immediately 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.

7.       Performance Targets

7.1      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.

7.2      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 7.4 and 7.5 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.

7.3      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.

                                      11
<PAGE>

7.4      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.

7.5      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.

7.6      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.

7.7      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.

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

8.       Overall Limits on the Granting of Options

         10% in 10 years for all plans

8.1      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

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

                                      12
<PAGE>

         (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 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.

9.       Individual Limits on the Granting of Options

         The Committee shall determine the maximum amount, or multiple of an
         employee's Salary, which shall be applied to limit the number, or
         the aggregate Market Value, of Shares in respect of which Options
         may, in any year, be granted (and, if not exercised, have not
         ceased to be exercisable) under this Plan and any other
         discretionary share option scheme to an Eligible Employee, or to
         employees within a defined group of Eligible Employees.

10.      Exercise of Options

10.1     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.

10.2     Save as otherwise provided in the following provisions of this Plan,
         a Performance Option may only be exercised after the Directors have
         given notice to the Optionholder as mentioned in rule 7.6.

10.3     Except as otherwise provided in the following provisions of this rule
         10 and rule 17, 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.

10.4     An Option may not be exercised at any time if the Optionholder,
         having been required by the Grantor to join in making an election to
         transfer liability to employer's secondary Class I NICs (as mentioned
         in rule 4.2), has failed to do so.

10.5     Save as otherwise provided in rule 7 and in the following provisions
         of this rule 10 and rules 12 to 17, an Option may be exercised in
         respect of such proportions of the Option Shares from such times as
         the Grantor shall determine and specify in the Option Certificate.

10.6     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

10.7     If an Optionholder ceases to hold office or employment within the
         Group for a Good Reason then, subject to rule 10.10, 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

                                      13
<PAGE>

                Period but before the date on which the Optionholder is
                notified as mentioned in rule 7.6, 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 10.13; 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 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

10.8     If an Optionholder gives or receives notice to terminate his office
         or employment with any member of the Group or ceases to hold office
         or employment within the Group for any reason other than those set
         out in rules 10.7 and 10.9, then an Option granted to him may only be
         exercised (if at all) in relation to such proportion of the Option
         Shares, and within such period, as the Committee shall (with the
         consent of the Grantor, where 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
                and notified to the Optionholder within the period of 3
                months beginning with the date on which the Optionholder so
                ceases (or, if earlier, gives or receives 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 Shares shall
                not exceed such proportion of the Performance Period as fell
                before the date of such cessation.

         Death in service

10.9     If an Optionholder dies in service, his Personal Representatives may,
         within the period of 12 months beginning with the date of his death,
         exercise an Option granted to the deceased 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

10.10    If an Optionholder dies after having given or received notice to
         terminate his office or employment with any member of the Group or
         after ceasing to hold office or employment within the Group, then an
         Option granted to him may, within the period of 12 months beginning
         with the date of death, be exercised by his or her Personal
         Representatives in respect of such of the Option Shares in respect of
         which the Option could have been

                                      14
<PAGE>

         exercised immediately before the Optionholder died and shall lapse and
         cease to be exercisable at the end of that period.

         Leaving the Group

10.11    For the purposes of this rule 10 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.

         Maternity leave

10.12    A female Optionholder 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 10 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.

         Deemed vesting

10.13    For the purposes of rule 10.7, 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 Option may only be
         exercised in respect of the said proportion of such percentage of the
         Option Shares.

11.      Manner of Exercise of Options

11.1     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 has become exercisable and which
                     have not been specified for this purpose in a prior
                     notice served by the Optionholder in accordance with
                     this rule 11; nor

              (ii)   be less than 1000 Shares or, if less, the number of
                     Shares in respect of which the Option subsists and
                     has become exercisable;

         (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.

                                      15
<PAGE>

11.2     Upon receipt of a notice of exercise of an Option, the Grantor (if it
         is not the Company) shall as soon as practicable notify the Company
         of the name of the Optionholder and the number of Shares in respect
         of which the Option is exercised on that occasion.

11.3     Upon receipt of such notice the Company shall, as soon as
         practicable, notify the Grantor of the amount of any Option Tax
         Liability and of any secondary class I NICs for which the
         Optionholder is liable in consequence of having joined in making an
         election as mentioned in rule 4.2.

         Satisfaction of Optionholder's liability to NICs

11.4     If an Option is exercised or released on any occasion, the
         Optionholder shall pay or procure the payment to the Optionholder's
         Employer of the full amount of any secondary class I NICs due in
         respect of any Option Gain and shall do so at such time as will
         ensure that the Optionholder's Employer is in receipt of cleared
         funds in time to enable the Optionholder's Employer to account to the
         Collector of Taxes for such contributions within 14 days following
         the end of the PAYE month in which the Option was so exercised or
         released.

11.5     The Grantor shall not be obliged to issue, transfer or procure the
         transfer of any Shares or any interest in any Shares under this Plan
         unless and until the Optionholder has paid to the Grantor such sum as
         is, in the opinion of the Grantor or Optionholder's Employer (as
         appropriate), sufficient to indemnify the Grantor or the
         Optionholder's Employer in full against any Option Tax Liability or
         has made such other arrangement as, in the opinion of the Grantor,
         will ensure that the Optionholder will satisfy his liability under
         such indemnity.

11.6     Subject to rule 11.7, the Grantor shall have the right not to issue,
         transfer or procure the transfer to or to the order of an
         Optionholder the aggregate number of Shares to which the Optionholder
         would otherwise be entitled but to retain out of such aggregate
         number of Shares such number of Shares as, in the opinion of the
         Grantor, will enable the Grantor to sell as agent for the
         Optionholder (at the best price which can reasonably expect to be
         obtained at the time of sale) and to pay over to the Optionholder's
         Employer sufficient monies out of the net proceeds of sale, after
         deduction of all fees commissions and expenses incurred in relation
         to such sale, to satisfy the Optionholder's liability under such
         indemnity.

11.7     The provisions of rule 11.6 shall not apply in relation to the issue
         or transfer of Shares on any occasion if the Optionholder has either:

         (a)    paid to his Employer a sum which, in the opinion of his
                Employer is, or will be, sufficient to satisfy the
                Optionholder's liability under the indemnity referred to in
                rule 11.5; or

         (b)    entered into arrangements with his Employer which, in the
                opinion of such Employer, will ensure that such liability is
                satisfied within such period as the Employer may determine.

11.8     Subject to rules 11.5 to 11.7 (inclusive), within the period of 30
         days beginning with the date on which the Company receives a notice
         of exercise which complies with rule 11.1, the Company (if it is the
         Grantor) shall allot or otherwise 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.

                                      16
<PAGE>

11.9     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 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 after all such restrictions are
         lifted and shall do so within the period of 30 days thereafter.

11.10    Subject to rule 11.11, as soon as reasonably practicable after
         allotting or procuring the transfer of any Shares pursuant to rule
         11.8, 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 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.

11.11    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.

11.12    The allotment or transfer of any Shares under this Plan 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.

11.13    All Shares allotted or transferred under this Plan 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.

12.      Demerger

         If notice is given to shareholders of the Company of a proposed
         demerger of the Company or of any Subsidiary, all Options 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 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) the interests of
         Optionholders would or might be substantially

                                      17
<PAGE>

         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.

13.      Statutory Reconstruction of the Company

         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 become effective, the Option shall lapse.

14.      Winding-up of the Company

14.1     If notice is given to holders of Shares of a resolution for the
         voluntary winding-up of the Company, all Options may, notwithstanding
         that any Performance Period has not then ended, be exercised in
         respect of all of the Option Shares at any time before the
         commencement of the winding-up or within such other period as the
         Grantor notifies to the Optionholder.

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

15.      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.

16.      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.

17.      Change of Control

17.1     Subject to rules 17.4 and 17.5, 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

                                      18
<PAGE>

         the Company shall come under the control of another person or
         persons, 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 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.

17.2     If at any time any person becomes entitled or bound to acquire shares
         in the Company under sections 428 to 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 at any time when that
         person remains so entitled or bound and shall lapse and cease to be
         exercisable at the end of such period.

17.3     For the purposes of the preceding provisions of this rule 17 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.

17.4     The provisions of rule 17.5 shall have effect only if, immediately
         after the Company has come under the control of an Acquiring Company,
         the Company nevertheless remains under the control of the person who,
         or persons who together, had control of the Company immediately
         before the Company came under the control of such Acquiring Company.

17.5     If, before an Option lapses, the Optionholders are each invited to
         accept an Exchange of Options, then Options shall lapse and cease to
         be exercisable at the end of such period as the Directors shall
         determine and notify to Optionholders (being a period which is not
         less than 28 days beginning with the date on which such invitation is
         issued to Optionholders).

18.      Variation of Share Capital

18.1     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 of 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/or

         (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 11.8, to the
                number of Shares which may be so allotted or transferred and
                the Exercise Price payable for each such Share

         PROVIDED THAT:

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

         (ii)   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

                                      19
<PAGE>

         (iii)  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

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

18.2     As soon as reasonably practicable after making any adjustment
         pursuant to rule 18.1, 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 revised option certificates in respect of
         his Options.

19.      Alteration of the Plan

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

         (a)    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 individual
                limitations on Option grants under this Plan the basis for
                determining Optionholders' rights to acquire Shares and the
                adjustment of such rights in the event of a variation of the
                Ordinary Share Capital or this rule 19 without the prior
                approval by ordinary resolution of the shareholders of the
                Company SAVE THAT the provisions of this rule 19.1(c) shall
                not apply to the extent that such alteration or amendment 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 obtain or maintain favourable tax, exchange
                       control or regulatory treatment for existing or new
                       Optionholders, the Company, any Subsidiary or any
                       Associated Company; and

         (b)    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.

19.2     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.

20.      Service of Documents

20.1     Except as otherwise provided in this Plan, any notice or document to
         be given to any individual in accordance or in connection with this
         Plan 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.

                                      20
<PAGE>

20.2     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.

20.3     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.

21.      Miscellaneous

21.1     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.

21.2     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.

21.3     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 8.

21.4     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.

21.5     The Directors may from time to time make and vary such rules and
         regulations not inconsistent herewith 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 rules, 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.

21.6     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.

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

                                      21
<PAGE>

22.      Jurisdiction

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

22.2     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.

23.      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.

24.      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.

                                      22
<PAGE>
                                                         [Option Certificate]

                          THE SMITH & NEPHEW 2001 UK
                         UNAPPROVED SHARE OPTION PLAN
                              OPTION CERTIFICATE

Name of Optionholder:            .............................................

Address of Optionholder:         .............................................

                                 .............................................

                                 .............................................

                                 .............................................

Employer Company:                .............................................

Date of Grant:                   .............................................

Type of Option:                  non-UK Option /UK Option/Performance Option**

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.

The Option is exercisable subject to and in accordance with the rules of The
Smith & Nephew 2001 UK Unapproved Share Option Plan as they are amended from
time to time ("the Plan") [The exercise of a Performance 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 Optionholder has been
notified that the Performance Target has been met. / OR:

In accordance with rule 10.5, this Option may normally be exercised as
follows:

(i)        1/10th of the Option Shares after the first anniversary of the Date
           of Grant;

(ii)       a further 3/10ths of the Option Shares after the second anniversary
           of the Date of Grant;

(iii)      a further 3/10ths of the Option Shares after the third anniversary
           of the Date of Grant; and

(iii)      the balance of the Option Shares after the fourth anniversary of
           the Date of Grant.]**

This Option shall lapse and cease to be exercisable [on] the [tenth/...........
........*]** anniversary of the Date of Grant.

A charge to tax and social security contributions may arise upon the exercise
or release of the Option. It is a term of the Option that the Optionholder
agrees to indemnify the Company and the Optionholder's Employer (or former
employer) in respect of any liability of any such person to

                                      23
<PAGE>

account for any tax or social security liability arising as a result of
anything done pursuant to this Scheme ("Option Tax Liability"). The
Optionholder shall be required to enter into arrangements satisfactory to the
Company to ensure that any such Option Tax Liability will be recovered from the
Optionholder. [Insert following sentence for UK-based employees only:] In the
case of employer's National Insurance contributions arising on gains made on
the exercise, assignment or release of the Option, the Optionholder shall, upon
the direction of the Company, enter into a joint election with the
Optionholder's Employer (or former employer) [for the employer's National
Insurance contributions to be transferred to him/in the form attached]**. The
Company shall be entitled to withhold the issue or transfer of Shares until such
arrangements have been made.

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 as appropriate
**   Delete as appropriate

                                      24
<PAGE>

                          FORM OF ACCEPTANCE OF GRANT

1.         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 Unapproved Share Option Plan
           [and the condition(s) of exercise set out in the Appendix to this
           Option Certificate.]*

2.         I hereby irrevocably undertake that if as a result of the grant,
           vesting or exercise of the Option the Company or any company which
           is my employer or former employer ("the Employer Company") is
           obliged to account to the Inland Revenue or any other tax authority
           for income tax, social security contributions or any other tax levy
           or charge, I shall indemnify the Employer Company against such
           liabilities as directed by the Directors of the Company.

           [Insert following paragraph for UK-based employees only:]

3.         [I hereby agree and undertake that I shall, if and when so
           requested by the Company, complete a joint election with my
           Employer Company (in a form satisfactory to the Company and the
           Inland Revenue) for the whole of any liability of the Employer
           Company to secondary contributions on any gains arising on the
           exercise or release of the Option to be transferred to me pursuant
           to paragraph 3B of Schedule 1 to the Social Security Contributions
           and Benefits Act 1992.

4.         I hereby appoint any director of [Smith & Nephew plc] to act as my
           attorney for the purposes of:

           (a)    selling (at the best price that can reasonably be expected
                  to be obtained at the time of sale) such number of the
                  Shares to which I become entitled upon the exercise of the
                  Option on any occasion as will realise sufficient monies,
                  after deduction of all commissions and expenses incurred in
                  relation to such sale, to satisfy my liability under the
                  indemnity referred to in clause 2 above; and

           (b)    paying such monies to the Secondary Contributor.

5.         The power of attorney given in clause 4 above is given by way of
           security for the performance of my obligation to satisfy the
           indemnity referred to in clause and is irrevocable in accordance
           with section 4 of the Powers of Attorney Act 1971.

6.         The Grantor of my Option shall not be obliged to issue or procure
           the transfer of such Shares to me unless and until the Directors of
           the Company are satisfied that arrangements have been made so that
           such liability is met in full.

                                      25
<PAGE>

7.         I hereby authorise the Employer Company, the Company and/or the
           Grantor to transfer any information held on me to the Employer
           Company, the Company and/or any third party for the purposes of the
           Plan.

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

Witness signature:      ...................................................

Witness Name (print):   ..................................................

Address:                ...................................................

                        ...................................................

                        ...................................................

Occupation:             ...................................................

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

*  Delete as appropriate

THIS FORM MUST BE EXECUTED IN THE PRESENCE OF A WITNESS AND BE RECEIVED BY THE
GRANTOR OF THE OPTION AS BELOW:

               [Insert name, address and fax number of grantor]

BY ....................... OTHERWISE THE OPTION WILL BE DEEMED TO HAVE LAPSED.

                                      26
<PAGE>

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

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

To:    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 Plan 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 1000 shares
           or (if less) all of the shares over which the Option subsists.

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

4.         A charge to tax and social security contributions may arise when
           this Option is exercised. It is a term of the Option that you will
           be required to enter into arrangements satisfactory to the Grantor
           to ensure that any such liability will be recovered from you. The
           Grantor is entitled to withhold the issue or transfer of Shares
           until such arrangements have been made.

5.         IMPORTANT.  Neither the Company, the Grantor nor your employer
           company  undertakes 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.

                                      27
<PAGE>

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
**         Insert for non-UK Options only
***        Delete/insert payee as appropriate

                                      28<FONT SIZE=2><P ALIGN="RIGHT">EXHIBIT 10.5</P>
<B><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>

<P ALIGN="CENTER">ActionPoint, Inc.</P>
<P ALIGN="CENTER">1998 Employee Stock Purchase Plan</P>
<P ALIGN="CENTER">Adopted Effective July&nbsp;1, 1998</P>
<P ALIGN="CENTER">Amended and Restated Effective March&nbsp;7, 2000</P>
<P ALIGN="CENTER">Amended and Restated Effective July&nbsp;1, 2002</P>

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<U><P ALIGN="CENTER">TABLE OF CONTENTS</P></u></b>

<pre>

<FONT SIZE=2.5>

								   PAGE
								   ----
   SECTION 1.  PURPOSE OF THE PLAN.................................   1
   SECTION 2.  ADMINISTRATION OF THE PLAN..........................   1
	(a)  Committee Composition.................................   1
	(b)  Committee Responsibilities............................   1
   SECTION 3.  STOCK OFFERED UNDER THE PLAN........................   1
	(a)  Authorized Shares.....................................   1
	(b)  Anti-Dilution Adjustments.............................   1
	(c)  Reorganizations.......................................   1
   SECTION 4.  ENROLLMENT AND PARTICIPATION........................   2
	(a)  Offering Periods......................................   2
	(b)  Accumulation Periods..................................   2
	(c)  Enrollment............................................   2
	(d)  Duration of Participation.............................   2
	(e)  Applicable Offering Period............................   2
   SECTION 5.  EMPLOYEE CONTRIBUTIONS..............................   3
	(a)  Commencement of Payroll Deductions....................   3
	(b)  Amount of Payroll Deductions..........................   3
	(c)  Changing Withholding Rate.............................   3
	(d)  Discontinuing Payroll Deductions......................   3
	(e)  Limit on Number of Elections..........................   3
   SECTION 6.  WITHDRAWAL FROM THE PLAN............................   3
	(a)  Withdrawal............................................   3
	(b)  Re-Enrollment After Withdrawal........................   3
   SECTION 7.  CHANGE IN EMPLOYMENT STATUS.........................   3
	(a)  Termination of Employment.............................   3
	(b)  Leave of Absence......................................   3
	(c)  Death.................................................   4
   SECTION 8.  PLAN ACCOUNTS AND PURCHASE OF SHARES................   4
	(a)  Plan Accounts.........................................   4
	(b)  Purchase Price........................................   4
	(c)  Number of Shares Purchased............................   4
	(d)  Available Shares Insufficient.........................   4
	(e)  Issuance of Stock.....................................   4
	(f)  Tax Withholding.......................................   4
	(g)  Unused Cash Balances..................................   5
   SECTION 9.  LIMITATIONS ON STOCK OWNERSHIP......................   5
	(a)  Five Percent Limit....................................   5
	(b)  Dollar Limit..........................................   5
   SECTION 10.  RIGHTS NOT TRANSFERABLE............................   6
   SECTION 11.  NO RIGHTS AS AN EMPLOYEE...........................   6
   SECTION 12.  NO RIGHTS AS A STOCKHOLDER.........................   6
   SECTION 13.  SECURITIES LAW REQUIREMENTS........................   6
   SECTION 14.  AMENDMENT OR DISCONTINUANCE........................   6
	(a)  General Rule..........................................   6
	(b)  Impact on Purchase Price..............................   6
   SECTION 15.  DEFINITIONS........................................   7
	(a)  Accumulation Period...................................   7
	(b)  Board.................................................   7
	(c)  Code..................................................   7
	(d)  Committee.............................................   7
	(e)  Company...............................................   7
	(f)  Compensation..........................................   7
	(g)  Corporate Reorganization..............................   7
	(h)  Eligible Employee.....................................   7
	(i)  Exchange Act..........................................   7
	(j)  Fair Market Value.....................................   7
	(k)  Offering Period.......................................   8
	(l)  Participant...........................................   8
	(m)  Participating Company.................................   8
	(n)  Plan..................................................   8
	(o)  Plan Account..........................................   8
	(p)  Purchase Price........................................   8
	(q)  Stock.................................................   8
	(r)  Subsidiary............................................   8
   SECTION 16.  EXECUTION..........................................   8

</FONT SIZE=2.5>
</pre>

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<B><FONT SIZE=2><P ALIGN="CENTER">ActionPoint, Inc.</P>
<P ALIGN="CENTER">1998 Employee Stock Purchase Plan</P>
<OL>

<LI>PURPOSE OF THE PLAN.</LI>
</B><P ALIGN="JUSTIFY">
The Board adopted the Plan effective on March&nbsp;25,
1998, effective as of July&nbsp;1, 1998.  The Board most recently amended and
restated the Plan effective as of July&nbsp;1, 2002.  The purpose of the Plan is
to provide Eligible Employees with an opportunity to increase their proprietary
interest in the success of the Company by purchasing Stock from the Company on
favorable terms and to pay for such purchases through payroll deductions.  The
Plan is intended to qualify for favorable tax treatment under section&nbsp;423
of the Code.</P>
<B><LI>ADMINISTRATION OF THE PLAN.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Committee Composition</B>.  The Committee shall
administer the Plan.  The Committee shall consist exclusively of one or more
directors of the Company, who shall be appointed by the Board.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Committee Responsibilities</B>.  The Committee shall
interpret the Plan and make all other policy decisions relating to the operation
of the Plan.  The Committee may adopt such rules, guidelines and forms as it
deems appropriate to implement the Plan.  The Committee's determinations under
the Plan shall be final and binding on all persons.</LI></P></OL>
</OL>

<B><LI>STOCK OFFERED UNDER THE PLAN.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Authorized Shares</B>.  The number of shares of Stock
available to all Participants for purchase under the Plan with respect to any
Accumulation Period shall be 150,000 (subject to adjustment pursuant to
Subsection&nbsp;(b) below).  If fewer than 150,000 shares of Stock are purchased
during an Accumulation Period, the unused shares shall not be available during
any subsequent Accumulation Period.  On July&nbsp;1, 2002, the aggregate number
of shares of Stock available for purchase during the life of the Plan shall
automatically be increased by the number of shares necessary to cause the number
of shares then available for purchase to be restored to 150,000 (subject to
adjustment pursuant to Subsection&nbsp;(b) below).  On January&nbsp;1 of each
year, commencing with January&nbsp;1, 2003, the aggregate number of shares of
Stock available for purchase during the life of the Plan shall automatically be
increased by the number of shares necessary to cause the number of shares then
available for purchase to be restored to 300,000 (subject to adjustment pursuant
to Subsection&nbsp;(b) below).</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Anti-Dilution Adjustments</B>. The number of shares of
Stock available for purchase under the Plan with respect to any Accumulation
Period, the aggregate number of shares of Stock available for purchase during
the life of the Plan, the 1,000-share limitation described in Section&nbsp;8(c)
and the price of shares that any Participant has elected to purchase shall be
adjusted proportionately for any increase or decrease in the number of
outstanding shares of Stock resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, any other increase or decrease in
such shares effected without receipt or payment of consideration by the Company,
the distribution of the shares of a Subsidiary to the Company's stockholders, or
a similar event.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Reorganizations</B>.  Any other provision of the Plan
notwithstanding, immediately prior to the effective time of a Corporate
Reorganization, the Offering Period and Accumulation Period then in progress
shall terminate and shares shall be purchased pursuant to Section&nbsp;8, unless
the Plan is continued or assumed by the surviving corporation or its parent
corporation.  The Plan shall in no event be construed to restrict in any way the
Company's right to undertake a dissolution, liquidation, merger, consolidation
or other reorganization.</LI></P></OL>
</OL>

<B><LI>ENROLLMENT AND PARTICIPATION.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Offering Periods</B>.  While the Plan is in effect, two
overlapping Offering Periods shall commence in each calendar year.  The Offering
Periods shall consist of the 24-month periods commencing on each January&nbsp;1
and July&nbsp;1.  However, the Committee may determine that the first Offering
Period applicable to the Eligible Employees of a new Participating Company shall
commence on any date specified by the Committee, provided that an Offering
Period shall in no event be longer than 27 months.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Accumulation Periods</B>.  While the Plan is in
effect, two Accumulation Periods shall commence in each calendar year.  The
Accumulation Periods shall consist of the six-month periods commencing on each
January&nbsp;1 and July&nbsp;1.  However, the Committee may determine that the
first Accumulation Period applicable to the Eligible Employees of a new
Participating Company shall commence on any date specified by the
Committee.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Enrollment </B>.  Any individual who qualifies as an
Eligible Employee on the first day of an Offering Period may elect to become a
Participant on such day by filing the prescribed enrollment form with the
Company.  The enrollment form shall be filed at the prescribed location not
later than 10 days prior to such day.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Duration of Participation</B>.  Once enrolled in the
Plan, a Participant shall continue to participate in the Plan until he or
she:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>Reaches the end of the Accumulation Period in which his
or her employee contributions were discontinued under Section&nbsp;5(d) or
9(b);</LI></P>
<P ALIGN="JUSTIFY"><LI>Is deemed to withdraw from the Plan under
Subsection&nbsp;(c) above;</LI></P>
<P ALIGN="JUSTIFY"><LI>Withdraws from the Plan under Section&nbsp;6(a);
or</LI></P>
<P ALIGN="JUSTIFY"><LI>Ceases to be an Eligible Employee.</LI></P></OL>

<P ALIGN="JUSTIFY">A Participant whose employee contributions were discontinued
automatically under Section&nbsp;9(b) shall automatically resume participation
at the beginning of the earliest Accumulation Period ending in the next calendar
year, if he or she then is an Eligible Employee.  In all other cases, a former
Participant may again become a Participant, if he or she then is an Eligible
Employee, by following the procedure described in Subsection&nbsp;(c) above.</P>
<B><P ALIGN="JUSTIFY"><LI>Applicable Offering Period</B>.  For purposes of
calculating the Purchase Price under Section&nbsp;8(b), the applicable Offering
Period shall be determined as follows:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>Once a Participant is enrolled in the Plan for an
Offering Period, such Offering Period shall continue to apply to him or her
until the earliest of (A)&nbsp;the end of such Offering Period, (B)&nbsp;the end
of his or her participation under Subsection&nbsp;(e) above or (C)&nbsp;re-
enrollment for a subsequent Offering Period under Paragraph&nbsp;(ii), (iii) or
(iv) below.</LI></P>
<P ALIGN="JUSTIFY"><LI>In the event that the Fair Market Value of Stock on the
last trading day before the commencement of the Offering Period for which the
Participant is enrolled is higher than on the last trading day before the
commencement of any subsequent Offering Period, the Participant shall
automatically be re-enrolled for such subsequent Offering Period.</LI></P>
<P ALIGN="JUSTIFY"><LI>If Section&nbsp;14(b) applies, the Participant shall
automatically be re-enrolled for a new Offering Period.</LI></P>
<P ALIGN="JUSTIFY"><LI>Any other provision of the Plan notwithstanding, the
Company (at its sole discretion) may determine prior to the commencement of any
new Offering Period that all Participants shall be re-enrolled for such new
Offering Period.</LI></P>
<P ALIGN="JUSTIFY"><LI>When a Participant reaches the end of an Offering Period
but his or her participation is to continue, then such Participant shall
automatically be re-enrolled for the Offering Period that commences immediately
after the end of the prior Offering Period.</LI></P></OL>
</OL>
</OL>

<B><LI>EMPLOYEE CONTRIBUTIONS.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Commencement of Payroll Deductions</B>.  A Participant
may purchase shares of Stock under the Plan solely by means of payroll
deductions.  Payroll deductions shall commence as soon as reasonably practicable
after the Company has received the prescribed enrollment form.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Amount of Payroll Deductions</B>.  An Eligible
Employee shall designate on the enrollment form the portion of his or her
Compensation that he or she elects to have withheld for the purchase of Stock.
Such portion shall be a whole percentage of the Eligible Employee's
Compensation, but not less than 1% nor more than 10%.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Changing Withholding Rate</B>.  If a Participant
wishes to change the rate of payroll withholding, he or she may do so by filing
a new enrollment form with the Company at the prescribed location at any time.
The new withholding rate shall be effective as soon as reasonably practicable
after the Company has received such form.  The new withholding rate shall be a
whole percentage of the Eligible Employee's Compensation, but not less than 1%
nor more than 10%.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Discontinuing Payroll Deductions</B>.  If a
Participant wishes to discontinue employee contributions entirely, he or she may
do so by filing a new enrollment form with the Company at the prescribed
location at any time.  Payroll withholding shall cease as soon as reasonably
practicable after the Company has received such form.  (In addition, employee
contributions may be discontinued automatically pursuant to Section&nbsp;9(b).)
A Participant who has discontinued employee contributions may resume such
contributions by filing a new enrollment form with the Company at the prescribed
location.  Payroll withholding shall resume as soon as reasonably practicable
after the Company has received such form.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Limit on Number of Elections</B>.  No Participant
shall make more than two elections under Subsection&nbsp;(c) or (d) above during
any Accumulation Period.</LI></P></OL>
</OL>

<B><LI>WITHDRAWAL FROM THE PLAN.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Withdrawal</B>.  A Participant may elect to withdraw from
the Plan by filing the prescribed form with the Company at the prescribed
location at any time before the last day of an Accumulation Period.  As soon as
reasonably practicable thereafter, payroll deductions shall cease and the entire
amount credited to the Participant's Plan Account shall be refunded to him or
her in cash, without interest.  No partial withdrawals shall be
permitted.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Re-Enrollment After Withdrawal</B>.  A former
Participant who has withdrawn from the Plan shall not be a Participant until he
or she re-enrolls in the Plan under Section&nbsp;4(c).  Re-enrollment may be
effective only at the commencement of an Offering Period.</LI></P></OL>
</OL>

<B><LI>CHANGE IN EMPLOYMENT STATUS.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Termination of Employment</B>.  Termination of employment
as an Eligible Employee for any reason, including death, shall be treated as an
automatic withdrawal from the Plan under Section&nbsp;6(a).  (A transfer from
one Participating Company to another shall not be treated as a termination of
employment.)</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Leave of Absence</B>.  For purposes of the Plan,
employment shall not be deemed to terminate when the Participant goes on a
military leave, a sick leave or another <I>bona fide</I> leave of absence, if
the leave was approved by the Company in writing.  Employment, however, shall be
deemed to terminate 90 days after the Participant goes on a leave, unless a
contract or statute guarantees his or her right to return to work.  Employment
shall be deemed to terminate in any event when the approved leave ends, unless
the Participant immediately returns to work.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Death</B>.  In the event of the Participant's death,
the amount credited to his or her Plan Account shall be paid to a beneficiary
designated by him or her for this purpose on the prescribed form or, if none, to
the Participant's estate.  Such form shall be valid only if it was filed with
the Company at the prescribed location before the Participant's
death.</LI></P></OL>
</OL>

<B><LI>PLAN ACCOUNTS AND PURCHASE OF SHARES.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Plan Accounts</B>.  The Company shall maintain a Plan
Account on its books in the name of each Participant.  Whenever an amount is
deducted from the Participant's Compensation under the Plan, such amount shall
be credited to the Participant's Plan Account.  Amounts credited to Plan
Accounts shall not be trust funds and may be commingled with the Company's
general assets and applied to general corporate purposes.  No interest shall be
credited to Plan Accounts.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Purchase Price</B>.  The Purchase Price for each share
of Stock purchased at the close of an Accumulation Period shall be the lower
of:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>85% of the Fair Market Value of such share on the last
trading day before the commencement of the applicable Offering Period (as
determined under Section&nbsp;4(f)); or</LI></P>
<P ALIGN="JUSTIFY"><LI>85% of the Fair Market Value of such share on the last
trading day in such Accumulation Period.</LI></P></OL>

<B><P ALIGN="JUSTIFY"><LI>Number of Shares Purchased</B>.  As of the last day of
each Accumulation Period, each Participant shall be deemed to have elected to
purchase the number of shares of Stock calculated in accordance with this
Subsection&nbsp;(c), unless the Participant has previously elected to withdraw
from the Plan in accordance with Section&nbsp;6(a).  The amount then in the
Participant's Plan Account shall be divided by the Purchase Price, and the
number of shares that results shall be purchased from the Company with the funds
in the Participant's Plan Account.  The foregoing notwithstanding, no
Participant shall purchase more than 1,000 shares of Stock with respect to any
Accumulation Period nor more than the amounts of Stock set forth in
Sections&nbsp;3(a) and 9(b).  The Committee may determine with respect to all
Participants that any fractional share, as calculated under this
Subsection&nbsp;(c), shall be (i)&nbsp;rounded down to the next lower whole
share or (ii)&nbsp;credited as a fractional share.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Available Shares Insufficient</B>.  In the event that
the aggregate number of shares that all Participants elect to purchase during an
Accumulation Period exceeds the maximum number of shares remaining available for
issuance under Section&nbsp;3, then the number of shares to which each
Participant is entitled shall be determined by multiplying the number of shares
available for issuance by a fraction.  The numerator of such fraction is the
number of shares that such Participant has elected to purchase, and the
denominator of such fraction is the number of shares that all Participants have
elected to purchase.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Issuance of Stock</B>.  Certificates representing the
shares of Stock purchased by a Participant under the Plan shall be issued to him
or her as soon as reasonably practicable after the close of the applicable
Accumulation Period, except that the Committee may determine that such shares
shall be held for each Participant's benefit by a broker designated by the
Committee (unless the Participant has elected that certificates be issued to him
or her).  Shares may be registered in the name of the Participant or jointly in
the name of the Participant and his or her spouse as joint tenants with right of
survivorship or as community property.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Tax Withholding</B>.  To the extent required by
applicable federal, state, local or foreign law, a Participant shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan.  The Company shall not
be required to issue any shares of Stock under the Plan until such obligations
are satisfied.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Unused Cash Balances</B>.  An amount remaining in the
Participant's Plan Account that represents the Purchase Price for any fractional
share shall be carried over in the Participant's Plan Account to the next
Accumulation Period.  Any amount remaining in the Participant's Plan Account
that represents the Purchase Price for whole shares that could not be purchased
by reason of Subsection&nbsp;(c) above, Section&nbsp;3 or Section&nbsp;9(b)
shall be refunded to the Participant in cash, without interest.</LI></P></OL>
</OL>

<B><LI>LIMITATIONS ON STOCK OWNERSHIP.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>Five Percent Limit</B>.  Any other provision of the Plan
notwithstanding, no Participant shall be granted a right to purchase Stock under
the Plan if such Participant, immediately after his or her election to purchase
such Stock, would own stock possessing more than 5% of the total combined voting
power or value of all classes of stock of the Company or any parent or
Subsidiary of the Company.  For purposes of this Subsection&nbsp;(a), the
following rules shall apply:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>Ownership of stock shall be determined after applying the
attribution rules of section&nbsp;424(d) of the Code;</LI></P>
<P ALIGN="JUSTIFY"><LI>Each Participant shall be deemed to own any stock that he
or she has a right or option to purchase under this or any other plan;
and</LI></P>
<P ALIGN="JUSTIFY"><LI>Each Participant shall be deemed to have the right to
purchase 1,000 shares of Stock under this Plan with respect to each Accumulation
Period.</LI></P></OL>

<B><P ALIGN="JUSTIFY"><LI>Dollar Limit</B>.  Any other provision of the Plan
notwithstanding, no Participant shall purchase Stock with a Fair Market Value in
excess of the following limit:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>In the case of Stock purchased during an Offering Period
that commenced in the current calendar year, the limit shall be equal to
(A)&nbsp;$25,000 minus (B)&nbsp;the Fair Market Value of the Stock that the
Participant previously purchased in the current calendar year (under this Plan
and all other employee stock purchase plans of the Company or any parent or
Subsidiary of the Company).</LI></P>
<P ALIGN="JUSTIFY"><LI>In the case of Stock purchased during an Offering Period
that commenced in the immediately preceding calendar year, the limit shall be
equal to (A)&nbsp;$50,000 minus (B)&nbsp;the Fair Market Value of the Stock that
the Participant previously purchased (under this Plan and all other employee
stock purchase plans of the Company or any parent or Subsidiary of the Company)
in the current calendar year and in the immediately preceding calendar
year.</LI></P>
<P ALIGN="JUSTIFY"><LI>In the case of Stock purchased during an Offering Period
that commenced in the second preceding calendar year, the limit shall be equal
to (A)&nbsp;$75,000 minus (B)&nbsp;the Fair Market Value of the Stock that the
Participant previously purchased (under this Plan and all other employee stock
purchase plans of the Company or any parent or Subsidiary of the Company) in the
current calendar year and in the two preceding calendar years.</LI></P></OL>
</OL>
</OL>

<P ALIGN="JUSTIFY">For purposes of this Subsection&nbsp;(b), the Fair Market
Value of Stock shall be determined in each case as of the beginning of the
Offering Period in which such Stock is purchased.  Employee stock purchase plans
not described in section&nbsp;423 of the Code shall be disregarded.  If a
Participant is precluded by this Subsection&nbsp;(b) from purchasing additional
Stock under the Plan, then his or her employee contributions shall automatically
be discontinued and shall automatically resume at the beginning of the earliest
Accumulation Period ending in the next calendar year (if he or she then is an
Eligible Employee).</P>
<B><LI>RIGHTS NOT TRANSFERABLE.</LI>
</B><P ALIGN="JUSTIFY">The rights of any Participant under the Plan, or any
Participant's interest in any Stock or moneys to which he or she may be entitled
under the Plan, shall not be transferable by voluntary or involuntary assignment
or by operation of law, or in any other manner other than by beneficiary
designation or the laws of descent and distribution.  If a Participant in any
manner attempts to transfer, assign or otherwise encumber his or her rights or
interest under the Plan, other than by beneficiary designation or the laws of
descent and distribution, then such act shall be treated as an election by the
Participant to withdraw from the Plan under Section&nbsp;6(a).</P>
<B><LI>NO RIGHTS AS AN EMPLOYEE.</LI>
</B><P ALIGN="JUSTIFY">Nothing in the Plan or in any right granted under the
Plan shall confer upon the Participant any right to continue in the employ of a
Participating Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Participating Companies or of
the Participant, which rights are hereby expressly reserved by each, to
terminate his or her employment at any time and for any reason, with or without
cause.</P>
<B><LI>NO RIGHTS AS A STOCKHOLDER.</LI>
</B><P ALIGN="JUSTIFY">A Participant shall have no rights as a stockholder with
respect to any shares of Stock that he or she may have a right to purchase under
the Plan until such shares have been purchased on the last day of the applicable
Accumulation Period.</P>
<B><LI>SECURITIES LAW REQUIREMENTS.</LI>
</B><P ALIGN="JUSTIFY">Shares of stock shall not be issued under the Plan unless
the issuance and delivery of such shares comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be
traded.</P>
<B><LI>AMENDMENT OR DISCONTINUANCE.</LI>
<OL TYPE="a">

<OL TYPE="a">

<P ALIGN="JUSTIFY"><LI>General Rule</B>.  The Board shall have the right to
amend, suspend or terminate the Plan at any time and without notice.  Except as
provided in Section&nbsp;3, any increase in the aggregate number of shares of
Stock that may be issued under the Plan shall be subject to the approval of the
Company's stockholders.  In addition, any other amendment of the Plan shall be
subject to the approval of the Company's stockholders to the extent required by
any applicable law or regulation.  The Plan shall terminate automatically on
December&nbsp;31, 2021, unless (a)&nbsp;the Plan is extended by the Board and
(b)&nbsp;the extension is approved within 12 months by a vote of the
stockholders of the Company.</LI></P>
<B><P ALIGN="JUSTIFY"><LI>Impact on Purchase Price</B>.  This
Subsection&nbsp;(b) shall apply in the event that (i)&nbsp;the Company's
stockholders during an Accumulation Period approve an increase in the number of
shares of Stock that may be issued under Section&nbsp;3 and (ii)&nbsp;the
aggregate number of shares to be purchased at the close of such Accumulation
Period exceeds the number of shares that remained available under Section&nbsp;3
before such increase.  In such event, the Purchase Price for each share of Stock
purchased at the close of such Accumulation Period shall be the lower
of:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>The higher of (A)&nbsp;85% of the Fair Market Value of
such share on the last trading day before the commencement of the applicable
Offering Period or (B)&nbsp;85% of the Fair Market Value of such share on the
last trading day before the date when the Company's stockholders approve such
increase; or</LI></P>
<P ALIGN="JUSTIFY"><LI>85% of the Fair Market Value of such share on the last
trading day in such Accumulation Period.</LI></P></OL>
</OL>
</OL>

<P ALIGN="JUSTIFY">Immediately after the close of such Accumulation Period, a
new Offering Period shall commence for all Participants.</P>
<B><LI>DEFINITIONS.</LI>
<OL TYPE="a">

<OL TYPE="a">

</B><P ALIGN="JUSTIFY"><LI>&quot;<B>Accumulation Period</B>&quot; means a period
during which contributions may be made toward the purchase of Stock under the
Plan, as determined pursuant to Section&nbsp;4(b).</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Board</B>&quot; means the Board of Directors of
the Company, as constituted from time to time.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Code</B>&quot; means the Internal Revenue Code
of 1986, as amended.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Committee</B>&quot; means a committee of the
Board, as described in Section&nbsp;2.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Company</B>&quot; means ActionPoint, Inc., a
Delaware corporation.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Compensation</B>&quot; means (i)&nbsp;the base
salary or wage paid in cash to a Participant by a Participating Company plus
(ii)&nbsp;any pre-tax contributions made by the Participant under
section&nbsp;401(k) or&nbsp;125 of the Code.  &quot;Compensation&quot; shall
exclude bonuses, incentive compensation, commissions, overtime pay, shift
premiums, all non-cash items, moving or relocation allowances, cost-of-living
equalization payments, car allowances, tuition reimbursements, imputed income
attributable to cars or life insurance, severance pay, fringe benefits,
contributions or benefits received under employee benefit plans, income
attributable to the exercise of stock options, and similar items.  The Committee
shall determine whether a particular item is included in Compensation.</LI></P>
<P ALIGN="JUSTIFY"><LI> &quot;<B>Corporate Reorganization</B>&quot;
means:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization;
or</LI></P>
<P ALIGN="JUSTIFY"><LI>The sale, transfer or other disposition of all or
substantially all of the Company's assets or the complete liquidation or
dissolution of the Company.</LI></P></OL>

<P ALIGN="JUSTIFY"><LI>&quot;<B>Eligible Employee</B>&quot; means any employee
of a Participating Company who meets both of the following
requirements:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>His or her customary employment is for more than five
months per calendar year and for more than 20&nbsp;hours per week; and</LI></P>
<P ALIGN="JUSTIFY"><LI>He or she has been an employee of a Participating Company
for not less than 30 consecutive days, or such other period as the Committee may
determine before the beginning of the applicable Offering Period.</LI></P></OL>

<P ALIGN="JUSTIFY">The foregoing notwithstanding, an individual shall not be
considered an Eligible Employee if his or her participation in the Plan is
prohibited by the law of any country that has jurisdiction over him or her or if
he or she is subject to a collective bargaining agreement that does not provide
for participation in the Plan.</P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Exchange Act</B>&quot; means the Securities
Exchange Act of 1934, as amended.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Fair Market Value</B>&quot; means the market
price of Stock, determined by the Committee as follows:</LI></P>
<OL TYPE="i">

<P ALIGN="JUSTIFY"><LI>If the Stock was traded on The Nasdaq National Market or
The Nasdaq SmallCap Market on the date in question, then the Fair Market Value
shall be equal to the last-transaction price quoted for such date by such
Market;</LI></P>
<P ALIGN="JUSTIFY"><LI>If the Stock was traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date;
or</LI></P>
<P ALIGN="JUSTIFY"><LI>If none of the foregoing provisions is applicable, then
the Committee shall determine the Fair Market Value in good faith on such basis
as it deems appropriate.</LI></P></OL>

<P ALIGN="JUSTIFY">Whenever possible, the determination of Fair Market Value by
the Committee shall be based on the prices reported in <U>The Wall Street
Journal</U> or as reported directly to the Company by Nasdaq or a stock
exchange.  Such determination shall be conclusive and binding on all
persons.</P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Offering Period</B>&quot; means a period with
respect to which the right to purchase Stock may be granted under the Plan, as
determined pursuant to Section&nbsp;4(a).</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Participant</B>&quot; means an Eligible Employee
who participates in the Plan, as provided in Section&nbsp;4.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Participating Company</B>&quot; means
(i)&nbsp;the Company and (ii)&nbsp;each present or future Subsidiary designated
by the Committee as a Participating Company.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Plan</B>&quot; means this ActionPoint, Inc. 1998
Employee Stock Purchase Plan, as amended from time to time.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Plan Account</B>&quot; means the account
established for each Participant pursuant to Section&nbsp;8(a).</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Purchase Price</B>&quot; means the price at
which Participants may purchase Stock under the Plan, as determined pursuant to
Section&nbsp;8(b).</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Stock</B>&quot; means the Common Stock of the
Company.</LI></P>
<P ALIGN="JUSTIFY"><LI>&quot;<B>Subsidiary</B>&quot; means any corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.</LI></P></OL>
</OL>

<B><LI>EXECUTION.</LI></OL>

</B><P ALIGN="JUSTIFY">To record the amendment and restatement of the Plan by
the Board on ________&nbsp;__, 2002, the Company has caused its duly authorized
officer to execute this document in the name of the Company.</P><DIR>
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<P>ActionPoint, Inc.<BR>
<BR>
<BR>
<BR>
By:  <U>&#9;&#9;</P>
</U><P>Title:  <U>&#9;&#9;</P></DIR>
</DIR>
</DIR>
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</U></FONT>

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